Release Date: February 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Increased forward five-year revenue to $126 million, providing long-term financial stability.
- Gross profit margin improved to 88%, driven by a favorable product mix.
- Signed significant contracts, including a $23.3 million extension with South State, with potential to extend to $54 million.
- Continued product innovation with new modules like My Emergency and My Results Tracking, enhancing healthcare efficiency.
- Strong cash position with $7.9 million in cash and $7.3 million in trade receivables, ensuring liquidity.
Negative Points
- Revenue growth impacted by significant procurement delays and budget constraints in the healthcare sector.
- EBITDA loss of $2.9 million due to increased headcount and operating costs.
- UK revenue decreased by $700,000, reflecting procurement delays and focus on large EPR contracts.
- Cost base reduction of $6.4 million required, including headcount reductions, impacting staff morale.
- Uncertainty in the timing of large contract awards, affecting short-term revenue and cash flow projections.
Q & A Highlights
Q: What was the catalyst for increasing your cost cutting and what sort of cuts are you making and how sustainable is this?
A: Absolutely. We've made the careful consideration has gone into it so that we can be sustainable. And we have looked where the business may have redundancies and some of that may be middle management. Some of it may be as a result of having implemented systems that can automate some of the processes that were being done manually. And we also, as I said, have come to the end of a large part of the delivery for the Australian Defence Force program of work. And we did add, I think some 13 heads in order to address that. So there's a combination of areas from which we've been able to draw. The Catalyst has been really, as I said, and I think I indicated as much as the second quarter that we would look at it come February what the forward revenue projection would be for this financial year. And with that, I'm tenders that we anticipated. And I'm not talking about the electronic patient record attendance here, but the tenders from other areas that we're progressing, whether they would land in this financial year and if they do I think they're going to land towards the end of the financial year and therefore, one could see that revenue and cash were going to be impacted. So I think it was a combination of looking at the business and understand that we could run it more efficiently, but also and that it was important to adjust the cost base at this point in time, I fully believe that the adjusted cost base and can support a much higher revenue multiple as we go forward, mainly because of those efficiencies and processes and systems, we are no longer anywhere near start-up or scale-up. We are now a business that is mature and is running mature processes to support our customer delivery where it fits very much.
Q: As the NHS financial year ends on the 31st of March, is that historically much activity prior to year end? And does that impact the timing of any contracts awarded in H2 of this financial year or FY 25?
A: And historically, correct, there is activity at the end of March and and I think there will still be some activity. But the APR contracts, as I have said in previous calls, have really had an impact on the total procurement landscape in the NHS. So that people have stopped looking at what they're doing in smaller procurements and have focused on how they can extract funds from NHS England. And in order to do that, they need to go through the IPR process and the IPR process takes its time. We also know that the funds for the electronic patient record program have been moved out of this financial year substantially. So it does impact the timing. And it has certainly meant that this year has been a an unusual one in respect of all of the other modular activity that we would usually say, coming out of the UK and I do expect that there will be contracts awarded and obviously, the data one is going to be of a reasonable size for us and we'll have some forward cash associated with it and then maybe some other and some of the contracts of that nature. But we would not expect any of the APR contracts that we are involved in to impact this financial year's revenue for us.
Q: What, if any, have you budgeted for costs of entering new regions? And what does that commercial timeframe per client?
A: We have been looking at new regions for some time now and there is many ways in which you can choose to enter new regions. Some of them is about going and setting up and you're eyeing companies such as we did in the many, many moons ago with us an entry into the U.K. with patient track. Others is around looking at partnering with people who or companies that are already in situ way. They're offering may inherently our offering may enhance the offering, and that is a far less expensive way and a way in which to test your on your offering in new markets. So at this point, we're not budgeting any significant costs associated with entering new markets, but certainly are starting to look at Canada, which I've obviously looked at and I've spoken about before as a very viable market entry point for us that we will potentially choose to partner with someone and maybe have somebody on the ground in a contract sort of basis that can advise us without having to necessarily set up an entire sharp are into until we start to demonstrate traction.
Q: Of the $200 million TCV you're tendering for, is that mostly contract expansions with existing sites or new trucks? And what percentage split is there between big EPR projects versus smaller modular additions?
A: Look, the part that the take-or-pay contracts we're going after is actually larger than $200 million. That $200 million is really what the value is of the APR UK contracts that fairly sizable. And but if you look at our pipeline at the moment, it is a combination of some APR contracts there on modular, a lot of modular and flow opportunities and virtual care opportunities amongst our apartments or what the tenders that we are currently going forward, that would be a mix of electronic patient records as well as the small and modular plays around flow observations and virtual Okay.
Q: Did Alcidion lose any tenders to competitors during January or February?
A: No, we did not. And due to the revenue weighting on the second half of each financial year will another capital raise be needed to survive future years. We are not planning on having to do a capital raise. Obviously, adjusting the cost base has been done with the full knowledge of what the cash while our future revenue projection is at this point in time, and we will be managing the business to that forecast revenue.
Q: When a patient is discharged in Australia and they become eligible for At Home Medical Review, what role do we have in this? And is this something that we are wanting to build?
A: No, that I mean that is not currently the market we're targeting. You'll find that that's probably fairly high volume, low margin type business. Typically where we are focused is on the hospital using solutions such as ours to manage the full patient engagement, including all of their BiDil Funds Management and connection patient who would normally or otherwise be taking up a hospital bed, but the interest saving that care instead in their own time.
Q: What is your level of confidence in the renewal of contracts which are ending in the next 12 to 18 months?
A: Well, historically, the renewal rates are very high with negligible customer churn as I indicated, and we obviously look at each contract on a case-by-case basis as to whether there are in there are instances potentially where a UK customer may have chosen an electronic patient record that we didn't bid for, and there are many of those, and that might be replacing one of our modules. So we obviously look at that in the overall forward projected revenue. But
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
