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Alcidion H1 FY2021 Results – Strong half year sales driven by strategic contract wins

Highlights:

  • H1 revenue of $11.1M, up 36% on the prior corresponding period (pcp)
  • Gross profit of $9.8M (88.1% gross profit margin), up from $7.1M (87.4%) pcp
  • $17.4M contracted revenue added in H1, up 190% pcp and representing one of Alcidion’s highest half year sales to date
  • Contracted revenue to be recognised in FY2021 increased to $21.7M, a 17% increase on FY2020 full year revenue with further six months remaining
  • A further $23.0M of sold revenue to be recognised over next five years from FY2022 to FY2026, with $22.4M of that being recurring product revenue delivered at 85%+ margins
  • Cash reserves of $12.5 million at 31 December 2020
  • Milestone contract with South Tees NHS Trust valued at $11.3M over five years

Alcidion Group Limited (ASX: ALC) today released its financial results for the six-month period ending 31 December 2020 (H1 FY2021).

Alcidion Managing Director Kate Quirke said, “This period was important for Alcidion. The continued uptake of our product suite and strategic headway made with key customers in our UK and ANZ markets positions us favourably for a solid second half.

“The official launch of our flagship Miya Precision product suite in the UK built on our existing market presence and saw our customer base expand as we signed our largest deal to date with South Tees NHS Trust. Patientrack and Smartpage continued to open doors for new customers in the UK.

“Despite the pandemic remaining a challenge for healthcare providers globally, we are still seeing a demand for investments in digital healthcare solutions, particularly in the UK where government-led investment in digital transformation remains a strategic priority.”

“Our strong performance in H1 is an important validation of our investments in scaling to drive growth. As we complete our investment phase in FY2021, we expect to see continued acceleration in revenue while our cost base stabilises,” Kate Quirke concluded.

Financial

Alcidion delivered revenue in H1 FY2021 of $11.1M, a 36% increase on H1 FY2020.

H1 FY2021 was one of Alcidion’s strongest sales performances to-date adding $17.4M in new sales revenue (up 190% pcp) and increasing total sold revenue able to be recognised in FY2021 to $21.7M, 17% higher than FY2020 full year revenue with six months of the year remaining.

Of the $21.7M contracted to be recognised in FY2021, $14.0M is recurring and $7.7M non-recurring.

Alcidion also has a further $23.0M of sold revenue to be recognised over next five years from FY2022 to FY2026, with $22.4M being recurring product revenue expected to be delivered at gross margins consistent with current levels of 85% or higher. Whilst not factored into the above calculation, Alcidion is confident of renewing or continuing to roll a significant portion of current customers that may have a contract expiring in the next 5 years.

Alcidion’s gross profit[1] for H1 was $9.8M compared to $7.1M pcp, representing a gross profit margin of 88.1% compared to 87.4% pcp.

EBITDA for H1 FY2021 was a loss of $0.9M, a 47% improvement on the $1.6M loss pcp. The investment phase in key areas of our fixed cost base – sales staff, IT and HR – is now largely complete, albeit H2 will incorporate the full-year impact of investments made in H1, which will result in a stabilisation in the cost base going forward.

H1 FY2021 cash receipts from operations totalled $10.8M, a 17% increase on pcp. This result excludes a payment of $3.0M relating to the South Tees contract, which was received in the first week of January. Cash reserves remain strong with $12.5M cash at 31 December 2020 and further bolstered in January by the receipt of $3.0M mentioned above.

Operational

Significant contract wins included a milestone contract and extension with South Tees NHS Foundation Trust for Miya Precision, OPENeP, Smartpage and services, valued at $11.3M. The contract represents Alcidion’s largest ever Miya Precision contract and makes South Tees the second UK customer (after Dartford & Gravesham) to implement Miya Precision.

Additional sales milestones included strategic Miya Precision contracts with Murrumbidgee Local Health District and Sydney Health District in Australia and a five-year $1.5M agreement with NHS Lanarkshire to implement Patientrack across the board. The period saw important headway made with Smartpage in the UK, following its appointment to the NHS £3M Clinical Communications Procurement Framework in August 2020. A full list of significant contracts signed can be found in the Managing Director’s Report.

Operationally, the Company’s focus has been on scaling the business in preparation for rapid growth and to capitalise on the rising market opportunity in UK and ANZ as the shift to digital healthcare accelerates.

In H2, the Company expects its sales pipeline to remain healthy as health IT procurement returns closer to normal now that healthcare providers have established protocols to manage COVID-19 cases.

Investor webcast

Managing Director Kate Quirke and Chief Financial and Operating Officer Colin MacKinnon will host a live conference call and Q&A via Zoom this morning at 11:30am Australian Eastern Daylight Time (AEDT).

Investors are invited to register for the webcast at the following link:

https://us02web.zoom.us/webinar/register/WN_WsSKA1yrQ-a5mXgkFn-fdw

Registered participants will receive a confirmation email containing the Zoom access link and alternative phone dial-in details.

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[1] Changes have been made in the classification of Cost of Sales expenses since 1 July 2021 to align with industry practice and reporting by other listed software companies. FY2020 comparative has also been reclassified to reflect this change. Please refer to the Managing Director’s Report for further information.