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Kate Quirke bought 1.5M shares worth $195k today at $0.13 share price. During the March pandemic sell-off, she bought at $0.10. In total, she now owns around 60M shares. The crazy thing is that she owns ordinary shares, not options. She is aligning herself with shareholders which is what every investor hopes in seeing.
Sometimes the best thing to do is follow management and buy with them :) Kate would not buy shares if she thinks Alcidion is worth multiples of what is valued today. The market is very short term focused.
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
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
Q4 FY20 results
Like some other posters, the results were largely in line with expectations.
Key takeaways
My thoughts
Some additional thoughts from me for discussion...
Snapshots based on 4C from Q4 FY20
Pretty evident that:
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
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:
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
This is the largest Miya Precision contract they have signed to date.
To promote a healthy discussion, below are my thoughts around key reasons on why the share price has been drifting down. I welcome ideas from both sides and agreeing/disagreeing in a constructive manner.
Revenues are not growing quickly enough
The market might be expecting stronger revenue growth that the 9% uplift in FY20 revenue (using lower end of FY20 guidance, $18.3M vs $16.9M in FY19).
As mentioned in my previous posts, there are many factors contributing to this with the most obvious being Brexit (government in care taker mode and a new government being formed) and Covid19. Not only have these occurred during what would usually be the busiest period for Alcidion, it has also obscure the view of what would have been the first 'clean' full year (post integration etc) of the new Alcidion (old Alcidion + MKM Health). Because of this, the market does not have full visibility of the revenue generating profile of Alcidion in a typical year.
Nevertheless, I still think for Alcidion to be able to achieve revenue growth and beat revenue guidance in these difficult circumstances is a good effort.
It is also important note that the healthcare industry is a very slow moving beast, particularly so in the public system where the biggest proportion of Alcidion business reside. Customers are sticky, contracts are typically between 3 and 5 years, long winded procurement process, risk avoidance trumping innovation aka inertia etc. Consequently, things take a much longer time than many anticipate - for example:
Alcidion has experienced the short term pain in Brexit and Covid19, but I think there would be some long-term gain. There will be an acceleration in the digitisation, data analytics and artificial intelligence because of regulatory compliance, demand for greater efficiency gains, capacity constraints etc.
Misinterpretation of contracted revenue figures
26% fall in FY21 contracted revenue of $12.8M vs. $17.2M in FY20 and also the perceived fall in recurring proportion of the contracted revenues
It is my belief that some market participants might have interpreted the 'contracted revenue' reported in the 4C of Q4 FY20. The contracted value relates solely to the start point of FY21. Without reading carefully the chart headings, some might assume there was actually a decline in contracted revenue performance.
However, if you compare it to the corresponding start point for FY20 (which was reported in the 4C of Q4 FY19, there is actually a 9% uplift. Not only is this a healthy starting point for FY21, there is also an increase in both the proportion of recurring revenue (up from $7.7M to $9.7M) and product revenues (up from $7.1M to $9.7M). Alcidion earns higher margins in revenues derived from recurring activities and products.
It can also be observed that the contracted revenue pipeline also gradually increase throughout the course of the financial year.
Growth in operating expenses has continued to outstrip growth in both revenues and cash receipts
Growth in Cost of Sale of Goods and Services is expected to outstrip revenue growth
In my view, Alcidion has been upfront in explaining this to the market for some time now. The focus is to increase top line revenue in the three key geographical markets, noting that the 'old Alcidion' pretty much did not have a sales and marketing team. The 'new Alcidion' therefore has to improve and enlarge its sales an marketing team and capability to cross and up sell the additional products and services.
As mentioned above, there is a time lag between the scaling up of sales and marketing capability and when growth actually flows through.
One of the key takeaway from the recent webinar is that the COO/CFO expects headcount to still increase but with the 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.
One might reasonably ask why is this important. Again, based on my previous discussion with the management, it is my understanding that some of the institutional investors that they have engaged with had given the feedback that Alcidion needs to achieve 'consistent' positive quarterly cashflow before they would consider investing, mainly due to risk management and their investment mandate.
A lot of optimism or expectations were baked into the market capitalisation
At market valuation >$120M, the market was valuing Alcidion as a typical SaaS business and expecting strong revenue growth and quicker execution of contracts. The current trajectory does not match this profile.
