Alcidion Group Limited (ASX: ALC) today released its Appendix 4C and business update for the three-month period ended 31 March 2020 (Q3 FY2020) and to date.
- Solid performance amidst COVID-19 pandemic, highlighting importance of Alcidion’s platform; sales pipeline remains strong across all markets;
- At the end of Q3, $17.2M in sold revenue to be recognised in FY2020, exceeding FY2019 full year revenue of $16.9M;
- Solid start to H2 with $4.2M revenue from new contracts added in Q3, of which $2.4M should be recognised in FY2020;
- Total contracted revenue of $41.6M out to FY2025 (including FY2020 $17.2M) and a strong balance sheet with cash reserves of $15.9M; and
- Significant new contracts signed since 1 January 2020 include:
- Townsville Hospital and Health Service contract to implement Smartpage;
- An extension and renewal agreement with NHS Fife for a further five years;
- The implementation of a data warehouse across all Calvary Health Care sites;
- Systems integration contract for national Digital Pregnancy Health Record pilot; and
- Murrumbidgee LHD to expand and extend use of Miya Precision and Miya MEMRe.
Alcidion Managing Director Kate Quirke said, “Amidst an unprecedented global healthcare and economic crisis, the Alcidion business has delivered a solid performance over the quarter with a number of new or expanded contracts being signed globally.
“While the COVID-19 pandemic is putting significant pressure on healthcare organisations, we are well positioned to weather the challenging business environment in Q4. We have evidence that our platform is successfully supporting our customers in managing clinical risk and resources and improving efficiency, with new sales opportunities being generated to offset other opportunities which have been deferred. Importantly, the current crisis has also enabled us to demonstrate the value of our technology in managing and monitoring patients outside of the hospital setting.
“We were particularly pleased to see in Q3 that Murrumbidgee LHD has committed to continue using Miya Precision and MEMRe for an initial 12 month period, with the intention of extending its use across the LHD as well as deploying it as a platform for monitoring patients in the home who have tested positive for COVID19.
“From a product and customer support perspective, we have responded quickly to the global pandemic, incorporating the ability to identify and monitor patients at risk of contracting COVID-19 into Miya Precision and Patientrack. We recently provided Patientrack at no cost to the new NHS emergency hospital in Manchester, one of the temporary NHS Nightingale hospitals that have been set up across the UK to cope with peak demand on hospitals. This allows us to demonstrate the value of our technology in response to a health crisis.
“While we remain mindful of the business risks posed by COVID-19, we are fortunate to have a strong balance sheet and our customer base are largely public sector customers with long term contracts in place.
“As a result of the COVID-19 pandemic we have scaled back some of the planned spend for the next 12 months and we will continue to monitor the impacts of the virus on revenue growth. Should the crisis be protracted and begin to impact our business performance, we are confident that our current cash reserves and our ability to further reduce expenditure, leaves us well positioned to respond.”
Business update – Q3 FY2020
Total contracted revenue to be recognised in FY2020 as at 31 March 2020 was $17.2M, now exceeding the total revenue recognised for the full year of FY2019. Of the contracted revenue expected to be recognised in FY2020, $10.0M is recurring revenue (representing a 37% increase on Q3 FY2019) and $7.2M is non-recurring revenue.
There was an additional $4.2M in contracted revenue sold in Q3, with $2.4M of that likely to be recognised in FY2020. Building on the $15.4M sold FY2020 revenue at the end of Q2, this would normally have increased sold FY2020 to $17.8M. However, a reduction of $0.6M has resulted from the implementation of certain projects slowing as a result of customers being focused on planning for and responding to the COVID-19 pandemic. While these projects are continuing, some revenue recognition milestones will now be achieved in FY2021.
Contracted (sold) revenue out to FY2025 stands at $41.6M, including the $17.2M sold FY2020 revenue. Of this, $32.1M is for products and $9.5M is for services.
Significant contracts signed in Q3 FY20 included a new contract signed in January 2020 with Calvary Health Care to implement a data warehouse across all Calvary Health Care sites.
During the quarter we also signed a contract with Townsville Hospital and Health Service for the implementation of Smartpage. This was won through a competitive tender process and is the first contract for Smartpage in Queensland.
Just after the end of the quarter, in early April we contracted with eHealth NSW to be the systems integrator for their development of what will be a pilot for the national Digital Pregnancy Health Record. This built on our successful partnership with NSW Health on the Child Health Record project.
Murrumbidgee Local Health District (LHD), has elected to continue using the Miya platform for at least a further 12 months, following an initial pilot at Wagga Wagga Base Hospital as part of eHealth NSW’s Proof of Concept challenge. It has initially committed to pay at least $488k for use of the software and some related services through to the end of this calendar year.
Murrumbidgee LHD will roll out Miya MEMRe – Alcidion’s mobile electronic medical record (EMR) – to an additional 300 clinicians and implement a COVID-19 monitoring dashboard for Miya Precision, to enable the monitoring of COVID-19 patients, both in-hospital and remotely.
The findings of the eHealth NSW Proof of Concept Innovation project have not yet been released by eHealth NSW, as its focus is expected to remain on COVID-19 in the short term.
On 1 April, Alcidion announced an extension and renewal agreement with NHS Fife for an additional five-year term for Patientrack, totalling $1.47M over five years.
Cash flow highlights
Q3 saw an overall net cash outflow of $1.2M ($1.8M in Q2). Receipts from customers in Q3 were $4.0M, down 9% vs Q2.
Operating cash outflows were $5.2M in Q3, down 16% on the prior quarter but still including some continued investment for growth in the UK and Australia. Appointments of new staff, including senior sales staff, contributed to an increase in staff costs consistent with plans to further scale-up sales and marketing capabilities.
As at 31 March 2020, Alcidion held $15.9M in cash and cash equivalents including a $7M term deposit maturing in the next 3 months, which was not previously included as available cash.
The related party payment of $259k reported in Item 6.1 of the Appendix 4C relates to the payment of non-executive director fees and executive director remuneration in Q3.
While the COVID-19 crisis has not had a significantly negative impact to date, Alcidion will continue to monitor the potential risks to its business and the broader healthcare market. The business has been able to adapt to a remote working environment without interruption of services to clients, and there exists a strong sales pipeline across all markets.
From a product and customer support perspective, the Company has responded quickly to the global pandemic, incorporating the ability to identify and monitor patients at risk of contracting COVID-19 into Miya Precision and Patientrack.
At this stage, with resilient revenue, a healthy sales pipeline and strong balance sheet, the Company believes it is well-placed to maintain current business operations for the duration of the COVID-19 pandemic, even if some growth plans such as expansion to new geographies need to be deferred in the short term.
Investor Conference Call
Alcidion Managing Director Kate Quirke is hosting a conference call with investors this morning at 9:00am Australian Eastern Standard Time (AEST).
Sydney – 02 9007 4041 Melbourne – 03 9912 0327
New Zealand Toll Free – 0800 452 794
Hong Kong – 800 906 986
Singapore – 800 852 3140
Canada/United States – 1 855 336 4664
United Kingdom – 0808 168 3761
Conference ID: 10005915