Pinned straw:
Discl: Held IRL 1.42% and in SM
@Tom73 , fully agree! Adding my notes and charts to the mix. I topped up a few months ago, so will not be adding.
OVERALL
- A positive and very much BAU quarter for ALC, mostly in line with historical seasonal trends, continuing the momentum of positivity
- Cash flow is aligned to seasonal trends
- Costs remain well under control, other than a bigger jump in Product & Dev cost which is due to payments to 3rd party providers for the Leidos and Mizaic solutions which was expected
- New Sales was initially disappointing, but is very much aligned to historical seasonal trend - some key wins though - expansions in new-ish customers, take up of new-ish modules, and 1st site in QLD for Miya Precision
- Excludes the giant UHSussex deal which appears to be on track for a May 2026 completion
- No change to FY26 outlook which should be comfortably achieved, assuming UHSussex is signed in May 2026
The ALC share price has barely moved in response to what has been positive news this FY, but the overall trend is unmistakably up.
CASH FLOW
Jump in Net Cash from Operations and return to positive cash flow from operations from 2Q to 3Q is very much in line with historical seasonal behaviour
- Only item that stood out was Product Dev and Operating costs of $3.4m, which stood out, as a big jump - this was due to payments to 3rd party partner products associated with the recently expanded Leidos contract an the provision of Mizaic to North Cumbria. Whilst expected, the stand out was still a sharp one
- Other costs were mostly in line
- Staff cost control continues to be flat, with a slight downward bias - Kate reiterated the same message around staff costs, that they will go up in small margins and will not rise in line with revenue increases
- Cash balance $15.1m, no debt
- Kate reiterated via responding to a question - ALC currently has no interest in exploring a capital raise
QUARTERLY SALES
- Was initially a bit disappointed with the drop in Quarterly New Sales, particularly against the huge Q2 -> Q3 jump in FY2025, but this drop is also seasonal
- Q3 FY2025 New Sales was exceptional with the huge $37.5m signing of the North Cumbria deal, in FY26, Q4 will likely be exceptional once the UHSussex deal is done in May 2026
- Kate noted that the TCV trend is uncertain as it really depends on when contracts are signed
- Split of New Sales between Recurring Revenue and One-Time Services is roughly 90%: 10%, this will likely continue
- No concerns from a financial perspective
There are positive updates on New Sales/Renewals though:
- Expansions in new-ish customers I see as really positive - NCIC, particularly - they are barely 6-9M into using Miya, Hywel was signed in Feb 2025, so they are also fairly new - it can’t be negative at these sites if they are modules this early.
- Scope expansion deals on new-ish modules - Miya Emergency Department - a good sign of solution relevance and fit
- Then new customers - Gold Coast Health for Remote Patient Monitoring, 5-year contract - this was significant as it was the an entry to a “digitally progressive” customer and the 1st deployment of Miya Precision in Qld. While Qld as a whole is “digitally progressive”, ALC is under-represented in the state, hence the significance of this win.
OTHER COMMENTS IN RESPONSE TO QUESTIONS
- “Value-based Healthcare” impact - Kate advised that while this emphasis is being talked about in the NHS, the challenge will be for the Trusts to restructure themselves to enable this - ALC is across this, but only inching towards this type of engagement
- Question around a comment in a Oct 2025 Darworth Trust Board Report that “Miya and Patient Track not fit for purpose” - Kate responded that this comment was in the context of Miya and Patient Track being not fit for purpose for ICU use, which is a fact. Kate also confirmed that ALC did not pitch for this at Dartford, so a non-event comment
- Middle East, Canada are both progressing and are pleased with interest from those markets - both are government procurement markets, so there is a need to understand how the procurement process works
OUTLOOK
No change. Should be comfortably met assuming UHSussex deal is signed in May 2026 - no indications that it won’t be signed
@jcmleng great notes - I didn't make the call, but am keeping a watch on $ALC.
UHSussex EPR
For Kate to be this confident about UHSussex EPR, indicates to me that what remains is governance process on the NHS side. The Board of UHSussex will only have authority for typically GBP5-10m decisions. I expect the final decision requires NHS England signoff (not necessarily full Board, but someone will have been tasked to approve.) So, I'm guessing once Kate believes it is "done" at the local level, it will need to await the next UHSussex Board meeting, and then their recommendation/decision goes onwards to NHS England.
My point is that, if in late April, she is calling a May expectation, then it must be down to those final details and governance sign-offs. Something would have to have go wrong for it not to emerge positively, given Kate and team’s ample experience with the NHS. (I think this is a very different level of certainty from a few years ago, when she was forever blaming slow NHS procurement.)
Cash Flows
Which turns me next then to the Cash Flow trend chart. Below, I’ve shown my own visualisation of this, choosing a TTM (trailing 12 months) method to smooth out the quarterly and seasonal variations. (The trends lines are fitted to the last 12 Qs - shown by the shaded box.)
While on the face of it, in the last 3 years, the trend in OpCF is clearly positive – after the prior 4 years bumping along OpCF breakeven – it is important to remember that Q3 FY25 received the big cash receipt from the 10-year NCIC EPR deal upfront payment.
Which brings me back to UHSussex EPR: if signed, it will generate a similar positive bump up, putting more “white space” between expenses and receipts. Equally, however, if for any reason it isn’t signed, then the positive effect of the 3Q FY25 NCIC payment will cycle out of the TTM chart, and the trend won’t look so great. And I think that’s why the SP is stuck in the $0.90 - $1.20 channel for now.
If UHSussex EPR is signed in the next few weeks, then that’s 2 chunky EPRs in 2 years. With costs seemingly well managed for now, that is probably enough to lift OpCF sustainably into positive territory.
My Key Takeaway
I am somewhat divided on the decision to invest or not. My gut says UHSussex IS going to happen, and we’ll see the SP leg up again. But equally, is 2-big-deals-in-2 years enough to show that $ALC is now on the road to sustainably growing cashflows? I’m not sure.
While it is tempting to trade the contract decision, the question I’m struggling to answer is does it together with NCIC demonstrate that $ALC is going to consistently win more NHS EPR trust deals? For me to invest in $ALC again, I have to believe that it does.
Disc: Not held
@mikebrisy, my view is that there is not too much uncertainty with UH Sussex, given the 8 Jan 2026 announcement. It was won via competitive tender. I expect most of the broad contracting parameters, including the duration, potential TCV etc would have been a tender requirement, against which ALC must have responded with a detailed tender response proposal, which if awarded, must have been broadly accepted.
I do think Kate confidence is not misplaced, given how it was won, unless of course, some dramatic event happens which halts the funding and then the wheels will completely come off. The precedence from the North Cumbria deal, 10 years, $37.5m, also won by competive tender, adds to the deal-being-imminent confidence.
But you are right, it should be down to the governance process within the trust and with the NHS.
There is no deal, until there is a deal and it will be a major relief once it is announced, for sure.
