Alcidion Group Ltd
ASX:ALC
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Alcidion Group Ltd
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Median results for Q3 FY '23. This is for the period ended 31st of March 2023. So before we begin today, I'd just like to acknowledge the traditional owners and custodians of the various lands on which we work and meet today and to pay my respects to their elders past, present and emerging. I extend that respect to originals and [ tourist right iron of people ] have joined us on the call today.
So today in webinar, we have our Alcidion's Chair, Rebecca Wilson; Managing Director, Kate Quirke; and CFO, Matthew Gepp; and the structure of the webinar will be a [indiscernible] by Kate to cover off the operational commercial and financial highlights, followed by Q&A.
[Operator Instructions] We will endeavor to answer as many questions as possible. And if there are some similar questions, we will group them together. But if there's some reason we do not manage to get to your question, then please, please send an e-mail to me, [indiscernible], or the investor@alcidion. An email address, and we'll come back to you as soon as possible. Thank you very much. And Kate, I will now hand over to you.
Thank you, Hannah, and thank you, everyone, for your time this morning. As Hannah mentioned, I will walk you through a summary version of the investor communications that were lost with the ASX this morning, covering the Appendix 4C for the third quarter, along with the overview of our commercial position and outlook, and they'd be happy to answer any questions thereafter.
During the quarter, Alcidion secured $4 million of new sales in Q3, with [ $2.1 ] million of that recognizable in this financial year. The new sales comprised $2.7 million of recurring product revenue from new product sales, which is around 67% of that and $1.3 million of nonrecurring services revenue, which includes product implementation related to the deployment of our solutions.
At the end of the quarter, we had $36 million of contracted revenue affected to be recognized in FY '23 with a further $0.5 million of scheduled renewal revenue from existing customers expected to be converted to contracted revenue in FY '23, which is 14% up on the prior corresponding period. The Q3 cash resales were $10.4 million, delivering a small negative operating cash flow of $800,000, and we retain a strong balance of $11.1 million as at the 31st of March with no debt.
The company generated cash receipts for the year -- have generated cash receipts for year-to-date which is a month of $29.3 million, up 7% on the same period last year which illustrates the strong conversion capabilities we have in respect of turning revenue into cash by meeting our contractual milestones in terms of delivery of our projects and solutions to customers. We remain confident of the positive operating cash flow of achieving positive operating cash flow in Q4 given our strong contracted and recurring revenue base that we already have. We're comfortable with the count cash levels and then being able to support our ongoing operations. To break that down in a little bit more detail.
As I said, we generated new sales or a million. We're currently expecting $2.1 million of that to be recognized as revenue by [ 23%]. The split there in 67% of it being [ recover ] like revenue at 33% related to services to implement product. And that the cash received from customers was $10.4 million with a negative operating cash flow of $800,000.
[ Point cash ] expenses were consistent with Q2 at around $11.3 million. And we expect that our cost base will level out as we go forward from this point. In terms of cash receipts, I talked about that being $29.3 million year-to-date, and we expect those cash receipts in Q4 will follow a similar growth trend to previous years so it's a strong Q4 in respect of cash receipts.
As I indicated earlier in the call, we stand at $36 million of contracted revenue expected to be recognized in FY '23 with a further $0.5 million of scheduled revenue from renewals, from existing customers, which we will convert in this year. You may remember that, that was around $2.9 million at the beginning of the year. So we have converted the majority of those contract renewals that were planned for resigning and recommission conversion this year. So you can be confident in that additional $500,000. And obviously, that's without any further sales being made in this quarter that could contribute to contracted revenue.
Based on the current debt balance and already signed contracts that we are working on in delivery, Q4 is forecast to be the highest quarter of cash receipts for the year. And we do couple that with the stable cash cost base is expected to result in positive Q4 operating cash flow, which will improve the overall cash position. As I indicated in the update when we released it this morning, we remain very confident about the outlook for us again. However, I did point out in that release that with current delays in procurement timing, specifically around the EPR and the NHS procurement program, which is outside of LCDs control. These timing delays may have an impact on revenue. That will be able to recognize in this financial year, and therefore, we'll have a subsequent impact and we may not be able to deliver the positive EBITDA for FY '23 as intended.
We do currently have the strongest pipeline in our history and we are getting extremely positive feedback from our solutions.
