I have followed hospital workflow software company Alcidion (ASX: ALC) for almost a decade now, but I can’t say I’ve done a particularly good job of it. Despite owning the stock for many years, I ultimately sold out for a loss because I lost patience with the slow rate of growth and lack of profits. The reality is that contract wins just came a lot slower than the company itself had predicted.
However, in recent months there are a number of signs that Alcidion’s business is improving, and as a result, I feel a lot more positively about the stock than I did in the past.
First of all, Alcidion made a small profit before tax in FY 2025 of $320k, after having made a loss before tax of about $1.1m in H1 FY 2025, implying a 2H FY 2025 profit before tax of about $1.4m. Now, that means, even if we assumed the entire FY foreign exchange gain of $935k occurred in the second half, the company did genuinely make a profit before tax in the second half.
The ongoing lack of profitability was one of the main reasona I lost patience with Alcidion shares, so I consider this genuine (albeit small) profit before tax in the second half to be a truly positive sign.
Second, I believe the sociological stage is probably quite favourable for Alcidion shares. Over the last three years the share price has truly plumbed some depths, with many of the lower conviction shareholders (like myself) selling out. Since many current shareholders would be fairly high conviction holders, who were willing to put up with quite disappointing results, that could set the scene for a strong share price rise in the future.
Supporting the theory that the sociological stage is set, 45m shares traded at 12c yesterday (which was slightly above the prevailing price over the preceding days). This could signal that an overhang has been removed. While I’m purely speculating here, it is possible that this trade will be good for the share price in the short term, because generally share price increases on unusually large volume do suggest someone with deep pockets is interested in buying.
Finally, the potential catalyst for this buying interest may well have been the recent announcement that a contract with “Total Contract Value (TCV) is under negotiation; anticipated to be in excess of A$35M depending on the number of modules included, over a minimum 7-year period.”
Over recent years, Alcidion has struggled to achieve any sustained growth in recurring revenue, as shown below in their FY 2025 presentation.
If we assume this mooted contract with $35m TCV over 7 years includes $7m implementation, capital licenses and techinical services revenue, then that would imply about $4m in annual recurring style revenue, a boost of 15%. Now, the announcement didn’t say what the revenue breakdown would be, but there is obviously some potential for a gigantuan narrative shift if the company can actually grow recurring revenue for a few years in a row.
We can also see that Q1 was off to a positive start, at least in terms of cash receipts.
That said, I am still somewhat concerned that the strategy of selling to the UK NHS is just a really hard strategy, because that organisation is just a really difficult and slow customer.
Personally, I’m probably not particularly well-suited to steer the ship with this particular stock, since it is impossible to know how my prior disappointments might colour my vision. As a result, it’s hard for me to have much conviction in my own views (and I probably don’t even deserve to be asked about the stock).
Nonetheless, I wanted to flag these notable improvements for readers, because I know many of you still hold the stock, having (quite sensibly, it turns out) chosen to show Alcidion stock more patience than I did. And there is no doubt in my mind that the last nine months or so truly have demonstrated notable improvements at the company.
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Disclosure: The author of this article does not own shares in ALC and will not trade ALC shares for at least 2 days following the publication of this article. This article is not intended to form the basis of an investment decision and is not a recommendation. Any statements that are advice under the law are general advice only. The author has not considered your investment objectives or personal situation. The author has not considered your investment objectives or personal situation. Any advice is authorised by Claude Walker (AR 1297632), Authorised Representative of Ethical Investment Advisers Pty Ltd (ABN 26108175819) (AFSL 276544).
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