Alcidion Group Ltd

ASX:ALC

Earnings Call Transcript 2020-Q4

[Sam Sinclair]

Good morning, everyone, and welcome to Alcidion's quarterly results investor webcast this morning, hosted by Managing Director, Ms. Kate Quirke. So before we begin today's webcast, we'd like to first advise several things. First of all, this webcast is being recorded. [Operator Instructions]. Today's webcast will feature a presentation from Alcidion's Managing Director, Ms. Kate Quirke, followed by a Q&A. [Operator Instructions]. I would now like to hand over to Ms. Kate Quirke, Managing Director of Alcidion.

[Kate Quirke, MD, CEO & Executive Director]

Thanks, Sam. Good morning, everyone, and thanks for joining us early on a Monday morning for an update on Alcidion's operating and financial performance for the fourth quarter of the financial year 2020, covering the 3 months until the 30th of June '20.Today, we'll be referring to the appendix 4C quarterly cash flow statement and the business update that was released to the ASX this morning. With me on today's webcast is Alcidion's Chief Operating Officer and Chief Financial Officer, Colin MacKinnon. After the presentation, Colin and I will be happy to answer any questions you have, as Sam has indicated. I must say I'm very pleased to be, being able to do this from the office this morning being based in Melbourne. I'm in pretty serious lockdown at the moment. But thought if we were doing a call, it was probably a good idea to be away from barking dogs and home school children, so an opportunity for me to get out of the house. I'm looking forward to taking you through today, detail of our activities during the fourth quarter and a business update during what's been a challenging time for everyone across the world, of course. And I do hope all our shareholders have managed to remain safe and are coping with the challenges that this pandemic is presenting to everyone. And there's no doubt it's created pressure for businesses and indeed, for health care providers, particularly. And that's created an interesting dynamic in our market. COVID-19 has no doubt highlighted the benefits of our technology. And as I talked through the update today, I'll give you a couple of examples about where our technology is being deployed, particularly to help with COVID. And we're also conscious that the health care providers, especially hospitals that are dealing firsthand with this pandemic and the impact of it and needing clearly to prioritize acute care delivery over some of the decision-making and the projects that we're working on. So at times, it has meant that resources have had to be deployed rapidly to what we would call in the front line, but I believe now we're calling the last line of defense. And in some cases, that's meant diverting staff away from our projects or project delivery. And I think I referred to that potential back in the first quarter -- in the fourth quarter -- in the third quarter update. And I think that's really important to keep in mind. And the knock-on effect of that is obviously that some of our implementations and also some major investment decisions by our customers are being delayed. And to some degree, as you would expect, the business has been impacted by that. We reported last quarter some delays to projects, as I said. And in some cases, we're seeing some of those decisions being dragged out over the quarter. And you'll note that we have announced quite a few new contracts in the first month of this quarter. And that is potentially some of the impact that we're seeing some decision-making taking longer than we might have anticipated in a non-pandemic world. But despite that challenging macro environment we have, I'm very pleased to report that we've delivered a healthy sales performance and growth in the final quarter and in the financial year overall. We've responded very quickly to adapting our solutions to support the critical needs of the hospitals that we're dealing with, including the development of the COVID assessment for patients at the bedside. We've enhanced the risk indicators in Miya Precision. We've been working with a couple of our sites, monitoring vital signs of COVID patients real-time in the hospital, but also in the remote setting away from the hospital.We've made several enhancements to Miya Precision and patient track platforms to help hospitals meet all of these new demands that are on them. And as you'll see in the update I go through today, we've also included the -- there's also increasing demand on our highly skilled team of data analytics and integration specialists. And so we've also seen increasing revenue from -- with respect to our services business as our customers are needing that support and assistance during this time. We continue to see evidence of a growing market opportunity for Alcidion and our products, both in the short-term as we help customers with the COVID-19 situation, and in the longer term, as hospitals are increasingly realizing the benefits that technology like ours can bring in the management of risk, improving safety and, of course, in managing hospital resources. Before we jump into a few slides, just to outline the financial performance in more detail as per we released in the appendix, I thought it would be good to start giving you a little bit of an overview of our sales achievements in the fourth quarter and in the period right up until now, which obviously extends a month or so beyond the end of the first quarter -- fourth quarter. During the fourth quarter, we signed new contracts and renewals with a total contract value of $3.7 million. This included a 5-year Patientrack extension signed with 1 of our longer service customers, NHS Fife. And that was to extend Patientrack across the entire health board that have been running 1 of their hospitals, and there will be a minimum of 10 hospitals. The total contract is -- values around $1.47 million over 5 years. And what was really pleasing about this is we moved from a contract that had been annually renewed each year for some time to a fixed 5-year term renewal. So we've now got that committed recurring revenue coming in from Fife. And what's also really pleasing about Fife as a customer, is that they have popped on studies and published data on the impact that Patientrack has had on positive outcomes for their patients. And the more we see our customers creating that evidence base for us, the more beneficial that is to further uptake of our solutions. Subsequent to that deal, in Q1, just last week, we recently announced a deal with a second NHS