Alcidion Group Limited (ALC) Earnings Call Transcript & Summary

All righty, let's kick off. Good afternoon, everyone, and welcome to Alcidion's investor webcast for its financial results for the financial year ending 30 June 2021 or FY '21. [Operator Instructions] Today's webcast will feature a short presentation from Alcidion Managing Director, Ms. Kate Quirke; and Chief Financial Officer, Matthew Gepp, followed by a Q&A. [Operator Instructions] Please note we will hold all questions until the conclusion of the presentation. I would now like to hand over to Kate Quirke, Managing Director of Alcidion.

Thanks very much, Amy. And good afternoon, everyone, and thanks for joining us on today's call. I'll provide a bit of an overview, as Amy said, of our operational and commercial success for FY '21 and as outlined in the annual report and appendix that were lodged on the ASX this morning and also a summary of the overall financial results for the year. Joining me today on the call is our Chair, Rebecca Wilson; and our Chief Financial Officer, Matthew Gepp. And as -- we'll run through the presentation, first, and the results. I'll hand over to Matt, who will give you a little bit more detail from a financials perspective. And then we'll move to taking questions at the end. Okay. We have delivered an exceptional year of growth here at Alcidion resulting in a record full year revenue of $25.9 million, which was up 39% on the prior year. This was within the range that was identified when we did the quarterly reporting at the end of Q4. This is the top end of that range. Most notably and importantly, the recurring revenue increased significantly to $16.3 million, which was up 56% on the previous financial year. From an EBITDA perspective, which is the information that is new in terms of some of this information was obviously alluded to or range given at the 4C. EBITDA loss was $500,000 or $0.5 million, and that reflects our continued emphasis that we've had and always have explained to shareholders on investing to scale the business. So as we are signing new revenue, we are investing back into the business to grow the business, to grow the opportunity and to scale the business, ready to support the continued growth and acceleration of that growth in the years ahead. The underlying EBITDA, though, once we remove the share-based payments and the M&A costs, was in fact positive $500,000 or $0.5 million. We delivered a positive operating cash flow for FY '21 of $1.5 million, which is an uplift of $3.6 million on FY '20. And we concluded the financial year with a strong cash balance of $25 million. Also, the gross profit margins of 88.3% reflect an improvement of 2.4% on the prior year. And this has been driven by the accelerated growth we've had in recurring revenues, with license fees and maintenance and subscription fees taking up a larger part of the revenue increasingly. And we've seen that happening increasingly over the years since we completed the acquisition of MKM Health and Patientrack. With nearly 40% growth in the past 12 months on our revenue, we did that securing a greater market share across Australia, New Zealand and the U.K. We have signed important new contracts that provide a solid foundation as we enter the new financial year. And that sees us starting the new financial year with presold contracted revenue and scheduled renewals that will take place during FY '22 of a combination of $18 million and as well as a fairly strong pipeline with contracted revenue out to FY '26. [ Move to the next slide ] -- oops. Jump ahead there. Sorry. And from a contracts perspective, the -- as I said, the contracted revenue came across all our geographies, but we did see an increase, a significant increase, in the revenue coming from the U.K., which is following exactly the plan and the strategy that we have set out. And it makes sense in that it being the largest market we currently operate in, and the opportunities there continue to grow. So the [ commercial ] growth we saw was achieved by our execution on that accelerated growth strategy we've had in place. It was also executed in tandem with the M&A strategy that we have been executing over the last 12 months or so, which resulted in the acquisition of ExtraMed in April 2021. That acquisition also added new customers and further opportunities for us in the U.K. Just looking at some of the contracts in detail from the U.K. perspective. The South Tees NHS contract is the largest single Miya Precision contract we've signed. It was initially signed for about $9.3 million and then