Some pretty impressive headline numbers from AHC's 1Q26 trading update at the AGM this morning.

Revenue of $23.2m up 51% and a record EBITDA margin of 18.1% (compared to 17.8% in 2H25). It's tough to pin down exactly where organic growth is landing, but management have provided a full year target of 10-14% and the EBITDA margin expansion provides confidence that acquisitions aren't just providing empty calories.

There were a couple of questions at the AGM about board shareholdings and the potential to pay a dividend again, but compared to some other recent AGM's it's fair to say AHC shareholders are content with how things are travelling right now. After being forced to survive through Covid (which larger peer HIL couldn't achieve), AHC is thriving now.

Austco released a trading update today to coincide with their AGM later this morning. Overall impression is it was what you would want to see, which is to say, solid. They didn't break down the organic/inorganic split, which would have been nice, but did reconfirm targeted 10-14% organic growth for FY26. Highlights included:

• Revenue of $23.2 million, up 51% on the pcp, which includes both organic and inorganic growth.

• EBITDA of $4.2 million, representing 18.1% EBITDA margin, up from 16.0% at FY25 year-end.

• Order book of $54.6 million at 23 October 2025. 

Here's how the order book has tracked over the past six years:

Overall it continues to deliver at or above what I need it to in order to justify continuing to hold. I've been lightening some positions that have gotten a bit frothy in recent months but Austco is not one of them.

[Held]

Good to see some actual Performance Rights with Hurdles. Not common in the shares I hold down in this part of the market cap world.

I've just posted a valuation for Austco. Overall it looks strong. But I'm relatively new to this company. So I have a few questions for the Austco old-timers and wise folks like @Wini, @Noddy74, @raymon68, @lyndonator, etc.

1. Why did revenue start to grow in 22/23 after many years of stagnating?
2. Who are Austco's main competitors?
3. Who is John Bennetts and why does he own 16%?
4. Who is Robert Grey and why has he been aggressively offloading shares?
5. Is there a reason Austco uses the language "revenue from customers" rather than just "revenue"?
6. How comfortable are you with the strategy of acquiring resellers, given the resellers aren't entirely focused on reselling just Austco but also have other unaligned sources of revenue and profit?

Austco today announcing the acquisition of NZ-based call system solutions provider and Austco reseller, G&S Technologies. I don't know about others but I find it very difficult to play armchair quarterback on acquisitions. There are just too many factors, like working capital pegs and balance sheet health, that are completely unknown unless you're in the tent. However, what we can say based on what's available to us:

• 3.5 times EBITDA - tick. It's in line with other acquisitions they've done, which have so far proven successful. They're maintaining price discipline.
• The EBITDA conversion % is roughly in line with the existing Austco business - tick. On that measure at least seems to be of reasonable quality.
• Strengthens direct sales capacity - tick. They've been doing this across multiple regions and it's been working so far.
• Up to 75% funded by scrip, at Austco's discretion - tick. Give them skin in the game and preserve cash. Yes, it's somewhat dilutive but there's always going to be a trade off.
• It's a meaningful addition - tick. It roughly represents half of Austco's business from 12 months ago. They've grown considerably since so probably represents about a quarter of FY25 business but still significant.

Only slight quibble is that they didn't take the opportunity to update on the order book but I'm nit picking.

[Held]

Good update and broadly in line with the assumptions in my valuation (so don't feel the need to update it for now).

Market seems to like it - up 6% on reasonable volumes (for Austco shares at least).

DISC: Held (SM and IRL) and continuing to add to (IRL)

Austco provided a short update on the first quarter of the year. The update was light on details, with no mention of profit or cashflow numbers.

This could be interpreted negatively, but I’m not certain that’s what this means. I think it's more likely that they are using their privilege to not have to report these. 

Whilst microcap Jesus gave them some grief on Twitter for reporting the order book in a very selective way which I agree with, it feels like the market is missing that growth with acquisitions is coming in at 90%.

If we use the same profit margin as last year, which was actually quite high at 13%, my back of the napkin math is that they may end the year on a PE of around 8-10.

If the organic growth can be maintained at 15%, then the fair PE should be somewhere around 15. This implies fair value on the stock somewhere around $0.45.

Austco released its full year results announcing Revenue of 58.2m, NPAT of 7.1m (tax offset by the last of its loses) and an order back log of 50m.

