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#The bear
Added 4 weeks ago

Alcidion are an acquisition hungry company, they don’t really develop their products - they acquire them. We’ve seen this over the last few years with Silverlink and ExtraMed - if you scan back through their news stories on their own website you almost never see product announcements. 

I think the last update I saw was some time (years) ago with them upgrading Miya.

The acquisitions are a mix of bolting on capabilities and buying their way in the door to relationships, their lack of new contracts makes me think this part of healthcare tech is extremely sticky in general, and maybe Alcidion’s products aren’t any more sticky than anyone else's. It also means they have to take a lot of calculated risk on acquisitions that might not work out.

Alcidion dilutes like it’s free money. It hurts shareholders. Their most recent dilution was the most puzzling of all to me - a historically lumpy business blindsided by its own lumpiness. It feels like poor planning. They seem allergic to taking on debt - maybe that's a good thing? but raising at 7 ish cents when they've been sold at 33 cents in the past? ouch.

As others have mentioned based on my update on their last year's hiring - this is both a positive and a negative in my mind. It’s great they still have the growth focus, but they don’t have the momentum to back it up. They had this amazing year in 2022, then essentially fell off a cliff in 23. 

Lastly, Alcidion’s geographic focus is incredibly UK dependent (yeah I know Leidos is in there, but look at the amounts in the UK), getting in with Alcidion means you’re strapping yourself to the clusterfuck rocket going on in the UK to do with the NHS - I’ve posted in the past there’s a couple of podcasts you can listen to, to get the general vibe of the state of things up there and it ain’t pretty. 

Now you could argue that junior doctors in the NHS getting paid the equivalent of a supermarket checkout person up there is an opportunity for digital healthcare to smooth things over, or you could potentially look at it as there not being enough money to go around - despite the massive TAM being bandied about.

Disc: I hold IRL and in SM

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#Wins and renewals 2019-2024
Last edited a month ago

80585b29cac4ec15740cfe2b22419c919f81b9.png

Notes from contracts/renewals 

  • In red i've marked what appears to be contracts that lapsed without renewal, 
  • in yellow contracts that are up for renewal/extension this year.
  • I couldn't figure out what was actually different from the second Leidos announcement in May 2022 to the first in December 2021 so I just omitted it.
  • The sheer concentration of renewals and new contracts in the UK apart from Leidos in Australia shows they’re highly concentrated in the UK
  • They have a concentration risk with 2 clients Leidos and South Tees, but while larger, their contracts are also much longer than others.
  • March/April seems to be by far the biggest time for contract wins, closely followed by November/December.

Note:

Dates on this aren't exact, they're the month of the announcement.


*EDIT* I've updated the date formats to be DD-MM-YYYY as the default format was American and misleading.

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#Hiring last 12 months
Added a month ago

One pattern i've seen in tech companies that don't want to let employees go (first hand) is they stop replacing people that leave, and they cease or severely restrict hiring.

I was curious if I could spot anything on the wayback machine with careers at Alcidion that might hint at something that might have surfaced the trouble they were having late last year.

d212186f4bbdb9fe528c3b0734bee02cc72474.png


There are a bunch of snaps dating back to 2020. Keep in mind that these snaps are not the exact point in time when the change occurs in the website, but just a coincidental point at which wayback machine chooses to index the page. At Alcidion's peak of hiring in 2021-2022 they had something close to 16 job ads open at one point. At their lowest point, September 28th 2023 they had 0 job openings.

So let's look at LinkedIn and see what we can find out about recent hiring at Alcidion in the last year

First of all, LinkedIn thinks you're a bot if you open 149 profiles quickly.

  • Alcidion have been hiring a tonne in the last year. More than the careers page would have you believe - I guess they got internal referrals or people contacting them with applications.
  • It seems like Alcidion generally fills positions really fast.


Since January 2023 Alcidion has hired:

  • Multiple business analysts (3 at my count)
  • Testing and test automation leads (I wouldn't usually expect to see testers or writers being hired by a company in trouble, that being said given its healthcare tech - test automation is a bit more critical than your typical software product).
  • Marketing content developer
  • Project managers
  • Security analysts
  • A director of marketing
  • Data visualization specialists
  • etc etc (probably more, but I got sick of LinkedIn challenging me with logins and finding the people again).


At my last count before LinkedIn decided get in my way, there were 18 new hires in the last 12 months.

So what did I learn?

  • Unfortunately, Careers page history isn't really a proxy for anything.
  • Opening 149 profiles and looking at the history is tedious, I really need to look into a quicker way to aggregate new hires of the last 12 months.
  • If Alcidion is struggling, their hiring practices don't appear to show it.




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#SPP vs results
Added a month ago

From the SPP doc:

faf693aed54681a5bc3040256cd3849cb93ceb.png

And the results / closure:

fedc3782c0624c5ef0a6989ae2ddfc4769652f.png

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#ASX Announcements
Last edited 2 months ago

Oh yes, finally a decent win. Original contract was 2020 Nov for 9.5M and extended with additional 2M in 2022 Dec. This is a big win for ALC and partly vindicates the need to keep employees.

Alcidion signs $23.3M South Tees contract extension until 2033

  • Alcidion extends contract with South Tees Hospital NHS Foundation Trust for an additional 8 years for Miya Precision Electronic Patient Record (EPR)
  • o Extended contract period is 10 years (to 2033) which includes 2 years remaining on the existing contract
  • The minimum contract value is $23.3M (£12.2M) over the new contract period of 10 years
  • Further options to include PAS (Silverlink PCS), Emergency Department (ED) and Virtual Care
  • modules would add $9.3M (£4.9M) to the minimum contract value
  • Options exist to extend for a further 5 years to 2038
  • Validates value proposition for Miya Precision Electronic Patient Record (EPR) solution and acts as key reference point for the NHS EPR market 


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#ASX Announcements
Added 2 months ago

Much-needed good news for beleaguered $ALC.

ASX Announcement

Alcidion signs $23.3M South Tees contract extension until 2033

• Alcidion extends contract with South Tees Hospital NHS Foundation Trust for an additional 8 years for Miya Precision Electronic Patient Record (EPR) o Extended contract period is 10 years (to 2033) which includes 2 years remaining on the existing contract

• The minimum contract value is $23.3M (£12.2M) over the new contract period of 10 years

• Further options to include PAS (Silverlink PCS), Emergency Department (ED) and Virtual Care modules would add $9.3M (£4.9M) to the minimum contract value • Options exist to extend for a further 5 years to 2038

• Validates value proposition for Miya Precision Electronic Patient Record (EPR) solution and acts as key reference point for the NHS EPR market 


My Analysis

South Tees was already $ALC's largest and highest-profile NHS client, and this contract is by some margin, the largest even pipping the 15-year potential of the Leidon ADF contract (if I am not mistaken).

That a core client undertakes such a commitment to the $ALC product suite is great news. However, to maintain the thesis $ALC needs to follow-up over the coming months with additional material NHS contracts, including with new customers.

I cotninue to hold, for now, but am still mulling this one over as it was descended towards the bottom of my merit order.


Disc: Held in RL and SM

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#Analyst Views
Added 3 months ago

From Fintel & Nasdaq

Alcidion Group (ASX:ALC) Price Target Decreased by 31.25% to 0.11

The average one-year price target for Alcidion Group (ASX:ALC) has been revised to 0.11 / share. This is an decrease of 31.25% from the prior estimate of 0.16 dated October 31, 2023

The price target is an average of many targets provided by analysts. The latest targets range from a low of 0.08 to a high of 0.14 / share. The average price target represents an increase of 53.70% from the latest reported closing price of 0.07 / share

What is the Fund Sentiment?

There are 6 funds or institutions reporting positions in Alcidion Group. This is a decrease of 1 owner(s) or 14.29% in the last quarter. Average portfolio weight of all funds dedicated to ALC is 0.00%, a decrease of 30.59%. Total shares owned by institutions decreased in the last three months by 18.66% to 922K shares


DISC: Held in SM & RL

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#ASX Announcements
Added 3 months ago

Some comments and observations based on discussions I have had with Alcidion in relation to the recent performance and capital raise.

Following that discussion and subsequent follow ups, Alcidion, to its credit, did improve and provided a greater transparency in its AGM webinar. But then... the extension of the SPP deadline had me dumbfounded...

Capital raise

Optics wise, the capital raise looked rushed and not well thought through. I was comforted by the level of due diligence Alcidion went into to explore other funding options. At the end of the day, it all comes down to which option was the cheapest.

Company is also not budgeting in the $1M from SPP. That entitlement was included to provide equal opportunity to retail shareholders. Company does not expect to use much, if any, of the other $5M, more like an insurance policy if situation does not improve.

Company also initiated preliminary discussion with major shareholders prior to the capital raise being announced and there was support from major shareholders. It was also an opportunity to bring new institutional investors on board. It is important to note that the company has no control over what the small institutional investors might choose to do with their shares if they have a very short term focus.

Cost base

When this question (which obviously was on everyone’s mind) was asked at the webinar, I felt it was a missed opportunity to articulate what other options they have considered, including what levers they could pull.

Perception wise, it came across that the company is still stubbornly electing not cut staff numbers in the hope that things would turn around soon. I know this is not the case, but what Kate could have done is to take the question head on and inspire confidence that the company is proactively seeking out ways to conserve cash. Potential options include:

·        Encouraging under-utilised staff (if any) to use their leave entitlements (including unpaid leave)

·        Exploring other employment options (e.g. contractor arrangements to provide the company with more flexibility)

·        Undertaking a review to extract further efficiency gains and savings

As the old saying goes.... "Never let a serious crisis go to waste".

These potential options are not mutually exclusive, nor does it mean that Alcidion has to deviate from its current course.

My understanding is that the company is not envisaging to use the $5M (or $6M) raised for operational purposes. But if things do not improve, company has contingency plan on other levels to pull, including reducing underlying cost base.

At this stage, company is still expecting a stronger second half and remains confident of EBITDA and operating cashflow positive result for FY24. I suggested withdrawing this guidance given all the uncertainties, but company remains confident.

Corporate strategy

I questioned if the current high risk strategy of running a cash burning company is still sustainable, one that is largely based on hoping to win some (but considerably delayed contacts) is still suitable for current circumstances. Shouldn’t company simply bunker down, work towards sustainability asap and wait out any further delays with the procurement process without raising capital?

Company remains committed to current strategy and believes it is temporary. If uncertainties persist, company will then react accordingly and pull other levers.

Public perception and investors’ confidence

Company agreed that it wasn’t a good look to delay the quarterly webinar, release the 4C after market and announcing a capital raise on the last quarterly reporting day. Many things were happening at once and many discussions were held over different matters over a longer period. Nevertheless, company will look to improve its performance in this area.

For obvious reasons, the market reaction has highlighted both the board (led by Rebecca Wilson) and Kate’s diminishing credibility. It is imperative that steps are taken to restore market confidence.

As investors, we now need a clear line of sight of how the board and Kate intends to steer Alcidion out of this situation and emerge stronger. It is comforting to know from my discussion that the company does indeed have contingency plans if things don’t turnaround in subsequent quarters. However, this point was not made but should have been articulated at the webinar.

Greater care also needs to be taken regarding the language used in further webinars. Lines such as "It became obvious during the last few weeks" does not inspire confidence that both the board and management are keeping their fingers on the pulse of the business or even (I hope not) suggests a disconnect between CFO with the CEO/Board.

Dual role of chairperson

I expressed my concerns with Rebecca Wilson’s involvement as chairperson with both Alcidion and LBT Innovations on the basis that would this divert her time, attention etc between one another. Have received assurances that this would not occur. I will continue to hold the company and her accountable on that front.


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#Australian Super
Last edited 3 months ago

Slightly reassuring that Australian Super has increased their holding by 42,125,000 shares or 38% in the last 12 months. Be greedy when others are fearful? Did anyone else read the announcement of change in substantial shareholding - why is the price of the 30,000,000 shares on 6/11/23 not shown? And it is listed as 'CONVER' as opposed to 'OS-PURCH'?

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#ThesisUpdate
Last edited 4 months ago

I'd like to provide an update on my investment thesis for Alcidion. 

There have been extensive discussions about Alcidion in our community, demonstrating the epic value of Strawman.

Rather than rehashing what's already been said, I want to share how recent developments impact my investment thesis.

Original Thesis Overview: Earlier this year, I outlined my investment thesis in a public article. In summary, the thesis revolved around Alcidion's potential to achieve approximately $10 million in Annual Recurring Revenue (ARR), along with all services revenue, from the NHS. I believed this milestone could trigger substantial cashflow generation, painting a brighter future for the company. 

A punch in the stomach: The most recent quarterly update delivered a significant blow to my thesis. It's not primarily due to the appalling cash outflow. I invest in some companies that are pre-profit, and am wiling to accept I’ll get the timing wrong in many of those. That’s OK. What hit harder was the clear indication that Q2 and possibly Q3 would be underwhelming quarters. Although the company maintained the idea of achieving EBITDA profitability by year-end, it's evident that this goal is now less likely. 

It’s hard because year, I share the belief that many of these challenges are beyond Alcidion's control, stemming from the broader issues plaguing the UK healthcare system. However, the question arises - how many more quarters can I be told the same story?

Conclusion: This situation presents a tough dilemma. My investment in them has taken such a hit anyway that it’s become rather meaningless in my portfolio, but that shouldn’t excuse doing nothing.

I'm willing to grant them a few more quarters to see if the situation improves. However, if there's no notable progress, my thesis will be severely undermined by the time Q4 results are released.


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Valuation of $0.120
Added 4 months ago

Ok going have rough stab at this, finding hard to forecast revenue growth too far in future. Take this valuation with grain of salt.

Assume no growth Revenue $40m

I used a share count of 138,851,125 which includes $6m capital raise dilution plus I have included an extra 3%.

Revenue per share 0.03 Cents

Revenue multiple of something similar to VHT of 4 gives me 0.12

Probably review once more information comes to light


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#SPP
Last edited 4 months ago

Well the details of the SPP were released ...

https://www.marketindex.com.au/asx/alc/announcements/share-purchase-plan-announcement-3A629872

The SPP aims to raise up to $1.0M via the issue of up to approximately 13.33 million fully paid ordinary shares (‘SPP Shares’). The SPP is not underwritten

Alcidion’s existing eligible shareholders will be the given opportunity to subscribe for a maximum of $30,000 per shareholder in SPP Shares at the same offer price as the Placement of $0.075 per SPP Share


Given that you can currently buy the shares on market for less than the SPP price ...



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#Broker View
Added 4 months ago

With all this very interesting discussion on ALC at the moment (great insight) ... FWIW RBC one of the few brokers who cover ALC have released two report updates in the past two days

This before ALC's webcast:

1Q24 activities report reveals weak CFs, contract delays and an equity raising

ASX: ALC | AUD 0.10 | Outperform | Speculative Risk | Price Target AUD 0.16

Sentiment: Negative

Our view: After the market close, ALC has released its 1Q24 activities report. We were surprised by ALC's weak CFs in 1Q24 (particularly the -$8.0m of negative operating CF), as well as the need for an equity raising given the company had net cash of $14.6m at Jun 23. While the company has been awarded a new contract with a new NHS trust customer and has increased its contracted revenue for FY24, the company notes there has been continued delays to larger contracts being awarded and the board believes it is prudent to raise capital to ensure there is a strong cash balance

Key points from the announcement:

  • Net operating CF was -$8.0m in 1Q24 (vs RBCe +$0.5m), which is the company's largest negative quarterly operating CF in our record of quarterly activities reports going back to 3Q17. The weak net operating CF was attributable to lower than expected cash receipts of $6.4m (vs $12.0m in 1Q23) arising from a smaller number of new sales in the prior quarter and continued delays to larger contracts. Management notes that the 1Q of the year is typically a lower cash receipt period. Management noted there were also several larger one-off cash costs ($0.6m for FY23 staff bonuses, $0.3m for annual software and insurance renewals and a larger VAT/GST payment of $2.3m)
  • New Total Contract Value (TCV) sales were $2.5m in 1Q24 (vs $1.8m in 1Q23 and $2.7m in 1Q22)
  • Total contracted revenue was $35.3m at the end of 1Q24, which has increased slightly from $33.7m at the end of 4Q23.
  • ALC has been awarded a new contract to provide its Miya Precision Emergency module (its newest module) to a new NHS trust customer
  • The company had a net cash balance of $6.5m and no debt at the end of 1Q24
  • The ongoing delays in electronic health procurements has led the Board to believe it is prudent to raise capital to ensure
  • there is a strong cash balance. Therefore the company is undertaking an institutional placement to raise $5.0m and it has an intention to raise up to a further $1.0m via a share purchase plan. The funds raised will be used to support the ongoing business operations and provide confidence to shareholders that ALC has a strong balance sheet to execute on its market opportunities. The placement will result in the issuance of ~67m fully paid ordinary shares at an issue price of $0.075 (which represents a 23% discount to the last close and a 25% discount to the 10-day VWAP)
  • The company maintains its expectation for an EBITDA and operating cashflow positive result for FY24


and then this from after:

Cautious on the near-term outlook - downgrade to Sector Perform

Our view: We have become more cautious on ALC's near term outlook considering ongoing delays to health technology procurement processes and the pace of deterioration in the company's cash position in 1Q24. We acknowledge ALC's operating CFs can be volatile between quarters, but nonetheless we are wary of further CF weakness in the near term. While there remains a large growth opportunity for ALC over the long term as the healthcare sector gradually adopts digital health solutions, we downgrade the stock to Sector Perform (Speculative Risk) with a revised PT of $0.12/ share from $0.16/share given our caution on the near-term outlook

Key points:

Weak F1Q24 CFs. Net operating CF was -$8.0m in 1Q24 (vs RBCe +$0.5m), which is the company's largest negative quarterly operating CF in our record of quarterly activities reports going back to 3Q17. The weak net operating CF was attributable to lower than expected cash receipts of $6.4m (vs $12.0m in 1Q23) arising from a smaller number of new sales in the prior quarter and continued delays to larger contracts. Management noted there were also several larger one-off cash costs ($0.6m for FY23 staff bonuses, $0.3m for annual software and insurance renewals and a larger VAT/GST payment of $2.3m). While we note ALC's operating CFs have been volatile between quarters, we were surprised by the magnitude of the operating cash outflow in F1Q24

Equity raising to strengthen capital position. The ongoing delays in electronic health procurements has led the ALC Board to believe it is prudent to raise capital to ensure there is a strong cash balance. Therefore the company is undertaking an institutional placement to raise $5.0m and it has an intention to raise up to a further $1.0m via a share purchase plan. ALC plans to use the funds raised to support the ongoing business operations and provide confidence to shareholders that ALC has a strong balance sheet to execute on its market opportunities. We were surprised by the deterioration in ALC's cash position and the equity raising given the company had $14.6m of net cash at F4Q23

Management maintains a positive outlook. Despite the continuing delays on larger contracts, ALC management maintains a positive outlook and expects to be EBITDA and operating CF positive for FY24. Management highlighted it signed a contract with a new NHS trust customer in F1Q24 and total contracted revenue for FY24 was $35.3m at the end of 1Q24 (vs $33.7m at F4Q23)

Forecast and recommendation changes. We have made slight reductions to our revenues to reflect ongoing procurement delays and have incorporated the $5m private placement and an assumed $1m SPP. We downgrade the stock to a Sector Perform (Speculative Risk) given ongoing delays to larger contract awards and our caution on the near-term outlook 


DISC: Held in SM & RL

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#ASX Announcements
Added 4 months ago

This quote from yesterday has been on my mind all day.