extended fairly quickly to $11.3 million over 5 years. We continued to see growth and opportunities in our Miya Observations and Assessments in the U.K., previously known as Patientrack. And we -- as I've talked about in a lot of these calls, the use of those shareholder frameworks in the U.K. is important to us -- not shareholder, contracted frameworks that allow us to -- procurement frameworks, rather, that allow us to have our solutions actually sitting on those framework contracts that our customers can buy from those frameworks without needing to go to tender. And that saw 5 wins during the calendar -- during the financial year in the United Kingdom for Smartpage. Looking to the Australia and New Zealand region, where we're seeing digital health care primarily focused around virtual care. This was always part of our strategy, that out of hospital or hospital in the home. As I've said before, we've seen that accelerating as a result of the activity around COVID. So we've seen contracts with Murrumbidgee and Sydney. There's a lot of activity in this space across Australia. We have also signed renewals with key customers like ACT Health. That contract has been probably 17, 18 years long-standing renewals. And very pleasing to see Western Health. You have a contract for Miya, which is a predecessor to Miya Precision -- extend that contract whilst they look at a move to Miya Precision in the future. Looking to New Zealand, where we're seeing a lot of activity. And I'll talk a little bit more about the market opportunity later. We signed a contract for -- the first contract in the ANZ region for the deployment of the Better medication solution, which is one of the third-party products that we market and have been successful with in some sites in the U.K. and now seeing that down in this part of the world as well. Our reputation for servicing this growing sector of health care has provided us also with the opportunities to move into adjacent markets. And I didn't want to skip over that important announcement that we made around the Australian defense force preferred provider status that we have. This is a contract where we'll be working in a consortium with other partners to provide longitudinal health record to support the full end-to-end digital health requirements of the Australian defense force wherever they're deployed. That is a contract that is not expected to be signed until towards the end of this calendar year, in November, December, but it is progressing as expected. In terms of the corporate activity in general. In -- it was September 2020 that we officially launched the Miya Precision product into the U.K. market, delayed slightly because of the activity of COVID over there. We're seeing increasing interest in that. It's whole premise is to aggregate disparate information into meaningful dashboards supporting the interoperability of data or the sharing of data throughout health care systems and facilitate communication using that data to support decision-making. And it plays very well to the current strategies that we're seeing. The NHS -- or the NHSX is the digital arm of the NHS. Our goal is to establish Miya Precision as a proven yet pioneering solution, and it was pleasing to see growing demand for Miya Precision across the board in the last 12 months. Obviously, as I mentioned, most significant was the South Tees deal. In April 2021, we completed the acquisition of ExtraMed for AUD 9.5 million, and that allowed us in Alcidion to be positioned as a leader in the U.K. market for patient flow management software. They brought to us 9 NHS trusts, 6 of which are entirely new to Alcidion. 3 have some presence of our current solutions. And that gives us a presence in 19% of the NHS trusts in the U.K. with at least one of our products, so opening up the opportunity from a market share perspective. To support that, we successfully completed an $18.4 million placement and share purchase plan through the support of institution and -- institutions and sophisticated investors, which enabled us to complete that acquisition; and to maintain a strong, healthy cash balance to continue to deliver on our strategy of growth. I would like to very much take this opportunity to thank all shareholders who participated in both the raise and the share purchase plan. [ It was ] heavily oversubscribed. And I know not everyone received all of what they wanted or, in some cases, any of what they would have liked as a result of that, but the demand was extremely significant. And we really do appreciate everyone's interest and support in that.