Scotland board, NHS Lanarkshire, which resulted in a $1.52 million 5-year agreement to deploy Patientrack across their entire health board. Initially, with this one, we've deployed Patientrack on a pilot based at the University Monklands hospital in 4 wards. And that was to support this hospital's digital hospital initiative. And then during the COVID pandemic Phase I, a fifth ward was added to pilot our -- the COVID-19 assessment tool. And the resulting agreement that we signed last week will see Patientrack rolled out across its 3 compute hospitals. And the network of community hospitals that they have. What's really significant about this one. It will also be deployed at NHS Lanarkshire's command center, a new central command center. And this aggregates data into a central place. So clinicians can view what is happening across all of their hospitals in terms of patient activity. And for us, that's an exciting next step in terms of our engagement with this particular board, but it also highlights the importance that -- of the role that Alcidion products are playing in supporting NHS Scotland's digital ambitions. And with the command center being something we're seeing spring up in a number of hospitals globally. In Australia, we've continued to see -- I might just move my slide over. In Australia, we've continued to see demand for our solutions in supporting COVID-19 patient monitoring, for example, especially in the remote and virtual care setting. Just -- many of you have probably heard discussions around virtual care and telehealth in the last few months. Virtual care is a rapidly growing health care trend globally. And we're really proud of the capabilities we've built into Miya Precision platform to enable this. We've been very agile, very responsive in being able to do this. And that's 1 of the real strengths of the Miya Precision platform, is that it is set up for us to be able to deploy these very agile case solutions for use of our technology. In the last quarterly, we reported that Murrumbidgee Local Health District had elected to continue using Miya for a further 12 months, and they wanted to extend the focus to looking at remote and in hospital COVID monitoring. And this followed the use of Miya Precision at Wagga Wagga Base Hospital as part of eHealth's New South Wales innovation challenge, which you've heard me talk about before. So the customer had committed to a further 12 months of use in working with us to continue to roll out the capabilities of Miya Precision, then COVID came along and we increased the focus to look at that. And that is why there are 2 contracts related to the first initial 12 months. So that arrangement with Murrumbidgee continued through Q4, and we're pleased to report that the initial contracts were signed and announced in July for confirming what the final contracted scopes would be for that first 12 months. And that actually commenced back in January. Included in the contract is the implementation of the monitoring dashboard from Miya Precision, which Murrumbidgee is using to monitor patients who have tested positive for COVID-19, both in hospital and isolating at home. And additionally, they've also rolled out Miya Memory, our mobile EMR platform that sits off Miya Precision and pushes all of that EMR data out to the doctors and nurses on their phones. So we're up to 200 clinicians are going to be using that to access test results, real-time risk indicators on their own devices, which is -- has the advantage of removing the risk of handling shared devices in this very infection-related environment that we're now working. So that's been extremely positive. A further strategically significant contract we signed in Q4 was this initial 12-month contract with Sydney Local Health District, which is 1 of the largest metropolitan health districts in New South Wales, has over 12,000 staff, serves a population of 700,000 people. And the initial $560,000 contract was signed on the 30th of June. And that includes the implementation of Miya Precision platform to support the delivery of virtual care at Sydney's Virtual Hospital, which is called RPA Virtual. And some of you might have seen, particularly if you're in Sydney, but if you actually Google up RPA Virtual, you'll see quite a lot of press related to this engagement in terms of what RPA are doing with it. In terms of the use of Miya Precision, they're intending to use it to remotely monitor COVID-19 patients initially, but there's certainly plans to look at other chronic conditions beyond COVID-19 and how it works is clinicians in the care center are able to remotely monitor patient vital signs, 24 hours a day using feeds from remote devices. So you'll probably know that there's a lot of people actively creating device, remote devices. Patients can wear them. And it will capture their vital signs, and we're drawing that into the Miya Precision platform, connecting it with their EMR data and improving the information and the capability of that virtual center to monitor patients who are isolating. And so our platform will be used to ensure that those patients receive the highest standard of care, whilst also assisting the safety of the clinical staff who were looking after them. We've developed a really strong relationship with Sydney LHD. And while not covered by this contract, we believe there's significant opportunity ahead to expand our scope beyond this initial 12-month contract and to implement Miya Precision across the entire Sydney LHD district and to work -- to improve patient outcomes across that whole district. The final contract to call out, and you will have seen the announcement, is the extension with ACT Health for our technical support services for a further 2 years, which was valid at $1.3 million. This is a separate agreement to the full product suite contract that we have that looks after Miya and Patientrack and Smartpage. But it really continues to highlight the strength of their relationship with ACT and the report that we have with them as a partner for both products and services. It's a long-standing relationship we're proud of. We look forward to continuing to support them as they move through their digital strategy and deployment of that. Moving on to the details, a little bit more of the detail of what was in the 4C. I'd like to give you an overview of how we're positioned at the end of Q4, what our sales pipeline and opportunities look like going into -- going into FY '21, which were obviously just 1 month into. Firstly, looking at the cash flows for the quarter. We reported a 90% quarterly