Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Alcidion Group Ltd (ASX:ALC, Financial) reported a 6% increase in annual recurring revenue, highlighting the company's ability to maintain a steady revenue stream.
- The company successfully reduced its EBITDA loss in the second half of FY24 to approximately $600,000, showcasing effective cost-saving measures.
- Alcidion Group Ltd (ASX:ALC) secured significant new contracts, including a 10-year term with North Cumbria Integrated Care NHS Foundation Trust, valued between $30 million and $40 million.
- The company has a strong balance sheet with $11.8 million in cash and improved working capital, setting a positive outlook for FY25.
- Successful deployments of new modules and solutions, such as the emergency department module at Hampshire Hospitals Trust, demonstrate the company's capability to innovate and meet customer needs.
Negative Points
- Full-year revenue for FY24 was $37.1 million, down 8% from the prior year, indicating a challenging market environment.
- The company reported an underlying EBITDA loss of $3.4 million for the full year, reflecting financial challenges.
- Slower-than-expected market activity in the first half of FY24 impacted overall performance, necessitating cost reductions.
- Implementation revenue decreased due to lower sales activity, affecting the overall revenue composition.
- The company faced challenges with some contracts, such as the delayed deployment of the emergency department module at University Hospital Southampton.
Q & A Highlights
Q: Will management consider a debt facility for a rainy day?
A: At this point, we are comfortable with our reduced cost base, revenue pipeline, and solid cash position, so we do not see a need for a debt facility. Debt facilities come with costs and impose constraints on the business, so we would remain open but do not see it as necessary at this time. - Kate Quirke, CEO
Q: Are any existing SilverLink sites being upgraded to Miya Precision?
A: The first one will be North Cumbria. We have another site running PCS in the cloud, but they haven't moved to Miya Precision with the new front-end yet. We continue to look at this opportunity within the context of EPR deployments. - Kate Quirke, CEO
Q: Is Alcidion looking at opportunities in Canada or India at the moment? Can our software be easily implemented in those jurisdictions?
A: We have done some work on checking the applicability of our solutions in Canada and India. There is no additional work needed from a software perspective. We continue to explore opportunities in these markets and others, having dialed back market expansion focus in FY24. - Kate Quirke, CEO
Q: What are the opportunities and threats presented by recent advances in generative AI, and how is the company addressing these?
A: Generative AI presents exciting opportunities in clinical decision support, personalized medicine, and drug discovery. However, it is critical to understand potential threats such as explainability, security, privacy, and accuracy. We are well-placed with our standardized data platform to support algorithmic deployment and are exploring ambient intelligence to support clinical documentation. - Kate Quirke, CEO
Q: Can you provide an update on the UHS contract? Have any extension options been taken up since December '22?
A: UHS has been slower in deploying the ED module than initially planned. We are meeting with them next month to discuss the order of deployment. No additional options have been taken up yet. - Kate Quirke, CEO
Q: Can you break down the contracted revenue for future years of $130 million into the revenue categories you are now reporting?
A: For the most part, the $130 million represents annual recurring revenue. There will be implementation revenue in FY25, but past FY26, we do not have visibility of implementation revenue. - Matthew Gepp, CFO
Q: How much interest have the excellent Alfred Health results generated from other services in Victoria and other states?
A: The results have generated a lot of interest and enthusiasm. We have presented these results at various conferences and have had many new connections wanting to discuss them further. We also use these results to help customers with their business cases. - Kate Quirke, CEO
Q: With Will Smart being a non-executive director of Great Western, will this represent a conflict of interest or create potential issues?
A: We have reviewed Will's formal appointments and relationships and determined there is no conflict. His relationships in the UK market are seen as a benefit to us. - Rebecca Wilson, Chair
Q: Will we expect Q4 2023 labor cost base of $6 million to $6.2 million to be impacted by salary increases for FY25?
A: We are working on salary increases in line with CPI, which will have an impact but not significantly alter the underlying cost base. - Kate Quirke, CEO
Q: How is the Board holding itself and management accountable for the execution of the long-term strategy?
A: We have KPIs in place for both the executive team and the Board. There is a gated process for DSTI, where if minimum financial goals are not met, 70% of any available bonus is not paid. This occurred this year. We balance recognizing important elements for future success with acknowledging underperformance. - Rebecca Wilson, Chair
Q: How can you be confident that the year ahead will be a more positive one?
A: We start FY25 with a stronger balance sheet and better working capital. We expect additional contributions from North Cumbria and historical new revenue figures. Combined with increased sales activity and adjusted cost base, we are confident of achieving at least a small EBITDA positive result. - Kate Quirke, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
