In morning trade the Alcidion Group Ltd (ASX: ALC) share price has surged higher following the release of its first quarter update.
At the time of writing the health informatics company's shares are up 5.5% to 29 cents.
What was in Alcidion's update?
During the first quarter Alcidion signed several new and recurring contracts, with a total contract value of $2.54 million. Of this, a total of $1.24 million will be recognised in FY 2020.
This lifts its contracted revenue for FY 2020 to $12.9 million, which is 16% higher than the same time last year. Looking further ahead, total revenue sold out to FY 2025 has lifted to $34 million.
But this could be given a sizeable boost in the near term following the strategically important contract signed with Healthscope during the quarter. This is the first sale of its data and analytics capabilities to a major private hospital group.
Alcidion reported cash surplus from operations of $136,000 for the quarter. This represented the third consecutive quarter of positive net cashflow and improved its cash reserves of $4.4 million.
Though it is worth noting that some of its first quarter expenditure was deferred. This was "due to business partners, the timing of which is linked to customer receipts as well as deferred tax obligations in the UK due to changing the company name."
As a result, cash outflows are expected to increase from $4.7 million during this quarter to $6.3 million in the second quarter.
Management commentary.
Alcidion's managing director, Kate Quirke, revealed that management is very pleased with the company's start to FY 2020.
She said: "We are very pleased with the continued momentum of Alcidion in the first quarter. As a result of several new contracts that were signed during the period and a greater stream of recurring revenue to be recognised in FY20, the Company is well placed to continue to deliver growth during FY20. These new contracts represent an important indicator of our increasingly in-demand offering as global healthcare embraces digital solutions to improve care."
The managing director also spoke positively about the deal with Healthscope.
"Our recently announced contract with Healthscope marked an important milestone, representing the first private healthcare customer for data and analytics, demonstrating the value of Alcidion's capabilities across both private and public healthcare," she added.
"As a result of the cash surplus from operations, stronger sold revenue pipeline, and our first entry into private healthcare for data and analytics, Alcidion remains well placed to deliver growth in FY20 and beyond," Quirke concluded.