increase in cash receipts in Q4, totaling $7.6 million. The increase, largely due to several Q3 payments, what might have been Q3 falling into Q4, combined with an upswing in cash payments, which we often see towards the end of the financial year. The operating cash outflows also saw an expected increase to $7.3 million. This consists of payments to partner product suppliers for resold product. Many of you know, we have a couple of key relationships with Better and NextGate for their products. Also payments of VAT and GST tax, and the planned increases to headcount, which is to support our growth plan that we have articulated back towards the end of last calendar year. So overall, Alcidion an delivered an operating cash surplus in Q4 for -- of $250,000. Looking at the year overall, from a cash perspective, Alcidion saw a net cash outflow of $2.6 million for the full year. This is completely in line with expectations and supports our growth strategy, which reflects the strategic investments we've made during the year, to grow our operations, to scale up the business, to add capabilities that we need to make sure that we are well positioned for the opportunity that is ahead of us and our products. And this was all funded by our successful institutional placement in November. We go into the next financial year with solid cash reserves of $15.9 million, which is the same as reported in the prior quarter. In terms of the FY '20 performance overall, we're really pleased to note that Q4 sales performance has remained steady despite the pressures that, obviously, this global pandemic has presented. This performance is supported by a really solid pipeline, which will enable us to continue our growth into FY '21. We expect to announce the full FY '20 revenue in August. And this is likely to be in the range of $18.4 million to $18.7 million, subject to, obviously, audit proceeding, which will represent an increase over last year's revenue performance, which was $16.9 million, which is really very pleasing given the current environment we're in, given the impact that it has had on our customers. And obviously, when compared to many other companies. In terms of the outlook for FY '21, we've already contracted revenue for the next 5 years. Many of you will know that we have a combination of recurring and nonrecurring revenue contracted out often 3 to 5 years. So if you look at what we've got contracted out -- contracted in this year, in FY '21, we already have $12.8 million contracted to be recognized in this financial year, which is a 9% increase on the prior year same period, which really positions us advantageously for our future growth. As you can see, we've also got a really solid base of recurring revenue, $9.7 million. And it's important to note, just looking at these charts, coincidentally, the figures are the same for them both in this quarter, but it's product services recurring and nonrecurring. They're not actually linked as revenue from products can sometimes be nonrecurring. I have spoken before about how our model works. Most often, we encourage customers into a subscription-type model for its products. But we often see customers who are given a government grant to acquire software in the current -- within the current financial year, and they may elect to purchase software with an upfront license. So we still have some of that occurring. And that would be what we would see those as nonrecurring revenue. We have an additional $17 million contracted to be recognized out to FY '25. So the initial contracts signed throughout FY '20, such as that with Sydney and Murrumbidgee, have contributed to a strong forward-looking pipeline of potential business for us. We're confident this pipeline will continue to grow and strengthen in the year ahead, especially as we see market conditions improve. But also as we see the evidence emerging from these implementations. Murrumbidgee is up running and live and we will be doing some marketing off the back of that success. Sydney is well underway and should be live with the RPA virtual capability in the next month or 2. And we'll be able to use that then as evidence base for further marketing and support of our solutions. If you add those conditions to the work we've been doing, continuing to enhance the platform, adding in additional capabilities for the pandemic monitoring and patient assessment, all of these are vital to our sales strategy in the near term. We've really focused also on creating virtual connections with our customers. And we've conducted many online meetings and demonstrations and targeted webinars during this time to continue building that pipeline. We also know our industry and probably many others has also gone quite virtual with a number of conferences changing to an online format. And I'm presenting at 1 in September, for example, that is run by the international side of HIMS, where we get to present what we're doing, and it really reaches quite a large audience through those sorts of mechanisms. Looking out to the long-term -- the medium to long term, of course, our value proposition and strategy remains the same: to support the long-term digital transformation of health care globally with our solutions. We've seen engagement with customers in our key jurisdictions open up over the recent weeks, with many more sales calls being conducted. Some of them, and increasingly, more of them, are being conducted in person with the exception of those of us in Melbourne, who will be virtual for a little while to come yet, I think. This, combined with the interest in what we're doing to support health care transformation across all of our customers and people like ACT Health and Dartford and Gravesham in the U.K. continue to be solid reference sites for us in terms of what we're doing. So we're still seeing increasing interest in our products as people look to the benefits of what we're delivering to our customers. Finally, before I hand over to questions, we'd like to thank our shareholders and our staff for their ongoing support. The staff here at Alcidion have been exceptional during this period, working remotely, continuing to be incredibly productive, engaging with our customers, and it's been fabulous to see how they have responded. And we look forward to continued success in positioning Alcidion as the leader in health care transformation through the smart use of technology. So that concludes our business update for Q4, and we'd like to now welcome any questions you have. I'm going to stop sharing my screen so I can focus a little bit more.

