1492746908803 - Scores of job losses expected at Orion Health

Scores of job losses expected at Orion Health

Job losses are looming at software firm Orion Health in the wake of the company missing financial forecasts. 

Chief executive Ian McCrae said Orion employed 1200 staff and planned to reduce the number of roles it had by about 10 per cent.

However, he said the roles that would be axed included vacant ones that the company had yet to fill, so the number of redundancies would be “significantly smaller” than the 10 per cent figure might imply.

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The restructure would be across the board, both in New Zealand and at its offices overseas, he said.

Consultations were under way and New Zealand staff should find out who among them would be affected next month, he said.

McCrae signalled this week that Orion would return to the more conservative “organic growth” strategy that it pursued prior to its sharemarket float in 2014, and would pare back its research and development costs to match the sales it bagged.

That was after it forecast a $32m to $38m loss for the year just closed.

The plan was to get Orion back into the black this financial year, which might be towards the end of the financial year, he said.

“We are going to ‘right size’ the company.”

One of the areas that would be cut significantly would be research and development, he said.

Orion currently spends 33 per cent of its revenues on r&d, which was “well above the industry norm” of 16 to 18 per cent, and the figure would still be in the mid-20s immediately after the restructure, McCrae said.

“We will be trending over the next few years towards the industry norm of 18 per cent.”

Orion’s software is used to manage the health records of more than 100 million people around the world.

On Tuesday it announced it had won a new contract worth $9 million over five years to provide a “comprehensive care solution” for hospitals, GPs and other care providers in the English county of Dorset, which has a population of more than 765,000.

Orion had not made a statement to the NZX about the restructure as of mid-afternoon on Friday, but McCrae said it should come as no surprise. Its shares were trading down 2c at $1.37, valuing the company at $219m.

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