Fund managers concerned by Orion’s unusual approach ahead of going to the market.

Fund managers have expressed concern over Orion Health's unusual decision to not provide earnings forecasts ahead of its highly anticipated initial public offer, which will raise up to $150 million in new growth capital.

The Auckland-based company, which develops IT systems used in hospitals, yesterday registered its prospectus and declared an indicative price range for its sharemarket listing of $4.30 to $5.70 per share, which would value the firm at between $720 million-$915 million.

IPO prospectuses usually contain detailed forecasts of future financial performance, but Orion decided not to include such information because of the inconsistent nature of its revenue.

Chief operating officer Graeme Wilson said the company's revenue came via large contracts and it was difficult to provide accurate forecasts "as to when contracts will land and not land".

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Fellow Kiwi software developer Gentrack, which listed in June, was forced to downgrade its profit forecast just five weeks after the float because of delays with major customer contracts.

Salt Funds Management managing director Paul Harrison said the lack of prospectus forecasts - combined with the $14.8 million loss Orion has reported for the six months to September 30, up from a $4 million loss in the same period of last year - was "disconcerting". "It doesn't give investors much to go on, particularly in a business that you're expected to pay for growth opportunities."

However, Harrison reckoned investors would give Orion "the benefit of the doubt".

Another fund manager, who did not want to be named, said the lack of forecasts required a leap of faith by investors. "Personally, if I don't get forecasts I don't invest."

Andrew Ferrier, Orion's chairman, said forgoing forecasts was "the prudent thing to do" and a huge amount of financial information was included in the prospectus.

Orion was previously profitable, with profit rising from $385,000 in the 2010 financial year to $7.8 million in the year to March 2013, according to the prospectus.

Ferrier said the recent losses were a result of investments for future growth.

"We've had our eyes open that we had to move ahead of the curve [and] that we had to start ramping up that R&D investment."

A big surge in growth in the United States - where the company secured 15 new customers last year - had resulted in higher implementation costs.

That might have hit the company's bottom-line, but Wilson said the new customers would prove valuable in the long-term.

Meanwhile, the company said the new capital would help fund the establishment of 40 new research and development teams, with seven to eight staff per team.

Orion float
• Up to 17.4% of Orion being sold through IPO.
• Indicative price range of $4.30 to $5.70 per share.
• Will value Orion at up to $915 million.