Not participating here as much as I used to in the past as it turns increasingly negative. Happy for people to hold different views but sometimes you got to be able to back up those views rather than to turn it personal.
I only had the chance to watch the webinar today. Didn't get the chance to participate due to personal commitments etc. In short, it wasn't as bad as I thought it would be, but that is just my opinion.
Negatives
The withdrawal of the guidance/forecast for a positive EBITDA for FY23 just compounded the pain for what was already a disappointing Q3
Ongoing staffing issues and political uncertainty are still having a significant negative impact on Alcidion. Not only in procurement cycles but also, in my view, uncertainty over whether or not the timelines set for digitalisation could be pushed out further as the new health minister(s) and chancellor have more pressing priorities. It is still continuously evolving and there is nothing that Alcidion can do about it
Pace of revenue is not keeping up with the level of operating expenses (which management has inferred is stabilised and unlikely to rise any further). Kate has said the right thing about not being short-sighted and cull too much of operating expenses (based on FTEs) at the expense of future revenue growth. But when times are bad, it is incumbent on management to pull all levers to steady the ship while not having a detriment impact on operational wise. Things like rostering for staff efficiency, encouraging staff to go on enforced leave (mix of paid ad unpaid leave) where circumstances allowed, exploring rental leave and office space (given the new hybrid working environment we are all in). I like to think that these operational levers are being explored and pulled somewhat.
Positives
Management integrity and creditability. To be honest, I would have seriously considered selling a decent proportion of my holdings if the Kate had not pulled the positive EBITDA guidance/forecast. In my post on the Q2 4C, I noted that Kate had for the first time included some caveats around that guidance/forecast. Given what we all knew about the staffing issues, strikes etc in UK, it was inconceivable that the guidance/forecast could still be maintained. If maintained, it would tell me much about the integrity of the individuals I trust with my monies because it would imply: (a) they had no idea what was going on and are just hoping go a luck last minute turnaround; (b) a breach of their continuous disclosure obligations because that expectations first disclosed in FY22 forms as important part of the market's expectation on Alcidion. However, management was transparent and first disclosed about the issues in Q2 before pulling it altogether in Q3 rather than to deliver the bad news in Q4.
Positive outcomes and feedback from reference sites. By all accounts (both from management and posts by users in Twitter), implementation was successful and users had positive experiences. Kate mentioned about saving on average 45 minutes per shift. That is a big deal in the new covid world that we live in.
No evidence to date that would suggest that the strategy that Alcidion is pursuing is not fit for purpose. Looking past the short term challenges in sales and procurement, Alcidion's products is what healthcare delivery desperately needs - not just focused on at point of care but also post care, integration into patient discharge and linkage with aged care, social care etc.
Like many, I was initially hoping for Silverlink to produce some wins. But that is not really focus, the acquisition was really meant to provide Alcidion with the capability to participate in larger valued integrated tenders which it was precluded from as a standalone. We can have a separate debate about the price paid, technology etc but it was really a thing that had to happen. To not do so means Alcidion would increasingly lose its relevance in a evolving landscape and continually reliant on crumbs from the likes of Epic etc. Now we can either partner up with the bigger players to target the big NHS trusts and/or go alone targeting at the smaller trusts. Nevertheless, I accept the jury is still out on the Silverlink acquisition.
The challenge now is whether or not the shareholders can look past all these short/medium challenges and evaluate if Alcidion's underlying operational performance has deteriorate to such a degree that the underlying investment thesis has changed. I would argue not, but the timeline and risk profile have both definitely adversely changed.
I would be interested to know how the institutional shareholders would react. Are they prepared to look past these short/medium term turbulence or has the risk-reward profile, in their opinion, significantly changed. Good opportunity or time to cut losses?
Personally, I view this as a good opportunity but everyone's circumstances is different. Who is to say that the share price won't go lower or shoot up as the stronger than ever pipeline opportunities eventuates (if it does!)
ALC Price at posting:
9.8¢ Sentiment: Buy Disclosure: Held
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