[Sam Sinclair]

Great. Thank you very much, Kate. So for the next 25 minutes, we'd like to open up the webcast to questions before we aim to finish up prior to the market opening. We know there are a lot of participants on the line this morning. We're hoping to get through as many questions as we can. [Operator Instructions] So the first question, Kate, is, how is the business going in the U.K.? Does your pipeline remain strong?

[Kate Quirke, MD, CEO & Executive Director]

Yes. And thank you for that. Yes, absolutely. And as a matter of fact, I'm really pleased with the progress in the U.K. Obviously, from the U.K.'s perspective, it's had some headwinds. We started back -- and it seems a long time ago, the first half of the financial year, we had Brexit. We had a new election. We had a new minister come to lead in health care. When Matt Hancock was confirmed, who has a very strong digital agenda in the NHS, and then -- so just when that was organized, and we were ready to fire, COVID came upon us. And so it's been -- there's been some challenging headwinds. So I've been really pleased with the engagement that we have had. We have really a brand-new sales team. We've got some of the existing sales team, but we've more than doubled the sales team reach, and they brought with them a lot of contacts. So in respect of the building of that pipeline, I am very happy to say it has increased despite all of those external factors. We're continuing to see engagement. We're about to launch a big marketing campaign into the U.K. I would have talked about this in the last quarter update. But we decided prudently to delay that until we had got through this first serious wave of the pandemic, because a lot of our marketing messages probably would have fallen on deaf ears during that time. But I'm very pleased with the engagement that our sales and management team have in the U.K., and I expect we will see the kind of results of that investment in the medium term.

[Sam Sinclair]

Thanks, Kate. So we've got another U.K. question here, and that is, what is the competitive environment at the moment in the NHS Trust market? And are there x smaller competitors that have exited the market?

[Kate Quirke, MD, CEO & Executive Director]

I'm not so sure about people exiting the market, although there's probably going to be a bit of a shakedown as a result of some of the change in the move to virtual care and telehealth means you have to be very, very agile and being able to adapt to that. From a competitive market, the big thing that's changing in the U.K. is a move away from investment in the big electronic medical records. That's still happening to a degree. But there's a real mood in the U.K. to look at products like what we do with Miya Precision, to create an orchestration layer or an integration capability across their existing investments. So if they've already invested in a laboratory system or a radiology system, they really came to look at that as an alternative to these big EMR solutions. And so that is the big change for us in the U.K. market, and I'm very positive about that. And Matt Hancock, the minister, has actively stated that he does not want to see significant investment continue in this big, what we calls monolithic EMR systems, and we want to see more agility in the market. So I see that as 1 of the big competitive changes that is an opportunity for Alcidion to go after.