Kate, sorry to interrupt. Your slides aren't advancing.

What am I -- [ did that move now ]?

[ It has ].

Thank you very much.

[indiscernible].

I'm actually doing this from home, obviously, in a COVID environment but with a new WiFi, so [indiscernible]. Thank you for letting me know. In terms of -- I'm going to talk a little bit more about the changes to personnel when I get through the slides. So I'll pick that up at that point. I'd like to hand over to our CFO, Matt Gepp, now, who will give you a little bit more detail on the financial results.

Hi [ and good afternoon ]. Thank you, Kate. I'd also like to welcome all of the shareholders who joined us today. So we're on the financial dashboard slide. On the top left, you can see our 3-year revenue. And here you can see the strong year-on-year revenue growth that Alcidion has delivered with a 39% increase in FY '21 to $25.9 million. As Kate mentioned, that's at the upper end of the range that we talked about in our July 4C release. The revenue for the year does include a contribution from ExtraMed for the last 2.5 months, but the underlying organic growth is still an impressive 36%. We've now seen 3 consecutive halves of revenue growth since H1 FY '20. And the second half of '21 has delivered $14.8 million revenue, which is a 42% growth on the prior corresponding period. Moving to the right. This is our revenue by region. This is a new graph that we've not shown before in our presentations. It really demonstrates how important the U.K. market is to Alcidion, which makes sense considering it's a much greater addressable market for us in that region. The revenue contribution from the U.K. has increased from 16% in 2019, up to 44% in FY '22. That's more than 4x growth in -- just in 2 years. The U.K. growth in revenue has largely been underpinned by organic sales, particularly the South Tees deployment. And there was a smaller contribution from the ExtraMed acquisition of about $600,000. We completed that in mid-April. Moving to the bottom of the slide. This is our EBITDA for the year. We saw a substantial improvement in EBITDA, $3.4 million improvement over FY '20. We delivered an EBITDA loss of $500,000 for the year. As Kate mentioned, that EBITDA loss includes around $230,000 of noncash share-based payments and around $0.75 million of costs relating to acquisition expenses, totaling $1 million, so excluding that, our underlying EBITDA is positive $0.5 million. So excluding those items, what's delivered the significant improvement to the EBITDA in FY '21? And it's really the difference in the rate of growth of our revenue, which increased $7.3 million in the year, compared to the rate of growth in our staff costs, which increased $3 million in the year. Moving to next slide, Kate, is the profit and loss. I've talked a little bit about this already. On this slide, we can see the changing nature of our revenue mix, with recurring revenue making up 63% of total revenue in '21 compared to 56% of the revenue in FY '20. And while the nonrecurring revenue increased at a respectable rate of 17%, it was really the recurring revenue increasing at 56% that led to the overall impressive increase of 39% for the year. Again as Kate mentioned, gross profit percentage increased 2.4 points to 88.3%, and that's largely attributable to the increase in the recurring revenue mix of our total revenue. Year-on-year, our staff costs increased $3 million or 19%. Much of that growth came in Q3 and Q4. And that also includes the onboarding of the ExtraMed staff that came with that acquisition in April. So we will see the full year impact of those H2 hires in FY '22, plus of course the addition of new hires to support our organic growth strategy. Moving on to the balance sheet. So we end the year with a strong and what I can only say is an uncomplicated balance sheet. Cash is up $9.1 million to $25 million, and we have no debt. That cash balance is more than sufficient to absorb the quarterly fluctuations in operating cash flow that we tend to see between quarters. Our trade receivables at the end of the year are at an acceptable level, and I'll note that the business has not had to take an impairment against its receivable now for many years. The intangible assets increased $9.9 million off the back of the ExtraMed acquisition, and you can find more details about that in Note 12 of the accounts. And of course, the intangibles of $27.5 million have been tested for impairment, with the result being that there is no impairment required. The only other large movement on the balance sheet is the income in advance or deferred income. That's up $2.4 million on the prior year, partly due to some deferred revenue we acquired with the ExtraMed acquisition but really mostly due to the South Tees contract which saw Alcidion receive record receipts in our Q3 Appendix 4C of around $11.5 million. There's nothing else of material interest on the balance sheet, so we'll move on to the cash flow. Okay, receipts from customers was a record $32 million, up $11.5 million or 56% on the prior year. Just a reminder that receipts from customers does include GST or VAT at various rates, and some of that cash can find its way into the income in advance. That being said, receipts from customers exceeded payments to suppliers for the year and saw us deliver positive operating cash flow of $1.5 million. That's an improvement of $3.6 million on the prior year. And that's broadly in line with the $3.4 million increase we saw in EBITDA. When working capital doesn't move around too much year-on-year, that's what we would expect to see. Alcidion isn't a CapEx-heavy business, with only 300,000 -- or $300,000-odd spent on fixed assets for the year representing just a little over 1% of our total revenue. And that spend was split fairly evenly between office space and equipment for our staff. We've talked about the ExtraMed acquisition already. You can see here we spent $9.5 million on that acquisition. And finally on the cash flow: The business successfully raised $15.4 million at $0.32 in a placement in the second half of the year, and that was followed very quickly by a successful $3 million SPP at the same price. I'll note that nearly 1/4 of our shareholders participated in that SPP, and we netted $17.5 million cash after costs for both of those. I'm more than happy to take questions on any of the above at the end of the session. And I'll hand back to our Managing Director, Ms. Kate Quirke.