Is a re-rating on the cards?

https://austcohealthcare.com/wp-content/uploads/2024/08/29AUG24_media-release.pdf

Austco Healthcare Awarded National Purchasing Agreement with Premier

Austco Healthcare Limited's (ASX: AHC) subsidiary, Austco Marketing & Service (USA), has

been awarded a National Group Purchasing Agreement for Nurse Call with Premier, Inc. The

new agreement allows Premier members, at their discretion, to take advantage of special

pricing and terms pre-negotiated by Premier. Premier is a leading healthcare improvement

company, uniting an alliance of approximately 4,400 U.S. hospitals and 250,000 other

healthcare providers.

Whilst this agreement does not guarantee immediate revenue, it is an important step in

promoting the Austco brand as a leading Nurse Call provider in the US and provides

immediate reach to the alliance of hospitals and healthcare providers.

"We are honored to be awarded this National Group Purchasing Agreement with Premier,

Inc. The agreement underpins Austco’s reputation for delivering innovative, high-quality

clinical communication solutions to healthcare providers nationwide. We’re excited to offer

Premier members access to our industry-leading technology designed to enhance patient

care and streamline operational efficiency," said Clayton Astles, CEO of Austco Healthcare

Austco puts out out their hand for a capital raise

Bell Potter are the underwriters.

Bell Potter also did the raise for Clarity Pharmaceuticals and only 33% took the offer.

I think this could head the same way. Extra 15m shares for retail OR Bell Potter has to buy up to 10m shares (going by the 33% using Clarity and an example) if retail do not take the offer.

I know comparing Clarity Pharmaceuticals and Austco is not an apples to apples comparison but I'm making the point that that retail right now doesn't have the stomach to tip money into the begging bowl unless there is very clear upside and synergies.

Sold on the pop on the morning

[not held].

What do they do?

Ausco develop software and hardware relating to healthcare communications systems, primarily nurse call and real time patient tracking systems, as well as re-sell and market complimentary systems.

They are also Systems integrators (nurse call and PTS installation contractors), through acquisitions, giving them sales channels into various geographic markets. It has achieved this primarily through acquisition, and is part of a strategy to enhance their direct sales channels in Australia, where systems integrators tend to have the customer relationships.

Financials

The business experienced significant disruption throughout FY 2021 due to COVID-19. Since then, revenue CAGR is 18%

Gross margins have remained relatively flat over the past 3 years at around 52%.

Profit margins have been in the range of 2-7%, noting the business has been profitable over the past 3 years.

Since H1 2022, software and software services revenue CAGR is 28% over the past 2 years, and is now 21% of total revenue. AHC has been developing its Nurse call and clinical comms platform Tacera,

Sales Pipeline: Sales pipeline has more than doubled to $44.4 million over the past 12 months, leading into H2. AHC revenue streams are seasonal, with H2 traditionally being the stronger half. The sales pipeline has benefited from the following recent acquisitions:

• Acquired Amentco (Integrator) for $10.6M (3.5 x 2023 EBITDA) - Feb. 2024
• Acquired Tecknocorp acquisition for $2.6M plus earnout (3.5 x EBITDA) - Sep. 2023.

• Present revenue value is annualising H1 revenue.

Share Price Performance

Share price has been in an upward trend since early 2019.

Valuation

Austco Healthcare Ltd is trading on a trailing PER of 24.5. However, given the strong pipeline into a seasonally stronger H2, I would estimate the forward PER is around 20, which appears to be reasonable value, assuming it can continue to grow at around 10-15% pa.

Ownership

The largest owners are:

• Former CEO / Founder: Robert Grey (19.2%)
• Aust. Ethical Investments (17.8%)
• Asia Pacific Holdings (18.1%)

The board is a lean one, with just 4 members

MD, Clayton Astles owns 1.1% of the company, and Brendan Maher (CFO) 0.85% . Other directors holdings of around $100-200k each.

AHC has some solid institutional investors, with reasonable inside ownership

Management Incentives

Short term incentives are based on pre-defined profitability, gross margins, and revenue financial targets. Non-financial are product development, process improvements, and Leadership and team contribution.

Summary

AHC strategy of rolling up integrators and re-sellers in Australia at about 3.5x EBITDA will juice revenue and hopefully profits over the next few years. The call option is it the re-sellers / integrators enable AHC to get their sticky Tacera platform on sites around the country. Once these systems are in, they are difficult to replace.