[Sam Sinclair]

Thanks, Kate. So the next question is, do you see continued investment in marketing and business development in FY '21, [indiscernible] with revenue growth?

[Kate Quirke, MD, CEO & Executive Director]

Yes, we will continue to invest. The sales team is in place, so I don't anticipate a need to grow the sales team. But as I mentioned just earlier, we have planned investments in marketing around the positioning of Alcidion and that is basically delayed from last quarter as we move it forward. And we'll continue to be responsive to how the market is moving in terms of -- as everyone can appreciate, it's a very fluid environment. We need to be responsive to how our health care customers are operating at the time. But we will start to see -- our plan is to start to see the revenue results or the return on the investment as we move through into FY '21, probably towards the back end, we're a little bit delayed, pushed out a quarter or 2 now as a result of the impact of the pandemic, but in no way is that business going away.

[Sam Sinclair]

Thanks, Kate. The next question is, can you comment on the Australia/New Zealand market opportunity -- market currently? And what your key targets are for the coming financial year?

[Kate Quirke, MD, CEO & Executive Director]

So Australia and New Zealand, quite different market opportunities for us. The Australian market opportunity is very much the sort of work we're doing at Sydney and Murrumbidgee LHD, where we have 75% of the Australian market has already invested in electronic medical records. So Miya Precision in that instance sits atop -- on top of that and unlocks some of the investment, the value and the investment that customers already have made. So we're very focused on sites using our technology on top of the big EMR providers. There is, of course, 25% of this market, often large private hospital chains, but some of the smaller hospitals who have not gone down the market for an electronic medical record and who are looking at alternatives to that, because the investment and the long-term commitment to putting those in this, it does not warrant the return on investment for that. And they're looking at alternative ways of delivering that electronic medical record market. So that is an opportunity for us also in Australia, but that is also the opportunity for us in New Zealand. In New Zealand, we have a continuing patient track opportunity. We have around 45% of the market there, utilizing Patientrack already. And that leaves still a large percentage of the market operating in paper from a Patientrack and a Smartpage perspective, that's also an opportunity. But we also see the New Zealand market as being those that are looking to an alternative to those big EMR providers. So some of the capabilities of the Miya Precision platform, as we are seeing, for example, at MidCentral -- MidCentral District Health Board in New Zealand, they formed a strong reference for us into that market. So each of the -- and across all of that, in Australia and New Zealand, we will still have a steady flow of services revenue from our data and analytics capability. Many of you will know, we're implementing at Calvary, we're implementing at Healthscope, a data and analytics warehouse capability, and we'll still continue to see interest in that kind of capability through FY '21 as well.

[Sam Sinclair]

Yes, thank you, Kate. So just while we're looking at the New Zealand market, can you please provide some commentary for the New Zealand business, particularly if there's been any pickup in activity, given that normality has largely resumed in New Zealand?

[Kate Quirke, MD, CEO & Executive Director]

Yes. Well, normality hasn't fully returned to New Zealand, even though in the day-to-day life, it has. If I talk to people from a digital health perspective, they're still catching up from what was a massive undertaking to get all of their workers working remotely. They did -- they responded very quickly, but it was still a very intense response. So there's still a lot of mop up coming along from that and a focus on the general position at telehealth market. For us, I think the engagement is really about positioning, I think, integration. There's just been a big review going in New Zealand called the Simpson Review, which is looking at the whole structure of health and the delivery of health in New Zealand. And there's some rumor that some of these district health boards might be consolidating into larger groups, there's 20 of them, maybe they'll go to smaller number. So we're watching all that activity interestingly. And continuing to market our solutions in there, but we will need to wait and see what happens with that shakedown. So I see the short-term opportunities for Patientrack and Smartpage most strongly in New Zealand.

[Sam Sinclair]

Thank you, Kate. So the next question is, what is the total contract value at the end of FY '20? Is it around $30 million based on $12 million contracted for FY '21 plus the additional $17 million to be recognized over the next 4 years?

[Kate Quirke, MD, CEO & Executive Director]

Hi Colin, would you like to answer that one? I might give our CFO a chance to respond. I think he's on mute.