And as such, the outlook for Alcidion remains strong and positive while there are several opportunities progressing positively through the pipeline, the impact of this longer sales cycle, which in most cases is actually caused by staffing issues across health care worldwide.
But particularly in the NHS, combined with the strikes that we've been seeing, as a result of that longer, the impact of [indiscernible] the sale to make challenges in FY '23, would you consider to be a shorter impact and fully expect contracts to continue rolling along as envisaged in terms of our investment in strategic belief in the [indiscernible] for us again.
The level of engagement, which is very important from prospective customers continues to remain high. And the increasing referenceability of our [ Myer ] solution continues to add to our confidence in the [indiscernible] in the last few days, one of our flagship customers now just went live with the last component of the EPR deployment in Myer, which is e-noting.
And basically, this is taking that large paper, the actual documentation, that doctors and nurses do across a patient taking that paper into a digital environment and supporting them in that process. And this is an area which many legacy EPRs have been [indiscernible] acceptance for and there are documented studies that have been done about new of that legacy yards contributing 30% decrease workload from an administrative burden. But our team has actually been up with this customer in the last few days on a site visit or a reference study that -- and we are extremely positive about what we're hearing and the impact that it's having on the day of doctors and nurses and nurses have quoted that [indiscernible] to take them 45 minutes on this shift on the first day use. And for the first time ever, they've left work on time. The junior RMO has completed their ward rounds, that early came together for a coffee to collaborate around some of their patient data. This is the first time that this happened since they started at the trust.
So in an environment where we have doctors and nurses striking because of their working conditions. This is a real well impact our solutions are having, and I can say hand on heart that payback that you will not hear generally when doctors and nurses start using a new electronic patient record. We're asked to document on ironically a whiteboard. The feedback as it been going through using the system. And some of the feedback we've had is I've had more time to care today since noting went live. It has already saved me an hour today. Can someone please check my work this all seems too easy. We will be publishing and sharing this incredible effect and the customer is certainly very happy to act as a reference site for us.
So I think that is very important for us as we continue to look at conversion of the pipeline through the latter part of this financial year and into FY '24. It's fair to say the challenges for being health care are real and here to stay across the world to have not enough staff to treat the current and emerging population leading health care is real and these issues will be the same.
It's not a postcode issue. We are never going to have enough staff to deliver health care. We do it today, especially as we're getting an increasing demand on that health care requirement. I recently heard the U.S. Assistant Defense Secretary, who is responsible for the health of all defense personnel, which means it looks after about 7 million participants, which is about the size of Victoria, South Australia combined. And he is responsible also for the supporting the digital rollout there. And he spoke about digital health needs to address 2 of the key challenges that [indiscernible] and for increasing efficiency in of patients because of the starting issue and in supporting new models of the new training patients. And this is exactly where Alcidion is focused. We look at the ways to increase the flow of patients by presenting information and data about what's holding up the price of discharge. What is it that patients are waiting for before they can actually return home.
By providing solutions like noting that actually reduce the burden of administration and allow more time for care and of course, by supporting new models of care, such as [ petrol ] care and what we've been doing to [indiscernible] . I'm very proud of the impact that technology is making, and I look forward to taking people and more caregivers across the globe.
Thank you for your time, and I'm very happy now to hand over and take your questions.
We do have a few questions that have come in on the chat here and advance on the e-mail. So I'm just going to read the [indiscernible] [Operator Instructions] Okay. So we noticed that you have new customer management announcement. How will the [indiscernible] ?
That is true. One of the [ remaining ] individual names is to have a customer request product, they do not wish to have the amount of money or the products that they're saying necessarily publicized in such way. So obviously, where we had a contractual disclosure climate that is 10% above or so around $3.5 million [indiscernible] and more. We will, of course, once those -- but what we're going to do going forward on a quarterly basis is to identify additional new module sales and the value of those module sales and where they're landing from a geographical perspective. And I think that will provide the information that's required whilst at the same time forgetting the privacy of our customers.
So how long do you expect the delays in procurement time lines to continue? And what will be the ongoing impact on EBITDA?
It's very difficult to say exactly what the timing will be. Obviously, as I said, staffing issues are [Technical Difficulty], but what we have seen in the NHS in particular, is the largest program of work at this kind ever. [indiscernible] was being invested. It is across the country, different piece, different components of any sort of maybe or full PR procurement. And there are processes that they need to go through, starting with the business case, moving into an RFI and RFP demonstrations and then through to contractual negotiation.