”Q1 is historically a lower period for contracted receipts given the billing cycles of various customer contracts, thereby generally resulting in operating cash outflows. In Q1 FY24, this was further compounded by a smaller number of new sales in the prior quarter and continued delays to larger contracts, particularly with the NHS electronic patient record program, which resulted in new contracted customer receipts being lower than anticipated.”

If this was the case then why not do a CR earlier in the quarter and announce it professionally without the last minute.com drama. The minimum expectation is they behave like well paid professionals running a multimillion dollar company.

Thesis is alive with the cash flow positive for FY24 again reinforced and a steadily increasing revenue stream albeit slowly. As they reported “Q2 starts with $2.9M of debtors and has $11.6M of contracted billing scheduled” we can look forward to better numbers with no dramatic cringeworthy theatrics like yesterday. It was like an episode of the Apprentice.


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#Industry/competitors
Added 4 months ago

I wanted to have a look at how the NHS is progressing in its digitalisation stratgy.

So I teamed up with my new buddy Bing Chat Enterprise to generate this list of 40+ accouncements for EMR systems from over the last two years. These are much bigger investments that for $ALC's products. The contract sizes range from about GBP8m right up to GBP50m. (I have not personally verified the whole list, however, a sample do check out.)

I note that the 2023 list is shorter (pro rata) than 2022.

I wondered though, with so many decsions being taken on big EMR platforms, whether that may be one issue for $ALC for the following reasons:

  1. The EMR is a big financial commitment, In the run up to making it and in the aftermath, spending on other systems many be squeezed
  2. In the run up to an EMR procurement decision, it may be hard to get management to take decision on patient flow and other solutions. This could be for reasons including: attention focused on EMR bundles of functionality (which may obviate the need for $ALC investment) and questions of inter-operability
  3. Both in the run-up to and aftermath from an EMR decision, human capacity in the NHS Trust will likely be focused on the success of the EMR. $ALC may be struggling for attention, in some cases.


So, an alternative hypothesis is: "$ALC is reporting slow decsion-making on new contracts, because the systems attention is elsewhere?"

Here is the AI-facilitated list (enjoy)

  • September 2023: Bradford Teaching Hospitals NHS Foundation Trust selected Cerner as its preferred supplier for its new EMR system.
  • August 2023: Alder Hey Children’s NHS Foundation Trust awarded a contract to DXC Technology to deliver its Lorenzo EMR system.
  • July 2023: Nottingham University Hospitals NHS Trust signed a contract with System C to implement its CareFlow EMR system.
  • June 2023: University College London Hospitals NHS Foundation Trust selected Epic as its preferred supplier for its new EMR system.
  • May 2023: The Royal Marsden NHS Foundation Trust signed a contract with Civica to implement its Cito EMR system.
  • May 2023: Lancashire Teaching Hospitals NHS Foundation Trust selected Cerner as its preferred supplier for its new EMR system.
  • April 2023: Surrey and Sussex Healthcare NHS Trust selected Cerner as its preferred supplier for its new EMR system.
  • April 2023: Imperial College Healthcare NHS Trust extended its contract with Cerner to implement its Millennium EMR system across its five hospitals.
  • March 2023: Barnsley Hospital NHS Foundation Trust awarded a contract to DXC Technology to deliver its Lorenzo EMR system.
  • March 2023: Manchester University NHS Foundation Trust awarded a contract to Allscripts to deliver its Sunrise EMR system.
  • February 2023: The Hillingdon Hospitals NHS Foundation Trust signed a contract with InterSystems to implement its TrakCare EMR system.
  • February 2023: Oxford University Hospitals NHS Foundation Trust signed a contract with Epic to implement its EMR system across its four hospitals.
  • January 2023: St George’s University Hospitals NHS Foundation Trust selected Epic as its preferred supplier for its new EMR system.
  • January 2023: Liverpool University Hospitals NHS Foundation Trust selected Cerner as its preferred supplier for its new EMR system.
  • December 2022: Royal Berkshire NHS Foundation Trust awarded a contract to System C to deliver its CareFlow EMR system.
  • December 2022: Guy’s and St Thomas’ NHS Foundation Trust extended its contract with Cerner to implement its Millennium EMR system across its three hospitals.
  • November 2022: North Bristol NHS Trust signed a contract with Allscripts to implement its Sunrise EMR system.
  • November 2022: Sheffield Teaching Hospitals NHS Foundation Trust awarded a contract to InterSystems to deliver its TrakCare EMR system.
  • October 2022: Barking, Havering and Redbridge University Hospitals NHS Trust extended its contract with Cerner to implement its Millennium EMR system across its three hospitals.
  • October 2022: King’s College Hospital NHS Foundation Trust signed a contract with Epic to implement its EMR system across its four hospitals.
  • September 2022: Luton and Dunstable University Hospital NHS Foundation Trust awarded a contract to Epic to implement its EMR system across its two hospitals.
  • September 2022: Mid Yorkshire Hospitals NHS Trust selected Cerner as its preferred supplier for its new EMR system.
  • August 2022: East Sussex Healthcare NHS Trust signed a contract with Civica to implement its Cito EMR system.
  • August 2022: Great Ormond Street Hospital for Children NHS Foundation Trust awarded a contract to DXC Technology to deliver its Lorenzo EMR system.
  • July 2022: Dorset County Hospital NHS Foundation Trust selected Cerner as its preferred supplier for its new EMR system.
  • July 2022: Birmingham Women’s and Children’s NHS Foundation Trust signed a contract with System C to implement its CareFlow EMR system.
  • June 2022: Chelsea and Westminster Hospital NHS Foundation Trust awarded a contract to DXC Technology to deliver its Lorenzo EMR system.
  • June 2022: East Lancashire Hospitals NHS Trust selected Cerner as its preferred supplier for its new EMR system.
  • May 2022: Portsmouth Hospitals University NHS Trust signed a contract with InterSystems to implement their TrakCare EMR system.
  • May 2022: Royal Free London NHS Foundation Trust extended their contract with Cerner to implement their Millennium EMR system across their three hospitals.
  • April 2022: Cambridge University Hospitals NHS Foundation Trust selected Epic as their preferred supplier for their new EMR system.
  • April 2022: Leeds Teaching Hospitals NHS Trust awarded a contract to Allscripts to deliver their Sunrise EMR system.
  • March 2022: University Hospitals Bristol and Weston NHS Foundation Trust signed a contract with Epic to implement their EMR system across their two hospitals.
  • March 2022: The Newcastle Upon Tyne Hospitals NHS Foundation Trust extended their contract with Cerner to implement their Millennium EMR system.
  • February 2022: South Tees Hospitals NHS Foundation Trust awarded a contract to System C to deliver their CareFlow EMR system.
  • February 2022: Northumbria Healthcare NHS Foundation Trust selected Allscripts as their preferred supplier for their new EMR system.
  • January 2022: The Royal Wolverhampton NHS Trust signed a contract with Allscripts to implement their Sunrise EMR system.
  • January 2022: Royal Cornwall Hospitals NHS Trust awarded a contract to System C to deliver their CareFlow EMR system.
  • November 2021: University Hospitals Birmingham NHS Foundation Trust signed a contract with Cerner to implement their Millennium EMR system across their four hospitals.
  • November 2021: Norfolk and Norwich University Hospitals NHS Foundation Trust awarded a contract to DXC Technology to deliver their Lorenzo EMR system.
  • October 2021: County Durham and Darlington NHS Foundation Trust signed a contract with Civica to implement their Cito EMR system.
  • October 2021: Barts Health NHS Trust secured £12m of funding from NHS England and NHS Improvement to invest in a new EMR system and selected Cerner as its preferred supplier.


Note: I don't have an up to date number, but there of the order of 200-250 NHS Trust in the UK, so this is a minor but significant fractoin of the whole.

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#Risks
Added 4 months ago

There are multiple risks i see fundamentally and sentiment vise.

1. Management ability and willingness to reduce cost of business is minimum- and happy to raise capital at distress price to fund delayed contracts

2. Kate mentioned that procurement approach has changed for EMR and it went into tender process and not every NHS trust going in FY24.

3. Risks are two fold now, probability of them winning the contracts x probability of them winning in required timeframes till balancesheet allow to fund employees.

4. Management and Boards ability to navigate potential difficult macro environment.

5. There were no high hopes for Q2 and Q3 results - sentiments isn't going to turn anytime soon

I would have preferred them to reduce the cost base somehow instead of dilution. History of dilution is very poor...makes it difficult to increase any KPI per share

I just sold my shares at loss and will come back at higher prices once i have confidence that it is self funded.

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#Wealth transfer
Added 4 months ago

Wow! This has become wealth transfer machine from shareholders to employees.

Management decision not to reduce staff cost even after delayed contracts is costing balance sheet and shareholders.

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#Trading Halt
Added 4 months ago

$ALC in a Tading Halt pending annoucement of the Capital Raise.

There is a call later this morning on the 4C Quarterly, which is yet to be released.

I can't attend, so hoping to read reports from other StrawPeople.

Not sure why a CR is required, as they had $14m at end of June, and cash flow generative. It's hardly an opportunistic raise given the SP!

So presumably there is an acquisition on the horizon?

Interesting.

Disc: Held in RL and SM

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#Handy Commentary
Last edited 4 months ago

ALC commentary: 9:00-11:31

https://ausbiz.com.au/media/walkers-software-stocks-to-watch-ansaradas-quarterly-boost-felixs-deal-expansions?videoId=32535

Claude Walker gives some handy commentary in the lead-up to ALC releasing its Appendix 4C Cash Flow Quarterly Report on Oct. 31st.

I agree with: ALC needs to become profitable and the UK contracts need to come through for the share price to start climbing out of the doldrums.

Disc: Held IRL & SM

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#Alcidion Wins HTN’s Communicat
Added 4 months ago

Alcidion Wins HTN's Communication Tool of the Year Award

Dear Shareholders,


We are delighted to share the exciting news that Alcidion has been honored with the prestigious "Communication Tool of the Year" award by HTN (Health Tech News). This recognition showcases our commitment to innovation and the transformative impact our solutions have had on healthcare communication and patient care. This award is a testament to the outstanding collaborative efforts of our teams at Guy's and St Thomas' NHS Foundation Trust and Lancashire Teaching Hospitals NHS Foundation Trust.


Before Smartpage's introduction, healthcare institutions, like Guy's and St Thomas' NHS Foundation Trust, relied on paper-based processes and pagers. These antiquated methods led to inefficiencies, a lack of accountability, and ultimately poorer patient care outcomes. With the implementation of Smartpage, our technology has empowered healthcare professionals by providing them with a fast, reliable, and contextual messaging system, complete with two-way closed-loop communication and comprehensive task management capabilities.


The impact of Smartpage has been profound, with benefits that include:

  • Full visibility of activity, enabling staff to prioritize and respond quickly to deteriorating patients.
  • Reduction of unnecessary interruptions, leading to improved patient care.
  • Easier clinical collaboration and real-time data insight.
  • Better integration and operational efficiency.

Lancashire Teaching Hospitals, another esteemed partner, adopted Smartpage across both clinical and non-clinical services and witnessed an average of 60 percent of daily jobs activated within five minutes, showcasing its effectiveness in a real-world healthcare environment.


Smartpage is currently live within nine NHS organizations, with plans to expand to other trusts and develop their time-saving software.


We are immensely proud of this recognition and grateful for the unwavering support of our shareholders. This award reaffirms our mission to drive positive change in healthcare through innovative technology, and we look forward to the continued journey of improving patient care.

 

Read full Article Here

Thank you for your ongoing trust and support.

 


Sincerely,

Team Alcidion

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#Alcidion and Olinqua partnersh
Added 6 months ago

In the episode of Talking HealthTech, Kate and Martin ( Founder of Olinqua) discuss how their partnership can reduce hospital wait times and overall make things more efficient and Why this is the right time for this partnership.

https://www.youtube.com/watch?v=SDjGrXj5KYU

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Valuation of $0.160
Added 6 months ago
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#FY23 Report
Added 6 months ago

Alcidion reported its FY23 report

Revenue:

33547a2d17c723751de90967d3f8f43c50940a.png


Receipt from Customers

8a4a5c2a75cf70e933676ac2a6c106a05b6b68.png

Expense

51c1a829edbd3817ff500da84f202bc54ce293.png

Operating Cash

5687dc8f9a396821fd6d8c34822cf87e6dd420.png

No. of Shares

4266f86fa90db29e07d1489df17f2be3460d99.png


My view:

In the absence of an NHS contract, Alcidion currently looks like a slow growth company. However, I get a sense that Alcidion has significantly hired in anticipation of NHS contracts and because of those contract delays, expense has grown fast compared to revenue.

In one of the calls, Kate mentioned that it would be very shortsighted of her if she started cutting costs and suddenly had NHS contracts and struggled to find the resources to fulfill them.

Although Alcidion hasn't performed that poorly in the absence of NHS contacts - However, I anticipate there will be significant pressure on Alcidion's share price for some time because one of the co-founders ( Ray Blight) seems to be selling his portion after his resignation. He resigned on 30 June 2021 and also Alcidion's previous CFO Collin MacKinnon who retired last year is selling down his portion. ( Highlighted yellow in the screenshot below).

So If Alcidion wins large NHS contact sometime in the next 6 months, that will provide significant liquidity for them to get out ( if they completely want to) and then there will be more buyers than sellers hopefully.

fe5cb0e6680a4ade980b9c3293a3de9db3fef7.png



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#News - NZ Health
stale
Added 6 months ago

Interesting article about the NZ health system, potentially may help ALC if they are one of the cloud/platform providers utilised...

https://www.pulseit.news/new-zealand-digital-health/fewer-better-platforms-and-national-scale-at-the-heart-of-nzs-data-and-digital-plans/?utm_source=Pulse%2BIT+-+eNewsletters&utm_campaign=4029a82790-PulseIT_eNews_23_08_2023&utm_medium=email&utm_term=0_-4029a82790-%5BLIST_EMAIL_ID%5D&goal=0_b39f06f53f-4029a82790-413265617&mc_cid=4029a82790&mc_eid=eeee4aadd4

Fewer, better platforms and national scale at the heart of NZ’s data and digital plans

23 August 2023

By Kate McDonald

Te Whatu Ora's director of strategy and investment for data and digital, Darren Douglass.

Te Whatu Ora – Health New Zealand plans to consolidate its health technology assets on fewer, better cloud-delivered platforms, look to scale existing technologies on a national rather than district level and even slow down or cease planned procurements as part of its data and digital strategy in the coming years.

A refresh to the national interoperability roadmap is also underway as part of Te Whatu Ora’s data and digital thinking in response to the Pae Ora (Healthy Futures) Bill that came into force last year.

The legislation saw the district health boards replaced with Health NZ and the establishment of Te Aka Whai Ora (Māori Health Authority) and a new public health agency, but it also set a vision for the New Zealand health system that achieves Pae Ora Healthy Futures for all New Zealanders.

This includes five system shifts, including reinforcing Treaty of Waitangi principles and obligations; ensuring that people have access to a comprehensive range of support in their local communities, which has led to the establishment of localities; equitable access to high quality emergency and specialist care; and empowering the workforce.

It also emphasised the need for digital services to be at the core of achieving system reform. According to Te Whatu Ora’s director of strategy and investment for data and digital, that has provided the organisation with the ability to set policy, to commission digital services and to contract commercially at scale in ways that couldn't be done under the devolved structure.

“Our strategy … is very much intending to use those levers,” Mr Douglass told the MedInfo conference in Sydney last month. “We haven't published a digital strategy yet, but we're pretty well advanced in our thinking of what the key components of a digital strategy are.

“New Zealanders I think are really good at innovating but we are pretty rubbish at scaling that innovation. So how do we make sure that we enable innovation, we ensure that innovation is aligned to our mission and the priorities we have? I talked about levers. We have commissioning, commercial and funding levers that we can and will use to ensure conformance to standards and minimum data and digital requirements. And that will accelerate the delivery of safe and effective services.

“And where we need to will apply policy and regulatory levers as well. As we start our journey, we will simply be using commissioning, funding and other incentives, but in time, if we need to move to a regulatory environment, then we were prepared to do that.”

DIGITAL AND DATA PILLARS

New Zealand published a national interoperability framework led by chief standards adviser Alastair Kenworthy and the Health Information Standards Organisation (HISO), in September 2020, which is now being refreshed.