[Colin Bruce MacKinnon, CFO & COO]

Yes. Apologies for that. The window disappeared. Okay. So we've got -- the total that we've talked about is the $12.8 million, which is for FY '21. And then there's the further [Technical Difficulty] to FY '25. So yes, the total, if you add the 2 together, comes in just under $30 million. There's always an adjustment to forward contracted revenue when you sign off a financial year. In that obviously, all the contracted revenue for that financial year that's been reported in previous quarters, is no longer in future contracted revenue. But overall, this is a very sort of healthy starting point for us to be entering FY '21, even compared to last year, which again was a favorable start to the previous year.

[Sam Sinclair]

Thank you, Colin. Did you want to add to that, Kate?

[Kate Quirke, MD, CEO & Executive Director]

No, no. Thanks, Colin.

[Sam Sinclair]

Okay. The next question is looking at Australian revenue. So can you provide us a breakdown of Australian revenues between the private and public hospital sectors? Notwithstanding COVID, is there a bias to adoption of the products to either sector?

[Kate Quirke, MD, CEO & Executive Director]

Yes. I don't have at hand, percentage breakdown between the two. But by far, the revenue that comes to us is -- favors the public sector. And that's just by nature of the way in which the public health sector spends on IT versus the private health sector. They're much more focused, there's much more of a focus on ROI. That could change over time. Our engagement with the private health sector at the moment is very strongly in the data analytics and building the warehouse capabilities and supporting them through that. Part of the outcomes of putting in a warehouse with a whole lot of dashboards is to identify the areas in the hospital or in the health care system where you might benefit from the deployment of further technology. So that's where we're at with the evolution of our private customers. They're very much starting to look at where across our business could we see significant increases and improvements to health care delivery if we deployed additional technology. But still, we are -- I would say the majority of our revenues coming from the public sector. And of course, in the U.K., nearly all of it is public sector.

[Sam Sinclair]

Thanks, Kate. So the next question is, there was no payment for R&D in the quarterly cash flow. What sort of R&D are you doing at the moment?

[Kate Quirke, MD, CEO & Executive Director]

Well, we're doing a lot of R&D. As you can see, just the work we've been doing around COVID, obviously, but we're continuing to develop and enhance the Miya Precision platform. We don't call it out separately anymore. I think that -- and Colin might correct me if this -- in terms of the appendix, because we no longer rely on R&D tax credits. We look at our development as being an expensed item across the business. Did you want to add anything to that, Colin?

[Colin Bruce MacKinnon, CFO & COO]

No. No, that's correct. And it's very hard to draw the line. It again depends on the definition you take from R&D, but increasingly, when it comes to R&D grants that's a very restricted definition where it has to be true research, et cetera, rather than ongoing planned development of the product, which is mostly what we do. So our overall expenditure on product development is going to increase slightly, but not massively. We already have a very productive team, both servicing the existing product line as well as working on new developments. So whereas in the last year, it might have been in the vicinity of $4 million, it may go up to sort of $5 million or just over it as we -- over the next couple of years, but we're not planning a massive increase in current capacity because we've already scaled up, not only to do the core development, but to do a lot of the supporting activities we increasingly have to do around a clinical product set, which includes quite a bit of quality assurance and quality management and additional testing that's required for those sort of products.

[Sam Sinclair]

Thanks, Kate and Colin. So we've got a couple of questions here relating to M&A. So questions are, are you seeing any compelling acquisition opportunities presently? And has work on that front been put on hold due to COVID-19 or is Alcidion actively exploring options to scale up?

[Kate Quirke, MD, CEO & Executive Director]

Thanks, Sam. No, activity hasn't been put on hold. We are continuing to be open to opportunities for M&A where strategically aligned or where they allow us to scale up the business in an appropriate manner to support the growth strategy that we have. No compelling opportunity right at this point in time, but we continue to be open to looking for those opportunities.

[Sam Sinclair]

Thank you, Kate. So the next question is, what is the quarterly staff cost base now with the new sales teams?

[Kate Quirke, MD, CEO & Executive Director]

I think I might give Colin that one. So I know it roughly, but I'll get it out by $0.5 million or something, so I'll give it to him.

[Colin Bruce MacKinnon, CFO & COO]

Got you, mate. Look, we have been increasing headcount progressively as a product of those strategic investments. So a lot of that investment has been in whether it's sales staff or some of the added product development and quality assurance sort of staff, as well as whilst we look at it very carefully, we do inevitably have to continue to build the corporate support team that, if you like, is needed to build, to support a business that's looking to scale up quite dramatically. So obviously, in FY '20, a lot of those new hires, the salary contributed to costs only for part of the year. So we will see an increase in staff costs going into FY '21 and beyond -- mainly into FY '21 as those we be at the full cost of that additional headcount. So I think moving into FY '21, we're probably looking at staff costs around just around $4.75 million on a quarterly basis.

