Alcidion Group Limited (ASX: ALC) today released its Appendix 4C for the three-month period ended 30 September 2020 (Q1 FY2021) and the below business update.
- Strong start to FY2021, with $4.8M new contracted revenue sold in Q1 – up 30% on previous quarter and up 92% on Q1 last year;
- Total contracted revenue to be recognised in FY2021 stands at $14.7M at end Q1, up 14% on Q1 last year;
- Cash receipts from customers were $6.4M in Q1, a 34% increase on Q1 FY20;
- Net cash outflow of $1.2M, reflecting ongoing investment in growing the business with cash reserves of $14.7M at end Q1;
- Significant contracts signed or announced since 1 July 2020:
- Sydney LHD –12-month contract for Miya Precision to support COVID-19 virtual care
- Murrumbidgee LHD – 12-month contract for Miya Precision platform including Miya Memory
- NHS Lanarkshire – 5-year agreement to implement Patientrack across board
- ACT Health – 2-year extension to long term integration support contract and further project work
- Queensland Health – additional work on the Referral Services Directory(RSD) platform
- Lancashire Teaching NHS Trust – 5-year Smartpage contract
- Panel contract with Vic DHHS for implementation and support of the Victorian Hospital Incident Management System
Alcidion Managing Director Kate Quirke said, “I am pleased with the strong start we have made to the new financial year. It has been an important sales quarter in Australia, where we signed initial contracts with significant potential for future expansion. In the UK, our expanded presence within NHS Scotland and appointment to the Clinical Communications Procurement Framework for Smartpage are already demonstrating value, as evidenced by the NHS Lanarkshire rollout and the Lancashire Teaching Trust contracts. These are important steps forward as we accelerate growth in this market.
“Furthermore, our rebranded Miya Precision product offering and UK marketing activities undertaken in Q1 bode well for us in FY2021, enabling our products to better align with how our customers are implementing digital health solutions.
“While COVID-19 continues to challenge healthcare providers, particularly as the UK experiences a new wave of cases, the operating environment has stabilised overall, as healthcare providers now have protocols in place to manage cases and are returning focus to digital health initiatives placed temporarily on hold. Through this, Alcidion has delivered strong sales growth, with new contracts added this quarter representing a 30% increase on the previous quarter, and almost doubling sales performance from the previous corresponding period. This reflects the growing recognition that Alcidion products provide critical support to clinicians and patients across our markets as well as demonstrating early returns from our recent investments in growing our sales capability.
“We continue to scale up our sales, product implementation and marketing capabilities to accelerate growth in all markets, as healthcare undergoes unprecedented digital transformation. Investment in these areas will remain our focus throughout the financial year to support further growth and firmly establish Alcidion as a leading provider of digital healthcare solutions in this rapidly growing market.”
Reclassification of recurring and non-recurring revenue
The Company advises that, commencing Q1 FY2021, it has adjusted the classification of recurring revenue to include all product licence fees. Previously, while annual licence fees and subscription fees were classified as recurring revenue, upfront fixed-term licence fees, which comprised a smaller portion of product revenue, were classified as non-recurring revenue.
As churn in all product customers is negligible and customers paying upfront for initial fixed-term licences nearly always continue licensing the product on completion of the fixed term, the Company has reclassified fixed-term licence revenue as recurring. This is consistent with how recurring revenue has been explained in the FY20 full year investor presentation.
The change in classification resulted in newly contracted recurring revenue in Q1 being $269k (3%) greater than would otherwise have been previously reported.
During the first quarter, Alcidion signed new contracts and renewals with a total value of $4.8M, a 30% increase over the prior quarter and 92% higher than Q1 in FY2020. Of this new revenue, $2.1M will be recognised in FY2021.
At the end of Q1, total contracted revenue able to be recognised in FY2021 was $14.7M, a 14% increase versus FY2020 contracted revenue at Q1. Of this, $9.9M is recurring and $4.8M is non-recurring revenue.
The revenue split between products, implementation and services is as follows:
For FY2021 and the next five years to FY2026, total contracted revenue is $32.8M, with $27.7M recurring and $5.1M non-recurring revenue.
As described in the July 2020 business update, the following significant contracts were signed in early Q1 and announced to the market in July:
- Sydney LHD – $0.56M 12-month contract for Miya Precision to support COVID-19 virtual care
- Murrumbidgee LHD – two initial 12-month contracts for the continued use of Miya Precision and Miya Memory at Wagga Wagga Base Hospital, as well as for COVID-19 monitoring in and out of hospital with combined value of $0.7M.
- NHS Lanarkshire – $1.52M 5-year agreement to implement Patientrack across board
- ACT Health – $1.32M 2-year extension to long term integration support contract
Other new contracts signed in Q1, but not separately announced, included:
- ACT Health – $0.42M of further project work
- An NZ DHB – $0.14M extension to a Patientrack support contract.
- Queensland Health – $0.30M additional work on the RSD platform
- Lancashire Teaching NHS Trust – $0.24M 5-year Smartpage contract
Alcidion was appointed as a supplier to the NHSX’s £3M Clinical Communications Procurement Framework, a new procurement vehicle established to support NHS Trusts phase out pagers by the end of 2021. The NHSX is a joint unit bringing together teams from the Department of Health and Social Care and NHS England and NHS Improvement to drive the digital transformation of care. The appointment allows NHS Trusts to quickly and easily procure Alcidion’s Smartpage solution without the need for tendering. Smartpage has had continued success over the last few months, with a new sale to Lancashire Teaching in the UK, and positive clinical communications outcomes achieved with ACT Health, Nelson Marlborough District Health Board, Counties Manukau District Health Board and Townsville Hospital and Health Service.
In addition, Alcidion signed a contract with Victorian DHHS as one of two suppliers able to provide implementation and support services to deploy the Victorian Health Incident Management System (VHIMS) across the state. The VHIMS has been developed to improve the quality and consistency of incident data reported by health services, and all health services must comply with the minimum data set by July 2021. Alcidion and one other provider have been appointed to the panel to work with the potential 86 Victorian public health services that have elected to implement a local instance of the system. Health services can select the services that require from a catalogue that covers implementation, onboarding, support, hosting and development service options.
In Q1, Alcidion repositioned its product suite to better align with how customers are implementing their digital health strategy. This results in more product capabilities falling under the flagship Miya Precision banner, which now consists of sixteen individual modules that can be purchased according to the customer’s needs.
Cash flow highlights
Cash receipts from customers were $6.4M in Q1, a 34% increase on Q1 FY20.
Overall, Alcidion’s net cash outflow during the quarter was $1.2M. This was in-line with the Company’s expectations, with contributing factors including ongoing planned investment in scaling the business, higher than normal payments to suppliers of resold products and services, and payments of annual performance bonuses to executives and staff.
At 30 September, Alcidion’s cash reserve was $14.7M.