Presently, sales orders are exceeding the H1 2024 revenue run rate, indicating a strong H2 is ahead of us.

DISC - HELD

I’ve only looked at the results quickly from being tied down with work, but I make it that the TLDR on Austco’s results is that they are mixed with growth that is yet again to come ‘in the near future’. 

It’s not like they’re making this up because the continued and impressive growth of the order book supports this (up $5M to $44M total since reported at the AGM). But still, I’m a little surprised given I thought management had hinted they would start to chip away at the order book. 

Perhaps someone that’s more properly read could shed a little more light and offer their opinion. Certainly nothing worrying here with top line of 11%, but thought we might get more, especially considering recent acquisitions (although I admit I reckon they would have only just been integrated and barely had time to add). 

Austco has announced a $3.8 million contract win across two hospitals in Singapore.

They have also announced this has taken their order book to $40.7 million, up from the $38.7 million announced at the AGM last month. They've been on a bit of tear this year having more than doubled the order book since February this year.

Zooming out a bit the order book has been steadily rising since late 2019, apart from some COVID and supply chain impacts through 2022 and early 2023.

Nice to see at least one of my holdings kicking ass and taking names. I still think it flies under the radar a bit considering its history of profitable, non-dilutive growth. @Strawman have we spoken with Clayton?

Austco has come out with a roadshow presentation today, with lots of funky graphs and "buy me" arguments. Not a lot new, although they did disclose sales orders were up again from last month's record high to $37.2m - so they're filling the funnel faster than they can drain it. (Ignore the 'Revenue from customers' tag - revenue it ain't).

Austco is one of my more comfortable holdings. They disclose often enough to make you feel wanted, without getting all over-promotional. When they make investments in product or people they set realistic expectations about how long it will take to get a payback from the investment. They certainly appear to be in that zone of getting a return of previous investment right now though.

If I were being hyper-critical I'd say the CEO is very well compensated for a company of this size. However, Clayton appears to be getting the job done so I'll not quibble while that remains the case. It's arguably not a screaming bargain but if they keep growing at the rate they are it will look cheap soon enough. Happy to hold.

I know this is followed and owned by some erudite members @Strawman @Wini and I also see a big future for this business. As frequently noted healthcare needs modernisation and from a big picture perspective I also see the worlds ageing demographics as a tailwind.

Aside from those external factors it’s great to see their R&D spend increasing and hope that this helps them cement more work noting the record sales order book…

look forward to other takes

 24 August 2023

ASX Release

Austco Healthcare increases revenues by 17%, invests further in sales capability and R&D

• Revenue from customers up 17% to $42.0 million

• Software and SMA revenues up 65% to $8.5 million

• Gross Margins increased to 53.4% compared to 52.5% in pcp

• Research and Development investment up $0.9 million to $4.6 million

• NPAT down $0.07 million to $2.3 million

• Open Sales Order book grew to a record high of $36.1 million

• No dividend has been declared to fund organic and inorganic growth

Austco Healthcare Limited (ASX:AHC) (Austco), a global leader in clinical communications solutions, announces a 17% increase in revenue from customers over the prior comparative period (pcp) to $42.0 million for FY23.

Software and SMA revenues were the largest driver of increased revenues, up 65% or $3.3 million to $8.5 million. This growth more than offset supply chain increased costs and allowed for improved Gross Margins up from 52.5% to 53.4% for the year.

The company achieved revenue and gross margin growth during FY23 despite fluctuations in raw material availability and pricing due to ongoing supply chain disruptions. During the year, the company undertook proactive measures to ramp up manufacturing output, resulting in a corresponding boost in revenue recognition. Even with the increase in manufacturing output and revenues, our Open Sales Order book grew to a record high of $36.1 million as of August 16, 2023.

As outlined in recent investors presentations, Austco has taken strategic advantage of its increased revenues to invest in its future sales and product capability. We continue to grow our investment in Sales and Marketing resources across several markets but have also increased our investment in Research and Development (up $1.1 million to $3.2 million) and also have funded $0.2 million of M&A costs, some of which have been incurred in finalising the acquisition of Teknocorp, which is intended to complete this quarter.

The investment in additional Sales and Marketing resources and Research and Development is expected to give rise to further increases in organic revenue growth. Further, the earnings per share accretive acquisition of Teknocorp will drive inorganic revenue growth.