Mr Douglass said the roadmap was built on the principle that we should not unreasonably block or hinder access to data. “Rght now in New Zealand, within our sector organisations and within our industry, we have lots of example of blocking and hindering access to data. New Zealanders need to have access to their own data. That's the journey we're on and we're improving.

“The idea that interoperability is a feature that we might choose to add needs to go away. It needs to be at the core of everything we do. We've been moving down this track and have delivered some some really useful capability in terms of FHIR infrastructure, in terms of terminology, services, in terms of driving standards adoption, but we will we will be accelerating this.”

Te Whatu Ora has also recently announced that Accenture will build the National Data Platform (NDP) to unify information previously held by numerous organisations such as district health boards.

Te Whatu Ora has also recently announced that Accenture will build the National Data Platform (NDP) to unify information previously held by numerous organisations such as district health boards. This platform is targeted at data for planning, insights and analytics rather than data for direct patient care but is one of the data and digital team’s big priorities for the next 12 to 18 months.

Mr Douglass said the platform would make data more accessible within Te Whatu Ora and out to the wider sector. “It also mitigates a lot of our technology debt, because today, a lot of our data is locked up in pretty ageing technology that you can't get access to,” he said. “This is a major modernisation drive as well.”

NZ also has a data and information strategy for health, developed by the manager for data governance Simon Ross.

“The data and information strategy for health really strongly focuses on effective data governance, focuses on Maori data sovereignty. It is about that security, privacy, trust, social licence aspect of information. Technology is great in that we can make information and data accessible and usable in ways that five years ago we couldn't, but our governance and our maturity are really lagging behind the technology. And that's a risk.”

AGILE PLATFORMS

Te Whatu Ora is also developing a strategy around platform and agile, targeting the numerous cloud platforms that are in use but which Mr Douglass said are not used consistently.

“Our strategy is to consolidate to fewer, better cloud delivered platforms that enable reuse and innovation in scaling, alongside continuing to invest in our cybersecurity capability and maturity,” he said.

“We will be making choices and decisions around the platforms we leverage and use and then driving those out. That allows us to pool our investment, enable collaboration, and also to start small and then innovate on top of that platform capability.

“That will also simplify the environment that we have. We're going to reduce complexity and standardise our systems and processes. We’ll leverage what we've got and will accelerate delivery of these digital services nationwide. That reduces cost of risk and accelerates release of value.

“Our discussions currently are that we are going to look to restrict technologies to no more than two technical solutions in any one domain in the short term, and in the longer term, we would be looking to move to nationwide strategic platforms where feasible.”

Mr Douglass said the digital and data team met weekly with chief data officer Leigh Donoghue to look at investment proposals. A number of plans that were proposing to go to market to look for solutions that already exist in other parts of the system have been put aside.

“We've stopped activity in order to focus on how do we scale up and leverage the tools that are there,” he said “Or if we go to market, how do we go to market at national scale, not a district or even regional scale.”

Corporate systems are also being looked at as part of the organisational change that has come with Pae Ora. Bringing 29 different organisations into one means it needs corporate systems and capabilities to support the change.

“Today we have 20 payroll systems. If you were to ask anyone how many people Te Whatu Ora employs, I can almost guarantee that we wouldn't know the answer to that, because that data is spread across multiple systems. There's a balance, we can consolidate our corporate systems and deliver absolutely nothing to get us closer to Pae Ora, but if we don't address that, then you have an organisation that just finds it really difficult to do the basics.”

KEY INITIATIVES

Driving conformance to a minimum set of data and digital requirements and standards is a key initiative, which will be supported by a move towards certification of applications and solutions, Mr Douglass said.

That means a balance between setting standards but also looking at the cost of complying. “We can't fund it all from the centre, but nor can we simply set the standard and expect the sector to get there without assistance.”

Other key initiatives are the national data platform and consolidating the fewer, better platforms. “We're looking at platform capability that can be leveraged by our organisations now into the sector. We are reducing complexity and variation and we're already stopping procurements.

“We're already looking at reuse of what we've got, and scaling it up. A good example is our national maternity platform and the roll-out that's been optional for district health boards. It's no longer optional.

“We will be strongly pushing the roll-out of that national maternity platform. One of the things that gives us as a national maternity spine, so a maternity record that will be accessible everywhere in the country.”

The Hira program to provide summary record data to consumers and their whanau and available to their care team is also a key initiative, as is the technology to support population health screening programs.

“Our national immunisation register is currently being deployed and there's a lot to build on from the COVID technology platforms around population health. So bowel screening, cervical, breast screening, a lot of investment going into those areas. And then there's about 300 other things that aren't on that list.”

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##Valuation of ALC
stale
Added 6 months ago

Hi there, I note the average intrinsic value of 16c on the graph but wondering today what are people's thoughts on ALC's intrinsic value after recent results?

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#Tailwind
stale
Last edited 7 months ago

On top of the favourable NHS progress, there is likely to be reason for optimism closer to home. For those of you who don't know, there is an announcement imminent in NSW with the single digital patient record coming.

https://www.ehealth.nsw.gov.au/solutions/clinical-care/electronic-medical-records/sdpr

Rumour has it that EPIC is the contract winner - all the American staff in Canberra for the 2022 implementation of EPIC there were quite open with NSW being the next job for them. The successful candidate is still officially unannounced.

With 15 LHDs and 3 specialist networks in NSW, each of whom already run their own implementations of an EMR with Cerner and Orion the two most common systems and nobody in NSW using EPIC, it's hard not to think that this would not result in some flow through to Alcidion as there is a need it bridge the past and future.

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Valuation of $0.180
stale
Added 7 months ago

Valuation/ Price Target adjustment based on Q4 FY23 Quarterly Activities Report.

Number and size of NHS Trust contract wins between now and March 31st 2024; the UK Govt budget spending deadline will be a key factor in the short to medium term.

Highlights:

  • Q4 FY23 positive operating cashflow of $6.0M, up 81.8% on pcp (prior corresponding period)
  • Record quarterly cash receipts of $17.6M, up 25.7% on pcp
  • FY23 full-year positive operating cashflow of $0.2M
  • FY23 cash receipts of $46.9M, up 13.2% on pcp
  • Q4 FY23 new sales of $7.3M
  • FY23 new sales of $29.9M with $9.9M recognised in FY23
  • Demonstrating momentum of modular product upsell strategy
  • Renewal contract agreement signed with two existing Patient Care System (PCS) customers who were acquired as part of the Silverlink acquisition, the fourth contract renewal since the acquisition of Silverlink, triggering the final earnout payment
  • FY23 revenue (unaudited) expected to be around $40.0M
  • Opening contracted and renewal revenue to be recognised in FY24 of $33.7M
  • Cash balance of $14.6M as at 30 June 2023 ($11.1M at 31 March), with no debt 

ALC_4C_Q4_2023.pdf


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#Industry/competitors
stale
Last edited 7 months ago

Given the interest in Alcidion recently there seems to be a lack of update on competitors.

Oracle has rebranded their Cerner Acquisition.and put NHS on the front page

https://www.oracle.com/healthcare/

afb259cd8b4e395e2503de8dd3590a2b0c347d.png

I think Oracle will be very hard to dislodge. My logical thinking therefore is Alcidion could be an acquistion target.

But it won't be Oracle as they have already found their "dance partner" with Cerner.

In the meantime for many of you it would be good idea to go through the Oracle website. Maybe go through all the other competitors too which there are probably many.

On the flipside, I don't think Oracle has managed to dislodge the dominance of Xero with their Netsuite offering. So maybe there is still some hope. However Xero had a big headstart over Netsuite. Oracle also likes a "big bang" approach on deployments compared to ALC's future strategy.

ALC is on the watchlist but I think I need to see a bit more consistency on some metrics and get them to highlight more on the advantages over the incumbents. Maybe someone with more background and time here should do a SWOT analysis on their products versus competitors and do a kind of Gartner "Magic Quadrant". Also at this market cap with so many competitors I'm seeing better value elsewhere with better competitive advantage.

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#Liquidity
stale
Added 7 months ago

Fantastic comments from the crew already. Here's one of the best things I reckon:

32a7031881e21163d52ad738159260ac45129a.png

Just over $1M in volume. Liquidity is coming back baby.

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#4C Report
stale
Added 7 months ago

I agree with @NewbieHK and @Remorhaz that the $ALC result today was a postive.

I'll skip the usual summary of results and analysis and focus instead on an assessment of my usual CF trend analysis and take a look at contracted revenues. The common thought process I am bringing to all of my small caps that are approaching inflection is: "now that costs are under control and also now that we are seeing the organic growth engine exposed, is the revenue growth and operating leverage strong enough to make this an interesting investment?"

First some general observations:

  • The selling of incremental modules approach appears to be working.
  • The mix of renewals and new contracts is good.
  • NZ appears to have reached a possible turning point. No point writing too much, as it is the size of an Aussie State, but worth a mention. Kate has commented before on the slow progress in NZ, because they have been impacted by the consolidation of District Health Boards into a consolidated structure. This kind of reorganisation plays havoc with IT procurement decisions because of all the energy that is consumed in the internal reorganisation. So I am sure they will be focused on trying to get a roll out of the module that is in place in one of the former DHBs. And after that more modules? Eventually, the new organisation will kick into action and start making decisions. (I have three members of my extended family working in the NZ health service, and the staffing pressures are as real there as in Aus and UK.)
  • The key message of "we're saving clinicians time", be it doctors, nurses, or orderlies will resonate strongly with decision-makers, given the perennial staffing pressures in all markets.
  • They are building strong "reference cases". This is important because public health services are not in competition with each other and openly share good practices, and coalesce around common solutuions. $ALC are doing a good job on social media with this, as others here have observed.
  • Costs appear to be reasonably under control, with Kate setting clear expectations for FY24.


Now to the analyses.


1. CF Trend Analysis

944a6e1bdac39371d983a7ba122a2200868e76.png

Above is the usual CF analysis. I usually prefer to focus on FCF, but because of the acquisitions within the 8Q window I am going to focus on OpCF. (Although, you can see that absent the Silverlink earnout, $ALC is solidly in the exploitation phase with minimal capex.)

Previously, I have shown the trend lines over the entire dataset, but I am increasingly using the last 8Q, as above, because I think that is a better reflection of the impact of management efforts in the more recent capital constrained environment.

If you compare the above chart, with earlier editions, the good news is that the slope of the OpCF line is increasing significantly. Obviously, the very strong most recent Q helps a lot.

Given the high Q-on-Q volatility it would be wrong to say that the last 3Qs shows a positive trend. So, I won't say that! But the longer term trend is there. Again, I'm not going to show the FCF trend line, as the one-off Silverlink impact renders this meaningless.


2. Analysis of Contracted Sales and Revenue

In lieu of an explicit outlook, I've noticed that in each Q4 report, Kate gives a statement of how much of the contracted revenue is expected to be realised as revenue in the following FY.

So, in the graph below I compare that component of the CR (denoted as "CR(Q4-1)FY") with the revenue or the forecasted revenue from the FY (denoted as "Rev FY").

Above each blue bar (the CR), I plot the % of how much of the next year's revenue is already contracted.

You can see that over the last 3 years, it has been 69% (2021), 58% (2022) and 71% (2023), yielding and an average of 66%.

For FY24, I have used these %'s from the previous years with $33.7m of CR to be recognised as revenue in FY24 to project a range of forecast revenue outcomes for the FY24.

These revenue projections equate to FY23-FY24 revenue growth rates ranging from 19% in the low case to 45% in the high case, with a mean of 28% revenue growth.

This is where I have to write "past performance is no guarantee of future performance" and indeed, with a constant sales force going in to FY24, you might expect being at the lower end of the range to be more likely. It might even be lower (all things being equal) because a constant level of incremental sales represents a progressively declining % increase of each year's base.

However, if $ALC lies anywhere on that range, and provided costs can controlled as Kate has indicated, then we should expect FY24 to be both significantly cash generative at the OpCF and FCF levels.

(OK. I'll stop there and put my inner analyst back in the box).


5101199cbf00fa760f986ba06e0c44d789c29c.png


My Key Takeaways

Overall, the $ALC analysis indicates that the company is passing through the CF inflection point. Given the very large Q-on-Q variations, it is important to take today's positive result in its wider context, and I think Kate's measured and qualified delivery did justice to that.

However, in the UK (and to a lesser extent in NZ), the health systems face particular head winds. In the UK the NHS is widely perceived to be in crisis. I have lived in the UK for 20 years and much of my business network and extended family live there today. At a personal level, I am aware of stories that show the system to be under stress, subject to industrial unrest and suffering from political interference. Kate made reference to these headwinds, and again to her great credit was very balanced in how she tells the story.

$ALC's continued progress despite these headwinds is encouraging. My only issue, is in the case of the UK, there is no end in sight.

I am considering increasing my position in $ALC. With the SP at 25 x EV/EBITDA(FY25), it is sitting between $M7T (12) and $VHT (38), and my current position size indicates a higher risk rating than it deserves. One to mull over, and I will likely wait until Monday, when $M7T reports. There's enough data now that it might even be time to build a DCF. Now there's a cheery thought.

Disc: Held in RL (0.9%)

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#Business Model/Strategy
stale
Added 7 months ago

for those interested in the Olinqua tie up--looks incremental, Australian ED's

https://olinqua.com/alcidion-and-olinqua-partner-to-reduce-record-hospital-wait-times-that-cost-australian-lives/

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#Q4 FY23 Results
stale
Added 7 months ago

Some notes after watching the business update presentation (thanks for sharing @Remorhaz )

  • Record quarter for cash receipts -- $17.6m, which account for 37% of the total cash receipts for FY23
  • Positive operating cash flow for quarter and the full year -- FCF +'ve for the quarter. (this was promised at the start of the year)
  • $40m in revenue (unaudited) for FY23 -- approx. 17% increase on prior year
  • $14.6m in cash with no debt. Cash balance up 32% since Q3
  • Costs stabilised. Expect no major changes. Staffing levels seem appropriate given growth expectations.
  • Silverlink earnout now complete
  • Level of engagement with prospects remains high
  • All legacy Miya contracts renewed and upgraded (shows how embedded products are, and also makes upsell & integration of additional modules much easier. Also there's less support work required -- ie less cost)
  • New sales of $7.3m for the quarter was ok, but unlike cash receipts far from a record. Some delays to EPR work in the UK likely having an impact here. Kate said sales will often be modular and staged.
  • Already $33.7m of contracted and scheduled renewal revenue expected to be recognised in FY24 (this time last year that figure was $28.3m, so a 19% lift). A good reminder of how much visibility there is in this business.
  • Kate didnt give guidance on what NPAT would look like in the current year, but said they expected continued strong revenue growth and stable costs -- so hopefully we should see a decent net margin start to emerge. At the very least, it seems they will be self-funding going forward. BUT things like geographic expansion or other investments could change that. More "colour" will be presented at the formal FY results


In general. I really like Kate's style. She's a straight shooter and I think she and the team are generating some tangible results in a sector that is notoriously slow and bureaucratic.

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#Financials
stale
Added 7 months ago

It seems Alcidion has been quietly going about its job and slowly accumulating sales. The highlight seems their ability to continue to make sales and increasing cross sell opportunities even with the NHS digitalisation process taking place at a slower than expected pace. As a holder I am feeling a lot more reassured today that the CEO Kate has the ship moving in the right direction.

https://www.alcidion.com/wp-content/uploads/2023/07/ALC_Q4_FY23_Quarterly_Activities_Report_and_Appendix_4C.pdf



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#May be?
stale
Added 7 months ago

Seems like some sort of process is starting. I am not an expert but wording suits ALC.

https://www.uhsussex.nhs.uk/news/early-market-engagement-for-electronic-patient-records-epr-solution-procurement/

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#Broker View
stale
Added 7 months ago

Sentiment Indicator

1.0

No. Of Recommendations

1

BROKERDATERATINGRECOMMENDATIONTARGET PRICE% TO REACH TARGETBell Potter

12/07/2023

1 Buy $0.12 23.71%

  • COMMENTARYBell Potter transfers coverage of Alcidion Group to Thomas Wakim and retains a Buy rating, lowering the target to $0.12 from $0.20. Attention is on the upcoming fourth quarter update.
  • While negative FY23 EBITDA has been guided, the focus will also be on the opening balance for contracted revenue in FY24.
  • The broker notes in recent years the company has broadened its customer base and expanded its product offering, and remains well-positioned to leverage its investments, particularly in the UK.
  • FORECAST
  • Bell Potter forecasts a full year FY23 dividend of 0.00 cents and EPS of minus -0.40 cents.
  • Bell Potter forecasts a full year FY24 dividend of 0.00 cents and EPS of minus -0.10 cents.


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#Financials
stale
Added 9 months ago

Alcidion announced today that it had signed two Silverlink PCS contract renewals.

Along with this signing, these two contracts also trigger the earnout payment of A$2.8m agreed upon during the acquisition.

An interesting new update is that their current cash on hand is $15.6m Which is $4.5m more than the last disclosed figure as of 31 March 2023 in their 3Q 4C.

So two months of 4th Q have passed and their general expense of Q is ~11.5m so I think it indicates to me that 4th Q receipt will be in the vicinity of ~$15m.

8b776d79a1ffa7f289217b91c152a655ff4758.png

So if we exclude this $2.8m payout, their FY23 operating cash outflow will be roughly 2m or thereabout.

Essentially, if it manages to sign a few big NHS contracts by the end of FY24, the Probability of them being cash flow positive in FY24 is very high.

sentiment currently for this business is very low.

Seems like the perfect setup for better performance compared to the index in my opinion for the next 2 years.

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#Bull Case
stale
Added 10 months ago

More buying again by director, D sharp. when a director is buying a bit, like here, i like to look at their credentials to see whether they know what they are doing. of course, some directors understand share prices more than others. DS was an ED at small cap specialist broker Cannacord for 12 years, in ECM IPO etc. given this i would think he understands the risk/return in the small/micro area.