Thanks, Matt. Now [ I'm able to ] unmute. Thank you very much for that. As I said earlier, we've got accelerating sales momentum, having signed significant contracts across all of our territories. And these contracts demonstrate the ongoing opportunity Alcidion has having just begun to gain traction in our key markets with Miya Precision, our flagship product. We can see there the contracts that were signed. It's also worth noting that the contracts that we signed during the year are spread across the product portfolio, with the Miya Precision contracts supported by ongoing interest in Smartpage and Miya Observations and Assessments which we -- previously was known to many shareholders as Patientrack, along with the services and the third-party contracts and opportunities that we have. So this allows us to establish a really strong presence as a key player in health care IT globally in terms of what we offer and present to the market. In line with the company's strategy for scaling for growth, we continue to invest in our people. We added key roles in the corporate structure. Across an additional General Counsel, we built up the people placing culture function, build -- continuing to build-in our internal information technology capabilities to support both the scale of the organization and to protect the -- obviously the data and the systems that Alcidion run from the current world in terms of cyber. So we continued to make those investments. In the first half of FY '21, Lynette Ousby was elevated to the role of MD for the U.K., recognizing the growing opportunity we have there, the growing number of customers and staff. If you look to the annual report, you can see the growth in numbers that we've had in terms of people in the U.K. And in the U.K., that's around looking after not just sales and marketing capability but the delivery capability that comes with being successful in that region. In June 2021, we appointed Matt, who you've heard from today, as our CFO. And those functions were all previously performed by Colin MacKinnon, who will be familiar to many of you; and he had a role of both Chief Operating Officer and Chief Financial Officer. Following the recent management hires that we have made to increase the resourcing capability across the financial and operational areas, Colin will step down on the 30th of September from Alcidion and the role of COO will be redundant and taken up by these other corporate roles. Many of you will know that Colin was a founder of the MKM Health business that was acquired by Alcidion in 2018, and he's since then been a very key part of our senior management team. The Board at Alcidion and I personally would like to thank Colin for his significant contribution to the business over the past 3 years. Recently, just announced last Friday, we also welcomed 2 new Board members, Ms. Victoria Weekes and Daniel Sharp. And I hope you've had an opportunity to read of the very extensive backgrounds and experience that these 2 individuals have. They will be joining our Board, effective the 1st of September. We're very excited to have them join our team. They each bring valuable skills and experience that will continue to support the growth and evolution of Alcidion. At the Annual General Meeting, one of our long-standing Board members, Nick Dignam, will step down after having served on the Board since 2016. And this has all been part of a Board-led strategy. Rebecca can certainly talk to it more in terms of supporting the growth and scale of all of Alcidion. That involves not just the roles within the company but also the Board and its role in leading us. So an increase in -- as Matt referred to, there was an increase in staff costs during the year. That's consistent with the strategy that we have and have stated of scaling, particularly in the U.K., to take advantage of these emerging opportunities that we have and to further capitalize on those opportunities. You will see us continue to recruit in point roles that we are looking for during FY '22 to continue to scale the business. And there are some roles that we had planned to fill in FY '21 that we had not yet filled. In some respects, that was due to COVID and the lack of access to people and skills, starting to see that settle down now. And we're seeing a lot of interest from people in the industry who are watching what Alcidion is doing and who have bought into the purpose and the passion in the organization. I'd like to just touch a little bit, before we finish, on the opportunity ahead of us and the continuing growth of the pipeline. You will have heard me talk about the U.K. and the opportunity for us. We have a tremendous growth opportunity ahead of us in the U.K. in -- as the new financial year unfolds. As we mentioned, we started with already a record contracted revenue, but we will see accelerating sales across all the regions we operate in. In terms of the U.K., the NHSX is the digital of -- NHS, and they continue to support through both funding and very targeted programs the digitalization and modernization of the NHS. They're committed to the 4-year Digital Aspirant program that was announced under Matt Hancock. And they've recently openly stated that they want to see a shift from large systems that lock-in data to ones that provide an open and modular approach such as that which we've taken at Alcidion, so really looking forward to working with our existing customers in Dartford and South Tees to prove out our proposition and how it supports the NHS initiatives. This will include us continuing to become part of relevant procurement frameworks that help us to streamline that procurement and then those that allows direct award to -- contracts to Alcidion where appropriate or where we have been chosen. I think importantly