Reported NPAT was down $0.07 million to $2.3 million as compared to pcp, as funding investments in Sales, Research and Development and M&A utilised the margin improvement from this financial year.

1/31 Sabre Drive Port Melbourne VIC 3207 ABN 67 108 208 760 t +61 (03) 9209 9688

  Revenue ($m) 50

 45

40

35 31.2 30

25

20

15

10

5 0

42.0 35.9

FY22 FY23 2H Total

      FY21 1H

Revenues from customers

Total FY23 revenues of $42.0 million were up $6.1 million or 17% on FY22. This is the highest reported revenue over the last 10 years.

Both halves contributed to the record revenues, although second half revenues of $21.4 million were up 3% on first half revenue.

The North American market continued to drive the increase in revenues from customers.

Despite the record revenues demonstrating our ability to convert our Sales Orders into recognised revenue, new contract wins have maintained a strong Open Sales Order book to underwrite revenues in FY24. The Open Sales Order book currently sits at $36.1 million.

Software and SMA revenues from customers

High margin software and SMA revenues are key to our strategic growth plan and have been our primary focus over the past few years.

With the prior year’s COVID-19 restrictions (which impacted our ability to drive software sales as high solution sales require face to face interactions) now passed, we have seen strong take up, with software and SMA revenues up 65% or $3.3 million.

Software and SMA revenues in FY23 accounted for 20.2% of total revenues, up from 14.4% of FY22 revenues.

We expect this trend to continue as customers navigate towards higher solution sales with a higher proportion of software and as customers renew SMA’s at a higher rate seeing the value of support and software upgrades over the life of their product deployment.

 9 6 3 0

Software & SMA Revenue ($m)

5.2

8.5

  4.4

FY21

1H

FY22 FY23 2H Total

  24

22

20

18

16

14

12

10

FY21

55.0% 54.0% 53.0% 52.0% 51.0% 50.0%

Gross Margin ($m)

     FY22 GM $

FY23 GM %

Gross Margins on revenues from customers

The Company recorded gross margin percentage growth despite ongoing global supply chain challenges, which have adversely impacted raw material availability and pricing.

Material growth in software and SMA revenues more than offset supply chain increased costs and allowed for improved Gross Margins up from 52.5% to 53.4% for the year.

In addition to software and SMA revenue growth, new products to market assisted in gross margin growth.

Off higher revenues and higher margins, the amount of Gross Margin delivered in FY232 materially increased from $18.8 million to $22.4 million.

Indirect Cost Base

During the year, our cost base grew from $16.9 million in FY22 to $20.7 million in FY23 as we:

• Invested in Sales resources across multiple regions;

• Invested in additional R&D activities by putting on an offshore team to deal with a restricted development cadence from the core US team as resources were diverted from our product roadmap to configure and test alternate parts necessary to deal with supply chain issues. This was a significant contributor to the increased $1.1 million in net R&D expensed in FY23. We disbanded this offshore team in August 2023 as they had completed the backlog of tasks; and

• Invested $0.2 million in M&A activity, mainly in relation to the recently announced Teknocorp acquisition which is

nearing completion.

With a long sales cycle, the payback for additional sales resources is not immediate; however, initiatives put in place in FY22 assisted in driving FY23 revenue growth.

Further, the Teknocorp acquisition will be EPS accreditive in FY24 and the increased R&D costs from the offshore team will be reduced in FY24.

 Cost Base ($m) 24.0

20.7

 18.0 12.0 6.0 0.0

16.9 14.7

   FY21 1H

FY22 FY23 2H Total

  4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

NPAT ($m)

3.4

2.3

2.3

     FY21 1H

FY22 FY23 2H Total

Statutory Net Profit after Tax

Statutory NPAT is $2.26 million for FY23, 4% lower than FY22 NPAT of $2.33 million.

Whilst higher revenues and stronger gross margins provided for a higher gross margin amount, this was strategically consumed, as discussed above, to position Austco for growth in future years.

During the year, Austco also increased the amount of deferred tax assets recognised, reflecting the profitable trading (and outlook) of its US business ($0.5 million) and Australian business ($0.1 million). This gave rise to an income tax credit for the year.

The FY21 result in the corresponding chart benefited from $1.9 million of one off Other Income, being COVID grants and legal settlement related.