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#Directorbuying
stale
Added 10 months ago

Another director buying Alcidion

$55k

a2f1c5446ecc4002fec063f76f938bb11985a0.png

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#Random thoughts
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Added 10 months ago

In the background, I noted several very positive accolades for Alcidion on LinkedIn:

  • Diane Carter, Digital Programme Manager at South Tees Hospitals NHS Trust mentioned: “Significant work went into the analysis of existing forms and developing what was required for the new #digitaljourney and I'm pleased to say it's been an incredible success! Huge well done to the whole team, thank you to Alcidion for their amazing and reactive support (as usual)”


  • “I can say hand on heart that the tech support we receive from Alcidion is by far the best we get from any of our software suppliers. All your staff are an absolute pleasure to work with, knowledgeable and an asset to your company. They should be recognised and congratulated for their exemplary work.”
- Elli Chapman, Applications Specialist, North Cumbria Integrated Care NHS Foundation Trust


Full post: Commented on them alongside 4 other reports in my Substack this week.

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#Management Buying
stale
Added 10 months ago

Rebecca Wilson

·      3 May 2023

Direct 250,000 price $0.097 per share ($24,250)

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#Broker View
stale
Last edited 10 months ago

Figured with all the ALC discussion lately I'd drop in some of what one of the few brokers which cover ALC think - read into it what you will ...

From RBC Capital Markets (from their updated report dated 27/04/23) - they have an Outperform rating with a 12m price target of 20c


Longer sales cycle impacting revenue and profitability in the short term

Our view: ALC's 3Q23 activities report was mixed with new sales coming in higher than we forecast, however net operating cash flows were slightly below our expectations and management has flagged the risk of not being EBITDA positive for FY23 due to delays in customer procurement programmes. Consequently we have reduced our revenue and earnings for FY23 and are now forecasting an EBITDA loss and negative operating cash flow in FY23. We retain an OP given the positive outlook over the medium term and high TSR implied by our PT

Key points:

Higher-than-expected contract wins. ALC achieved 3Q23 new sales with TCV of $4.0m (vs RBCe $1.8m). At the end of 3Q23 the company had $36.0m of contracted revenue expected to be recognised in FY23, with a further $0.5m of scheduled renewal revenue from existing customers expected to be converted in FY23. Management noted the company's current pipeline is the strongest in its history

Delays in customer procurement impacts near-term outlook. While the company has been winning new contracts, management noted there have been delays in customer procurement that may have an impact on revenue that is able to be recognised in FY23 and consequently the company may not be able to deliver a positive EBITDA in FY23 as intended. However, management considers this to be a short-term timing impact

Operating CF weaker than expected but management projecting a strong 4Q23. Cash receipts were $10.4m for 3Q23 (vs RBCe $12.0m) and net operating cashflow was -$0.8m, which was below our forecast of +$0.7m. However, management expects 4Q23 to be the strongest quarter for cash receipts this year based on current debtor balance and already signed contracts

Forecast changes. We have reduced our revenue and earnings for FY23 to reflect a lower amount of new contracts. We are now forecasting an EBITDA loss and negative operating cash flow in FY23. We make some minor changes in subsequent years to reflect the slower award of contracts


Valuation and recommendation

Outperform, Speculative Risk rating with a $0.20/share price target

Our $0.20/share 12-month price target is derived from our base-case DCF valuation. We use a three-stage DCF valuation model in which we forecast cashflows to FY31, followed by a 10-year horizon period where cashflow growth gradually slows from 4% to our terminal value growth rate of 2.5%, and then we calculate a terminal value 


Valuation

We value ALC using a DCF methodology with a 9.6% WACC, a 1.35 beta, 5.5% equity risk premium and a 2.5% terminal growth rate. Our $0.20 price target supports our Outperform, Speculative Risk rating and is based on:

  • A new Miya Precision contract awarded every 2-3 years in Australia and the UK
  • No integrated EPR contract awards in the UK
  • No new contract awards received in New Zealand
  • Long-term EBITDA margin of ~16%
  • We retain a Speculative Risk qualifier given the unpredictability of future events related to the Frontline Digitisation programme, and stock price volatility that could result in substantial upside/downside swings not anticipated in our valuation
  • Upside scenario
  • Our $0.36 upside scenario has the following assumptions versus our base case:
  • The NZ business wins 3 Miya Precision and 3 Patientrack contracts between FY23-FY31
  • The UK business wins 3 integrated EPR contracts between FY23-FY31
  • Long-term EBITDA margin of ~22%
  • Downside scenario
  • Our $0.07 downside scenario has the following assumptions versus our base case:
  • The UK business loses the majority of its revenues during the Frontline Digitisation programme
  • The company wins no new contracts in Australia or the UK
  • Long-term EBITDA margin of ~12% 


Investment summary

Tailwinds from increasing adoption of digital health solutions. ALC is a beneficiary of the trend of greater adoption of health technology and health digitisation as organisations seek to become more efficient because of ageing demographics, hospital crowding, increasing complexity of case mix, rise in chronic disease conditions, Government funding pressures, staff shortages and cost pressures. The UK's Frontline Digitisation programme is providing ALC with an opportunity to win new contracts

Modular and interoperable solutions. ALC has a modular product suite offering that allows customers to vary their scale of investment and change, and also means installation can be significantly quicker compared to a large-scale platform. ALC's products are also interoperable and augment a customer’s existing investment in health systems

Ability to offer integrated EPR solutions. Following a series of acquisitions, ALC can now offer a full integrated EPR product to address primary clinical and administrative requirements

FCF and EBITDA positive. ALC has been investing to develop and sell its product but has now reached a critical scale and became FCF and EBITDA positive in FY21. We expect ALC’s EBITDA margin to gradually improve with more contract wins leading to operational leverage in the business. We forecast the company’s EBITDA margin reaching a sustainable level of 16% in FY31

Risks to rating and price target

• Strong competition leading to contract losses and/or inability to win new awards

• A different number of contract awards compared to our assumptions could provide upside or downside to our forecasts and valuation

• Labour shortages limiting the ability to hire staff for product development and business development, as well as increasing operating costs above our assumptions

• Changes in regulation leading to a slower adoption of digital health solutions could provide downside to our forecasts and valuation


DISC: Held in SM & RL

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#Q3 FY23 4C Report
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Last edited 10 months ago

Straw significantly edited as there were some errors in the earlier cash flow figures, now corrected.

Text also updated following the presentation Q&A and some observations added. Apologies for what is now a very messy straw ... but accuracy is important!

Figure 3 added to show the quarterly new sales from the presentation.

@Valueinvestor0909 has picked out the key issues.

Based on Q2 FY23 report we were all expecting at least $2m (edited from $3m) of the cash receipts (** see below comment) to be due to the late payments in the previous quarter. So the reported receipts of $10.446m are really only c. $8.5m (edited from $7m) from the quarter, so meh.

Also, Q3 Sales are unimpressive, - the graph wasn't in the 4C release, but is included in the presentation. (Edited out my earlier comment, throwing shade at Kate for not reporting this metric!) I've included it in Figure 3, below.

Taking a step back, I've updated my usual 4C Cashflow plot (Figure 1). And because $ALC is lumpy from Q to Q, I have plotted the same data in a trailing 12 months (TTM) format.

Basically, $ALC is running hard to stand still - there being no significant trend now in OpCF since the Silverlink acquisition.

I'm hanging on because Kate appears to be controlling costs well, and the UK implementations are providing reference sites. It should be expected for these implementations to take time, given the long sales cycle. So I am holding for now, but I think another year or so, and the strategy needs to start delivering operating cash flow growth.

** Comment:

During the Q&A today, one investor asked about the "late $5.6m receipt", to which the CFO (correctly) replied that the questionner was mistaken. He then clarified that there was a late payment of $2m in Q2 and, because some payments in Q3 were also received late, that Q3 receipts could be considered "normal" (swings and roundabouts argument). This confused me, because if this is true, why did they make a song and dance about it in Q2. Doesn't it just mean that a portion of payments falling due towards the end of the Q will always risk falling into the next Q?

CFO was adamant that Q4 will be the strongest receipts of the year. This is also in the release, so that indicates to me that >$13m Q4 receipt is in the bag. Given that the cost base is stable and investments are dialed right back, this means they will likely have a final Q that is OpCF and FCF positive.... provided they get paid ;-)

Key Takeaway

Management are trying very hard to get the most out of each quarterly report, for example, to achieve the (now abandoned) promise of being EBITDA positive this year. Personally, I think they are trying too hard to put a positive gloss on their communications. Now I don't believe Kate and her team would mis-state the facts, but they need to be careful with the spin, as it is easy to trip yourself up over time. For example, it is fine to talk about NHS staff shortages and strikes. But we all watch the news, and that is a characteristic of the market they are playing in. It is a fair headwind countering the tailwind of the drive to digitally emable the NHS.

I am observing a pattern in several tech holdings that, when sales and receipts in the quarter fall off the growth trend, there is a tendancy to talk about timing of payments, slow sales cycles, delays in renewals, and the strength/growth/record nature of the pipeline. (Examples from $3DP, $EVS and $ALC). As investors, we only have to wait 13 weeks to see if the story plays out so, thank goodness for the 4C and quarterly reporting! Equally, it is important to recognise that 13 weeks is a short period of time and the lumpiness from quarter to quarter can be very significant, as Figure 1 shows. It is as important not to over-react to one bad quarter as it is to over-react to one good quarter. Whatever the fair value of $ALC, I don't believe that today's result warrants a 10% markdown. Of course, using a cricket analogy, for every over that you don't hit the target run rate, it means more boundaries are needed in subsequent overs to stay on target overall.


Figure 1

d48a825bffbd186313b5a636f89a7011d30db6.png

Figure 2

d580930d762122adc7b5b4288d4f0d46e46e81.png

Figure 3

8e1debb684fd61f9b07b581167ff7bf2c22fec.png


Disc: Held IRL and SM



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#hmmm
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Last edited 10 months ago

Alcidion released Q3 cash flow and commentary.

I was looking for Cumulative new sales graph which is obviously missing. ( Edit : I will take this as missed by mistake rather than intention as I could see this graph in presentation that was delivered in zoom meeting)

From Q3 FY22

2cc1665937e179a91ab8f245d02cb11e78cb68.png

From Q2 FY23aa9d87e00c7e5ff4dda42fdb5cdb378672191f.png


Another issue I find that, It advised the market in Q2 following,

4addf1f40bb950e1c5714e997309293c4aed6e.png

I would expect Q3 to be huge if $5.2m of Q2 is delayed and landed in Q3.

FY23 EBITDA positive will not be achieved.

b3679039c133257a486e6e47567fe799dc4785.png

The only shining light is :

f3a7230a85ac30d7eb255d9a7e2ed6f2ba498b.png


EDIT:

Kate seems a very open and transparent CEO and knows what she is doing. This is more of a confidence in management to deliver what they say. When Kate says that they is delay in NHS contracts - I am more inclined to believe her rather than be cynical.

I will hold my position because of strong and capable management

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Valuation of $0.150
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Added 12 months ago

Alcidion FY23 I’m estimating at about 42m, their report said they have 32.9m to be recognised so far in FY23, so another 10m isn’t going to be out of the question for them to hit given the last quarter is always Alcidion’s best.

We have new prospects through Victoria in Australia, proven Cerner integration here and in the UK, more modules to upsell and close to 40 NHS trusts to potentially upsell to, and a University hospital trust that offers a full suite of Alcidion products as the paragon. While there may have been musical chairs in the UK government, I believe the efficiency tailwind is probably going to be a boost for Alcidion.

I suspect growth will improve with added proven capability, and more modules to upsell to existing customers and increased network effect. 

I’m going to be assume an 20% for every year, even though the last few years have shown to be over 30%.

Cerner itself had a price to sales ratio of about 4.5 before it was delisted in the US (not exactly a like for like product but there aren’t exactly a tonne of companies just like Alcidion), so I’m going to assumed Alcidion will be at about 4.5.

I’m going to expect at least one capital raise based on their history of capital raises, and Kate’s general preference to do a cap raise over taking on debt, so I’ll increase shares on issue by 20% over that time. Shares on issue 1.5 billion.

Probable case: FY26 at a growth rate of 20% with some share dilution:

  • Market cap 317m
  • Shares on issue 1.5b
  • Revenue 70m
  • Price 20 cents
  • Discounted back 12% to 15 cents


Happy case: FY26 at a growth rate of 30% and no dilution:

  • Market cap 436m
  • Shares on issue 1.2b
  • Revenue 90m
  • Price 34 cents
  • Discounted back 12% to 24.5 cents


What I want to see in future reports to make sure things are on track:

  • Proof the upsell model is working
  • If the Cerner integration is the opportunity claimed, we should hopefully see faster adoption


Things to watch out for:

  • Is there a limit to how many trusts or new customers Alcidion can take on at one time? There probably is a ceiling.
  • Signs the integration step takes too long and there is a backlog (therefore receipts will go up)
  • Cap raises and dilution


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#Staff costs
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Added 12 months ago

@Seasoning I have been looking at the same question. Silverlink acquisition closed on 16th Dec 2021.

So staff costs in 1H22 are essentially pre-Silverlink at 11.814m (cash costs).

In 2H22 staff costs were $12.196m (up from $9.641m or 26.5% from PCP). So, I take that as the approximate Silverlink impact.

Now looking at 1H23 over 1H22, we have $14.47m over $11.814m or +22% - slightly less than you might have expected given Silverlink in a zero inflation environment. There will be early overhead synergies. So if you then consider wage inflation, its actually a very reasonable result.

In summary, I don't see any issues with the increase in staffing costs.

Disc: Held IRL and SM

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#Staff costs
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Last edited 12 months ago

I was going through stuff from their presentation for potential questions for todays meeting and I realized something about staff costs in this screenshot. If the impact of silverlink staff was just 2 weeks contribution, what's the full contribution in a half? Does this mean the staff cost increase we're seeing is not the full picture and they're actually much higher? or am I reading this wrong.

577ceeec4c8e4c1d41a61c39af0bc85b553599.png

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#Bear Case
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Added 12 months ago

@Seasoning, my thoughts are the same, I think 'meh' is actually generous. I posted a 'bear case' over five months ago now and this result has seen me refer back to that Straw to cross reference.

The picture isn't any prettier to what it was then. Yes, revenue has increased, but costs are widening.

2fd57a593e82cf46aaf15646c727088bc9dc2e.png

In the last 12 months, we have seen revenue increase just over 2m, but key costs (suppliers and employees) have increased by more than 5m. That isn't sustainable and isn't reflective of operational leverage or scaling.

I don't hold. There is a good business somewhere in there but I am yet to see it. I will leave them on the watchlist for now, but my bear case argument has solidified after H1 results. A cash raise in the next 12 months is becoming increasingly likely, not that this is unusual for the business. Since FY18, shares have increased from 800m to more than 1.25 billion. Further dilution will occur -- it is just a matter of when, not if.

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#Investor call
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Added 12 months ago

Just got off the call.

Opportunities:

  • The foothold into Victoria with the Alfred (a teaching hospital), from my knowledge Alcidion hadn’t really ventured into Victoria before.
  • Proven integration with Cerner - may open up other opportunities
  • Full Alcidion suite with South tees now serves as a reference to others.
  • Tailwind with current poor staffing in hospitals in the UK market

Risks:

  • They keep buttering us up with 'political turmoil,' to be fair to them it has been a bit of a revolving door there so I'm willing to give them the benefit of the doubt - but it shows you how sensitive they are to the UK in their success


A note I made about their strategy:

828bf7787a721f6df57aa343daf4f0068158c7.png

If you're wondering about their acquisitions - The ExtraMed acquisition has value at 'Phase1,' Silverlink at 'Phase 3'. I find that interesting because they've said that having PAS capability was how they'd land customers - but this looks like more in the expand part.

About increased costs

It was said on the call that it was a combination of wage inflation, and the Silverlink staff being on for more than 6 months. They said they don't intend to hire like they have in the past - but are looking to fill certain positions. So according to them we shouldn't see the staffing costs increase as drastically as it has.

It was framed as a percentage of revenue, and in that framing it doesn't look as bad, but it's worth noting the increase in marketing costs that was also there.



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#HY23 Results
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Added 12 months ago

Just putting this here now. My initial thoughts is it's pretty meh, and I feel like they're really trying to focus you on the revenue while glossing over the increased costs.01793b25f0c4bd3ab1e2c307038df54419ec4f.png


46ea4124c4f55a99839b99721db2e3fef0f2a5.png

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Valuation of $0.160
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Added 12 months ago

I work as an emergency doctor and i remember taking part in a trial of alcidions new paging system back in 2016. It was good but my hospital chose not to purchase the software due to cost and the old system being adequate- inferior but adequate.

they have a fantastic range of products which most health professionals I know think are really useful-

heres the huge BUT- whilst healthcare are incredible innovators when it comes to patient treatment and intervention, it is painfully slow at IT modernisation. This ultimately comes down to cost of course. Budgets can barely pay for the staff required never mind modern IT systems. One hospital where i work at still uses pens paper and fax machines for around 50% of the work. And 20 year old (generous) IT systems for the rest.

my point is that whilst alcidions technology is excellent and helpful to health trusts- experience from within the industry is that it will take them a longer time than hoped to grow their revenue due to a general lack of investment from hospitals into new IT systems


well run company

exciting products

but they have a tough job ahead to grow rapidly enough for big returns

hence i agree with scottyp recent valuation at P/S of 5

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Valuation of $0.150
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Added one year ago

Current P/S of close to 5 reasonable, with expected growth in revenue of say 12-15%. I think fair value current, somewhere from $0.14 to $0.16 by my numbers.

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#4C Report Q2 FY23
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Last edited one year ago

Just me trying to provide a balanced view to facilitate a more robust discussion, not ramping nor down ramping Alcidion.


