Adding my notes and thoughts after having a closer look at the ALC 1HFY25 results.

Discl: Held IRL & SM

SUMMARY

It was a really positive 1HFY25 result, which came on the back of 2 big contract wins in Feb 2025 of Hywel Dda, ALC’s first win in Wales and the monster 10-year North Cumbria Miya Precision EPR win. It has vindicated my decision to stay invested and await the turnaround as I came very close to existing at around 4c. It does feel like the turnaround is now very much in play and there is clear confidence and a spring in Kate's voice on the call today.

ALC achieved (1) EBITDA positive of $0.3m and Underlying EBITDA positive of $0.5m (2) $39.5m of FY25 contracted revenue and (3) Record new TCV sales of $61.3m YTD. These are significant as they will enable ALC to meet the 2 FY25 goals of being EBTDA and CashFlow positive. 

The steady stream of wins in the past 6-9 months, with Hywel and North Cumbria won via competitive tender, are positive signs of the competitiveness of the Miya Precision Platform, the modular nature/approach and of price - the referenceability of these sites sets ALC up for future UK Trust wins. It provides good confidence that ALC is back into “win contracts” growth mode and directly addressing the major “contract slowdown” concern of FY23/FY24.

The cost base continues to fall, down 22.7% YoY and down 14.7% HoH - management has guided that the cost base is “largely fixed” and hence, further operating leverage is expected. From the updates around go-lives/deployment and the good stream of new contracts, ALC appears to be executing the implementations well and quickly with the optimised headcount, which provides good confidence in this cost base guidance.

With increasing confidence that ALC has addressed the 2 key issues that has weighed it down - (1) Contract growth (2) bloated cost base, the thesis looks be back on track. It now looks to be a good time for me to consider a top-up to further average down my cost. Current zone between 0.085 and 0.095 looks like a decent re-entry point given 38.2% retracement and support/resistance going back 21 months to May 2023

FINANCIALS

Very good steady rise in % Recurring Product Revenue since FY21.

SALES

$18.3m new Total Contract Value sales, including both contracted and renewal:

• 4 in Aust - Hume, NALHN, Peninsula Health, Sydney LHD
• 1 in UK - Northumbria
• Excludes 2 new contracts subsequently executed in 2HFY25 - Hywel Dda (Wales) and North Cumbria

FY25 YTD New TCV sales, including 2HFY25 contracts is $61.3m - highest new TCV signed in ALC’s history

FY25 contracted revenue YTD is $39.5m, assumes a minimum $8m revenue recognised this FY from NorthCumbria, mostly license fees - this exceeds the $36.0m revenue ALC flagged to achieve EBITDA positive in FY25

Alcidion able to demonstrate referenceabilty across its core products in all its key markets; important role in the selection criteria

• Hywel Dda (Wales) contract was a country first, won via competitive tender
• North Cumbria was a significant win as it was for an EPR platform and was won via competitive tender - 2nd EPR contract after South Tees in Dec 23, also for 10 years, key reference points as to shape and size of various EPR contracts

BALANCE SHEET, CASH FLOW

• Cash balance of $7.7M and no debt at 31 December 2024
• 1HFY25 Receivables of $9.7m was significantly higher than EOFY $5,2m but H2 has always been a strong period for cash collections - no concerns with this
• Cash outflow from Operating activities was $4.1m, down from 1HFY24 outflow of $11.4m, predominantly due to reduced cost base

OPERATIONS

• Continued good track record of rapid deployment - Hume Rural, Dartford & Gravesham NHS Trust, Royal Bolton Hospital, Hampshire Hospitals NHS Foundation Trust were all deployed in 1HFY25
• This has been achieved with the post-headcount optimisation exercise of 3QFY24, providing confidence in management guidance of “fixed cost base” and of ALC’s modular platform approach

OUTLOOK

• FY25 contracted revenue signed to date will result in full year revenue growth (vs. FY24) and positive EBITDA and cashflow
• Confident of being EBITDA and cashflow positive in FY25