We first wrote about Alcidion (ALC.ASX) back in April 2020. This report mentioned that despite the setback of COVID Alcidion still delivered a stellar Q3 FY2020 Business Update. So lets take a look at why Alcidion Group (ALC.ASX) are up a Massive 200% since We Warned You!
Share Performance Year To Date
Alcidion share price is up a massive 179% year to date. The shares are trading at 45c a share with a market capitalization of $466million.
Companies Growth Prospects 1 Year On.
So let’s take a look at why Alcidion Group (ALC.ASX) are up a Massive 200% Since, We Warned You! We first reported on Alcidion during their Q3 result last year, lets take a look and compare this against the prospects a year later.
| Q3 2020 | Q3 2021 | |
| Cash Balance | $15.9m | $15.3m |
| Receipts (TD) | $13.1m | $22.3m |
| Net Cash from / used in operating activities | -(1.22)m | -(499)k |
| Q3 Sold Revenue to be recognized in FY20 | 17.2m | 24.7m |
| Contracted Revenue + 5 Years | 41.6m | N/A |
It’s worth noting that ALC Q32021 cash balance does not include the additional ~$5million as part of their recent SPP.
As you can see above there has been a massive increase on comparable quarterlies regarding the receipts up nearly ~70%. This is massive growth and we think ALC could be on the cusps of providing a year of positive cashflow and reaching an inflection point of profitability.
“ALC on the cusps of positive cashflow and the inflection point of profitability”
-Prophet Invest 2021
Alcidion’s Sticky Revenue Growth
It’s worth remembering that ALC employs a lot of marketing resourcing into securing these initial contracts. However, once these contracts are awarded they are typically around 2-5 years in duration. Feedback from the industry is that they also typically renew the contract as well after using their first period. This is due to the sticky nature of the software and the massive benefit that they bring for patient flow and EMR software in the medical environment.
ALC Acquires ExtraMed
On the 15th of April 2021, Alcidion announced to the market that they have acquired ExtraMed. ExtraMed is a leading UK provider of patient flow management systems with nine of the NHS trusts, six of which are new customers for Alcidion.
In our opinion this puts ALC in a strong position to win additional work at other NHS trust sites over the UK. It also enables ALC the opportunity to upsell the customers the traditional ALC suite such as PatientFlow and Miya Precision, etc.
This acquisition is extremely strategic for ALC, as they will now become the leader in the UK market for patient flow. This represents a total market share of ~19% of the NHS acute market.
Contracts with Department of Defence
Alcidion has been selected as part of a consortium to utilize their Miya Precision digital product to improve occupational care for the Australian Defence Force. The Contract has an estimated value of $21million and work may start this year.
This adds yet another layer of sticky revenue into the ALC order book over the next 5.5years. Subject to final negotiations and Commonwealth funding approvals, final contract is expected to be in calendar Q4 2021.
Once this is setup, it is also very likely that there will be future contracts to maintain and continue to build upon the original contract. This is highly typical of defence contracts.
Its worth noting that a $21million dollar contracts adds ~50% on the 5 year projected revenue and is a massive win for the company.
Alcidion Group: Prophet’s Take
Prophet continues to be bullish on ALC.ASX stock, we hold a significant position in our portfolio and we see these gains continuing into the future. Check out the Prophet Portfolio Here.
The stock will likely take a little bit of a breather now after the SPP. However, as Alcidion continues to add additional revenue and report their FY2021 result we can see the share price starting to move upwards again.
We look forward to their full year result presentation and announcement.
If you want to know how we find these and more check out our Gateway to Investing Book The Gateway To Investing (eBook) – Prophet | Investing and Shares (prophet-invest.com)
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