The Q2FY23 was a combination of hits and misses to me for the following reasons:


MISSES

1) I felt Alcidion was trying to divert attention from the disappointing numbers using using the $5.2M figure to explain the lower cash receipt. As the CFO has clarified in the webinar, only around $2.6M can be attributed to the delayed payments. The remaining $2.6M is correctly attributed to Q2FY23 and has no bearing on the lower than expected cash receipts in Q1FY23.


How it has been worded has had the unintended/intended consequence of making some shareholders think that Alcidion would have been cashflow positive in Q2FY23 if the whole $5.2M was entirely attributed to Q1FY23.

6ad6f2f1e501a6dad8cba14bc424d9cbeb1cb3.png

2) Rightly or wrongly, I was personally expecting a better 4C for Q2FY23 going by previous comments made by the CEO. Because we had a modest negative operating cashflow 4C in Q1FY23 and a positive operating cashflow of $1.5M in Q2FY22, I was therefore not expecting an underlying -$1.8M operating cashflow in Q2FY23 (after accounting for the $2.6M in delayed payments). To be fair, I might also have misinterpreted some of the context underpinning the comments.

468e0d574554f268fdbc935e412cfc023c0a30.png

3) Having watching the webinar a second time, I also picked up that Kate has added a disclaimer to her usual guidance that the company remains on track to achieve a positive underlying EBITDA and cashflow in FY23. It now assumes 'continued momentum in the UK', bearing in mind that the political uncertainty in Alcidion's biggest market has had an adverse impact in CY22.


4) Alcidion has also stop reporting the recurring and non-recurring split in its entirely, only disclosing this split for new sales. Looks the same to most people but mean differently in practice.


For example, this spilt was previously disclosed as

310f54eae22ed68a45db42bd01ee2f37c50abb.png

Now we only get this from Q1FY23:

8517d2a027a77841e867ddc84b50b05d827955.png

5) The lumpiness in Alcidion's cash receipts profile is inherently lumpy, as evidenced from the chart below. Q1 and Q2 will continue to underperform relative to the second half of the financial year. Nevertheless, the overall trend is still positive.

104ceadb246086b3dedefa9471ccbcf1065406.png


HITS

1) New sales and recognisable revenue continue to track upwards

de607de5969b33c4eba3d66df0555bc3b3cbcb.png

48f6c614d989c005af7a00dbb4f9888475cc2b.png

2) Cash expense has stabilised and maybe (just maybe) the benefits of operating leverage would soon start to kick in. Management has indicated that the cost base has achieve stabilisation and is unlikely to fluctuate substantially moving forward..

...the opening of the revenue-cost jaw.

7c85b332fd1624fc842c5257125b1db0119557.png





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#Investor webcast
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Added one year ago

The recording of the Q2 FY23 Business Update webcast is now available online

https://vimeo.com/793957357


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#Investor webcast
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Added one year ago

Some of my notes:

One thing I noted from the 4C was they said -4.5 mil operating cashflow due to receipts not coming through at the right time. When someone asked a question in the update - they said they expected half of the 5m outstanding in receipts was expected to go through - so they still would've been negative. Weird to write that on the presentation and either way it would've been negative operating cashflow.

Another thing mentioned on the call, not particularly new info was the importance of Silverlink in them winning the contrast for the exemplar University hospital South Hampton, and the number of modules chosen at this location. Having a presence at one of the digital exemplars is a big deal due to this being a proving ground of success and the potential of it being used as a template for the rest of the roll out in the UK. There was also a bit of expansion in existing customers and extension of contracts.

A number of tenders are up and not entirely just for EPR, but many of the other offerings that Alcidion has, another thing to watch with Alcidion over the year.

Lastly, Kate mentioned that the NHS digitisation strategy had some delays due to various political issues in the UK - but the deadlines are still the same - so it will be interesting to see how this plays out.

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#4C Report Q2 FY23
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Added one year ago

9c871763bce9c93e6a90c076cd91dc4607c55f.png

d5ee58ce6b425363f14dcbd128d369723a8c50.png

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#Capital Raise/ Acquisition His
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Added one year ago

Alcidion Historic Capital Raises – Raised $91.6m since February 2016, current market cap of $177.5m ($0.14 closing price today)

·      December 2021 – Raises $55m, $43.4m Institutional, $11.6m Retail at $0.25

·      April 2021 – Raises $18.4m - $15.4m Institutional, $3.0m Retail at $0.32 per share

·      November 2019 – Raises $16.2m Institutional at $0.18 per share

·      February 2016 Backdoor listing IPO raises $2m at $0.031


Alcidion Past Acquisitions

·      December 2021 – Silverlink Software - £30.0M (A$55.5M), with a further £3.0M (A$5.6M) subject to earn- out conditions being met  - one of the largest and few remaining specialist Patient Administration System (PAS) providers servicing the UK NHS market. https://www.asx.com.au/asxpdf/20211207/pdf/453wnjclj8q22z.pdf

·       April 2021 – ExtraMed - £5.3M (A$9.6m) cash – a leading UK NHS provider with a 20+ years track record specialising in providing patient flow management software. https://www.asx.com.au/asxpdf/20210415/pdf/44vkm3v1vy36jz.pdf

·      April 2018 – MKM Health and Patientrack – Initial payment of A$12m with A$10m satisfied by the issue ALC shares and A$2 million payable in cash. A further contingent consideration of up to A$4 million payable in 12 months in ALC shares. MKM Health is a leading provider of IT solutions to healthcare providers across Australia and NZ and UK based Patientrack is a world leading supplier of healthcare software. https://www.asx.com.au/asxpdf/20180424/pdf/43tfk0r6z2k3kq.pdf

·      Dec 2017 – Oncall systems Ltd – upfront cash NZ$750K (A$680K) plus performance milestones second component was capped at maximum additional payment of NZ$2.25m (A$2.0m) made up of 40% cash and 60% Alicidion shares – leading provider of a cloud based; clinical communications suite known as Smartpage https://www.asx.com.au/asxpdf/20171206/pdf/43pykzhvl88ymy.pdf


Inside Ownership                   Ordinary Shares    % ALC Issued         Net Value at $0.14      

Malcolm Pradhan                   134,582,403                10.61%                         $18.84m

(Was Director & Chief Medical officer retiring AGM Nov 2022)

Raymond Blight                      92,678,438                  7.31%                          $12.97m

(Co-founder, Ex-CEO)

Katie Quirke (CEO)                  47,561,285                  3.75%                         $6.66m

Rebecca Wilson (Chair)           1,662,489                    0.13%                        $0.233m

Simon Chamberlain (Board)   517,308                       -                                   $0.072m

Victoria Weekes  (Board)        160,000                       -                                   $22,400

Daniel Sharp (Board)              328,572                       -                                   $46,000

Total                                        277,490,495                21.88%                        $38.85m

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#gainingmomentum
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Added one year ago

Alcidion extending partnerships, additional $8.4m. Proof that the software gaining momentum.

1d6ef39e50fe40a96f6717ce45f1742e159378.png

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#Integration
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Added one year ago

Through a family contact I had the opportunity to speak to someone who is a part of a team managing IT systems at a hospital that uses Alcidion. I mentioned that it sounds like they have some interesting systems at the hospital and if they’ve worked with something called Miya. While this person was not a health professional - it turned out they were part of the team that worked with Alcidion on the hospital side and said Alcidion were a really pleasant vendor to work with, who took the time to sit down ask questions and listen, as opposed to vendors like Oracle, and as a result they’re going to see something going live in the next few weeks (I’ll be keen to hear how that goes!)

While this doesn’t really change a whole lot for me regarding Alcidion, it’s good to hear that they’re taking the time to manage their relationships with the teams they need to work with where it sounds like other bigger players just throw their weight around.

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#Webinar
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Added one year ago

From the Coffee Microcaps Technology Conference:

Day 2 (09/11/22) included presentations from SP3, ALC, SPZ, SYM, & AVA

Youtube link to Alcidion's presentation by Kate Quirke


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#Oct31 Investor pres
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Added one year ago

Takeaways from the Investor presentation

  • Current turmoil in UK doesn’t necessarily put the digitisation programme at risk or that spending to the NHS has been impacted.
  • They have seen it impact the speed at which negotiations are progressing.
  • Seeing the Silverlink acquisition paying off with opening up pipeline for sales and making them competitive in areas they wouldn’t have been able to be. It’ll still take time to demonstrate the value.
  • Consolidated NZ Health is now 4 main regions, and they are positioned well with relationships for this.
  • No indication of a pullback in digitisation programme with NHS, If anything they are seeing less inclination to spend on the large electronic medical record providers.
  • On there being a possibility of Miya being used outside Healthcare Kate did mention that she wouldn’t discount adjacent areas (such as with the ADF, and with aged care).
  • Larger contract sizes are generally taking longer to sign
  • Coming out of an accelerated growth phase that required expenditure to build the business, now they’re looking at levelling out that expenditure.
  • FY23 and beyond, As they increase revenue you’ll see a larger portion of that revenue demonstrated as bottom line profit.


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#Bear Case
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Added one year ago

Hi all, in light of the fact that Alcidion (ALC) is popular amongst members, I figured I would post a bear case for the business. Feel free to criticise and pick apart this argument – I have been a fan of ALC for over a year but am yet to bite the bullet. With any luck, we will generate some productive discussion around expectations and business prospects.

Since 2018, revenue has increased from 16m to 34m – both the result of both organic and acquisition growth. This growth is impressive, it has to be said. But ALC has struggled to demonstrate scalability during that time:

3150fde0b8286be0c0c8c196deb4890535841f.png

Let’s pretend the year is 2018. If we had the ability to skip forward to FY22 results, would you be happy with how the business has fared during that time?

In fairness to ALC, the pandemic had a huge impact on business operations. But they have hardly demonstrated resilience during this time. Outstanding shares have risen from 805m to more than 1.2 billion (as of FY22). The business hasn’t been close to profitable and continues to tap shareholders on the shoulder for capital – to both sustain operations and continue their quest for growth.

Is this harsh? Perhaps. The business is trying to embed itself in an industry that is traditionally slow to innovate and adopt new ways of thinking. But they weren’t founded in 2015 or 16 – this is a business that was founded more than 20 years ago.

69061a8c2df22edfef418fccbac6e1581f0478.png

In FY22, revenue increased by 8.5m (since FY21). Direct costs only increased by 1.8m to achieve this, and the business reported a gross profit of 29m, up from 22m in FY21. That is darn impressive, no doubt about it. But here’s the catch – employee expenses increased by more than 5m, ‘other expenses’ increased by another 1m and D&A more than quadrupled. Correct me if I am wrong, but the business also raised capital twice during the year, raising more than 70m – primarily to fund acquisitions. Employee expenses alone is a red flag to me, consuming around 70% of current cash intake.

I am interested in what constitutes a success for this business. How long do we as investors give ALC to make their mark and start funding their own growth? Is there an expectation amongst members that shareholders will continue to see their shares diluted for another five years while the business grows? Is this acceptable?

On the valuation front, I don’t think the current price is particularly attractive, nor ridiculous. They are currently trading at 5x P/S. My DCF returned a valuation of 0.5c, and this is assuming that Alcidion can steadily grow free cash flow over the course of the next four years. Based on their past history, they haven’t demonstrated an ability to do this so I am cautious about making these assumptions.  

Happy for all thoughts/comments.

Disc - not held.

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#Article
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Last edited one year ago

Latest digital health project to enhance decision making across Australian hospitals - October 28 2021

I found this article googling around the internet about Miya precision. Not sure if this is old news for others following Alcidion.

The summary: The Digital Health Cooperative Research Centre is doing research to evaluate and improve clinical decision tools across Australia, it's a 3 year collaboration between Sydney LHD, eHealth NSW, Queensland University of Technology, and Alcidion.

"Their project will make use of Alcidion's Miya Precision system to identify priority areas where decision support tools will add value. The platform, which consolidates data from various systems such as EMRs, is currently being used by the Royal Prince Alfred Hospital and Wagga Base Hospital. "

I think it could potentially be a big deal for winning government contracts, my partner deals a lot with government as part of a not for profit, and having peer reviewed studies behind you helps a lot. Of course, it depends on whether this research ends up finding decision support tools like Miya adding value.


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#Potential opportunity in INDIA
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Added one year ago

Just going through Annual report and few things stands out

91a90e80a78537c45c4717024c90f96aa85615.png

3c3ceadb0b134b6f666f60317b18ac734263b4.png

6ca25a4075cdd83b9f0bcb58f3877f0290392c.png


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#About NHS trusts
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Last edited one year ago

Given around 50% of Alcidion's revenue comes from the UK and recent macroeconomic happenings - I've been trying to learn a bit about their foothold in the UK.

I noticed that Alcidion had landed some NHS Foundation trusts, South Tees was a recent one, as was East Lancashire.

I had the question: How does a NHS foundation trust differ from other NHS trusts?

I found this old Guardian UK article to explain: https://www.theguardian.com/society/2002/nov/13/health.theissuesexplained

They are described as "sort of halfway house between the public and private sectors," where they do get some level of financial and managerial autonomy. An NHS foundation trust is typically one considered to be held to a higher standard and larger than other NHS trusts.

Next question was: How many NHS foundation trusts are there in the UK?

There are 145 authorised foundation trusts in the UK, 99 of those are acute. So of the 138 acute NHS trusts that Alcidion are targeting, 99 of them are foundation trusts.

Which are considered the best NHS trusts?

There's a site that ranks them: https://top100hospitals.co.uk/

South tees is in there at number 87. East Lancashire was 37.

Why do I care about this? well, if Alcidion are helping the best ones - this might help them win more contracts.

For those that aren't ranked highly, if Alcidion meaningfully changes their ranking here over time - then that might also be a positive sign.

The NHS Acute global digital examplars

There is no date on this NHS page - but there are a number of NHS trusts selected to be considered the most 'digitally mature,' In 2020, Alcidion won their first digital examplar contract with Taunton and Somerset NHS Foundation Trust, 6 of these use Cerner, 1 uses Epic with 1 'fast follower' using Epic. Still looking into who has contracts with the others.

Why are these important contracts? "Each Global Digital Exemplar has selected one (or occasionally two) trusts to partner with to accelerate their digital maturity. In some cases, this will be sharing software or a common IT team. Others will adopt standard methodologies and processes. Fast followers are supported by NHS England funding and will enable Global Digital Exemplars to establish proven models that can be rolled out across the NHS more broadly."

Meaning a contract here has the potential for a two in one.

A little tidbit on the financial well-being of NHS trusts

I also found some recent coverage from the HSJ, a UK based publication and podcast on health, a few of their recent reports speak of the threat to the NHS given economic factors. One interesting one was: The NHS’s £18bn rainy day fund. The TLDL of this report is that essentially they threw buckets of money at the NHS during the start of the pandemic, but many trusts didn't actually spend said money - so were encouraged to do some 'creative' accounting to hold onto the money, so the economic conditions in the UK may not hit those NHS trusts for a while.

I guess we'll get a good look in Alcidion's next half.





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#CDSS's
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Last edited one year ago

I found this article on Nature that gives an overview of CDSS's, pitfalls and opportunities. I found it useful to help understand the positioning of the Miya platform a bit better without the bias that comes with a company's own statement.

https://www.nature.com/articles/s41746-020-0221-y


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#Competitors
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Last edited one year ago

@Seasoning @Marsdrix, I think you need to look at what Miya offers to see that it isn't a direct competitor to Orion, Cerner or Epic, because it isn't solely an EMR.

Miya can be a full EMR, but that's not what it's key value proposition is. It's in integrating the datapoints from various legacy systems (many of which are nearing 40 years old) to aid in patient flow and clinical decision making.

One of my jobs is in a health service that uses Miya Flow, and as I understand it was considering adding on more Miya modules to integrate a mind bending hodge podge of clinical systems. In the end, this service has decided to throw it all out and start again with Epic.

Counterintuitively, this is excellent news for ALC. Why? Because you have 30+ years of patient data already stored on the existing EMR, which needs to be available and integrated into any new platform, and there is only one real player in this space.

With NSW Health moving to a single digital health record in the near future (a little birdie tells me that a decision is imminent, but won't tell me who the frontrunners are), Alcidion's offering is, in my view, going to be in very high demand across the largest health service in Australia. Similar issues exist across the developed English speaking health world, so the runway is a long one.

The biggest risk to Alcidion at the moment is not competitors, it's from Governments choosing to tighten belts too much.

A little tightening is OK, and probably favourable for Alcidion, because the cost of chucking out an old EMR to move to new one is huge, not only in capex, but in retraining a huge workforce that has become accustomed to a way of doing things. They can save by not investing in a new EMR, and just keep the legacy ones going with new bits on top for a little longer. And longer. And longer still.

To give you a sense of how expensive an EMR investment is, guess which private hospital operator has large numbers of its hospitals still using largely on paper based records for most of its services? Ramsay Health Care. Why? RHC want some guidance on what the Federal Government's digital health strategy is going to be before committing the money to it. And they haven't had that for 15+ years.

The mind boggles that in 2022, I am using Epic and Alcidion modules in one public ervice, Cerner and Orion in another public service, and pen/paper in the most profitable private service.

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#Quick look at epic
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Last edited one year ago

@Marsdrix that would be amazing.

I overlooked Epic. Quick look: present in at least 8 NHS trusts. Seems to have organic growth unlike Dedalus (who ill put my research in detail in the next few days as I’ve spent a lot more time looking at them).

So far I feel like Dedalus and Epic are the most likely threats to Alcidion, of the three ALC appears to have the most share of NHS trusts so far, but the other two just have so much money behind them and massive presence in multiple countries. The other competitors seem too far behind to catch up to these 3.

How likely is it for the winner to become a standard? Is this an environment where one becomes the absolute winner or is this an environment where multiple winners are possible?


Some related articles for Epic:

https://www.digitalhealth.net/2021/10/speculation-of-epic-deal-with-nhs-england/

https://www.digitalhealth.net/2022/07/two-nhs-trusts-go-live-with-epic-electronic-patient-records/

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#Competitors
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Added one year ago

Thanks for your great work and analysis @Seasoning.

