It’s a fair point Madamswer and would appear to be illustrated by those numbers/graph you have provided. Nevertheless, those are operating expenses, not just fixed costs. A chunk of those operating expenses will be variable in nature as it would be a significant operation the installation and implementation of the system in a hospital setting. Apart from migrating the existing database, there would be a mountain load of testing, tweaking and training in the hospital setting to get the software running optimally. It’s not like you can buy a Windows disk, install and be up and running the same day. I remember hearing the CEO talking about it somewhere but unfortunately can’t locate at this moment. She alludes to the need to hire extra staff in the implementation stage of the Leidos contract at around 5 to 6 minute mark of Q2 Webcast, and also makes some reference toward the end of the video, describing the need to bring on more staff as new deals move into the implementation stage. I believe they have partnered with an agency in the UK to be able to do this.
All in all, I have no problem these variable costs rising as it means we are winning more contracts. As the installed base gets bigger, I hope to see variable expenses (as well as fixed costs) become less and less meaningful.
This is a serious business, well led, in the right place at the right time (consider the problems hospitals are having with patient flow and overworked doctors/nurses ). Our software seems well received and we have grown through the pandemic, when other healthcare companies have cited extreme difficulty accessing and negotiating with hospital administrators. Contract wins could easily snowball in the sense that if enough hospitals successfully used our software, it would put pressure on the rest to follow. Doctors do work across the hospital system, different systems in different hospitals doesn’t make sense.
Perhaps one government contract could lead to many more. At minimum, we will see many upgrades to more comprehensive products. I just don’t believe now is the time to be selling, given:
1)We have had Capital raises at 30+c, and 25c.
2)The inflation/interest rate story is in the market already.
3)We are winning contracts on a regular basis.
Here is the link to the q2 webcast...
https://www.alcidion.com/asx-announcements/investor-webcast-recording-q2-fy2022/
