Healthcare tech company continues to grow profitably

Luke Winchester is always hunting profitable companies that have clear growth prospects which haven’t really been understood by the market, despite being successfully executed by management. Austco Healthcare, and international provider of healthcare communication and clinical workflow management solutions that produced $2.3 million NPAT in FY23 down by $0.07 million compared to pcp.

The company recently signed three major contracts in almost as many months, the largest being worth $7.4 million and involves a rollout of their industry-leading Tacera alarm management and clinical workflow solution across the new 548-bed St. Pauls Hospital in Vancouver, British Columbia.

Austco’s FY23 results revealed a $6.1 million, or 17% increase in revenue to $42 million.  FY22’s $35.9 million was also up over 15% from FY21’s $31.2 million. The high margin software and SMA section of the business was a significant growth driver, reaching $8.5 million in FY23, up more than 63% from FY22’s $5.2 million.

Luke Winchester is particularly excited to this part of the business grow, as he stated “Higher margin software revenue now makes up 20% of total revenue, and management have a goal of getting this up to 50%”.

He also makes note of the recent hole in the market left by Hills Health Solutions Pty Ltd, part of Hills Group (ASX: HIL), which recently went into administration, and how much of an opportunity this could be for Austco to fill the gap. The businesses operations have been split up and sold off, but Luke notes that they haven’t been bought by players with experience in nurse call solutions and he thinks that Austco has a clear advantage.

The company has also entered FY24 with their largest order book in history, currently standing at $36.1 million. Austco recently signed a $2.6 million deal with the 345-bed private hospital in Singapore. The Mount Elizabeth Hospital is the flagship operation of the large Parkway Hospitals Singapore group that operates numerous facilities across  Asia.

Another win came in May with a $3.9 million contract for a 192-bed aged care facility in Athens, Ontario. The Maple View aged care facility is municipality owned and is set to open in late 2025. The developed world’s aging population is expected to drastically increase government spending on aged care, this could open up new sales opportunities for Austco. 

The company has spent years continuously investing in research and development to refine their offering, and these contracts are starting to roll in because of it. The St. Pauls hospital has 1,100 full IP patient stations and 1,200 clinical workflow terminals. Luke stated that “this is the type of contract that this business never would have won 5-6 years ago, its only because of their investment in their product that they’re now able to go head to head with their larger peers and win these sorts of contracts”.

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