I am assuming that your frustration relates predominately to the current low share price. If so, many of us share that frustration.
However, I would not personally describe the current situation as ‘boring’ due to the many developments that have taken place over the past 12-18 months (many of which are already shared between us here on Hotcopper). We have already seen some evidence of the positive impact arising from those developments, with more expected to flow through over the next 12-18 months as the acquisition/merger gets bedded down.
The lack of ‘material news flow’ should not be interpreted as absence of developments in the background. In my view, the board and management have pretty much deliver on what they set up themselves to achieve.
For sure, Alcidion does not create the excitement from daily price movements of 100% or so, but it is an emerging real business that is actually earning operating cash flows. Short-term excitement can definitely be created by releasing vague statements about collaboration/partnership and etc with no revenue figures, but the market will ultimately wake up one day and realise everything was built on a house of cards and de-rate the company accordingly.
If you want a perfect example, check out what happened with Alexium International Group Ltd under the stewardship of Nicholas Clark. The ride of the share price all the way up to +$1 was wonderful until the truth slowly became evident. Some of the exciting partnerships and etc actually turned out to be unprofitable trials.
If you want to invest in an exciting company with lots of fluff, Alcidion is not that company.
As always, I am open to my fellow shareholders expressing a contrary view to inform the debate. However, such views have to be substantiated rather than a simple 'throw away' line.
Below is a brief overview of some positive developments that have taken place as a result of Alcidion’s focus of responding quickly to market changes and preparation for long-term transformation.
Renewed Board and management to bring expertise and fresh perspective
Some of my previous posts have already identified the capabilities and contact networks that Rebecca Wilson and Geoff Rohrsheim bring to Alcidion.
In my view, their appointment to the board are not simply a ‘job for mates’ but is clearly underpinned by deficiencies identified in the board skills matrix of the previous board. We have clearly seen a marked improvement in the quality of Alcidion’s communication and increased focus on commercialisation.
Strengthened product development and innovation to meet market demands
Following the acquisition of MKM Health, Patientrack and Oncall, Alcidion is now better placed to capitalise on emerging market trends to deliver better patient outcomes and efficiencies for customers.
If you step back and look at things in depth, the combined Alcidion Group is in a much more better shape than the old Alcidion, for example:
- the ability to offer a compelling integrated product offering that would lower the cost base (compared to standalone offering) and churn rate (as customers are less inclined to switch providers once they have integrated the various product into their organisational system. The latter strategy has been implement successfully in other sectors such as telecommunications and entertainment.
- the potential ‘jewel’ in Alcidion is its intellectual property in artificial intelligence. The AI space is starting to gain some traction now that Alcidion needs to continuously improve its Miya capability to remain on the front foot in order to capitalise on opportunities as they arise. As stated in my previous posts, the growing data feed from Patientrack is critical to Miya’s effectiveness. More data feeds leads a more powerful armoury to address avoidable errors and informed clinical decision-making.
- using recurring revenue streams from the previous MKM Health and Patientrack to fund R&D in the higher-valued analytics-AI layer. If not for the considered acquisition, would you prefer Alcidion to conduct capital raisings, share placement or debt to undertake R&D?
Strengthened sales and account management teams to drive sales and productivity
As Kate Quirke has recently admitted in the Morgans webcast, Alcidion previously had a non-existent sales and marketing team (probably an over-exaggeration) but, nevertheless, provides an important insight into her thoughts. This comment is also coming from someone who had delivered on approximately 20 percent year on year sales growth.
Ray Blight and Malcolm Pradhan are not ignorant and are both sensible enough to not only identify strategic opportunities but also self-identify potential or existing weakness/deficiencies and take action to address them. Both of them were well aware of the gap in sales and marketing capability hence the strategic acquisition of MKM Health and Patientrack. Alcidion also moved quickly to lock the bulk of the MKM Health’s sales and marketing team down before the formal acquisition via contracts, incentive schemes and non-compete clauses.
Alcidion has already secured $11.1 of contracted revenue so far for FY19, compared to the combined group unaudited revenue of $12.7 for FY18. With more than 7 months to go (realistically less given the festive season and holidays), Alcidion has already achieve 87% of the FY18 revenue figure.
Given the track record and experience of the sales and marketing team, would you bet against them to deliver on the board’s commitment on commercialisation?
Strengthened communication and engagement with shareholders, institutional investors and the health information sector
I am also firmly of the view that the level of communication has improved considerably. One only needs to compare the latest investor presentation with one from 18 months ago to see the marked improvement. As shareholders, we now have better visibility of their growth and commercialisation strategy, pipeline and ‘catalysts’ whereas before it was more targeted at healthcare professionals.
ALC Price at posting:
4.4¢ Sentiment: Buy Disclosure: Held
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