And you need staff at all bases, you think you certainly you complete the business case. So we are seeing -- some of the delays is just purely about access, particularly in the time level of staff striking. We got opportunity at all stages of procurement process and more and more being released. But to be an indication of one of the more side layers, we've just responded to one of that's probably in the months behind what published [indiscernible] was.
Now they're all at different stages. There are -- and I certainly expect it to be 12 or 13 months. And before [indiscernible] contracts on through. But so I think obviously is through the next 6 months. I don't think that's going to have an impact on progression of [indiscernible] coming through on contracts, but also...
Okay. So can you speak to the strong pipeline? How do you measure or how do you measure your plan?
Our compatibility about that pipeline for very good incentive. But strongest pipeline can be made a number of ways. And the 3 things I think that are poor overall value. As you would expect, a pipeline over value add and actually plan to be sort of near contracts in place that would have a simple impact in the overall. So we have -- that's also the number of opportunities. So we have a significant increase in number of opportunities and quality of those opportunities in terms of their progression through pipeline. And thirdly, and something that I think is extremely important is that we have that -- those opportunities spread across not being EPRs in NHS, but virtual care opportunities, opportunities for flow and management opportunities [indiscernible] communication.
And we have more and more opportunities to go and get you can to build great -- and so that's a measure on both in quality and the breadth of opportunities.
I think this one may for you [indiscernible]. Does management and the Board have a drive commitment to achieving profitability?
Well, we certainly declare that throughout the fiscal year, and we certainly see the value to our shareholders in reaching that profitability, and it certainly remains an important metric as [ a seat ] being very transit in communicating that at the start of this financial year and absolutely in attention that we would be able to meet that breakeven point, and they're gone beyond.
That certainly remains a focus for the Board and as Kate outlined, we are at a point of in time where timing obviously actual impact in our ability to be able to convert some of the contracts that are in the advanced stages of negotiation beside of June 30. And certainly, they're taking in really hard to get as many of those locked in. But certainly, our [ aim ] remains to be a profitable, resilient, diverse business going to the new financial year.
[indiscernible] question. And it said, it's good to see some of the good feedback from [ SAS ]. But have you received any negative feedback at all?
And what is the process of improvement for those involve?
Because you would not even say yes, of course. But I genuinely have not heard about that from a user perspective. What I think we use -- what more -- how can we speed up pace of further development, moving into new areas and certainly some of them being with the likes of the -- help agents around building [indiscernible] centers that allows them to manage the -- not only the flow of patients, what having the ambulances, what's having with national to bring that together into a centralized area. I think these are some of the areas we want to continue to further remember feedback -- but there isn't a particular area where I say screaming out this is [indiscernible] or issues. It's more about how we can continue the [ growth ].
Okay. I just wanted to follow on from a question a few times. What does the typical average contract time line like?.
You don't actually have a difficult contract timing. And although you can now store contracts have been 3 to 5 years in terms of post-contract, if the remaining what is the typical procurement cycle, again, that will be quite different depending on the sum of the contract. You can understand for the EPR program in the [indiscernible] instead of using the front work contracts, for example, which we've been on for a number of our products and has procurement. I wanted to even playing build for everybody so that all EPR providers are getting the same opportunity to respond.
And as a result, that has lengthened those time frames. But where we've been able to speed up the process everything like selling my observations and might flow directly, you sometimes see those procurements go 3, 6 months. But these EPR program, but at this stage, look at the 6- to 9-month type engagement. And that is up, I wasn't sure if it was procurement or contract that you were after.
That's okay. Cost and what is being done about this?
It's based on the construct that I can't point to instances that we've lost in a head-to-head tender. We have been extremely successful. But not a lot of that business today and has actually been done by [ tender ]. It's done -- some of it by the contracts were alot he U.K. We have not lost in ahead of tender.
We have had 2 customers like a golf at the moment that have moved to implement an EPR who have been using our patient track solution, one in the U.K. and one here.
Because Epic requires their customers implement predominantly fully integrate all of their modules. We have in that instance track replaced. So I would have called that necessarily easy to a competitor, and I haven't given up long term, the fact that we can happily coexist with putting the Miya Precision platform on top of Epic similarly as we do with Cerner in a number of sites around the geographies.
So the issue that we are talking about at the moment has got nothing to do with better competitors is purely about the time.