Open Sales Orders

Recent contract wins in Canada and Singapore have contributed to the growth of Austco’s OSO. Our Open Sales Order book now stands at $36.1 million at 16 August 2023, up from $29.3 million at 30 June 2023.

Open Sales Orders (OSO) represent confirmed contracted orders from customers that have not yet been fulfilled and, as such, no revenue recognised.

During the pandemic, we have observed a material build-up in our confirmed orders as site access restrictions and supply chain challenges hampered our ability to convert sales into revenue. In FY23, we materially delivered on the backlog of orders.

Faced with the uncertainties stemming from supply chain disruptions, we made the strategic decision to augment our inventory levels. This strategy was pursued throughout FY23, resulting in our current inventory reaching $10.8 million.

 40.0 35.0 30.0 25.0 20.0 15.0 10.0

29.8 20.1 22.9 24.5 23.3 22.5 22.1 24.7

36.1 29.3

14.5 15.7 17.1 11.1 11.3 10.7 11.6 12.8

Open Sales Orders ($m)

   25.6

20.3 20.3 22.6

 Jul-19

Oct-19

Dec-19

Mar-20

May-20

Sep-20

Nov-20

May-21

Aug-21

Nov-21

Feb-22

Mar-22

May-22

Jun-22

Sep-22

Oct-22

Nov-22

Dec-22

Feb-23

Apr-23

Jun-23

Aug-23

 Cash and Working Capital Position

Cash on hand was $4.7 million at 30 June 2023, down from $7.6 million at June 2022. Cash generated from operating activities of $0.3 million was modest and reflected further increases in our working capital needs, mainly inventory and receivables arising from a growing business. Dividend payments in FY23 net of dividends reinvested also consumed $1.0 million.

Dividend

No dividend has been declared, to fund organic and inorganic growth.

Research & Development

In the reporting period, the Company invested a further $4.6 million (FY22; $3.7 million), of which $1.4 million was capitalised (FY22; $1.5 million) in the development of its innovative nurse call and clinical communications platform, Tacera. Austco involves healthcare staff of all levels in the design process, ensuring our products meet the requirements of nurses, patients and healthcare administrators.

Innovation lies at the core of the company’s product roadmap. Through collaboration and an openness to embrace emerging technologies, we aim not only to meet the demands of today’s healthcare industry but also position the company to exceed the evolving needs of our customers.

The company remains dedicated to its ongoing efforts to enhance its market-leading real-time locating (RTLS) solution and software suite. These advancements encompass not only the core RTLS technology but also include advanced clinical workflow optimization, efficient task management, and insightful business intelligence solutions.

By leveraging cutting-edge locating technology, caregivers can streamline their workflows with precision. This includes the seamless automation of essential tasks such as automatic presence tracking, alarm cancellation, and comprehensive logging of completed rounds. Additionally, the convenience of one-touch mobile assistance is integrated, providing caregivers instantaneous access to precise location notifications directly on their iPhone and Android mobile devices through Austco's innovative Pulse Mobile platform.

On a global scale, our Tacera and Pulse brands are recognised as premier healthcare communications and clinical workflow solutions. The development of an open architecture, VOIP capable system that delivers IP to the patient's bedside is key to the evolution of the Tacera and Pulse brands well into the future.

 The Future/Outlook

The prospects for Austco Healthcare have never been more promising. Over the course of the financial year, we bolstered our sales and marketing capabilities in high-growth markets, strategically positioning the business to capture new opportunities within the growing healthcare technology sector. The investments we have directed toward sales resources and product development are expected to be the driving forces behind sustained organic growth in the coming years.

Fulfilling our $36.1 million order backlog will depend on the continued improvement of the global supply chain, which has encountered widely reported disruptions affecting lead times and manufacturing costs across various industries. Encouragingly, there has been a gradual improvement in the availability and pricing of raw materials, giving us confidence that the company can build on the momentum and continue to grow revenues and profits.

Austco’s strategic roadmap remains focused on growth-oriented initiatives. These include introducing innovative products, establishing strategic partnerships, and exploring potential mergers and acquisitions. These initiatives underpin our commitment to sustain and increase the company's growth trajectory well into the foreseeable future.