I’m not sure Epic are in the UK, but they are in Australia and America. Epic are a private company that produces an excellent Electronic Medical Record (EMR). There are useful communication features like messaging between treatment teams, through computer and smartphone app, with patient info attached and being able to see the name and contact number of the nurse taking care of a patient. Many things that anybody outside of medicine would just expect our systems can do.

My understanding is some of Alcidion’s software has a fair bit of this capability, but I need to check more. The positive for Alcidion is that it brings a lot of this functionality with their non-EMR offerings. Hospitals using Cerner or other EMR’s can get the functionality of those communications etc without (inconveniently) transitioning to the more expensive Epic.

Cogstate says their greatest competitor is a person sitting across from the patient with a pen and paper test. In many hospitals, especially more rural ones, Alcidion’s competitor is nurses and doctors sitting on Microsoft word or excel. Junior doctors across the world without these systems come in 30 minutes early to update the list with where all their patients physically are in the hospital. Even pre-Covid all you needed was somebody to order a few flu swabs one afternoon to make it musical fucking beds and the whole list needed to be reordered. Once I was in an under-resources backwater hospital we missed a patient for three days!

I have some time off after 7 night shifts in a row and one of my plans for it is to somehow get a demo of Alcidion’s products. If IR can help me I’ll get back to fellow straw people with the experience and if they are helpful.

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#UK Competitors
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Last edited one year ago

I have been trying to get a rough look at the competitive landscape for Alcidion, primarily in the UK.

It seems like Alcidion’s competition are companies that do a single piece of the many pieces Alcidion offer.

A good place to start felt like ALC’s most recent acquisition (Silverlink), they’ve obviously identified a need to focus on an area (EPR) - so it made sense to look at what the landscape in that area looks like.

I found a list of accredited EPR providers here (it’s not the most recent, it’s from 2019 - I noted that Silverlink isn’t present on this list).

https://www.england.nhs.uk/2019/08/nhs-launches-accredited-suppliers-for-electronic-patient-records/

I need to do a deeper dive into each of these when I get the time - so this is only a surface level look and there are probably some of these you could rule out. Some other thoughts I had while quickly checking these companies were whether or not contracts signed with NHS trusts with some of these were necessarily mutually exclusive for Alcidion. Competitors with full service products obviously would, but if these competitors only offered a single piece - would that necessarily rule out Alcidion signing a contract? I’m not sure. Mainly I just wanted to have a brief idea of who the companies were and how many NHS trusts they had signed - since that appears to be the main place of opportunity for Alcidion in the UK.

The list was:

Allscripts, Cerner, DXC, IMS Maxims, Nervecentre, Meditech, TPP, System C


Oracle Cerner - The big dinosaur, Oracle products are usually slow moving beasts, and probably the one all the other Healthcare tech are disrupting. Tangent: if you ever want to see why Xero is so loved, google Oracle Netsuite.

I couldn’t quickly find information on how many NHS trusts use Cerner, however, there’s no shortage of signs of a product with quality problems. 

https://spectrum.ieee.org/uk-coroner-fingers-nhs-computer-system-in-toddlers-death

http://pediatrics.aappublications.org/content/116/6/1506

https://www.healthcareittoday.com/2014/03/12/cerner-agrees-to-pay-106m-over-allegedly-defective-software/


DXC (NYSE:DXC) - 19 NHS trusts - a spinoff of Hewlett Packard Enterprise - Lorenzo patient record systems.

https://investors.dxc.com/investor-relations/default.aspx


Meditech (Private, US Based) - 5 NHS trusts

https://ehr.meditech.com/


IMS Maxims (Private) - 3 NHS Trusts

https://www.imsmaxims.com/about-us


Allscripts (NASDAQ: MDRX)- 3 NHS trusts

https://www.healthcareitnews.com/news/black-book-ranks-top-ehr-vendors-regions-across-globe


Nervecentre software (Private, UK based) - around 3 NHS trusts

https://www.esht.nhs.uk/2021/03/17/emergency-departments-go-paper-free-with-introduction-of-new-digital-patient-system/


TPP - (Private) - around 9 NHS trusts

https://tpp-uk.com/


System C - (Private) - 2 NHS trusts

https://www.systemc.com/about-us/


I’m curious if anyone else has looked into competitors / found a good list of who Alcidion is up against and where?

*edit*: dxc sold off Lorenzo to the Dedalus group. Ill be looking more into them next as they seem like a pretty credible threat to Alcidion

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#What if they didn't
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Added one year ago

@rh8178 I think it’s more a matter of what it would cost them if they didn’t acquire EPR capability, given the aggressive push toward digitisation in the NHS - not having a key capability that is battle tested could leave the opportunity open to global competitors and this stuff in healthcare appears to move pretty slowly - if someone else gets there first and cements their position it's going to be bloody hard for Alcidion to make up that ground, so to stretch the metaphor a bit further - you wouldn’t want to have a tailwind and no sail to push you forward.  

On the surface, it could look like Alcidion were in it to get 12 NHS trusts, and I do think that’s still a small factor at play here, but not key to the strategy. I think the fact that Silverlink had been tried and proven for EPR in multiple NHS trusts is the part that they likely wanted. It’s one thing to have EPR capability, I think the social proof is important for future contract wins.

I think Silverlink is probably too small to make a meaningful impact on its own (there are 12 personnel on LinkedIn and 1-2 specialists in integrating with NHS systems), but if Alcidion manage to integrate them well, it’ll be pretty key to their growth over the next 3 years in the UK.

So to answer your question, purely on numbers it looks expensive - but having proven and tested solutions that tick all the boxes is going to be really important moving forward and I’m not exactly sure what price that is worth.

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#Silverlink acquisition
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Added one year ago

Nice piece of digging @Seasoning - I think this stock is intersting. A question maybe for you - do you have a view on the price paid for Silverlink? Based on extrapolating the numbers disclosed in the note - it looks like it cost just under 30x NPAT? That seems like a lot unless Silverlink is growing really fast...

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#Insider trades history
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Last edited one year ago

Just to clarify the sell by Kate was not actually her but the company she owned a stake in @Seasoning. I think some of those websites incorrectly scrap data e.g market index. So her portion was actually $509k

Refer to ann 18/05/2021


Melbourne, Australia – Alcidion Group Limited (ASX: ALC) board has today been advised of a change in

shareholding by several directors, two of whom are substantial shareholders.

MKMS Investment Pty Ltd <MKMS Investment Trust> (MKMS) has sold all the 11.48 million ALC shares

that it held through a broker managed on-market transaction. The sale of shares was undertaken at

$0.34 per share.

MKMS is an entity owned by the five former owners of MKM Health to manage MKM Health’s

investment in Patientrack, both of which were acquired by Alcidion in 2018. MKMS is no longer an

appropriate investment vehicle for the individual parties involved and is therefore being dissolved,

requiring the sale of its interest in Alcidion. The unit holders of MKMS include current and retired

employees of Alcidion, who each continue to hold significant individual shareholdings in Alcidion. Kate

Quirke’s interest in MKMS equated to 1,497,557 million shares, representing approximately 3% of her

shareholding. Ms Quirke retains a cumulative total of 46,561,285 shares.

Simon Chamberlain, a non-executive director, has acquired 295,000 shares at $0.34 as part of the MKMS

managed sale.

Ms Rebecca Wilson and Ms Robyn Morris (spouse of NED Raymond Blight) subscribed for further shares

in the SPP, receiving 15,327 and 93,750 shares, respectively after having their original applications

scaled back in a manner consistent with other SPP applicants. Ms Wilson now holds 1,517,924 shares in

Alcidion.

In accordance with the ASX listing rules, relevant change in Director and Substantial Shareholder

disclosures will be released as appropriate.

Rebecca Wilson, Alcidion Chairsaid, “The sale of MKMS shares to Simon Chamberlain along with several

institutional shareholders further reflects the strong underlying support for Alcidion and assists in

maintaining an orderly market as the MKMS structure is dissolved. All of the underlying unit holders in

MKMS remain significant shareholders in Alcidion, with everyone excited by the growth opportunities

that lie ahead”.

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#Workhorse
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Added one year ago

From my last exploration, I wanted to know more about the people working at ALC and their breakdown of software engineers and designers - the people capable of either running the systems or producing new products. What’s their average tenure so far? Do they have a period of mass hiring anywhere?

Alcidion - 142 employees

CTO (10 years), promoted 1 year and a bit ago after 4 years as the head of data analytics. He had a background with AlfredHealth working as a Corner specialist, Cerner is an electronic medical record database.

Head of engineering (7 years) - has been in the position for 1 year and a bit (similar timeline to the CTO), previously worked for 7 years as Software Development manager for 7 years at Alcidion, background in what looks like consultancies.

Technical architect (15 years) - 3 years as architect, was a devops engineer for 7 years, and software engineer for 8 years before that all at Alcidion. 

Previously I was curious about the structure of their teams, people self-title on LinkedIn but it looks like we have a couple of delivery leads/engineering managers, and one product manager. The distribution of these seems reasonable enough for an outsider looking in.

Development and design team:

23 software engineers + 1 devops engineer

1 specialist mobile app developer

1 specialist front end developer

4 QA specialists

2 designers 

Tenures

Of the 23 software engineers - 10 have been at Alcidion longer than a year, half of those have been there longer than 2 years. 13 have been hired in the last 12 months. I noticed there was some shift in a lot of jobs around about that time for Alcidion. So many hires in that period could be them ramping up for something, or replacing people that moved on during the pandemic.

Potential for teams

Given the number of production staff, if they were to follow a Spotify model (https://www.atlassian.com/agile/agile-at-scale/spotify) of 6-12 individuals per team - they could probably field about 3-4 teams for developing new software.  

Takeaways

So how do I feel about Alcidion’s technical capabilities as an outsider looking in? I think this exploration has increased my confidence in the org. They have a reasonable amount of seniority in their engineering, some really long tenures are in there, however, the last 12 months of engineering hires feels like they could put themselves at risk of growing too fast and incurring technical debt if they don’t have the systems in place to protect against this, and we wouldn’t see signs of that for a few years (but I’ll be on the lookout for those kinds of mentions in glass door).

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#Staff retention
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Last edited one year ago

Given just about every software company (and a wide range of other industries) have issues hiring and retaining people at the moment, I was curious what sort of environment and sentiment there might be amongst the employees, and more specifically the developers at Alcidion - given they're essentially the core engine for growth here. I usually take Glassdoor with a grain of salt - you tend to get the extremes as with any review site and there’s always the chance that someone from the company is boosting the score with false reviews.

In this case there aren’t a huge number of ALC reviews compared to other tech companies, however, from the small sample size we’re looking at around 4.2 star compared to something like Atlassian 4.7, or Microsoft 4.6

cf92cbf584306a9832bad2067e2dff67b5b10d.png

One thing that stood out was a few mentions of praise for the tech stack.

0ade9b29c7dd207488f537be204edfffd56c38.png

I thought hmmm, how can I find out about their tech stack? Usually the careers page is a good start, however there wasn’t enough there for me to get a full picture. So I thought, I can probably use the wayback machine (https://archive.org/web/) to look at snapshots of their career page over the years. https://web.archive.org/web/20220601000000*/https://www.alcidion.com/careers/

My takeaways from their job ads (forgive me I’m trying to piece together a 1000 piece puzzle with about 50 pieces): 

  • Strong focus on security - a number of job ads with a variety of security levels in the company. I like this for some obvious reasons, but most of all Health data is one of the most sought after types of data for hackers.
  • It took them around 1 year to fill a Senior back end developer role in 2021 (ouch, we’ve had similar experiences in the past year)
  • Signs of advanced distributed systems design - I noticed in their stack they use RabbitMQ for messaging and there are a number of mentions of micro services. This means they’re probably building decoupled systems, which hopefully means less tech debt (although that’s no guarantee).
  • Front-end stack appears to be React with Typescript, looks like an expectation of Node (probably for tooling). I don’t see any mentions of older technologies, I’m not sure if that’s because they don’t want to mention the shame in their job ads or they’ve just taken good care of things over the years and been consistent. Anyway the positive I see in this is that they’re likely making use of building more modular component based front-ends with React, and Typescript means they have essentially a bit of documentation built into their front-end which will help developers pick up pieces of functionality more easily. Again, this is no guarantee but it's a good sign.
  • They appear to heavily use Microsoft Azure over AWS - this tech choice doesn’t really matter that much except that there are probably a lot more developers familiar with AWS than Azure.
  • I noticed a good mix of back-end technologies from C#/.Net core/Java/Node.js.
  • It looks like they had a heavy focus on Android App development earlier on in 2020 using Google Web tools but wanted to build out the capability of IOS with Swift.  
  • I saw they’re using ElasticSearch (distributed search and analytics engine), Postgres SQL (good for data warehouse), and MS SQL server (A pretty standard choice). These seem like appropriate choices for the kinds of problems they are solving. 
  • I’ve seen Alcidion mention AI/NLP/Machine learning a few times so I was a little surprised not to see Python/Scala or any of the other popular programming languages for this type of thing. This might be because I’m looking at a limited subset of job ads. *EDIT* - LinkedIn solved this one for me - they have an AI specialist who works in C++
  • *EDIT* I did go back to the job ads and see mentions of at least a moderately mature design system, which could translate to more efficient production. Also mentions of actual user research are a good sign (you’d be surprised how many organisations just wing it when approaching design).


Anyway, the picture I painted from the job ads I read was a pretty positive one - on the surface at the very least it sounds like a good mix of technologies. It looks like potentially process wise from glass door reviews they might have some pains. 

When you read this one:

8c10f53311bc920a33318ea5d11d673070bb59.png

The disgruntled developer above makes me wonder what their team structures look like. If I were going for a job there I'd definitely be wanting to ask as many questions as I could to surface this.

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#Insider trades history
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Added one year ago
  • Buy - Price 0.145 - $23,200 - Victoria Weekes (board member) - 06/09/22
  • Buy - Price 0.26 - $41587 - Victoria Weekes (board member) - 23/12/21
  • Buy - Price 0.255 - $49524 - Simon Chamberlain (board member) - 23/12/21
  • Buy - Price 0.34 - $100,340 - Simon Chamberlain (board member) - 17/05/21
  • Sell - Price 0.34 - $3,903,632 - Kate Quirke (MD) - 17/05/21
  • Buy - Price 0.13 - $195,000 - Kate Quirke (MD) - 28/09/21
  • Buy - Price 0.119 - $29,750 - Rebecca Wilson - 12/03/20
  • Buy - Price 0.138 - $137,500 - Kate Quirke (MD) - 11/03/20


Was the big sell off by Kate Quirke ever mentioned anywhere? Did Kate think the stock was overvalued at 0.34?

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#Ownership
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Last edited one year ago

I was going through their financial report and noticed that in the last year the ownership mix has changed.

Based on the report - it looks like ALC are at about 20-21% insider owned now, a change from last year where they were closer to 28-29% insider owned.

The breakdown of ownership of insiders:

  • Malcolm Proudhan - 10.61% (Cofounder)
  • Raymond Blight - 7.34% (Cofounder)
  • Kate Quirke - 2.19% (MD)
  • Colin McKinnon - 0.7% (Board)
  • Other board members add up to about 0.1-0.2%


The biggest shareholder is JP Morgan now.

Disc: Held on SM and IRL

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#Results webinar
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Last edited 2 years ago

(Edit: Fixing broken link)

Alcidion is holding a webinar next Wednesday, July 27 at 11am AEST to discuss its latest quarterly result.

If you are interested in attending, use this link to register:

https://us06web.zoom.us/webinar/register/WN_mzmtG2o_S1SUan4lef_Unw

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#ASA meeting
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Added 2 years ago

Just had a chat with Kate from Alcidion who is at the ASA conference in Melbourne.

A couple things of interest:

She reiterated that their customers are hyper defensive. In fact, any funding squeeze tends to be good as they force hospitals to increase efficiency.

Cash flow positive and very comfortable with the balance sheet.

She's quite excited about recent wins and how they should be able to increase penetration with these clients.

Good momentum with sales.

e451a4af9c55622faee90b540454d2c92e1dfa.jpeg

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Valuation of $0.175
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Added 2 years ago

Update:

1270m shares on offer, at current price of 19.5c that's a market cap of $248m

Expecting the business to do around $33m in revenue for FY22, about 27% above FY21. I think $50-60m in sales is very much attainable by FY25.

Costs have increased with new hires, but the balance sheet is in good shape and at the current burn rate the business is in no danger of a near term capital raise. They should be able to be self-sustaining from here.

Should Alcidion carry through on its sales momentum, and still retain a decent growth runway in 2025, a P/S multiple of 5 seems conservative. On (say) $50m in revenue that's about 20c per share. That's 15c net present value if you discount back by 10%pa.

On $60m in sales, using the same assumption, that's a net present value of almost 18c.

If we look at it from an earnings perspective, and assume a 15% net margin, and a PE of 35, we get (roughly) the same valuation range.

This is a pretty rough cut of things, but I like this approach as it connects expectations for sales growth, margins and market sentiment in a way which shows you what combination of factors are needed to underpin a good return.

What it shows me is that shares are probably slightly overvalued -- UNLESS you expect even stronger sales growth, and higher terminal margins and multiples. And that's certainly possible. Indeed, my previous valuation assumed just that.

But i'm going to pull things back a bit in an effort to be more conservative.

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#Q3 Results
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Added 2 years ago

Alcidion reported a net cash outflow for the 3rd quarter of $0.4m, although this was impacted by the settlement of M&A costs from the Silverlink acquisition. Excluding that, Alcidion saw a net inflow of $1.6m. Full results here.