As mentioned above, the public segment of the healthcare sector that Alcidion is focusing on is notoriously slow. Perhaps I also have been previously guilty of valuing Alcidion as a typical SaaS business and using peer comparison without fully appreciating how slowly things can move.
I was quietly impressed with Alcidion's performance in FY20 despite the headwinds. But obviously the market holds a different view, partly explaining the recent share price decline following the release of the 4C of Q4 FY20.
But then market sentiment can change quickly - for better or worse. Hopefully, it will turn for the better as management continues to execute and hit some sixes for us.
More inside buying from Kate (1.5m shares at current price), which pushes her total to over 58m. The share price has been held back for quite some time now, so maybe this backing from management (once again) can help get things going. Holders have been asked to be patient with this one and we are hoping the next quarterly doesn't disappoint.
9th September 2020 – FY20 Results Presentation
Headlines
· $18.6m revenue – 10% gain on FY19
· $12.8m presold revenue to recognised in FY21 – (this is 9% more than presold revenue from FY19 recognised in FY20)
· Cash reserves currently at $15.9m (cash burn has been estimated at $2m p/a so it gives them some time to get CF positive)
P&L highlights
· Recurring revenues as a % of total sales has risen from 46% to 56% - This is a positive sign for me as that switch to a SaaS model and that revenues are ‘locked in’ for future periods
· Cost of Sales has risen with highlights in the following
o Sales/staff & commissions up 48%
o Product development costs actually DECREASED
o Salaries/wages for staff up 56%
o Marketing costs DECREASED
o Operations admin costs DOUBLED
So breaking down these highlights, the market knew ALC was pushing back the expected date for cashflow breakeven and these results mostly reflect that. I don’t see the massive drive in operating costs over FY20 as bad as it sounds, I believe it is a necessary cost that helps build the footing for the company in the future. We could compare it to the 1991 Paul Keating quote “the recession Australia had to have”. The notion here being that ALC needed to bolster its sales staff & operating spending for the business for any success to be achievable in the future.
I found it surprising marketing costs were slightly down though, but I’m not 100% sure of the tender process ALC go through in winning new contracts and what role marketing plays in this.
Overall, an expected result as indicated by Kate & co through previous announcements. FY21 is a key year for these operating costs to flatten out and management begin to execute their plan and get some contracts on the board!
Alcidion appointed to UK National Health Service (NHS) Clinical Communications Procurement Framework
Mobile clinical communications improve clinician and patient experience
A new multi-million pound framework that will help the NHS ‘purge the pager’ provides NHS trusts in the UK with a means to quickly and easily procure Alcidion’s Smartpage messaging system without tendering.
NHSX has awarded Alcidion a place on its £3 million Clinical Communications Procurement Framework, a new procurement vehicle to help the NHS phase out pagers by the end of next year.
Smartpage allows instant two-way messaging between busy professionals providing them with read receipts and guaranteed delivery between all care team members, as well as the ability to share images and assign tasks. Healthcare providers using the system are also given organisation wide oversight in real time.
Lynette Ousby, UK general manager for Alcidion, said: “NHSX has shown a commitment through this framework to accelerate the spread of modern technologies in the health service that can help healthcare professionals communicate effectively during the busiest of times.
“The inclusion of Smartpage on this framework is an important independent validation for Alcidion’s Smartpage product. We look forward to helping trusts modernise their communications tools through a framework in a way that is affordable and straightforward.”
The new framework follows an order from health and social care secretary Matt Hancock for the removal of pagers from the NHS for non-emergency communications by the end of 2021. Speaking at the time in 2019, he said: “Every day, our wonderful NHS staff work incredibly hard in what can be challenging and high-pressured environments. The last thing they need are the frustrations of having to deal with outdated technology – they deserve the very best equipment to help them do their jobs”.
Alcidion has had significant success with Smartpage over recent months. Reliable and secure communication between clinicians is a critical component of digitally integrated and coordinated care across the healthcare sector. However, siloed information due to a complex mix of pagers, legacy phones and whiteboards is a cause of communication delays or errors in many hospitals today. This can lead to longer waiting times, delayed or missed care and lack of visibility into staff workloads.
To address these challenges, four leading healthcare organisations have chosen to implement or extend the use of Alcidion’s smart clinical messaging platform Smartpage: ACT Health, Nelson Marlborough District Health Board, Counties Manukau District Health Board and Townsville Hospital and Health Service.