This announcement was approved for release to the ASX by the board. ~ Ends ~

Further Information

Telephone AUS: +61 411 531 170 Telephone AUS: +61 439 369 551 Telephone US: +1 416 565 7457

Email: [email protected] Email: [email protected]

About Austco Healthcare Limited (ASX Code – AHC)

Austco Healthcare Limited is an international provider of healthcare communication and clinical workflow management solutions. Headquartered in Australia, the company has subsidiaries in six countries and supports healthcare facilities through its global reseller network, which includes growing markets in health, aged care and acute care. Austco Healthcare services markets including Australia, New Zealand, Canada, UK, USA, Asia and the Middle East. For further information, please refer to the Company’s website www.austcohealthcare.com.

 Clayton Astles

Chief Executive Officer

Brendan Maher

Chief Financial Officer and Company Secretary

Austco Healthcare wins AUD $2.6M contract to supply state of the art nurse call system and Tacera Pulse software platform

Azure Healthcare Limited’s (ASX: AHC) wholly owned subsidiary Austco Marketing & Service (Asia) Pte Ltd has secured a A$2.6M contract to supply its Tacera Nurse Call platform to Mount Elizabeth Hospital (MEH), a premier 345-bed private hospital located in Singapore.

Mount Elizabeth Hospital, a flagship of Parkway Hospitals Singapore, stands as a cornerstone of Asia's foremost integrated private healthcare provider, spanning Malaysia, Singapore, India, Greater China, and Brunei. With a reputation for excellence, MEH has emerged as one of Asia's largest private hospitals and boasts an unparalleled concentration of specialized medical professionals, including cardiologists, cardiac surgeons, neurologists, and neurosurgeons.

This strategic contract represents a significant advancement for the company. The contract includes Austco's innovative Tacera system, featuring RTLS-ready call points, Pulse Mobile, and industry-leading clinical workflow solution. Tacera's open architecture, coupled with its robust application programming interface (API), ensures seamless integration with a diverse range of hardware, software, and systems at MEH.

Critical messages, including medical emergency notifications, will be seamlessly transmitted to mobile devices and strategically placed application stations throughout the hospital. This immediate communication process ensures that medical personnel are promptly alerted, enabling rapid and effective responses. Furthermore, the two-way audio functionality establishes real-time connections between patients and healthcare providers, streamlining workflows, driving operational efficiency, and mitigating potential risks.

"We are thrilled to establish this partnership with Mount Elizabeth Hospital," commented Clayton Astles, CEO of Austco. "This contract win underlines our standing as a trusted industry leader and highlights our unwavering commitment to continuously enhancing our innovative solutions. The recent advancements in our leading Tacera nurse call and clinical workflow solutions align with our customers' objectives of enhancing patient outcomes and optimizing caregiver efficiency."

Austco Healthcare offers one of the world's most advanced nurse call systems by constantly updating the platform to meet the needs of any healthcare facility.

Revenue recognition will commence this financial year (FY24) and will be completed in FY25.

With this contract award, Austco Healthcare’s Open Sales Orders have grown to an all-time high of $36.1 million. Open Sales Orders (OSO) represent confirmed contracted orders from customers that have not yet been fulfilled and, as such, no revenue recognised. 

If I have a pet hate - and I have many! - it's when a company describes an acquisition as earnings per share accretive when they're paying largely cash in the deal. As long as there are earnings how could it be anything but EPS accretive? Anyway, Austco are doing an EPS accretive deal for Melbourne-based Healthcare reseller Teknocorp.

Including likely earnouts they will pay $3.85m to purchase $9m in revenue and $1.1m in EBITDA. The EBITDA multiple of 3.5x seems reasonable even in these austere markets, although they're to some extent cannibalizing their own sales given that a significant but undisclosed proportion of Teknocorp's sales are Austco products. Also a reseller is inevitably going to have a lower quality people-based business model, relative to Austco's proprietary hardware/software model, and so should justify a lower multiple.

In addition to Austco, Teknocorp also partners with Avigalon, Gallagher, inner range and IndigoVision. The rationale would appear to be gaining a greater proportion of the reseller's sales and acquiring a direct sales capacity in Australia. Other regions in which Austco operates already have this capacity.

The deal is expected to complete in early Q1 FY24.

[Held]

Whats not to like here -

$41m market cap

$7.8m cash no debt

$33.2 Enterprise value 

My forecast is NPAT 3.5m as they achieved $1.4m second half FY21

PE to enterprise value of 9.5

Record order book of $20.1m, FY 21 rev $31m

Directors buying recently for SMSF at $0.15 now trading at $0.14

Potential aquisitions on the horizon

Covid opening play as sales have been slowed due to access to hospitals and sourcing of components.

