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Q4 FY2020 Business Update – Solid results during challenging times

Alcidion Group Limited (ASX: ALC) today released its Appendix 4C for the three-month period ended 30 June 2020 (Q4 FY2020) and this business update.

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:
    • NHS Fife – 5-year Patientrack extension across entire board
    • NHS Lanarkshire – 5-year agreement to implement Patientrack across board
    • Sydney LHD – initial 12-month contract for Miya Precision to support COVID-19 virtual care
    • Murrumbidgee LHD – 12-month contract for full Miya Precision platform including MEMRe
    • ACT Health – 2-year extension to long term integration support contract

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 long-term digital transformation of healthcare, is being increasingly recognised.”

New business update

During Q4 FY20, Alcidion signed new contracts and renewals, with a total contract value of $3.7M to be recognised over FY20 and FY21.

Significant contracts signed during the quarter include an extension and renewal agreement with NHS Fife to extend Patientrack across all facilities, with a value of $1.47M over five years. At the end of June, Alcidion signed an initial 12-month $0.56M contract with Sydney Local Health District to implement Miya Precision to support remote monitoring of COVID-19 positive patients. The implementation, which is already underway, will see Miya Precision deployed to support Sydney LHD’s virtual hospital (rpavirtual) which is currently being used to monitor patients who have tested positive for COVID-19 and are in home isolation. This innovative virtual care model reduces the risk for health workers, as well as the need for personal protective equipment (PPE), by enabling remote, automated monitoring and communication with patients.

The first few weeks of FY21 has seen Alcidion announce several further contracts including two 12-month contracts with Murrumbidgee LHD for the continued use of Miya Precision at Wagga Wagga Base Hospital. Alcidion has also signed a five-year contract with NHS Lanarkshire, its second NHS Scotland customer, to deploy Patientrack across its three acute hospitals and community health network, totalling 1,250 beds. The Total Contract Value is $1.52M over five years.

The company also recently announced a two-year extension, worth $1.3M, to our long standing information technology support services contract with ACT Health.

Alcidion enters FY2021 with a healthy sold revenue pipeline with $12.8M contracted to be recognised in FY2021, a 9% increase in presold revenue announced at the beginning of FY20. Of this, $9.7M is recurring and $3.1M is non-recurring. Product revenue accounts for $9.7M, with $3.1M revenue being for services.

An additional $17.0M is contracted to be recognised over four years to FY2025.

Cash flow highlights

Cash receipts in Q4 were $7.6M, a 90% increase on Q3 ($4.0M). This increase was largely due to the usual upswing in customer receipts ahead of financial year end. Q4 operating cash outflows also increased to $7.3M. In comparison to the previous quarter, an additional $1.1M was paid to resold product suppliers, an additional $0.65M spent on planned headcount increases and $0.34M more spent on GST/VAT.

Alcidion delivered a net operating cash surplus of $0.25M in the quarter.

Overall, Alcidion had a net operational cash outflow for the FY2020 financial year of $2.6M. This reflects strategic investments made in FY2020 to grow our capabilities across all markets, funded by the successful $16.2M placement to institutional investors in November 2019.

At 30 June, Alcidion’s cash reserves were $15.9M, remaining the same as the prior quarter.

The related party payment of $259k in item 6.1 of the Appendix 4C relates to the payment of non-Executive Director fees and Executive Director remuneration in Q4.

Growth achieved in FY2020

At this stage, Alcidion is planning to report its FY2020 audited full year financial results by the end of August. It expects to report full year revenues of between $18.4M and $18.7M.

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