Health Check: ASX asks Ramsay to ‘please explain’ post-results share slump

• Ramsay says its full-year earnings met investors’ expectations – and if anything, were a tad higher
• Pacific Edge wins higher US reimbursement – but there’s a catch
• Leading up to AGMs, biotechs do the boardroom blitz

The ASX’s corporate watchdogs have asked hospital chain Ramsay Health Care (ASX:RHC) to explain why the company’s August 28 full-year results disappointed investors.

Ramsay shares fell up to 16% on the day, but that was far from unusual. The reporting jamboree was marked by dozens of violent share movements across the board, often seemingly out of whack with the actual results or guidance offered.

In a four-page missive, the bourse asked Ramsay if any measure of its statutory underlying earnings differed to market expectations.

These expectations could have been shaped by earnings guidance, or the estimates of sell-side analysts (brokers).

Ramsay replied that it doesn’t proffer formal guidance, but the average expectation of 16 analysts was for underlying net profit of $301.7 million and underlying earnings before interest and tax (ebit) of $102.8 million.

These estimates on average were 1.2% and 1.4% below Ramsay’s actual numbers.

The ASX also asked if at any point prior to the results release, the company was aware of any variance between its expected earnings and market expectations “of such a magnitude that a reasonable person would expect [to have a material effect on the share price]”.

Ramsay replied: “no”.

So, what caused the sell-off?

Ramsay opines the culprit was the outlook statement, which flagged – somewhat vaguely – “expected activity growth across all regions”.

But it also highlighted the “continuing challenges” experienced by Ramsay’s UK mental health business, Elysium Healthcare.

The company also didn’t proffer a “substantive update” on management’s review of Ramsay’s 52.8% holding in French hospital chain Sante Health.

Mystery solved!

Pacific Edge in reimbursement breakthrough

Trans-Tasman diagnosis house Pacific Edge (ASX:PEB) has won higher-than-expected US reimbursement for its bladder cancer test Triage Plus – but there’s a catch.

The US Centers for Medicare & Medicaid Services has recommended US$1328 per test as the final price, compared with a US$1018 draft price proposed in April.

The catch? The company’s Medicare administrative contractor currently deems the test as non-covered – a saga that has gone on longer than Blue Hills. (You might need to Google that one.)

Not surprisingly, Pacific Edge is preparing to submit a “reconsideration request”.

The company expects its entreaty to be supported by the publication of a supportive clinical study, currently subject to peer review.

Management also notes that in February the esteemed American Urological Association included Triage Plus in its microhematuria guidelines.

The Triage Plus test combines DNA  and RNA workflows with novel algorithms, thus proving “dramatic performance improvement over existing tests”.

The assays can be used on a broader patient population, enabling clinicians to classify patients as  high, intermediate or low risk.

“The resources needed to develop, validate and operate Triage Plus commercially are substantial,” CEO Dr Peter Meintjes says.

He adds that the test’s superior performance enables savings for the public health system, by reducing unnecessary procedures and “allowing clinicians to spend more time and clinical resources on those who need it most”.

Boardroom moves gather pace

Leading up to the AGM season, biotechs are reshuffling their board and management ranks.

In the most notable change, Proteomics International Laboratories (ASX:PIQ) chief Dr Richard Lipscombe plans to retire in February next year. That’s 25 years after he founded the diagnostics outfit.

He will continue to serve until the company finds a successor to fill his capacious boots.

Over at Wellnex Life (ASX:WNX), Ash Vesali becomes non-executive chairman. He takes over from interim Andrew Vidler, who remains as a non-executive director.

Targeted radiation therapy OncoSil Medical (ASX:OSL) has anointed Dr Thomas Duthy as chair. Duthy has been an Oncosil director since July this year. He takes over from Doug Cubbin, who held the role since August 2023.

At scientific instrument maker Trajan Group (ASX:TRJ), Sara Watts will not seek re-election at the upcoming AGM, having been a director since March 2021.

Watts chairs the audit and risk committee, a role to be filled by Tiffiny Lewin “while the board [monitors] the composition of the board and its committees”.

Various financial matters

Firebrick Pharma (ASX:FRE) has pocketed a $250,000 research and development tax incentive payment, relating to costs incurred in the year to June 30, 2025.

Firebrick is developing Nasodine as a broad-spectrum antimicrobial agent. Nasodine shares the same base ingredient of the commonly sold Betadine, albeit as a nasal spray.

Point of care diagnostic tester Lumos Diagnostics (ASX:LDX) has finalised a $5 million local from its major shareholders, Andrew ‘Twiggy’ Forest’s Tenmile Ventures and Ryder Capital Management.

The funds will support the company’s push to obtain a US Clinical Laboratory Improvement Amendment (CLIA) waiver for its Febridx finger-prick blood test.

This will greatly expand the US addressable market for the assay, which distinguishes between viral and bacterial respiratory infections.

The company has cancelled a previous convertible note funding arrangement with two other lenders.

Can we get a waiver? Yes, we Cann

Struggling pot play Cann Group (ASX:CAN) has been granted a reprieve by the National Australia Bank.

The bank has waived just over $1,378 million in quarterly and six-monthly fees that were due in late August.

Whilst “reserving its rights and remedies”, the bank “will not be taking any action at this time”.

Cann has a fully drawn $15.6 million loan with the NAB, as well as a $49.4 million construction facility pertaining to Cann’s Mildura premises.

The company says it is “engaging” constructively with the NAB and other financiers and promises to update the market at the end of the month.

Cann produced full-year revenue of $13.3 million, down 31% but narrowed a previous $9 million underlying loss to $5.1 million.