[Kate Quirke, MD, CEO & Executive Director]

Thanks, Colin.

[Sam Sinclair]

Thanks, Colin. The next question is, so back in 2017, Alcidion flagged a possible expansion into the U.S. Is this still on the cards?

[Kate Quirke, MD, CEO & Executive Director]

Thanks. And look, that is something that we have sort of way down the priority list. Geographical expansion is still very much on the cards. And obviously, during this time, it's been more challenging to -- well we can't do any travel associated with that. We still are engaging with some thoughts around geographical expansion into those near geographies and like geographies that I have talked about in the past, into places like Canada, into near-shore opportunities out of the U.K. and into Southeast Asia. An entry into the U.S. always would need to be very considered. And I believe we have such an opportunity ahead of us at the moment that we are rightly should be focused on the return on investment that we believe we can achieve in the current geographies and new geographies, with an eye to the U.S. at some point in the future.

[Sam Sinclair]

Thank you, Kate. The next question is, so looking at the $17 million sold revenue out until 2025, how is this structured? Is this a rough even split out until 2025?

[Kate Quirke, MD, CEO & Executive Director]

I'm assuming you mean the split between product and...

[Colin Bruce MacKinnon, CFO & COO]

I think it's more the -- they were asking about the profiling of the revenue over the various years.

[Kate Quirke, MD, CEO & Executive Director]

Okay.

[Colin Bruce MacKinnon, CFO & COO]

No, it's not evenly split. All our forward forecasts are a combination of shorter-term recurring revenue from older signed work that's coming towards the end of its current term before it gets renewed. We do -- in forecasting forward revenue, we do not assume any renewal of a current term because it's not actually sold until we get that renewal. So as current terms expire, then we have to go and actually secure that. We renewal and then it gets reported as sold work in that quarter when we renew it. So there is an inherent weighting of that forward sold work towards the next financial year. A bit less in the year after that, and then it tails off. And there's relatively -- there's still a healthy ongoing amount where we have signed long-term contracts, but if you're thinking 5 years out from now, when our longest contracts tend to be 5-year contracts, it's only going to be contracts that we fairly recently signed that are actually going to be booking revenue 5 years out. I would just point out that, that forward forecast is just actually at this point in time, as we've clicked over into FY '21, forecasting out to FY '25 is actually only 4 future years. From the quarter 1 reporting, we will drag in FY '26 as well, as we always report the current financial year and the 5 further years.

[Kate Quirke, MD, CEO & Executive Director]

Thanks, Colin.

[Sam Sinclair]

Thanks, Colin. So we've got a question here relating to the -- announcing the value of each deal. So I'm just wondering, is there a reason you announced the booking value of each deal? Can that sort of data play into competitors' hands or upset other customers if they paid more?

[Kate Quirke, MD, CEO & Executive Director]

It's a good question. Personally, I'd rather not have to announce those sorts of things, but it's a requirement of the ASX if we put a contract out that we include the name of the customer and the value of the contract and the term. And as many of you know, we have a threshold for announcing those. It's not only announced based on the value of the contract, it can also be things that are strategically valid that any normal investor, if they were in -- had access to that information, it could impact their decision-making. So there are a couple of reasons for putting things out. We are -- we do remove it when we're putting it out through our PR and marketing in terms of the customer, but for the ASX, we have to include it.

[Sam Sinclair]

Thanks, Kate. So the next question here is, Q4 is the first quarter of positive cash flow. Do you expect to be sustainably cash flow positive moving forward?

[Kate Quirke, MD, CEO & Executive Director]

Look, at this point in time, there's no predictability and that -- and our focus is really not quarterly. We are very focused on the medium to long-term growth of the business. As Colin indicated, we've got investments that are still coming through. As you've all probably recognized, we have quarter-by-quarter revenue and cash receipts that are lumpy. They don't come through consistently like you in terms of just building H1 on each other. So it's hard to predict at this point in time, when there are going to be cash flow positive quarters in terms of when those receipts come in. But in -- for the next year, it is not our focus to deliver cash flow positive outcomes. It is to demonstrate a significant growth in revenue from the investments that we have made, and we will continue to do that through FY '21.