Conservatively it should trade on a PE of 15 giving me a value of $0.18

27/8/21 Appendix 4E & FY21 Financial Statements

Solid result from AHC with NPAT coming in slightly ahead of recently provided guidance. Headline numbers were revenue down 1% to $31.3m and NPAT up 37% to $3.4m (guidance for $2.8-3.3m). Worth noting the company paid a higher tax rate than last year, PBT increased 49%.

It was a tale of two halves, with the Covid affected 1H recording $13.9m revenue and barely breaking even at the NPAT level after adding back Government subsidies. However, with Covid restrictions to hospitals and aged care facilities easing the 2H the company was able to work into their backlog and record $17.3m revenue and $1.4m NPAT.

Impressively, the company continues to grow its Open Sales Order Book which now sits at $20.1m, up from $17.1m at last reporting in May. 

Cashflow was solid despite an increase in prepayments and receivables (not a major concern given quality of customer base, likely just a timing issue). Free cash flow was flat at $2m.

The balance sheet has $7.8m cash with no debt.

Austco Healthcare second half revenues drive 37% increase in NPAT
• Revenue from customers up 25% in 2HFY21 (on 1HFY21) to $31.3 million for FY21
• Gross Margins increase to 55.2% for 2HFY21
• Software and SMA revenues down $0.5 million to $4.4 million in FY21
• Reported EBIT up $1.3 million on FY20 to $4.0 million for FY21
• Reported NPAT up 37% to $3.4 million for FY21, above high-end guidance range provided in May
• Open Sales Order book continues to grow, now at $20.1 million
Austco Healthcare Limited (ASX:AHC) announces a 0.4% increase in total revenue (excluding interest income) over FY20 to $33.2 million. Despite a year that remained dominated by COVID-19 supply chain issues and restricted access to customer sites, Austco Healthcare increased net profit after tax to $3.4 million, up from $2.5 million in FY20.
The $3.4 million NPAT is above the $2.8 - $3.3 million guidance range provided to the market in May 2021.

Austco has won a $3.3m contract to supply its Tacera Nurse call platform to Khoo Teck Puat Hospital -- a 795 bed hospital in Singapore (as a side note, Singapore has one of the worlds leading healthcare systems. Certainly in the top 5 globally).

ASX announcement here

The deal is a significant one, representing ~10% of last years total revenue. 

Further, the hospital belongs to the Yishun Health Network -- and it is Yishun that the contract is with. This network encompases many other healthcrae institutions in Singapore, so although it wasnt mentioned, I assume there's potential for the contract to be extended to other facilities if all goes well.

AHC have spent the last couple of years trying to shift their business model while also contending with US/China tariffs and then Covid-19.

I think management should be commended on the results they have achieved so far to try and move the business from a lower margin pure hardware business to a higher margin hardware/software business.

As can be seen in the image below, the business began to shift production from a reliance on Chinese suppliers to several outsourced manufacturers around the world to the point where their Dallas manufacturing plant was closed in December 2020.

A combination of growing higher margin software revenue and outsourcing lower margin manufacturing saw gross margins grow from 44% to nearly 53% in 2H20 despite Covid affected revenue and the onset of higher shipping costs from Covid disruptions.

The FY21 report will be interesting to see where margins land with manufacturing now fully outsourced and the effects of Covid beginning to dissipate in key markets. 

Austo Healthcare (AHC) is a provider of nurse call systems and software for hospitals and aged care facilities. Their Tacera system is best-in-class with recent R&D efforts to allow for real-time location of nurse staff to automate procedures, provide efficiencies and generate actionable data for customers.

Covid impacted the business heavily as they were unable to access sites to perform installations, upgrades and maintenance easily. This can be seen in the revenue chart below as revenues fell sharply in 2H20 and 1H21.

However the company continued to win new contracts and this resulted in a record order book which is now being eaten into with the recent FY21 update confirming 2H21 has seen a return to the $16-17m revenue of 2019. Interestingly, despite calling out a record order book at both the FY20 and 1H21 results, management confirmed the book continues to grow and is still at a record level despite the increased revenue meaning they are replenishing the orders faster than booking revenue even as restrictions are removed.