Alcidion Signs $9.5 million deal with South Tees Hospitals NHS Foundation Trust.
Here are a few extra details;
One of the hospitals within the trust includes The James Cook University Hospital which is a large, 1,024 bed major tertiary referral hospital.
The hospital is also a tertiary training centre for Newcastle Medical School. Which consistently ranks in the top 10 medical schools in the UK.
Alcidion currently provides services to follow NHS Foundation Trust's;
- Manchester university hospital
- Basildon and Thurrock university hospitals
- Westerns Sussex hospitals
- Fife
These hospitals all provided training for medical students, junior doctors and allied health.
In my opinion, if Alcidion can continue to provide quality services within these organisations it will have a large positive impact on the future perception of Alcidion's products by the junior medical and allied health professionals who are now coming through the pipeline of training and education. This group of people will be one of the important voices of feedback regarding product efficiency and quality which has a large weighting on long term success.
27 October 2020
Q1 FY2021 Business UpdateStrong first quarter of sales, investment in growth continues
Melbourne, Australia – Alcidion Group Limited (ASX: ALC) today released its Appendix 4C for the three-month period ended 30 September 2020 (Q1 FY2021) and the below business update.
Highlights:
* Sydney LHD –12-month contract for Miya Precision to support COVID-19 virtual care
* Murrumbidgee LHD – 12-month contract for Miya Precision platform including Miya Memory
* NHS Lanarkshire – 5-year agreement to implement Patientrack across boardoACT Health – 2-year extension to long term integration support contract and further project work
* Queensland Health – additional work on the Referral Services Directory(RSD) platform
* Lancashire Teaching NHS Trust – 5-year Smartpage contractoPanel contract with Vic DHHS for implementation and support of the Victorian Hospital Incident Management System
For the sake of writing down my thoughts, here is what I took away from the Digital Health webinar.
Everything was well-presented and quite straight-forward. It didn't feel like a sales pitch, which was the issue with a previous Digital Health article on ALC. Malcolm went into great detail about the practicality of Miya Precision and how the data it collates and displays can be used by clinicians effectively and productively.
It was great to hear from Neil Perry, the Director of Digital Transformation at Dartford and Gravesham NHS Trust. He went into great detail about the selection process of why they chose Miya Precision, noting that clinicians and technical professions showed a preference to Miya Precison and pushed for it over other options, and that management are happy with the results they are seeing. The partnership aspect was an important factor to them, meaning there was no need to 'rip and replace' their previous system.
Furthering on the partnership aspect of the business, Kate mentioned the partnership with eHealth NSW, noting that it was the customer who approached them with the intention of overlaying the existing Cerner EMR with Miya Precision to strengthen it's capabilities. This resulted in what is effectively a partnership between ALC and Cerner. In another answer, Kate focused on the partnership aspect of Miya Precision, noting is their focus to build upon the strengths of other PAS/EMR systems, negating the need for hospitals to replace the systems they currently have in place.
I was aware of the capability of Miya Precision to work with other PAS/EMR systems and this presentation has increased my confidence that there isn't a need to worry when competitors win contracts, eg. Epic's recent contract with ACT Health. This should negate some of the risk for hospitals when making the decision of digitalisation in regards to the money & time investment that is often a hot-topic when hospital contracts are discussed.
For those that wish to watch, the presentation is at the bottom of the page linked below.
https://www.digitalhealth.net/events/introducing-a-new-kind-of-technology-for-the-nhs/
Alcidion has reported that South Tees Hospitals NHS trust has extended its contract by a further $2m to $11.3m over 5 years, to include the Smartpage product, cloud hosting and some managed services.
The original contract was only signed in November, and included MIYA precision and Better OPENeP systems.
South Tees are now using the full suite of Alcidion products, as well as a variety of managed services. South Tees manages over 1000 hospital beds, and aside from a significant contract win will represent a vital reference site for their UK sales team.
ASX announcement here
Claude Walker from A Rich Life does a great breakdown of the recent deal here.
Update: Alcidion CEO Kate Quirke has gotten back to me and said: “The announced total contract value of $9.5M over 5 years includes all components of the total solution sold, including the resold OPENeP ePMA solution. This solution however represents less than 20% of the total value of the 5 year contract.”