In terms of customer cash receipts, the picture is pretty pleasing on a year to date basis:

30e1549b0f95624e0db6fb76acef085a096e7b.png

But, of course, expenses have also increased. Here's a chart from Claude Walker to give you a better picture of the cash flow history (this includes the Silverlink M&A costs). Note that cash receipts for the 3rd quarter are below where they were in the previous corresponding period.

b6bbcdafeaa3e17f96ef9287d8f820d33fa612.png

For the quarter, the company reported $12.5m in new sales TCV (total contract value). $4.3m of this will be recognised in this financial year. So far in FY22 (ie. the first 9 months) Alcidion has generated $42.9m in new TCV, of which $12.9m will be recognised this year. That's a 93% lift on the same period last year, and over 4x where it was in FY20

7a295ee17579acb0c62b946338e454f13bc111.png

All told, it's a decent result, with a lot of new sales won so far this year. A slowdown in quarter cash receipts, when compared to the previous corresponding period, isn't great but may just be timing issues (hard to tell).

The balance sheet is in good shape, and with around -$0.5m in free cash flow, and over $17m in the bank, there's no urgent funding requirements. Indeed, barring a major acquisition you'd have to expect the business should be self-sustaining going forward.

No guidance was given, but I'm thumb sucking around $33m in FY revenue -- that's a 27% lift on FY21. Based on that figure, shares are on a forward P/S of 7.5x. That bakes in a decent amount of growth.

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#Investor Newsletter
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Added 2 years ago

Alcidion Investor Newsletter - April 2022

The beginning of the new year has brought both new faces and new customers to Alcidion. In particular, I am pleased to welcome Florian Stroehle to the leadership team as Director of Strategy and Business Development along with two new additions to our UK team in Steve Leggett (UK Head of Strategic Markets) and Dr Paul Deffley (UK Chief Medical Officer). I look forward to working with them all as our team and product offering continue to grow.

From new partnerships to extensions of current agreements, I am extremely pleased by the momentum of deals which have been finalised by our team in recent weeks. Dartford and Gravesham NHS Trust were the first NHS site to procure Alcidion’s new Miya Emergency module alongside new partner Provation®’s anaesthetics module iPro. NHS Tayside are the third Scotland based board to implement Miya Observations, a milestone that recognises the benefits of the solution realised at NHS Fife and NHS Lanarkshire. We welcome our first community trust in Herefordshire and Worcestershire Health and Care NHS Trust who will deploy Miya Flow, the foundation module of Miya Precision. Contract renewals for use of the Silverlink Patient Care System (PCS) solution were signed with Moorfields Eye Hospital and Liverpool Heart and Chest Hospital – existing customers gained as part of the Silverlink transaction. Congratulations to our UK team for continuing to develop our relationships across the NHS.

With the new year has come the return of in-person conferences in some regions and we welcomed the chance to catch up with colleagues and customers at the Australasia Institute of Digital Health (AIDH) Digital Health Summit in Melbourne in February and Digital Health Rewired in London in March. These conferences provide Alcidion the opportunity to present the latest releases and products to the market and we look forward to the return of further opportunities as the year progresses.

On a personal note, I have recently joined the board of ANDHealth in the role of Non-Executive Director. ANDHealth is Australia’s leading provider of accelerator, incubator and commercialisation programs for digital health technology companies. As someone who has participated in ANDHealth’s programs and international delegations, I strongly support the work of the organisation and the demonstrable impact it delivers to CEOs and executives at all stages of digital health commercialisation and look forward to what we can achieve together.

We are looking forward to returning to our offices this year noting that we have implemented a hybrid model where our staff can balance their in-office and working-from-home time so that we remain engaged and effective.­

Sincerely,

Kate Quirke

Managing Director

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#Results
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Last edited 2 years ago

Alcidion H1 FY2022 Results Investor Webcast

Now available on Vimeo: https://vimeo.com/680677024


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#Participation in Rights Issue
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Added 2 years ago

Documenting the reason I am participating in the rights issue:

·       High price for the business, but justifiable in terms of value to ALC. Silverlink lacks growth as a stand alone business but offers significant growth to ALC as a combined offering.

·       Integration looks to be a good fit in terms of both the additional features but also technical compatibility, fully accretive in terms of product offering.

·       Large benefits available from market penetration provided with existing Silverlink customers but also expanded offering increases the TAM for ALC in UK market.

·       Appreciate the reason for the discount of the offer (urgency and time of year), like that they are putting existing shareholders first which largely mitigates the dilution and value loss from the discount.

This was my conclusion having watched the webinar and read the great straws from @composer as well as reviewed my valuation but have not updated it.

Disc: I own ALC

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Valuation of $0.375
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Added 2 years ago

Moving average down price range:

Buy at $0.35

Sell at $0.4

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#Quarterly update
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Added 2 years ago

Soft Q results for ALC. I think the next 3-6 months are key to upholding the thesis, with Kate setting clear expectations, as follows:

Growing Pipeline: Pipeline continues to develop with several sizable opportunities now entering the contract negotiation stage which has provided a heightened optimism about the broader opportunity for Alcidion, particularly in the UK market. Increasingly seeing the potential to cross/up sell our products to existing customers.”

Add to this the expected finalisation of the ADF contract before year. Confirmation of this will be a catalyst.

I would not be surprised to see SP weakness today, so will initiate a SM position to match my RL one.

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#Contract extension
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Added 2 years ago

Alcidion has expanded its existing agreement with Sydney Local Health District in regard to the Miya Precision remote patient monitoring system.

Originally established in July 2020 to manage covid home patients, it has now been expanded to include remote monitoring of patients with acute diverticulitus (a gastrointenstinal condition). This add $1.8m in total contract value over the next 3 years.

It's not huge -- boosting revenue by about 2% per year -- although its a good validation of the product (I'm assuming they would extend the contract if clinicians didnt find it useful) and it underscores the expanded use case potential for Miya among existing customers.

Full ASX announcement here.

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##Neutral
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Last edited 3 years ago

@momo and @ Chagsy this is great information you have shared and its good to hear from people on the ground actually working with or without these systems.

It also confirms how slow moving, dis-jointed and under funded most hospital systems seem to be regardless of which country you are in.

In saying that, its the reasons you have both raised that in affect provide the opportunity for Alcidion to drive home its solution in what seems to be a very fragmented, incomplete offering and slow to evolve market.  

I am not a holder and this is primraily because I seem to not be able to get my head around the whole space including, what seems to be a large number of competitors with a majority from the US, a few Indian, a South Korean, Dutch and Alcidion overing similar and different components of a whole hospital mangement patient care solution. 

As such, targeting the English hospitals system seems a smart move with the US companies probably busy enough with the North America market.

For the time being I have Alcidon on my watch list as I look to see how much traction they develop primarily in the UK and then other markets across the globe.

This is definitely one for the patient long term investor as change in this sector looks to be a slow moving beast. Which, might just be a positive, as it allows Alcidion, time to bolt on aquisitions that enable it to provide a more comprehensive system, whilst slowly gaining traction in its target markets.

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#inflection points
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Last edited 3 years ago

Here's the Arichlife coverage of Alcidion Q4 quaterly results.

 

TL:DR

- free cash flow positive already in 2021 (but note lumpy cashflow)

- upcoming profitability in FY 2023, roughly breakeven Fy2022

- price is more expensive than historically (ie more investor optimism)

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#Valuation Detail
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Added 3 years ago

Valuation detail attached is for the base valuation, an explanation of assumptions below.

Base valuation is what I am going with, Bull & Bear IV provide sensitivity context:

Bull: $0.63 (FY30 sales of 136m, NPAT 59.6m)

Base: $0.30

Bear: $0.15 (FY30 sales of 54m, NPAT 12.2m)

 

Assumptions:

·         Sales of 25m in FY21 growing at 6-7m a year lead by the UK which overtakes ANZ sales by FY26 with steady penetration into public health in both regions.  The need to implement the product puts a resourcing cap on the rate of growth, hence the almost flat line dollar growth assumption.

·         Margin improvement as recuring product income increases from 56% in FY20 to 88% by FY30 with gross margins increasing from 88% (H1 FY21) to 92.5% in FY30 but also helping reduce Opex% from 99% to 45% over the same period as service costs included in Opex drop as a % of sales.

·         Opex increases significantly in FY21 as already flagged and seen in H1 results, but as management have advised this scale up is mostly one off, so I have allowed for a 15% increase in FY22, 10% in FY23 then 5% going forward.

·         EBITDA% I expect to be negative in FY21, but positive from FY22 onwards, reaching 48% by FY30 due to operating leverage on software revenue.

·         Capex is light and I expect this to continue (R&D is expensed).

·         Share count growth of 10% for FY21 to account for the capital raise and options then 2%.  Further raises for acquisition I expect to be EPS accretive so have ignored.

·         Risk: I have not discounted for risk due to the strong cash position and clear support from capital markets to provide cash and customers to buy the product.

·         Future Opportunities: I have allowed for a 20% uplift in valuation for opportunities around growth of the product portfolio and margins via new acquisitions and product development.

 

In general, I see my valuation as conservative, even the bull valuation could be well under the opportunity ahead of ALC.  However, with a lack of clarity around product specific revenues, margins and user KPI’s it is very hard to put any substance behind higher levels of revenue growth.

 

I own ALC but have an order in to half my position at 50c.  I would buy again if it dropped to 20-25c or below and intend to hold the company for a long period base on currently available information

View Attachment

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Valuation of $0.300
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Added 3 years ago
Alcidion provides IT services and systems for hospitals to help manage patient flows and outcomes, mostly ANZ based but since 2019 also expanding into the UK targeting NHS Trusts. Recurring revenues in the form of long term contracts are forming an increasing proportion of revenue, but dissecting and projecting the types of revenue and margins is very difficult due to the rapid growth and transformation of the business over the last couple of years. The valuation detail and assumptions are in the straw with notes on the company and points of interest below. Due to uncertainty of revenue growth I have done a Bear, Base and Bull sales growth valuations to give a view of sensitivity to different levels of growth, but am working with the Base case rather than a weighting of bull/base/bear so will benchmark future results against the base only. General Impression on the company: • Leadership: With 2 co-founders on the board and the board holding around 30% of the company, there is more than enough skin in the game, experience and knowledge. • Growth & TAM: FY21 should see a return to growth of around 35%, from a slow FY20 of 10% and it is still early days in terms of penetration into the UK NHS Trust market with just 27 of them onboard in some way out of over 200 (FY22 NHS IT market said to be worth 4b pounds). The ANZ market also offers a lot of additional growth, so I don’t see any medium term speed limits on growth due to TAM. • Margins: The reporting of margins has changed in FY21 due to the reclassification of labour costs for service income now mostly being reported in Opex to give H1 FY21 margins of 88% Vs 26% for full year FY20. Messy, but I expect improved margins as recuring income from products (Vs services) increases as a % of income as the business grows. • Competition: The acquisition of ExtraMed has thinned the competitive field, but I expect solid competition from existing and new entrants into the field, however Alcidion has good momentum and traction indicating a solid competitive position and enough market growth that competition is not currently a significant limiter to growth – one to watch. • Industry: Med-Tech is big and growing rapidly, but hospitals are slow moving organisations so it is very challenging to get into hospitals with products but on the flip side, once you are in, it is very sticky. So growth is not likely to be exponential like a SAAS company due to time and resources needed to implement new customers, but revenues would grow with existing customers via cross selling and expanded use. Risks & Opportunities: • The US and European markets are not currently in scope for ALC, they are possibly a great opportunity, but also we may see competitive threats emerge from these markets. • Product failures pose a risk when operating in hospitals where lives are on the line – it hasn’t been a problem and probably wont be, but could be a company killer if a major problem occurs and governments step in. • Future acquisitions – both a risk and opportunity, depending on the quality, price and fit of the target company acquired. ALC is an acquisitive company so expect more. • Other: there is currency risk, legislative risk and key people risks to consider also, but I don’t see these as particularly elevated beyond normal levels of risk, but worth keeping an eye on. Product Notes: • I have not found sales by product, but given the complementary nature of the products (upsell/cross sell opportunities) it may not be possible to carve out specific revenue for these and services. • Services: ALC provides IT systems support for hospitals as a straight service business which is low margin but may be classed as recurring if under contract and also charges for implementation of products which a non-recurring service but leads to recurring and sticky product revenues. • Smartpage is an app based communication system designed to replace pagers, and acquired from Oncall. • Patientrack tracks patients’ needs and status within a ward, and has a considerable installed base in the UK. • Miya Precision allows high level tracking of how a patient is moving through the entire hospital system from admission to discharge. I first started looking at this business when it was 5c, but hesitated, unsure of it’s ability to grow, naturally by the time it showed it could the price was up significantly. Eventually I bought a very small amount of ALC in Sep 2019 then again in Mar 2020 for an average 18c price. I like it’s long term prospects, but will lighten my position if it hits 50c without additional justification, but only half and let the rest ride. That will allow me to ride the volatility I expect and not feel sea sick…
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#Q3FY21 Update 28/4/21
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Added 3 years ago

Strong growth driven by organic sales; Completed ExtraMed acquisition

Highlights:

  •  Positive net operating cash flow of $2.8M for Q3 FY21
  •  Strong organic growth adding $4.8M of contracted revenue in Q3, of which $3.0M will be recognised in FY21
  •  Contracted revenue to be recognised in FY21 (excluding ExtraMed acquisition which occurred after Q3 end) of $24.7M at end of Q3 ($15.9M recurring + $8.8M non-recurring)
  •  Selected as preferred provider (as part of a Consortium) for a major healthcare IT project to capture data and support clinical decision making across the Australian Defence Force with potential Total Contact Value (TCV) of approximately $21M over 5.5 years
  •  Expanded UK market presence via acquisition of ExtraMed, a leading provider of patient flow management software for hospitals in the UK
  •  Cash balance as of 31 March 2021 of $15.3M, with a net increase of approximately $6.6M to be received subsequent to the end of the quarter resulting from net proceeds of the capital raise (Placement + proposed Share Purchase Plan (SPP)) less payments relating to the acquisition of ExtraMed

Disc: I Hold

ALC is currently holding a SPP at 32cps, the closing date of the SPP is planned for 5:00pm (AEST) on Wednesday 5 May 2021, unless extended. Alcidion reserves the right to vary the closing date without further notice. 

View Attachment

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#DoD Contract 15/4/21
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Added 3 years ago

Further to their announcment of Investor Presentation~Aquisition of ExtraMed

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02363825-3A565332?access_token=83ff96335c2d45a094df02a206a39ff4

they have also announced

Alcidion and consortium partners selected as preferred provider for Department of Defence contract

  • Alcidion, as part of a Consortium, has been selected as the preferred provider for a major healthcare IT project to capture data and support clinical decision making across the Australian Defence Force
  •  Alcidion will provide the Longitudinal Health Record via its Miya Precision product
  •  Potential value of contract to Alcidion of approximately $21M over 5.5 years
  •  Subject to final negotiations and Commonwealth funding approvals, final contracts expected in calendar Q4 2021

Also they have a webinar at 11:00 today

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02363845-3A565344?access_token=83ff96335c2d45a094df02a206a39ff4

View Attachment

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#MD Presentation
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Added 3 years ago

MD Kate Quirke's presentation for the ASX Small and Mid-Cap Conference this week can be viewed on YouTube.

Worth a watch for anyone interested in their Miya Precision product and the UK opportunity.

Watch here

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#HY21 Results
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Added 3 years ago

Alcidion saw a 36% jump in first half revenue to $11.1m, with gross profit up 38% due to an improved margin.

Revenue already contracted for FY21 is $21.7m, already 17% above FY20 full year result.

The business is right on the inflection point of break even, reporting an EBITDA loss of $0.9m. And with the fixed costs base now largely stabilised, we should see a big improvement on this front in coming periods. (although some new costs added in H1 will have a full half's impact in the full year results)

Cash receipts were strong up 17% and the business now has $12.5m cash at the bank.

Doubling that latest sales numbers, you get a P/S of around 11.

All told, the business has good sales momentum, a solid pipeline of opportunities, attractive economics (when at scale), and conditions seem to be returning to normal post covid.

Results announcement here

Disc: held

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#Q2 FY21 results
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Added 3 years ago

Alcidion's latest quarterly results are encouraging. The details have already been posted (thanks mmff), but i have added a few thoughts after listening to the conference call:

  • Ongoing push from NHS to digitise is a strong tailwind, and ALC's ability to leverage existing systems without a full rebuild is an appealing option.
  • Inbound inquiries are growing. New sales hires performing well.
  • Dealing with covid challenges, and indeed the situation has helped underscore the value proposition 
  • Cost base to stabalise in coming quarters with widening operating margins expected thereafter
  • Quarter would have been cash flow positive except for a $3m South Tees payment that was received on first business day of Jan (i.e. a timing issue)
  • Cash position strong
  • revenue growth will depend on timing of sales -- expect some lumpiness as big contracts are secured.

I think ALC should be able to recognise ~$30m in revenue for FY21, which would put them on a forward price to sales of ~6.7. This doesnt seem ambitious for a business with a long runway and that is growing the top line at such a rapid rate. 