All right. What are your cash expectations for Q4?
Case presentations, where we may -- [indiscernible] cash receipt quarter for the year to Q4 a year where we picked up $4 million. So just very confident in it in cash flow for Q4.
We've got a few about the Australia, New Zealand market. So I'll combine these, and it is how we've been progressing in Australia and New Zealand. And any current opportunity as digital management in retirement homes.
Yes, I'll add, one second. So Australia, New Zealand we go on to talk about [indiscernible] New Zealand being a bit of a dry well for us in the last 18 months, while they are completely reorganized system out there.
And I'm pleased that in the order we signed our first contract at a national level with [indiscernible], which is the name of the one health for New Zealand health care. So that's fantastic, and I hope that's an indication that activity contracts in New Zealand will start to flow again. Having said terms starting perspective and a bit of post bit what do we do to that too. So we're very focused in Australia and on virtual content challenges in both efficiency and new models of care. We were recently headlining our virtual care conference in the last week or 2, presenting what we're doing within the Local Health District.
And our work cost flow with North and Western in Victoria about to go live a new version starts to really solidify our referenceability market as well. So very pleased with the progress in Australia and New Zealand, although, again, it's possibly been slower than we would have anticipated doing just [indiscernible] start.
Okay. How is Australia going to take on larger contracts that seem to be held by the incumbents? What is the point of difference in the Miya software versus Epic software?
Good question. In respect to -- I think I touched on it when I was talking about the feedback from South takes. So we position ourselves as a modular [indiscernible]. So the speed to value is one of our differentiators is that you can start to implement our modules very quickly and get response out of that -- now one of the things in the [indiscernible] fascinate and you speak to the staffing issue that we're seeing energy and health care is the -- limited.
The small number of FTE that they have actually had to deploy to get to where they are and I understand that it seemed to be sort of 1/3 of what some of those [ Ludger ] EPRs are actually requiring in that test. And as you marry staffing challenges with an ability to deploy quickly and more readily than the business case of what can is doing starts to become compelling in that market.
So I think that is differentiated. And the other of us. And again, it comes out its feedback in Southeast. We have taken a user experience first approach to our founder, were very always -- very focused on ensuring that we support critical care and the way lines deliberate, and I think that's going to demonstrate increasingly as we deploy things like noting. And I think also our market is not to displace Cerner and Epic. We are, in fact, focused on winning those EPR opportunities that are more interested in maintaining the investment they've already made in certainly same [indiscernible] Cerner or in the [indiscernible].
But what we have demonstrated and are continuing to do so is our ability to sit on top of Cerner and Epic and provide for those bad clinical workflows and clinician [ incenses ] on top of those existing platforms. And that's, I think, also a significant market opportunity for us.
All right. I think another one here for you, Matt. So it says staff costs are approximately 72% of your revenue. Is there a point where staff costs come down? Or is it likely to continue to be a major expense?
[indiscernible] actually, in staff cost as a percentage of revenue, it's something that we track and at its better low as we've seen in the past.
Of costs at all are not expected to come down the relationship and staff costs and revenue, though, should come down in the future, and that goes through our efficiency as this is us being able to generate more revenue from last half. So no, the [indiscernible] won't come down. We're not looking to cut back on staff. The goal is to grow the revenue and have the staff in place to deliver.
And I would just add to that, that we are very focused on these timing issues and that -- it's important from a referenceability perspective that we are able to deliver [ intertial ] commitment to customer and have the staff basins that has successfully deployed these contract hand. If we were to reduce staff at this point and then in 2 or 3 months' time, actually need to be moving into emission pays that lever sorts. The only reason was to cut costs and staff would be if we had no content in the future contract revenue [ for ] in that.
Okay. Kind of linked to that question, and it is how focused is asking on cost control. Is anyone there's no accidental waste fall spending?
Well, I think that everybody's job certainly in the senior leadership team and myself. We run what I would consider a lean organization in respect of how we -- the sort of success that we've been able to distribute from customer's feedback. It is important to may maintain cost and do maintain a focus on cost. Sign of of all travel needs to come from me, [indiscernible] count needs to come through me. People cannot actually hire new people without net in the budget.
And so I think we're very focused on it across all organization and having come from a privately owned company before I came into Alcidion, I understand the import is striking the right balance between cost control and ensure that we can grow the business. But we are certainly in a waste for what we do.
