The Orion Health Group Ltd (ASX: OHE) share price traded mostly flat this morning despite the innovative health care technology business announcing a robust half-year report.
In the six months to 30 September 2015, Orion, a newly-listed New Zealand cloud information business, reported a 27% jump in revenue, to $104 million, and a loss after tax of $26.8 million.
Although nobody likes to see a loss, Orion announced a number of key operational highlights, invested heavily in research and development (R&D), and experienced growth in targeted overseas markets.
"We are continuing to invest in R&D to maximise the huge opportunity we have identified for Orion Health," CEO Ian McCrae said. "Increasingly, the focus is moving from treating conditions, to treating individuals and when it does Orion Health will have the modern, scalable technology to deliver and enable it."
In the North American market, Orion achieved a 37% rise in revenues and signed a number of big customers, such as the United States Department of Defense and state governments. Orion's software now manages over 90 million patient records around the world.
The company reported a net operating cash outflow of $19.3 million for the period, compared to $13.5 million in the same period last year, but recurring revenues rose from 30% to 41%.
"We are really pleased with our progress in the first half of the financial year," Mr McCrae added. "Our business is growing and new market segments are emerging that have a need for our scalable platform."
Buy, Hold or Sell?
Much like XERO FPO NZ (ASX: XRO) and to a lesser extent Freelancer Ltd (ASX: FLN), Orion Health is a lightweight, scalable, information technology business in the making. It's unprofitable, sure. And it's burning through cash. However, if in 10 years Orion is still operational, and investing in itself like it does today, I'd be willing to bet it's a much bigger and more profitable business than many expect it to be.
Unfortunately, a valuation of any of these types of stocks is very subjective. Therefore, investors considering buying Orion shares must first complete thorough qualitative due diligence. Nonetheless, it's certainly worthy of a spot on your watchlist.