Overall, this is good news for shareholders as it suggests at least $6.5 million of recurring revenue from Miya, over 5 years. This in turn translates to about $1.3m per year in recurring revenue from Miya. That’s great news, and roughly in line with other contracts (albeit a bit bigger).
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:
Additional highlights for me include:
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'...
17 Nov 20: Since ALC annouced it's largest ever contract, the share price had a break out to $0.18. It fell back down to $0.155 but the buyers have soaked up all the selling and now it has broken above the trading range is hit a new high of $0.195.
NHS Lanarkshire to deploy Patientrack across entire board
Highlights:
* NHS Lanarkshire to deploy Patientrack to all three Lanarkshire hospitals and into the community setting, covering approximately 1,250 beds
* $1.52M total value to be recognised over five years to 2025
* NHS Lanarkshire is the second NHS Scotland Health Board to implement the Alcidion Patientrack solution
If I understand things correctly, we will have a good 4C either Q2FY21 or, more likely, Q3FY21. This would be mainly driven by the recent $9.5M South Tees' contract for the following reasons:
Because the South Tees contract is structured in such a way that it is heavily front loaded with approximately $5.48M of the total contract value is planned to be recognised as revenue in FY2021 (subject to milestone achievement), I suspect there is a sense of urgency in dispensing the grant funding as soon as practicable before the end of the UK financial year and therefore potentially boosting the cash inflow in either Q2 or Q3 of FY21. However, there can be a small difference in the timing of the cash inflow and revenue recognition.
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?
Key takeaways for me are:
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.
Separately, my understanding is that there have been some movements in the share register:
**I have taken for of an opinionated view of the Q1 report to differentiate my straw to @GetSmart's
October 27th, 2020 – Q1 FY2021
Headlines
· Q1 revenue at $4.8m (30% versus sequential and 92% on pcp)
o This reflects the new contracts signed over the past 12 months. (NHS, Murrumbidgee..)
· Total contracted (pre-sold) revenue for FY2021 is at $14.7m (14% increase pcp)
o Though last year, the pre-sold revenue for FY2020 was $12.9m (which was a 16% increase from that of FY2019)
o Hence the rate of change in growth has slowed (2%) – i.e the second derivative of revenue growth has become negative (thanks high school maths)
· Cash outflow for Q1 of ($1.2M)
o We know ALC have dipped back into cash flow negative as the cost base has been rising
o This cost base expected to flatten out over this current FY2021
· Cash receipts @ $6.4m
· Reclassification of non-recurring revenues as recurring revenues
o Product license fees that were previously recognized as non-recurring as now counted as recurring. This results in a $269k or 3% increase.
o These license fees “nearly always continue” hence the reclassification
· Presold revenue
o $32.8m revenue sold out over the next 5 years, equating to ¬$6.5m per year presold.
My thoughts
· Rather in line with expectations, slight changes to accounting and classification for revenues make may things look attractive, but these results are in line with previous expectations
· The announcement mentions a new NHSX ‘Clinical Communications Procurement’ that ALC are involved in where the NHS is turning to tech for its health departments, but no details provided regarding revenues etc…
· Cash reserves at $14.7m, which gives them around 5-6 quarters of continued cash outflows before they need to tap up shareholders for capital again
· The recent announcement of employee incentives was not a good look, as these incentives become activated if ALC manages to outperform the market between now and FY2023
o 6.5m performance rights given that TSR is positive and/or greater than the market (S&P/200) by JH23, which is not an overly ambitious goal in my view.
{I hold ALC shares, though I have lost some confidence on the back of some of the latest decisions by management as well as some of the reports from some healthcare workers here on Strawman}
Re-energising the health tech landscape
https://www.digitalhealth.net/events/re-energising-the-health-tech-landscape/
There will be a webinar in conjunction with Digital Health at 7pm (Melbourne, Sydney) on the 4th of September, 2020. The webinar will take place on Zoom.
https://zoom.us/webinar/register/WN_IQz1RZrqRU6_Z8PULWRcpQ?timezone_id=Australia%2FSydney
From the article:
"A new type of technology is being launched into the NHS that will re-energise the health tech landscape.
Miya Precision – the very first smart clinical asset for the NHS – is already attracting the attention of healthcare organisations looking to accelerate their digital adoption. Whether they are pursuing an electronic patient record, best of breed digital programme or are an integrated care system joining up disparate systems, Miya Precision offers an intelligent solution to unlock value from existing investments.