Okay. And I'd be interested to hear how much of our customer is it or required by customer once the...
Yes, we don't provide individual software conditions. So one version of especially across the customer in all agri, don't even have separations for the U.K., Australia and New Zealand, and we all provide their possible tools.
So we're very focused on what's going on so that the customers can actually build their own in not in special challenges in terms of the data that's being presented, we certainly do not do customization unless it's something that is going to be a value to the whole of the customer base as to deploy across whole product.
Financial one here, Matt. It says $5.6 million to [indiscernible] disease from invoicing.
Going $5.6 million of delayed receipts in Q2, we did to the January. And it was a [indiscernible] Q3. And [Technical Difficulty] Q4. So I have a normalized cash order, I think, the $5.6 million, I don't recall that.
Well, are you expecting your [indiscernible] account?
I think we should just as we do to [indiscernible] in a day, we're very confident that our support ongoing operations and taking the cap rate.
How information for gross [indiscernible] ?
It's progressing as planned as anticipated in have been met, and I think that to go live for the whole year the next couple of months. So it's a...
So this one is from the same gentleman who asked about the client. He said without discussing specific numbers, are you able to give us a percentage number or how much you get the pipeline issue versus the same time?
Like you have information at [indiscernible] I mean but I'll have that information at hand.
Okay. Also was able to interact -- all right. So how long is the quick delivery time to meet the first revenue recognition? Maybe if you contracted side, especially in the U.K?
Typically be very short because the fit contract mostly implementation of the software into our environment and access in that usually often within the month contract [ bank line ].
Further to a previous question as well. If you've got a customer that uses an alternative provider such as, can you integrate into them. Do you see that as an additional risk that you may lose to the customer?
Obviously, it's a potential that we keep a mindful watch on, particularly the people that buy Epic are the very large health engagement such as in the U.K., it's Canrig, Manchester and some London [indiscernible] and they're not typically the ones you patent act all the manager work. So I see less of a risk, I think they're much more -- the current patent sites are much more opportunities for us, for the Alcidion platform from a modular perspective.
However, it is worth noting that [ East Bank ], which is about to go live with Cerner, which is part of the [ LANX ] ICS, have, in fact, required that certainly integrate 2 patient. They chose patients won't even in existing use this page to track as the nursing observations or my observations and assessments module. So we are integrating to Cerner in that engagement, and that is going to go live in June. And I think will be a brilliant [indiscernible] .
Okay. So the one -- and I think it's resets -- you mentioned states early on, and it's a breakable of the efficiency that Alcidion bring?
Other hospitals recognize is and I'm able to use as or other sites as referenced display the entity on that day that all when sites that Southhaven been very positive.
The price business being held this with, in fact, the person leaves the EV program for the NHS.
So that he was there to see this positive feedback. And we had a number of other sites, not just in Southeast is reference for us as well, not only in the U.K. but in Australia.
Okay. As a clarification from an earlier question about the typical contract time line. It was referring to the average or typical length of contract rather than the procurement process.
On average, 5 years -- that the trust.
How do you see your solution interfacing with and being efficient to aged care? What's the patient transfer here?
And one that we're very mindful of and watching things -- one of -- there's 2 key contributors to just blockage or bed, lot where people are not being able to be discharged apart from things to go on in a hole and then is being for aged care and way NDIS are -- and so the ability to integrate with some of the aged care providers and home care providers, and be able to see streamline that move -- that flow of patients from the hospital set into both types of engagements is excellent. And I think that the capacity to do that integration is there now. Long term, I also think that the virtual care monitoring of patients in the high, could also potentially be extended into monitoring in ag facilities where they do have necessarily, not always have the depth of clinical expertise that the hospital may have.
So I think there's lots of opportunities to better integrate what we're doing with the age care sector.
We have one final question. It says, have you reached any guidance on approximate revenue in order totality?
Not receding guidance as opposed to multiplying out the operating expenses by 4 evenly on indications that.
Right. Thank you. That's all the presentation for today. If anybody else does have a question, please e-mail, we'll come back to you as soon as we possibly can. And Kate, do you have any remarks before we close?
Other than to thank my fellow colleagues on the call for attending today to thank you shareholders for your continued support. I remain open to respond to any questions that you have, and I hope we've been able to address those [indiscernible] today. And thank you for your continued interest and support to us.
Thanks so much Kate and thank you, everybody, for joining us this morning. Goodbye.