[Sam Sinclair]

Thanks, Kate. So we're not too far from our finish up time, but we've got time for a few more questions. So the next one is, who are the main competitors in Australia? And what are -- what is Alcidion's competitive advantage looking forward?

[Kate Quirke, MD, CEO & Executive Director]

I'm glad you said Australia because we have a different competitive environment in each of our key 3 jurisdictions based on what we're selling predominantly into those environments. So here in Australia, if we're selling the work that we're doing at Murrumbidgee, for example, in the proof-of-concept, which is layering this Miya Precision platform on top of existing investments like integrated EMR and then unlocking the value of that by making a mobile EMR capable, by allowing that algorithms to be deployed on that platform, ultimately driving artificial intelligence in health care. We have very few, if any, competitors that have targeted that kind of approach that we're taking. We are really making a market in terms of Miya Precision in Australia. Obviously, when it comes to Patientrack, which we don't really actively market in Australia because it is -- its competitor is an electronic medical record. Because what we're doing with Patientrack is filling out the capabilities of nursing observations and capture documentation patient assessments. And so the market for Patientrack is stronger in the U.K. and New Zealand for that purpose. So if I refer you back to an investor presentation that was possibly back at the beginning of this financial year, which were being lodged on the ASX. We did do a chart that represented the various functions that our products support. And the competitors that have something in those areas, for example, when we bid to win ACT Health, which was very much focused on putting Miya Precision into -- look at patient flow across their -- the ACT Health environment, our competitor was Telstra Health, with a flow management product. So depending on what we are marketing at the time, will depend on who the competitor is. So I would refer you back to that slide. I think it gives you a lot of information about our competitive market.

[Sam Sinclair]

Thanks, Kate. Do you have any data points or observations on churn and customer retention?

[Kate Quirke, MD, CEO & Executive Director]

Well, that's an easy one, because we have very little churn, not very little data. We don't need to collect a lot of data because I can't really think at the moment of -- in terms of our solutions, our products, where the Miya Precision or Patientrack or Smartpage products have been replaced. So what typically we see is a customer sign up. Sometimes getting that customer engaged and buying from you in the first instance, might feel like a real challenge. But once they are embedded with you and your products are delivering the types of returns that our -- and benefits that our products are doing, we will see customers continue to resign contracts over time. And if you look back at the history of our announcements, you'll see quite a lot of customers who have been using our products, particularly in Patientrack sense for a long time who continually resigned for another 3 years or another 2 years or another 5 years.

[Sam Sinclair]

Thanks, Kate. One other question. You mentioned Alcidion's main focus is to grow top line revenue in the near term. Is Alcidion also looking at ways to minimize cost of sales? For example, are there any synergies yet to flow-through from Alcidion's previous acquisition of MKM Health?

[Kate Quirke, MD, CEO & Executive Director]

I think a lot -- there were a lot of synergies that were created at that time around the back end, of what we were doing and around the product and what we were doing. But when we were acquired -- when MKM Health was acquired by Alcidion or we acquired them, Alcidion actually had no salespeople at that time. They were very focused on their marketing capabilities. So we've needed to -- whilst we've begun to use the sales team that MKM Health had, we've also needed to expand that sales team, especially in the U.K., where we were just selling Patientrack. Now to expand it to 3 lots of products in terms of Precision, Patientrack and Smartpage that we can sell across the U.K., We did not have anyone embedded a business development person in New Zealand. So I think as we have brought those businesses together and realize the opportunity ahead of us, it has been necessary to expand the sales and marketing capability of the combined organization in order to deliver this top line revenue growth that we believe is potential, ahead of us.

[Sam Sinclair]

Great. Thank you very much, Kate. Well, unfortunately, we've run out of time, and there are quite a few questions there. So if you have submitted a question that hasn't been answered, we've got it, and we'll make sure we follow-up with you. There are -- there are no further questions now as we close. So I'd now like to hand it back to Kate for closing remarks.

[Kate Quirke, MD, CEO & Executive Director]

Thanks very much, Sam, and thanks to Colin, for joining me on the call today. And to all of you for giving us your time and more importantly, for your support. Alcidion, we really have our eye on the medium to long-term in terms of this business. There is enormous potential. It is, by the nature of what we're doing, they are long-term complex contracts that stay in place for a long time. We are continuing to see that pipeline grow. And I'm very confident of the opportunity that is ahead of us, and I thank you, our shareholders, for your support, and I look forward to continuing to keep you updated as we progress. Thanks all for your time this morning, and stay safe.