the 4 stated pillars of the electronic patient record strategy for the NHS around openness, mobility, modular in nature and able to connect the ecosystems of health care plays exactly to the strategy and to the product development that we have undertaken here in Alcidion, so we're looking forward to continuing to work in that region and to grow the opportunities there. Closer to home, for those of you in Australia and in this region in general, the focus on digital health care and the emphasis on it continues very much with an eye on virtual care and hospital in the home at the moment. That's partly because of the investment we've already seen in electronic medical records in Australia. And they're now starting to look to unlock the opportunities from the data that is available in those electronic medical records; and to use platform, a platform like Miya Precision to support the aggregation of the data that they have of patients in the electronic medical record with remote monitoring of patients in the home. Patients collect the data, where patients are adding directly into their record. And people being able to treat patients outside of the home. Now that makes sense in COVID, obviously, when you don't want COVID patient -- positive patients in the hospital, but it's also really important to those patients that have chronic conditions that sees them as frequent flyers back in and out of the hospital system. They're better off being at home for their own personal outcomes. And certainly, in a pandemic environment, being able to treat them at home is a real positive. We are also seeing the emergence of opportunities -- reemergence of opportunities around patient flow and management of patients through the health care system again. And that's become about as a result of the pressures that having our hospitals' ICUs and so forth filled up with COVID-positive patients has put on the overall health care system, and that plays very directly into Alcidion's sweet spot of patient flow. In New Zealand, we're seeing the centralization of health decisions. They have had 20 district health boards in New Zealand, where we have a very significant presence in a number of them, certainly the majority. They're going to consolidate those down to a smaller number of regions. And one of the key pillars of being able to make health care more accessible in New Zealand is around digital health. We already have a very good presence in each of those 4 regions, so we're looking forward to working with our customers in New Zealand to looking to see how we can expand the opportunities there to support those changes in that market. Looking to FY '22, we are set to continue sales growth across all regions. We will continue to scaling the business through investment in our people and to support the company's strategy to become a global leader in health care technology. We enter FY '22 in a very strong position with $15.1 million of contracted -- actually contracted signed revenue, which is 18% higher than where we were at the same time last year. We've got a further $2.9 million scheduled contracted renewals during this financial year that -- we don't count that as revenue until they're actually signed, but as many of you know, we have a very, very high rate of renewal in terms of our contracts. I think it's just worth noting that we only count in that contracted revenue the revenue from signed contracts, so that doesn't include anything that may come our way as a result of the Australian defense force contract. And as you can see, contract revenue builds over the year as the existing contracts are renewed and new contracts are signed. So just to make clear about what that contracted revenue consists of. The focus for FY '22 is to continue to grow and accelerate the sales growth. We are at the beginning of the opportunity. We are currently 2 years into a 3-year growth strategy that's focused on increasing revenues, delivering significant contract wins, expanding our technology capabilities and developing programs with strategic partners that allow us to move into multiple and adjacent markets. Across all the markets that we operate, we will continue to focus on creating and capitalizing on those growth opportunities with both new and existing customers. We have a strong, growing sales pipeline across all those geographies in which we operate. And as we convert many of these opportunities into contracted sales and grow that revenue position, so will our focus continue to be on increasing shareholder value and expanding into ultimately new geographic markets when the kind of pandemic situation allows us to do that from a traveling perspective. I'd like to finish there, perhaps just a note on our strategic acquisitions. We do remain interested in an acquisition strategy. We are very careful and considered about the opportunities and what we are looking for in terms of M&A activities, so that will continue to be part of what we do through FY '22, if the opportunities present themselves that allow us to expand our offering to our customers or increase market share that then gives us an opportunity to further create organic growth opportunities. I'd like to thank the staff, the senior leadership team of Alcidion. They have been, as always, very passionate and very untiring in executing on our strategy and a great support to me. Equally I would like to thank the Board for the support that they give to all of us and for their guidance in terms of how we are growing this business. And to you, the shareholders. So I'd like to thank you very much for your continued support and interest. With that: It has been an exceptional year for Alcidion. We look forward to continuing with that success. And both Matt, [ Beck ] and myself are now available for questions.

