Austco’s record year sets up another acquisition-led growth phase

Record earnings meet a softer second half

Austco Healthcare Limited (ASX:AHC) has entered FY27 with a record result, but the shape of that growth matters. Revenue rose 16% to $94.2 million in FY26, EBITDA increased 14% to $14.9 million and statutory net profit after tax jumped 52% to $9.0 million. The strongest momentum came early: first-half revenue grew 30.7%, while second-half growth slowed to 3.4% as larger installation and project revenue moved between periods.

Gross margin provided a more durable positive signal, rising to 53.4% from 52.0%. Austco said integration and supply-chain efficiencies helped, while lower input costs are expected to flow through further because of the group’s long sales cycle. EBITDA margin nevertheless eased to 15.8% from 16.0%, as the enlarged overhead base from acquisitions ran ahead of the softer second half.

Recurring software revenue continues to build

Software and service-maintenance agreement revenue increased 19% to $11.4 million, now representing 12% of group revenue. Maintenance revenue rose by $1.1 million and software revenue by $0.7 million, supporting Austco’s stated strategy of adding higher-margin and recurring income alongside its hardware and installation operations.

The statutory profit increase also benefited from comparison effects. FY25 included a $2.2 million contingent-consideration expense tied mainly to the Amentco earn-out, while FY26 recorded a $0.9 million benefit from a favourable revision to the G&S Technologies earn-out. The effective tax rate also normalised to about 22%, compared with 26% a year earlier. That makes the 52% NPAT increase a strong headline, though not all of it represents underlying operating growth.

Order book recovers after currency distortion

Unfilled Contracted Revenue stood at $51.2 million on 17 August, up 13% from $45.2 million at 30 June. Management attributed that short-term rise to genuine new order intake rather than exchange-rate movements. Over the preceding year, however, the reported order book fell 5% from $53.8 million, largely because about 80% is denominated in foreign currencies; on a constant-currency basis, it was broadly stable and up 1%.

That distinction is important for a business reporting in Australian dollars across eleven operating units and six currencies. Austco’s cash position rose to $16.3 million at year-end, operating cash flow reached $12.5 million and borrowings were only $139,000. The group also paid $6.0 million of acquisition-related contingent consideration during FY26 and has a further $2.5 million obligation due in March 2027.

MCS adds another reseller to the group

After year-end, Austco acquired 100% of South Australian nurse-call reseller Medical Communications Systems for approximately $2.88 million. The deal comprised about $2.24 million upfront, with an estimated $0.64 million performance-based earn-out calculated at 3.5 times annualised FY27 EBITDA. The final earn-out will depend on MCS’s performance and may differ from the current estimate.

The acquisition extends Austco’s established approach of bringing authorised resellers into the group, following Teknocorp, Amentco and G&S Technologies. The immediate test is less the transaction price than whether integration converts the enlarged revenue base into the operating leverage management expects, while hospital capital-program timing remains the principal variable in the company’s FY27 outlook.

Tacera investment continues without a dividend

Austco invested $4.8 million in research and development during FY26, capitalising $2.0 million towards its Tacera nurse-call and clinical communications platform. The company also flagged cyber security, supply-chain concentration, tariffs, foreign exchange and key-person dependence as material risks. No dividend was declared for FY26, with capital instead being retained for integration, product investment and potential acquisitions.

There is no formal FY27 revenue or earnings guidance in the report. The near-term evidence will therefore come from the conversion of the $51.2 million order book, the delivery of margin benefits, recurring software growth and the contribution from MCS. A strong order book can support the next phase of growth, but it cannot remove the timing risk inherent in hospital projects or the translation effects of a largely foreign-currency pipeline.