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#Update & 4c 26 1 21
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Added 3 years ago

Highlights:

• $12.6M revenue added in Q2, 163% up on the prior quarter and 260% up on pcp (Q2 FY2020)

• Revenue of $21.7M able to be recognised in FY2021 as of Q2 FY2021 (i.e. 6 months remaining in the year), already 17% greater than FY2020 full year revenue of $18.6M

• Further $23.0M of sold revenue to be recognised out to FY2026

• Milestone $11.3M five-year deal with South Tees Hospitals NHS Foundation Trust for Alcidion’s full suite of products and services including Miya Precision & Better’s OPENeP

• Strong cash reserves of $12.5M as at 31 December 2020, strengthened by further receipt of $3.0M in early January 2021 relating to the South Tees contract

• Other significant contracts signed or announced in Q2 FY2021:                                          o NextGate – expanded reseller partnership to include UK and Ireland                                          o NT Health – program management services contract extension                                        o ACT Health – contracts for further integration services o NSW Health – extension to Child Data Hub (CDH) technical services contract

View Attachment

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#FY2020 Results Presentation
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Added 3 years ago

Key takeaways for me are:
 

  • Profitability - first time (I believe) this has been publicly stated. I still believe FY21 to be a year of accelerated revenue growth and that just maybe, profitability in FY22.
  • Revenue growth - question is how many more contracts can they win and how high can the total FY21 revenue figure be? As at 19 November 2020, Alcidion is expected to recognised $20.2M of revenues in FY21, with seven more months to go. Management has repeatedly stated that they expect accelerated revenue growth for 2HFY21
  • Operating leverage - cost base expected to stabilise at 1HFY21 levels. In my view, the key revenue threshold is around $30M. Once revenue exceeds this figure (assuming all else being equal), operating leverage will kick in and the majority of any new revenues will flow straight down to the bottom line. To be sure, Alcidion has a highly scale-able business model and is easily capable of generating sales in the several tens of millions of dollars with just a few NHS contracts.
  • Regulatory tailwinds - still intact and accelerating. Traction in key markets such as NZ (Simpson Review) and UK (Digital Aspirant program). Important to note that for some such as the latter, the funding is there - £28M in the first year and further funding to be provided over the next four years.
  • Progress on GP and community system - interesting developments taking place in this space. For context:


Key players from the NHS, big tech and pharmaceutical companies have been in discussions over the potential to commercialise 65 million NHS medical records, valued at up to £10B a year. Plans are for a “single, standardised, event-based, longitudinal patient record” pulled together from GPs, hospitals, mental health professionals, demographics registers, prescription records as well as information from the private health sector, with the aim of improving improve outcomes for clinical trials, drug discovery and medical technology.
 

  • Growth strategy - Alcidion's success in the short to medium term will continue to be heavily reliant on the UK market. Current growth strategy in that market of focusing on early adopters and digital exemplars to establish reference sites and leveraging off the NHSX Clinical Communications Procurement Framework makes sense to me.
  • Near term catalysts - Management noted the strong potential to expand scope of initial customer contracts signed in Australian market. My guess is that there have been discussions with some health districts in NSW in particular. Also, do not discount the potential for some catalysts from NZ. Remote patient monitoring will also will also be increasingly be a new market.


Separately, my understanding is that there have been some movements in the share register:
 

  • Cyan Investment has increased its holdings
  • Two nominees (Citicorp and JP Morgan) have also been buying. Question is for whom? Also, I wouldn't be surprised if they are not behind the repeatedly 1 share after market trade (as have yet happened again today!)
  • Donald K has sold down some of his holdings via (presumably) an arranged trade with Kate
  • Found of Patientrack (Michael Buist) has sold down some of this holdings. Good on him, he deserves a nice payoff.
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#Contract win
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Added 3 years ago

Alcidion has signed its largest ever deal for the Miya Precision product, worth $9.5m over 5 years. The vast majority of which represents recurring revenue. 

The deal is with the South Tees Hospitals NHS foundation trust. 

More than half of the contract value is to be booked in the current year, which takes locked revenue for FY21 to $20.2m, with 7 months of the year still remaining. Alcidion booked $18.6m in all of FY20.

Aside from the financials, this is a very positive step in my opinion.  It represents further evidence of traction in the UK market, as well as provides an important reference site and social proof.

ASX announcement here 

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#Q1 FY21 Results
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Added 3 years ago

Like some other posters, the results were largely in line with expectations.

Key takeaways

  • Reasonably well-managed company with its growth path underpinned by structural tailwinds. Hospitals and trusts have platforms/systems that will eventually need to be digitalised/automated
  • Key target markets appear to be delaying its decision points (for good reason) but the required changes are a necessity and not optional. Normality has resumed in some markets.
  • Contract with Murrumbidgee LHD runs out in December. Negotiations over an extension has already commenced - possibly an impending catalyst?
  • Alcidion is one of only two supplier to the Victorian health incident management system under option 2. Under option 1, the 86 public health services can elect to remain with their current vendor (if they can provide the service to meet the prescribed requirements). If not, it is either Alcidion or Dialog Information Technology
  • Managing Director noted that acquisition remains a possibility, particularly referencing the UK market
  • Managing Director seems confident over sales pipeline, as evidenced by the forward-looking contracted revenue pipeline. She also noted there are already some progress from the scaled up sales and marketing team. Cash receipts from customers in Q1 FY21 is also looking strong, compared to previous corresponding periods

My thoughts

  • Normality should resumed soon to the business administration side of the public healthcare system now that they better understand what they need to do on the front/last line. Perhaps, things should pick up from here on. Personally, I expect at least one more announcement before end of year and would be somewhat disappointed if we don't get it!
  • Recent expenditure to scale up sales and marketing capability is expected to slow down and stablise over the next few quarters. I expect the cost base to stabilise around the $4.75M per quarter mark. Give or take, all else being equal, Alcidion needs consistent cash receipts of approximately +$7.6M to achieve positive cashflow. Based on the Q1 FY21 cash receipts, we are approximately 85% of the target figure
  • Going by the above rough numbers, Alcidion will probably hit profitability when revenue exceeds >$30M. Like all SaaS companies, profitability will really accelerate when recurring revenues inched closer to the cost base.Given the FY20 revenue figure of $18.6M, profitability is still some time away even if I apply various revenue growth rate for FY21. This is why FY22 is the main game for me - possibly make or break of my investment thesis on Alcidion
  • Although the 4C reads okay to me, I still expect the share price to face downward pressure despite any short term bounce for two reasons: (1) there appears to be a party still drip selling; (2) the 'huge' opportunity cost of holding on to ALC in the current relatively bullish market
  • To break the current downward trend, we need a catalyst (and a damn good one!) to provide the liquidity for the seller(s) (including frustrated retail holders) to exit. For example, an integrated product offering for a trust over 5-years around the $7M to $8M range. In the absence of any 'news' to break the current cycle, the share price will continue to drift in no man's land, particularly with so many stocks running hard in the technology (e.g. cyber security and gaming) and commodities sector which are capturing the market's attention. To be honest, the medical technology sector is not exactly 'sexy' to the average punter at the moment
  • Because what Alcidion is offering to the healthcare market is revolutionary in some sense (e.g. AI via Miya), it is going to take ongoing time and effort to educate the healthcare professionals and administrators. The big positive for Alcidion is that it now has the reference sites plus PoC from the Murrumbidgee LHD and that the networks it could leverage off recent hires (for example, Alcidion's General Manager of Business Development in Australia and New Zealand (Steve Lutz) previously worked with eHealth NSW on the statewide community health and outpatient care (CHOC) and electronic medications management (eMeds) programs
  • Pure speculation on my part regarding the NSW Single Digital Patient Record, it is almost certain Alcidion would partner up with another party to go for that contract, against the traditional big boys such as Epic and Allscript. Check out the background of our executives and then check out which EMR that Miya has already been successfully proven to work alongside with - join the dots. On its own, Alcidion will have no chance as it would be deemed too small and risky. But together with this partner, they can offer a very 'compelling proposition' via a locally proven evidence-based proposal
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#FY20 Results
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Added 4 years ago

Alcidion's full year result pretty much came in as expected.

Ongoing investment in sales and marketing capabilities continue to delay cash flow break even. But this is a necessity to capitalise on the market opportunity. In fact, I think the structural shifts that were occurring prior to Covid19 and subsequently accelerated by the pandemic makes first mover advantage in the emerging land grab more the important.

Increased cost base is expected to stablise in FY21. Colin mentioned in the previous 4C webinar that he expects costs to stabilise around the $4.75M per quarter mark. Give or take, all else being equal, Alcidion really needs consistent cash receipts of approximately +$7.6M to achieve positive cashflow.

Going by the above rough numbers, Alcidion will probably hit profitability when revenue exceeds >$30M. This probably means profitability is still a few years away given the FY20 revenue figure of $18.6M. Like all SaaS companies, profitability will really accelerate when recurring revenues inched closer to the cost base.

Having said that, the timeline will be dramatically shorten IF Alcidion manages to secure a major contract. the Managing Director mentioned that she envisaged a integrated product offering for a trust over 5-years would be around the $7M to $8M range. Obviously the actual number might differ depending on the number of individual hospitals and beds involved, but it still provides a useful reference on the size of contract that could potentially eventuate.

The Managing Director also kinda hinted that she expects revenues to accelerate in the second half of FY21. All the necessary building blocks are slowly being placed in position to facilitate the emerging market opportunity. It all comes down to execution now.

The only bit of the webinar that I had me a little concerned is the CFO's explanation for cost of sale of goods and services, in response to Alcidion's low gross profit.

In the FY19 Annual Report, Alcidion stated the following:

NOTE: The Cost of Sale of Goods and Services for 2019 and 2018 differs from that presented in the unaudited Preliminary Financial Statements which followed the presentation used in the 2018 Annual Report, which deducted only the cost of third party product and hardware (i.e. cost of sale of goods only) from revenue to determine Gross Profit. This was inconsistent with how Gross Profit was presented in the 2019 Half Year Review where the cost of direct labour used to deliver services and develop, maintain and support product was also included in the Cost of Sale of Goods and Services. Accordingly, the cost of direct labour has been reclassified from the total Directors and Employee Benefits Expense amounts shown above to Cost of Sale of Goods and Services and the calculation of Gross Profit reflects this

I previously queried Alcidion on this change and their response is pretty much that it was permitted by standards, auditor did not raise concerns and that it was more reflective of the nature of their business.

In yesterday's webinar, the CFO acknowledged that their approach has made the result look much worse that it actually is, compared to if the direct cost of labour (which is quite significantly) was to be put below the top line. He further flagged the possibility of taking those costs out next year to boost the gross profit margin figure.

I am not implying something dodgy is going on and is convinced every adjustment will be done in accordance to accounting standards etc, BUT can anyone with an accounting background explain this discretion for companies to change their reporting methodology as they see fit?

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#FY20 Results
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Added 4 years ago

Alcidion's full year results came in pretty much as expected. 

Good to see the solid growth in recurring revenue, a healthy cash balance and some resilience in the face of covid.

Alcidion has a great product offering, important reference sites and good sales momentum. There's a big opportunity as healthcare goes digital, and they seem well positioned.

The company did stress the increased ramp up in investment needed to seize the opportunity. Scaling up began in earnest at the start of this calendar year and they expect the expanded cost base will start to stabalise during FY21.

This will delay cash flow breakeven, but I think it's a necessary investment. There's big first mover advantages when sectors are undergoing structural shifts. Not that the spend is guaranteed to deliver good results, but it's really unavoidable in my view.

On some rough numbers, assuming steady gross margins, it looks like ALC will not hit profitability until they get to close to $30m in sales -- which is likely a few years away.

They have over $15m in cash, and have a current operating cash burn of $2m pa, so they should be able to sustain themselves for a good while.

I still think $50m in sales by FY25 is possible, but with most of the growth in the second half of the period.

Anything can happen with the market price short term, but i think Alcidion remains a good bet for those working to a 3+ year timeframe

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Valuation of $0.160
stale
Added 4 years ago
Deferrals in projects, structural tailwinds etc should drive continue revenue growth. Applying a top line revenue growth of 20% to the lower end of FY20 revenue guidance (which I think is achievable given Alcidion did achieve 9% revenue growth in FY20 despite difficult circumstances) gives us a full year FY21 revenue of approximately $22.1M, of which 58% or $12.8M is already contracted. Using an EV-R multiple of 7, FY21 revenue figure of $22.1M and reverse engineering, we get a FY21 share price $0.17. Discount it by 10%, we get a share price of 16 cents for FY20.
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##Valuation
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Added 4 years ago

Some additional thoughts from me for discussion...

Snapshots based on 4C from Q4 FY20

Pretty evident that:

  • there is still an element of lumpiness in Alcidion's revenue profile but aggregated revenues have continued to trend upwards
  • continual shift towards recurring revenues (approximately 76% of total revenues based on latest 4C, highest to date)
  • revenues from products also make up approximately 76% of total revenues based on latest 4C, also highest to date)

For context on the upward trend in staffing course, listen back to the explanations from Kate and Colin in today's webinar once it gets uploaded onto Alcidion's website. From memory, Colin did mention that he expects staffing costs to stabilise at around +4M per quarter moving forward (can't recall the exact figure)

Valuation using a multiple approach

  • Market cap/Revenue: approximately 8x sales (using today's closing price of 15 cents and lower end of revenue guidance for FY20)
  • Enterprise value/Revenue: approximately 7x sales (using today's closing price of 15 cents and lower end of revenue guidance for FY20)

Latest 4C stated that Alcidion enters FY21 with a healthy sold revenue pipeline with $12.8M contracted to be recognisedin FY2021. Previously, Alcidion added $6.8M to FY20's starting position. Remember, we had Brexit and Covid19 which impacted what would ordinarily be Alcidion's strongest performing quarters.

Deferrals in projects, structural tailwinds etc should drive continue revenue growth. Applying a top line revenue growth of 20% to the lower end of FY20 revenue guidance (which I think is achievable given Alcidion did achieve (9% revenue growth in FY20 despite difficult circumstances) gives us a full year FY21 revenue of approximately $22.1M, of which 58% or $12.8M is already contracted.

Using an EV-R multiple of 7, FY21 revenue figure of $22.1M and reverse engineering, we get a FY21 share price $0.17. Discount it by 10%, we get a share price of 16 cents for FY20.

This suggests that the current share price/enterprise value is just about right, give or take.

For comparison purposes, the same approach using different multiples would give us the following implied share price for FY20:

  • EV-R multiple of 8: 18 cents
  • EV-R multiple of 9: 20 cents
  • EV-R multiple of 10: 22 cents

 

 

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#4th QTR 2020 results
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Added 4 years ago

I thought the quarterly reads okay to me. In fact, it has given me extra confidence that management is continuing to execute on their strategy, despite the current difficult times.

Key highlights include:
 

  • Positive net operating cashflow - plus for me, wasn't expecting this
  • Uplift in FY20 revenue forecast - from $17.2M (as at end of Q3 FY20) to the range of $18.4M to $18.7M (as at end of Q4 FY20). Also uplift from FY19 revenue of $16.9M. Bloody impressive in the context of Brexit and Covid19, if you ask me for the reasons Kate mentioned about resources being diverted to the front/last line!
  • Continuing uplift in operating expenses - within expectations given management has reiterated this multiple times that the increase in sales and marketing investment/expenditure is to drive top line revenue growth. You have to be either living in lala land or not bother carry out some basic research before posting any criticism


Additional highlights for me include:
 

  • Very low customer churn rate - Kate mentioned that she cannot recall a contract not being renewed once the product is embedded into the customer's system
  • The is a level of pent up demand that will flow through
  • Recurring revenues will continue to increase as contracts gets renewed based on a subscription model
  • Developments in NZ as a result of the Simpson review. Well worth a read as it touches on digital and virtual care. One recommendation in particular caught my attention: 'priority for digital investment shouldbe given to initiatives that will accelerate interoperability'
  • Alcidion currently in active discussions with a number of parties about their products
  • Structural tailwinds remain intact or might have even accelerate - e.g. virtual care settings and ongoing increased focus on digitalisation in UK and NZ.


If I remember correctly, Kate also hinted at an uptake of Patientrack in NZ.

Based on 'current' operational performance and valuation, Alcidion's current market cap is probably about right or a bit tad higher.

But for some of us, we are investing in what Alcidion could be in 4 or 5 years time. For things to play out as we think it should, it requires a combination of luck, good execution by management etc. Things may either play out exactly the way we believe it should or turn shit house - all part of investing.

Everyone's valuation of Alcidion will be dependent on a number of factors, including: your investment horizon, confidence in management execution, view of structural tailwinds or headwinds, sustainability of growth rates, capacity of Alcidion to upsell and cross sell its products, etc.... hence my previous comment of Alcidion probably being a case of 'averaging up'...

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#4th QTR 2020 results
stale
Last edited 4 years ago

Alcidion's results were ok, with record cash receipts and cash flow positive for the qtr. $15.9m in cash at the bank.

FY revenue is expected to come in between $18.4-18.7m (up ~10% from FY19), and with $12.8m of contracted revenue already locked in for FY21. There's roughly another $4.5m locked in each year through to 2025.

For a business on >8x sales, it's really not enough.

$3.7m in contracted revenue was added over the quarter, double the same time last year. Over the past 12 months they've added around $14m -- but this is over multi-year contract periods.

It's great to be start starting FY21 with $12.8m already locked in, but remember that they started FY20 with $11.7m. Not all sales are recurring (~75% are), so there's still a lot of work to be won.

Still, i think that's possible.

With an expanded presence and resources, they should hopefully be able to build on the sales won last year -- especially given the covid tailwind. $6.8m in sales were added to FY20's starting position. If we assume $10m in new sales added for FY21, we'd get full year revenue of $22.8m in FY21 -- about 20% top line growth. 

$50m in sales by 2025 would require this growth to be sustained over that period.

Definitely achievable, but I wouldn't want to bank on more than that for valuation purposes.

ASX release here

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#ACT Contract Renewal
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Added 4 years ago

Not huge news, but Alcidion resigning ACT Health for a further 2 years (in a deal worth $1.3m) for its patient management system is nice to see.

However, when the contract was last exteded in 2018 (see here), it was worth $1.27m for 2 years. It'd have been nice to see Alcidion increase the cost more (especially given the likely platform improvements over the last 2 years), or have bundled in other offerings.

So it's good that their solution is proving sticky, but would have been a very strong signal if they could have charged more. 

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#Q3 Business Update
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Last edited 4 years ago

11/2/20

Alcidion has announced a further $1m in sold revenue since the end of the 2nd quarter, taking the total sold revenue so far in FY2020 to $15.4m. This compares to the $16.9m that was recorded in all of FY19.

The presentation also reiterates the size of the market opportunity, the increased investment in growth and the recently strengthened balance sheet. 

See here

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#Q2 2020 Results
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Last edited 4 years ago

No major new insights this quarter in temrs of the broader, long-term narrative.

Business remains well placed, it seems, to continue strong growth, especially with