Using its clinical decision support engine, Miya Precision provides the necessary automation to alleviate the cognitive burden faced by clinicians. Early communications about the smart clinical asset sparked significant reaction from Digital Health readers and now Alcidion is holding this webinar with Digital Health to share more detailed information.
This webinar will:
Speakers include:
Comparing to the end of FY19 (30 June), we have seen positive developments on the following fronts:
I am certainly not suggesting that everything is rosy but credit should be given to the management for the achievements to date, bearing in mind that Brexit had slowed things in Q3 FY10. Covid19 further slowed things down as all available health resources were rightly diverted to the front line. Hence, procurement, sales and marketing etc has all taken a back seat. This delay is not specific to Alcidion but is consistent across the various health companies that I follow.
Based on current available information, the risk-reward proposition has definitely changed somewhat because of the following:
But on the other hand, the current pandemic should also accelerate the structural tailwinds that were already in play, namely:
At this point in time, Alcidion is probably a company that one should consider 'averaging up' as management further earn their stripes as opposed to 'averaging down'. I suspect this is probably the approach some smart investors are adopting in respect to Alcidion.
Some potential positive developments include:
If one take a longer view (>5 years), I really think that Alcidion is at a sweet spot - intersection of technology and healthcare. It is more likely to be a 'growth at reasonable price' company rather than one that would experience explosive growth rates. I would be extremely happy to be wrong though!
Alcidion Managing Director Kate Quirke said, “Despite challenging market conditions during the final quarter of the financial year, as the COVID-19 Pandemic (“COVID”) continued globally, we are pleased to deliver a healthy sales performance in the final quarter. Whilst COVID has delayed the signing of some contracts, with frontline healthcare organisations focused on the provision of critical care, we are pleased that the pipeline of potential business has continued to grow and we remain confident of our further growth.”
“The benefits that our technology can deliver; in managing risk, assisting clinicians to monitor patients and manage resources, both in the hospital and remotely, has been highlighted during COVID. This environment, and the enhancements we have made to our product suite to help healthcare providers manage COVID-19 risk, have contributed to us securing new customers and contracts in Australia and the UK.”
“Our involvement in the Monklands digital hospital experience run by NHS Lanarkshire was a springboard to our first Patientrack contract with this NHS board, further expanding our presence in NHS Scotland. We are also pleased to see the use of Miya Precision expand across NSW, with both Sydney LHD and Murrumbidgee LHD signing contracts for initial 12-month periods.
“Despite the current global climate, we are pleased to report growth in Q4 and FY2020 overall. We enter FY2021 well prepared to drive further growth, with a solid base of contracted revenue, much of which is recurring revenue, and a healthy pipeline of potential sales. In the current environment the strength of our value proposition to support both short term COVID-19 management and the longterm digital transformation of healthcare, is being increasingly recognised.”
Regarding the South Tees extension, the added contract value is for using Microsoft Azure to host Alcidion’s Smart page clinical communication solution and business change management services. This is exactly what I have been thinking about during March this year when Satya Nadella said: "5 Years of digital transformation to be deployed into 2 months". This was not going to happen when companies and institution cut technology spending during the height of the crisis.
NHS was one of the big talking points on Microsoft earnings call during the early part of the pandemic and I was worried that Microsoft would provide the technical solutions instead of Alcidion. However, I am proven wrong, Microsoft will provide the tech platform and Alcidion will build the capability. That's $2M to put hospital data into Microsoft Azure.
On a broader economic view, technology spending is happening again meaning we are at early stages of the recovery. The recession had a surprisingly fast rebound. Different countries will grow at different rates depending on how the vaccines get distributed across the globe.
25 Nov 20: ALC - Has been able to absorb the initial profit taking and continues to break out higher. It reached a new high of 23c but was sold down to close at 21c. Up from a low of 12c in September after annoucing their largest every contract in the UK.
*I'd like to start off by saying I do own some ALC shares and the purpose of this straw is to play devil's adovcate and highlight some risks.
On the back of the Q1FY2021 result, we can see that there was a net cash outflow for the quarter of $1.2m. Given the incoming receipts of $6.4m, this implies a cash burn of $7.6m p.q
Extending this to a yearly basis gives a cash burn of of ~$30m indicating they should hit profitability around revenues exceed $30.4m (which is a lot higher than the current $18.61m), given that the cost base stabilises which is what management have mentioned they expect in FY21.
