Rhapsody - the software company recently carved out of Auckland-based Orion Health after its NZX meltdown - has acquired a 100 per cent stake in Dallas, Texas-based Corepoint Health.

Both companies make software for sharing patient records.

"We are retaining both product offerings, existing headcount and continuing R&D investment in both Rhapsody and Corepoint," a spokesman for Rhapsody said.

Both companies are privately held. No financials around the deal were disclosed.

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A spokesman for Rhapsody said it employs just under 100 staff globally, with 50 of those in New Zealand.

"All roles in New Zealand will remain, and will remain New Zealand-based," he said.

"We are actively recruiting a further four roles currently, with any additional developer roles remaining in New Zealand too."

Ahead of the deal, Corepoint was majority-owned by private equity firm Audax. The acquisition was financed by Rhapsody.

Corepoint has 90 staff, all based in Texas, and is profitable, a spokesman said. He declined to share any financials.

The deal - disclosed overnight - was closed on June 26 but is still subject to regulatory approvals in the US.

Philippe Houssiau, Operating Partner at Rhapsody's controlling shareholder, UK-based HG Capital, said the merger would help accelerate product delivery.

There are no plans to take the merged Corepoint and Rhapsody public.

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What the heck just happened?

Orion Health sold a majority stake in its Rhapsody unit to UK-based HG Capital in a deal first announced in October last year.

Rhapsody was regarded by analysts as Orion's cash cow, earning $33 million last year, while its other two units, Population Health and Hospitals, both drowned in red ink as the company made a $40m net loss overall.

Orion Health CEO and owner Ian McCrae.
Orion Health CEO and owner Ian McCrae.

Orion boss and major shareholder Ian McCrae defended the deal, saying the rump of the company could be made profitable while the "mature" Rhapsody was the only asset attractive to buyers at a time when Orion badly needed to raise capital after a series of losses and blow forecasts that saw its market cap crash from $1 billion shortly after its 2014 IPO to under $200m before the HG Capital deal (which valued Rhapsody at $205m).

HG Capital was also the only prospective buyer willing to let Orion maintain a stake in Rhapsody, McCrae said (25 per cent, in the event).

The complicated deal also involved a share buyback that left McCrae holding nearly all of Orion's stock. A compulsory acquisition threshold was reached. The company delisted from the NZX in March.