Citadel flags looming customer loss

Citadel flags looming customer loss

Termination of the deal is possible from 2021

Darren Stanley - CEO, The Citadel Group

Darren Stanley - CEO, The Citadel Group

Credit: Citadel Group

Citadel Group (ASX:CGL) has warned shareholders that one of its longstanding customers, Queensland Health, is likely to look elsewhere for its laboratory information systems (LIS) once its current contract with the publicly-listed managed services provider expires.

“After 27 years, Queensland Health is likely to announce that it will not move to Citadel’s nextgen Evolution solution, preferring instead to go with a global multinational for their LIS [Laboratory Information System] requirements once the Group’s current contract expired in 2022,” the company said in a statement to investors.

Citadel noted that under the terms of its existing contract with Queensland Health, termination of the deal is possible from 2021.

However, the publicly-listed company stressed that the potential loss of Queensland Health as a customer of its LIS services was not expected to result in a material impact over the intervening three years between now and when the existing contract comes to an end.

Queensland Health’s looming departure from Citadel appears to be the sole shadow upon an otherwise sunny six months for the company, which told shareholders on 22 January that it had racked up around $62 million in new and renewed contracts since July 2017.

Among these wins was more than $6 million of software and technology projects with various Federal Government agencies, to be delivered across Australia over the next three months.

Additionally, the prior six month period saw Melbourne City Council appointed Citadel as its sole supplier and partner for enterprise content and collaboration services until 2021. The contract is expected to generate more than $5 million over its four-year term.

The Queensland Department of Transport and Main Roads (TMR), meanwhile, has entered into a six plus six-year software-as-a-service information management contract, with Citadel set to initially support approximately 7000 users and migrate data from nearly 400 legacy systems into its single cloud hosted platform, Citadel Information Exchange [CiX].

At the same time, the group revealed that the past half-year period saw it complete the final installation of what it claims is the largest multi-site pathology laboratory information system (LIS) project in Victoria, with Austin Health.

Altogether, the contracts the company has won over the past six months will see it move around 17,000 new users onto its cloud-based solutions during the coming year.

In September last year, Citadel Group revealed it had entered into an agreement to acquire Brisbane-based Charm Health, which supplies specialist oncology e-health systems.

Charm Health’s solutions are used by both public and private health providers of cancer care.

Terms of the deal saw the business make an $8.2 million upfront payment, with additional payments to be made for agreed over-performance, staggered over the two years following completion.

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