Share and un-confused video six stocks. This is Motley Fool Money. Can I fill this? I'm Scott Phillips, the Motley Fool's Chief Investment Officer here at Australia, and welcome to another in our very popular series, Motley Fool Stock of the Week.
We really pleased to bring it to you, of course, stock of the week. One stock every week from the Motley Fool's by universe. Now, fill this with your bare around since the beginning of this is the first one you've seen. Let me remind you of three quick things before we get going.
The first is we're bringing you a buy recommendation from one of our services. Could be one of our services, by the way, at least one of our services. It is a buy recommendation at the time of recording. Now, of course, the internet is forever.
Podcasts, YouTube videos are forever. So this will be up for a while. This is a buy recommendation now. We don't envision we'll change any time soon, but it's always possible.
So keep that in mind. We're not promising some remainder of my recommendation forever, but it is a buy recommendation when we record it and hopefully for the foreseeable future. Second, when we say it's a buy recommendation, we are long-term investors. We have no view about what's gonna happen the next day, all week, all month, or even year.
That's right, the long-term is measured in years plural. So we're looking for it a five years, even longer, into the future with this buy recommendation. And lastly, as ever, everything we do at the Motley Fool is general advice only. We can't give you personal advice and should always consider how our advice, our recommendations, our information, to your personal circumstances before you act on it.
Those are really important things to say. I know it's a bit boil-up light, but it is genuinely important legally, morally, ethically. We know we're gonna get out there and make sure you know exactly what we're doing. All right, with no further ado, let me introduce you to Kate Lee.
Kate is a Motley Fool analyst. Can I Kate, how are you? Oh, very good, how are you? It's good.
I'm very well, thank you. Thank you for joining us. This is your first talk of the week. We're excited to have you joining the roster.
Kate, you're gonna bring us a company that some people will have heard of. I certainly are aware of it, but I wonder if I've recommended it as a recommendation. I was excited to see it for some around. The company name is Alcidian.
The code is A-L-C. I guess it falls to me to ask you, Kate, what exactly is Alcidian and what does it do? Yeah, so Alcidian is a healthcare informatics company. So they make a software and their customers are mostly public health systems.
So we can think about local history districts here in Australia or National Health Service Trust in the UK. And then they sell the software or a flag platform that helps them clean clinical decision-making or communication among healthcare providers or say patient flow management and et cetera. So they've got a number of software that's been used at a hospital setting for mostly for the ARCHICARE. As I mentioned, their main market is Australia and New Zealand.
And most recently, they've made a very good progress into the UK market, which obviously, it's much bigger market than here in ANZ. Very good, thank you. Now obviously healthcare management generally, man, hasn't been brought to focus over the last 18 months. Obviously a really big, really important industry.
And if they can make it better, cheaper, faster, hopefully more efficient, maybe even some better patient outcomes, that'd be great for everybody. So obviously, why something like Alcidian might be wanted by Medicos, by the hospitals themselves, by the healthcare providers, what is it about Alcidian as an investment that has laid out to make it a buy? Actually, let me take a step back and then explain about what's happening in the public health system. I'm very excited about this company because this one is particularly in the public health system.
So there are two things that are happening globally in that delivery of healthcare, mainly in the public system. One is the digitization of personal health information. So that has been happening for a while. So from a decade ago, the US, UK, or here in Australia, there has been a shift towards digitalizing all personal health records and then whether you call it electronic health data record or electronic medical records.
So that's pretty much done. So people say more than half of all such records are stored in a digital format now. So that part has been done. And then you'd notice that much of the diagnostic imaging data is also distitized by now.
So what we have is that some parts of that healthcare system are already distillized, mostly on the data side. However, there's still room to improve in terms of the areas of, you know, healthcare actually delivery of the care. So that's what's happening. And then second important trend is the trend towards our hospital care.
So, you know, that before we used to say, oh, we expect to have more patients. Therefore, we're gonna build a new hospital that is. But there is this trend that we're gonna provide the care of the hospital at their homes. So the delivery of care is happening not just in the physical hospital setting, but also in patients at home environments as well.
So from these two backgrounds, it's very well school that the public health systems are now moving towards, you know, more digitalized healthcare. So RCD on stands right there, to benefit from such a structural trend in the big markets like the U of UK. So this company appears to be at the right place at the right time to me. We like that.
We like a nice, strong tailwind. And as you say, the better health outcomes is even better, but if we can do well as investors, that's fantastic. So you told us about the category you're told about the company being ready to do it. Obviously, we're not gonna buy just any company that happens to be in that space at this point.
What is it about our city that gives us the confidence to make a recommendation? I'm really excited about this UK opportunity. So according to the company's number, right? The odds are the market of the UK market, of their products, those categories is $1.1 billion.