Thank you, Kate and Matt. I'd now like to open up the webcast to questions. [Operator Instructions]

Our first question is how many third-party algorithms are run on our platform or the Alcidion platform. And will future revenue from these algorithms be significant?

Thanks very much. We have a number of third-party algorithms running on the platform. We deploy some of our own as well as third party, but just to be clear: We don't see that as a revenue stream for us. It's actually a feature of the platform openness and it's one of the things that we use as an important sales opportunity. Or shall we say a positive thing around the platform is that we do create an open environment where they can -- the customers can actually deploy algorithms that are generally available in the market, and there are many of these in health care. And part of our proposition to our customers is that we'll actually facilitate the sharing of that information across the customer base so there can be a shared benefit. So it is not something that we see as a revenue opportunity at Alcidion.

In your view, what are the areas that Alcidion has underperformed over the past few years? And what are you doing to address the underperformance?

Well, to be honest, I wouldn't say that Alcidion has underperformed in -- at all really in any areas. I think we've definitely been executing on our strategy. We're in the final year of a 3-year strategy. And we've executed well against that, experiencing significant growth, scaling the business to support that growth, moving towards breakeven in terms of how we achieve that. I think, at times, COVID has impacted some of those plans, but it's also presented us opportunities to accelerate our strategy such as we've done with virtual care. Possibly one area we would have liked to have been further along is with the geographical expansion. However, COVID has made this challenging, of course. I do think that we have more than made up for that with the expansion that we're experiencing in the U.K. and the opportunity ahead of us. It will continue to be a focus for us into the next calendar year, but we just need to have the prevailing environment to execute on that.

Any new area to [ expand ] in 2022, '23? Is this as in spend?

So I think you're saying any areas we will have additional expenditure, I think, rather than expand. As indicated earlier and through the presentation, we've still got a number of hires to support our growth, some of which were planned for FY '21 and some which will support us in FY '22. There will be some of that in the area of service delivery. Contracts like the defense force contract will have significant revenue with them, but we will also have some costs associated with that delivery in both the services area and the product area. We'll also invest in systems to support growth to help us run more efficiently where appropriate.

Can you provide some insights into Alcidion's response to intellectual property infringement?

I think, well, we haven't, as far as I know, identified IP infringement. Of course, we have a very active engagement across this. We have -- a new General Counsel joined us this year, Maria, who's one of her key areas of focus is to ensure that our IP is adequately protected. All our contracts with our staff, with our Board members and so forth have clauses around IP, including with our contracts that we have with customers. We have -- all engagements with partners are covered by NDA. So we're very actively aware of it and it is a key part of what we need to do as a business from a -- protecting the assets of the organization.

What do you expect the growth in annual revenue and annual profit to be over the next coming year?

So at this point in time, we don't give guidance on annual growth in profit. Where we are in terms of our development, we're very focused on growth in revenue. We hope to continue to accelerate growth. It's been a very strong year in times -- in terms of growth. I have indicated in previous presentations that we will look to break even in FY '22 in terms of profitability and then see an acceleration of revenue into the following year, which should drop to the bottom line's in terms profitability. Of course, if some of that revenue growth comes earlier than we planned, we may see ourselves moving to profitability earlier, but we are still sticking with that in terms of our guidance. We've been quite transparent in our quarterly reporting on the current sold revenue for the year and the revenue figure for 5 years out generally. So we believe that gives shareholders pretty good insight into how we're progressing, and we'll continue to doing that through this year.

Great. "The Alcidion team have been working hard. Investing in people has been key to my investment in Alcidion. What have you been doing to ensure the health and well-being of your team, including the executive team, so they can continue to drive the business to continued success?"

I think [ I may have ] Rebecca to answer that, [ seeing you've asked ] for how the executive [ have been able to look after as well ].

