@Seymourbutts Also agree it is positive, particularly as they are using multiple modules and have added modules during the term, it increases the stickiness of the product and reduces chances Dartford will undo all of this by selecting another provider for a full EPR.

@mikebrisy I just wanted to confirm and get better clarity on a few things.

Of the 400m spent in EPR systems last year the best ALC could do is basically renewals and extensions?

They have tenders in for the 500m earmarked for EPR systems in 2024?

After the 500m to be spent in 2024 this will represent 90% of NHS Trust EPR systems?

Thank you

(@jcmleng thanks for your summary)

@NewbieHK I had another look at the article, and need to make an important correction.

• The GBP400m spend relates to 2022
• The GBP500m spend relates to 2023
• The 90% relates to the overall NHS target to have 90% of trusts with some form of EPR by end of 2023 - this appears to have been achieved
• The 100% target is for end of 2025

It is not clear to me how much of the original GBP1.9bn remains to be spent. Assuming GBP900m was spent in 2022 and 2023, then that leaves GBP1000m for 2024 and 2025.

I guess a Trust ticks its contribution to "% coverage" target at the first module to "go live", which probably explains the 90% coverage at <50% spend. That would indicate that we are probably building up to a peak rate of IT $ deployment during 2024 (makes sense, 3rd year etc.)

$ALC have most recently reported that they are involved in tenders for contracts with "TCV of $200m+" so read that as GBP110m+, which also makes sense if there is GBP1000m to be spent in two years. They are billing for 11% of the remaining spend ... it is a market with a lot of players, and they can't offer all solutions.

The key message, however, is that the money is being spent and contracts are being let, and the target of getting "something" in each NHS Trust appears to have been ticked.

I only write this because you can come away from the engagements with Kate with the impression that everything is being held back. There is ample evidence to indicate that is not the case, even though there are reports of delays (as is not uncommon anywhere, public or private with an IT roll-out of that scale.) We've been hearing the "delayed procurement" message from $ALC for over a year now (I think) and all I am pointing out is the NHS has been spending a lot of the planned money, broadly in line with what you might estimate is the planned rate. Or in other words, in the time we've been hearing the "delayed procurement" key message, it appears GBP500m has been spent. Not contracted, spent.

I imagine there is rather a lot of "devil in the detail" and I don't want to give the impression that I have any deep or unique insights on this. I don't. I just always try to triangulate what I hear from management. Always.

As far as I can see with the $ALC disclosures over calendar 2023, is that the material disclosures relate to existing customers (South Tees renewal and extension, and Leidos extension). There is one undisclosed value of an Incremental Extension for an existing customer (Bolton NHS) in 2H 2023, as well as several "new" customers where the sizes of the contracts are undisclosed, as far as I can see.

My hypothesis is that the new customer contracts are quite small. This is not surprising. A new customer - given the option - is likely to go ahead and try one module first. (For technical reasons, as well as the poltical one of "ticking the box").

However, as far as I can determine, it has been some time since we had a new customer with a material contract where the value has been disclosed. I don't follow $ALC super-close, so I may have missed something, But that is as it appears to me.

The UK budget and the state of the NHS is a big issue at the moment. So another question is, "what happens to NHS IT spending after 2025"?

We should get an indication in this week's budget. However, the Tories are committed to tax cuts. Equally, they are almost certainly going to be kicked out in favour of Labour at the next election, which could be as early as May although likely later in the year.

Kate is alert to this because on the SM call, she referred to priorities in the NHS evolving every few years.

My bet, is that once the GBP1.9bn is spent, there will be the need for a lot more spending and eventually, a program for 2026 and beyond will be developed by the government of the day.

This is all a little bit close to home for me, as I have family members in the UK who are currently involved with the NHS. Without oversharing personal details, all I can say is that as of today their experiences are not very digital, coordinated or connected. When I read the NHS IT Strategy Paper, I feel like I am reading about another country.

Not sure that clarifies any of your questions.

@mikebrisy , with respect to not having a new customer with a material contract, it is a concern, though in the investor results presentation Kate did say that the current funding focus is for full EPRs, which has effectively slowed down the modular sales eg. to new and existing customers. Once hospitals have an EPR, there is still an opportunity for ALC to wrap around modules on top of another EPR.

@mikebrisy thank you for the comprehensive response to my questions.

I think it is concerning that with all this money being spent they simply are picking up crumbs. For me I think it says alot about their product offering.

@mikebrisy Nervecentre from what I can see won 3 significant contracts in the last 6-12 months, so I still do share your concern about ALC's ability to win new contracts. South Tees is reassuring, as is their new collaboration with 2 other 2 NHS trusts. Would like to see Dartford formally select ALC as their EPR.

@TPI1 you make a very good point. The initial flurry of activity to get core EPRs in during 2022-2025 could then arguably seed a follow-on wave of incremental module purchases, from a very wide customer base.

Question is whether you buy your modules from the core provider (Epic, Cerner, etc.) or from more focused players like $ALC. I just don’t know.

It may well be that we see $ALC come back with all guns blazing. I just don’t have any conviction in that thesis, so that’s why I am out. But it might happen.

@mikebrisy, having used Epic, Cerner and Orion (as well as a smattering of others including Miya) over the last few years, most of them don't work all that well as standalone modules, and integrating them is a right royal pain.

One factor IMO is that the big dog with momentum being Epic, is just very American in how it feels to use and navigate. Its not a good fit for how we provide care in Australia and particularly with our peculiar mixed public/private funding arrangements and how that's measured. Orion and Cerner are less so.

The UK hospital system is much more like Australia in terms of culture, funding etc. I'd be very surprised if Epic managed to get a foothold in the UK market with the current product offering.

That doesn't mean Alcidion is a shoe-in, but the user experience aspect of how the EMR is organised and whether it fits the culture of UK health services is an unmeasurable factor to consider.

And FWIW, NHS management aren't going to prioritise clinician friendliness if there is a significant contract saving to be had. For a cash strapped NHS, it's bottom line any day of the week and twice on Sunday.

@mikebrisy Reflecting on this, which I think is a pretty critical issue, I think in broad terms NHS trusts will use a core provider to do more/most things and continue to reduce the number of different software they need to use. Some stuff done previously by smaller focused companies can now be done by Epic, Cerner etc.., making some businesses redundant. But these larger companies can't be everything for everyone, just as Kate said about Telstra Health with their foot in every pie. My experience with some of the software they have has shown me that while they maybe everywhere, they can't be great at everything and may actually produce some very mediocre software in some cases. There will always be room for a smaller player being more nimble and agile to build out additional and more effective functionality on top, exactly what that is will evolve over time. In the primary care space GP software used in the past needed 'patient engagement' type software to be integrated into their core software, now the core software companies are starting to do this themselves. Now smaller companies are adding AI note taking to the GP software, in time, some of these will be eaten up by the core software! It's a moving beast and it is reassuring that Kate is aware of this and is looking 2-3 years ahead as to how things may evolve. The platform play by ALC is important to give them options and survive in the long-term in this sector.