In Australia, that's about $500 million. New Zealand, much smaller obviously. So it's really important that they made that first step into the big market. In the UK, there are about 223 NHS trusts.
Exquilig once focused on the community or mental health or specialised services, there are about really 145 trusts that are delivering extra care. Of that pool, currently 27 trusts are using at least one of our city owned products. So you can see that's about 20% market share. So they can grow one by expanding their product offering to the ecosystem customers.
And the number two by expanding its market share within the NHS trust in the UK. And then lastly, obviously that's just one of the countries that they are working on. So they can, you know, expand obviously in Australia, in New Zealand and elsewhere. So I'm very excited about the market opportunity.
And then secondly, the user's thickness, right? So we're talking about this public system. This all has care. I mean, the public has information where they store it on their platform.
All these patient flow information will be managed using their platform. So usually the contract needs to be renewed every four to five years. But even at the end of the contract time, I don't see, I mean, I see it's really very difficult for the users to transition into other systems. So there's market opportunity, there's user's thickness.
And then that geographical expansion that's happening. So those are the three reasons I really like this company. No, that's a pretty impressive triangle. A reason to think about it, as you say, a big market, a growing market.
And there is some sense of, you know, as you say, the land and expand idea is that as the buffer's like the other, if you get in once with something and then grow from there. And that's just one of the really interesting trends we're seeing right now, it's a trend so much as I know what's called. But there was a phenomenon, maybe it's the best word, of when you're changing from old to new or newer, it's a step change that lets you take on something like our CD or something else, zero is a great example of cloud accounting, that might be familiar with where, if you're gonna go away from desktop accounting, you'll look at new at some options. You pick a cloud option, probably zero, maybe not.
And you're probably gonna stick with it until some other seismic change happens because trying to take it all you gotta add a zero, put it into something else, just too much hard work, if you don't know how to upside. And as you say, I was sitting at the forefront of exactly that change, becomes the recipient of that new business. But changing your way from it, unless you bring something really materially better and different, just to hassle the cost, try to convince a whole lot of stuff, use a different system, by the way, it's my challenge, you decide. So they're really, really important.
Get more Motleyful Money Advice at fool.com.au forward slash triple N. Okay, let's make sure we can touch on the risks. We always do every time we do one of these stocks at the liquor should say, it's one of those things that we always try and do at the Motleyful to make sure we don't, just go out there and sell the telephosive story. That's why it's a buy, of course, but we're not blind to the risks, we're not unaware of the risks, we're certainly not make sure how this is a view as a way of those risks.
So I think you can just give us a quick summary of some of the risks facing our city and as investment. Absolutely. So the risks are, I guess, number one risk would be competition, right? So now they're doing very well and they're just one of the very few companies who actually do provide a full suite of the products.
So it's just that they're the one that can provide integrated software. But when it gets to individual software, like patient, not so much of patient, flow management, we'll say, clinical decision making, in that of category there are a number of competitors there. So and also we never know in the world of technology, in a couple of years time, there could be some new company, emerging company company, new technology, so there's always the risk for that. Secondly, I mentioned every four to five years and we knew the contract.
So there's absolutely the risk that they, if their orders or contracts do fall down, do fall down, then that's going to be a big red lake, obviously. Lastly, their cash flow is still negative. There are latest, what do we update to show the, they tend to that positive operating cash flow, but you generally they're in the red for now. So, you know, that next is company vulnerable to any, I guess, potential risks, such as the order flows lower down, then you know, the where to hide.
So obviously, those three risks are the ones that you want to watch out for. Very nice. And we'll summarize, thank you. Okay, here we have this part where this is the all about a pitch section of stock of the week.
You've given us a sense of what the company is, you're told a little bit about why you like it. You've shared the risks with us. Give us the all about a pitch, the 45 second version. Why should our viewers and listeners buy Alcedian today, your rent?
Alcedian, I think is very well positioned to benefit from that structural trend, that shift of the way the public system has care system is being delivered. So I think it's just a no brainer that delivery of care has to move to this to digestion. And then it has a proven track record in the local market and making a good progress into the larger market, which I always like to see. So, and also lastly, it's at the inflation point because if you think about, you know, past year obviously there was COVID, the attention of the public health care providers were at that, you know, dealing with that COVID and then that's out of the way.
So then give them the time to come back to the bigger problem, long term transition, such as the utilization. So I think it's a good story. Share price has run up a bit. I still see your future ahead in the long term.
Fantastic. Thank you. There you go. Fools, Kate, Lee, Motleyful Analytics extraordinaire, smart lady, and you can see all you like having her on the team.
And the stock was Alcedian, ALC is the code. It's about recommendation from one of our services and our free stock of the week for you this week. Now, of course, you can, and please do, follow us all around the web. Jump on the socials.
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