Austco Healthcare Limited

Ticker: AHC

Share Price: $0.225

Market Cap: $81.91m

PE: 11.25

Good afternoon my fellow spastics, let me introduce you to a hidden gem healthcare tech stock that I believe has been misunderstood by the market and in a prime position to explode.

Austco Healthcare makes sophisticated nurse call systems, enterprise reporting and analytics tools, and industry-leading software applications for caregivers and clinical staff. Their most advanced product is the Tacera call system which is the most advanced nurse call system in the world and offers a wide variety of functionalities to the patient and the nurse. It is a far superior and necessary upgrade to the traditional ‘hard-wired electrical buzzer’ that a patient will click and transmit no data rather than a standard on/off signal.

The Tacera system (amongst a suite of other things) is also a true enterprise reporting platform, aggregating data from every call point, room, unit, floor, building, campus, region, and health system. Slice and dice the data any way you like to gain insights into how your system is working.

Why is this important?

With the ability to analyse these metrics, the hospital can identify efficiencies and roll them out system-wide saving money long term. They can also identify areas for improvement and tweak processes to provide better care. The auto-generated reports can answer questions such as:

How long are patients waiting once they’ve hit the call button?

What’s the average staff response for each unit?

How long are staff spending in patient rooms?

Do we have enough coverage for the busiest times?

How long does it take to clean patient rooms?

Which unit has the most alarms? The fewest?

This is crucial information that can highlight staffing inefficiencies/shortages which could be severely impacting patient care/satisfaction.  

My thesis

When I hear people talk about this stock, it is commonly bashed because of its up and down financials over the last few years (hinting at lack of growth).

https://preview.redd.it/1rtf9bn4sapd1.png?width=366&format=png&auto=webp&s=9b2a10bfae06224249065b732a5674823acd61d3

Now if you hadn’t been following the company, from 2020 to 2023 you’d think it’s just another asx dog with lacklustre growth, however let me explain the headwinds this business has gone through over the last several years.

 In 2015 the current CEO Clayton Astles was appointed which resulted in a complete rejigging of the company’s products to focus predominantly on the high margin aspects.

It wasn’t an overnight fix, and he made some big changes like cutting down the product line and launching the advanced Tacera Pulse suite. It looked like AHC was set for impressive growth.

Then came a series of curveballs. The 2018 tariffs on Chinese imports meant that instead of focusing on growing sales they had to completely restructure their supply chain.

Once this was resolved, in November 2019, management planned to market in new geographies which was very quickly halted due to the COVID pandemic. Following the pandemic came a chip shortage and global supply chain issues which continued to disrupt plans for growth. However, the management team tackled the problems head-on, reengineering their products and adapting to supply shortages with agility. They even managed to scoop up major contracts while their competitors struggled.

 Now we are here in 2024, without any head winds in sight, and the potential of this business is really starting to shine through due to finally being able to have its sights solely set on growth.  

Some key financial highlights from their most recent investor presentation.

-              FY24 Revenue YoY up 38%

-              EBITDA YoY up 126%

-              NPAT YoY up 213%

-              Gross margin YoY up 37%

-              Contracted orders yet to be delivered stood at $50.3 million on 15 August 2024, up from $29.3 million or 72% at 30 June 2023.

AHC has been through the absolute wringer, yet have come out stronger every time, which I believe is a testament to the outstanding management team at the helm. Now that the company can finally focus on growth rather than navigating headwinds, I believe they are in a ripe position for growth given they already have a global foothold in the US, Asia, Europe and ANZ. Currently trading at a PE of ~11 I think there is a lot of upside to this stock and therefore this baby is going to the moon