Yes, absolutely. I can certainly answer that one, obviously really important in the current environment as well. And it's very multifactorially that we look at by career development, career succession as well as really looking at employee health and well-being. As I said, I think in this sort of COVID environment you would expect to see, and we do, do, a lot around employee assistant programs to really make sure that we're supporting our employees. All of that was in place prior to COVID as well. And I think it's really sort of set the culture of the organization where we really try to be best practice when it comes to looking after our team. I would say that also with flexible work. That was something that we have really embraced in Alcidion well before that's been forced on us with COVID, both in terms of how people like to work from a schedule perspective. As you can imagine, we have some very innovative people. And technology people tend to like to work at different hours, as well as sort of our staff that have families. And we want to make sure that we can really accommodate how team members like to work and what's the best sort of way for them to work and the best environment for them to work but also where they work as well, so prior to COVID, we certainly supported work from home back then. And obviously now we're fully embracing the opportunity to be able to work from home. So I think for us it is really sort of being able to do all of those. It's in addition to some of the fun things as well, as you've seen our staff numbers decrease really significantly over these last 12 months, with more to come this year. And so for us it's really about how we keep our teams connected, particularly as we start to see some really big growth in our overseas markets. And so we do that through sort of fun things, as well as sort of the professional development elements [ have evolved ].

Does Alcidion support the push to value-based health care, VBHC, as described by U.S. academic Michael Porter? What ALC products could be used to facilitate the company's approach to VBHC, supportive or otherwise?

Thanks very much for that question. This is potentially a long answer, so I'm not going to embark on the whole detail of it, but we are actually thinking [ of making this ] subject of a blog article in the coming months because it is an emerging area talked about a lot more in the U.S., emerging in discussions in the U.K. and a little bit less so in Australia. But that's partly the way in which we [ fund ] the health care system, but in short: Miya Precision supports and aids value-based care through giving a view of patient -- a patient or through the lens of the integration of care, both in hospital and out of hospital, primary care, social data and so forth; and allowing that data to be aggregated in such a way that value-based care decisions can be more easily made. So we believe that we're really well placed to support that as an initiative. We obviously keep a good eye on the discussion coming out of the U.S. around that, yes. And we continue to -- we'll be sort of interested in how we'd start to position that when we see our markets moving slightly more towards that as a consideration.

Next question is Matthew mentioned income fluctuates quarterly. What's the reason? Is it the invoicing cycles?

And Kate can help me with this one as well. [indiscernible] cash flow fluctuates quarterly quite a bit, as we've talked about. And often, we see Q3 and Q4 being quite high-cash-inflow months for us, but [indiscernible] invoicing and revenue also fluctuate quarterly. And that's very much driven by the type of sales that we're making in that period, whether it's a large product deployment or a large license sale, for example. There's always an underlying revenue level, but there are quite large peaks and troughs intra month and intra quarter there.

I mean yes. Some of it is just purely the nature of health care. And it is funded often in a capitalized manner rather than a accrual-based manner, and so they have to use some of that. And they spend the first half of the year deciding what they want to buy and the second half of the year buying it.

Yes. Sometimes, customers will pay for a very large upfront sum. And the revenue, we recognized over 12 months, maybe 18 months, but the cash and invoicing will happen now.

Great. What are your key ESG considerations?

I'm going to let Rebecca answer that.

Thanks, Kate. It wouldn't be surprising that this is very much on the Board agenda at the moment. And in fact, I'm leading a work stream with some of the members of the senior executive team really to bring to life what we're already doing now at Alcidion. For us, when we look at ESG, we have a really clear social impact. I mean that is the purpose of this organization, to improve patient care. And certainly we've got lots of sort of validation points to really support that. And not surprising also, we're very over-indexed when it comes to privacy and data integrity and so forth. For us, I think it's about how do we really sort of articulate that in a compelling way, so we're giving investors visibility to the work that we're doing now. I think on the other side, the E side of ESG, it's perhaps not as obvious as it would be for ASX-listed companies in the resources sector, for instance, when we look at our environment impact, but if you look at -- certainly travel will be one that we continue to look at, clearly low these days in the COVID -- in that sort of COVID environment as well. And because we are a cloud-based technology business, obviously we don't have the same infrastructure as well that would sort of lead to some of the upcycling sort of considerations of technology. So certainly very much on the agenda, very much a Board and senior leadership team collaboration in how we support this but certainly already [ one of the initiatives happening ] in the organization.