Given the current rate of receipts of $6.4m per quarter, they will reach ~$25m in revenue by year end if NO NEW CONTRACTED REVENUE IS SIGNED. I approximate in my head this figure will be closer to $26m given that the last quarter of each FY has tended to have higher receipts.
Given that last JH20 had a negative NPAT of ~$2m, i expect that the EPS/NPAT this FY will be further negative unless more sales are brought in this year. Given that the Murrimbidgee site is only a 12-month contract, we must hope that ALC are able to renew this. (I did ask Kate during the Q1 Presentation this week and she told me "they are in talks over renewal" which is somewhat positive".
Given the number crunching, i put a lot of thought into the sales pipeline for ALC. COVID has obviously made this process harder, but hospitals in general are extremely slow-moving when it comes to embracing change. To supplement this, there is plenty of commentary regarding the lack of change in hospitals from posters on Strawman (@Chagsy wrote a straw I believe).
The sales pipeline in the UK is more difficult than that in Aus due to the need for a tendering process and all the political/legal crap that is involved with this. In saying that, the industry & ALC still face a tailwind moving forward - the digitisation of the medical industry but I think it is further in the future than we imagine and I believe Alcidion's sales plan is lofty.
Introducing a new kind of technology for the NHS: Alcidion’s Miya Precision platform
https://www.digitalhealth.net/events/introducing-a-new-kind-of-technology-for-the-nhs/
As I mentioned in a previous Straw, there was a webinar on the Digital Health website last night about Alcidion and its introduction to the NHS. The webinar is now available to watch at the bottom of the page linked above.
Worth a watch for any shareholder, new or old!
Expansion of reseller agreement with NextGate.
Currently NextGate was used in AU-NZ and now the product suite will include the UK
Very much a novice here but just wondering what the market would need to see for Alcidion to increase its value? From what I have seen/read they have been increasing contracts and earnings but yet the share price has sat steady now dropping slightly.
Q4 FY2020 Business Update Solid results during challenging times
Highlights:
* Healthy Q4 sales performance despite challenging market, with $3.7M contracted revenue added in the quarter, more than double the corresponding period last year
* Final FY2020 revenue anticipated to be in the range of $18.4M and $18.7M
* $12.8M in revenue has already been contracted to be recognised in FY21 with a further $17.0M sold out to FY2025
* Net operating cash flow surplus for the quarter of $0.25M, resulting in cash reserves of $15.9M at 30 June 2020
* Cash receipts for the quarter from operations of $7.6M, consistent with usual uplift at year-end
* Alcidion products have been enhanced for in-hospital and remote monitoring of COVID-19 patients and deployed live into hospitals
* Significant contracts signed and announced since 1 April 2020 include:
o NHS Fife – 5-year Patientrack extension across entire board
o NHS Lanarkshire – 5-year agreement to implement Patientrack across board
o Sydney LHD – initial 12-month contract for Miya Precision to support COVID-19 virtual care
o Murrumbidgee LHD – 12-month contract for full Miya Precision platform including MEMRe
o ACT Health – 2-year extension to long term integration support contract
Alcidion Group Limited (ALC) are a healthcare technology-based firm that engage in the development of software products to be used in hospitals, with the overall aim of improving systems deployed in hospitals and ultimately saving lives. They are based out of South Australia but sell products in Australia, NZ & the UK.
Most recent contract wins (most are recurring revenues)
· Townsville hospital
· NHS Fife (UK)
· Murrumbidgee LHD
Products they offer
Patientrack – tracks patient status and uses predictive and recursive algorithms to support time-critical care.
MIYA Precision – combines AI-based Predictive analytics and a Clinical Decision Support (CDS) to create a dashboard for hospital staff. Used for decision making, patient flow monitoring and track patient deterioration risk using data.
MIYA MEMRE – Creation of a mobile platform for MIYA precision, allows for a mobile patient record.
(I hold)
Alcidion grows recurring revenue base, while investing to accelerate growth
Melbourne, Australia – Alcidion (ASX: ALC) has today released its audited full year results and Annual Report to Shareholders for the Financial Year ended 30 June 2020 (FY2020).
Highlights:
revenue for 6 months nearly equal to prior 12 months...