• ASX health stocks fall 1.87% in the past five days as reporting season ends
  • Healius moves to a statutory loss of ~$29 million following reduced demand for Covid-19 testing
  • Catalysts in next few months for several ASX health stocks which could provide welcome boost

Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 26 years, explains what the movers and shakers have been doing in health and gives his ASX Powerplays.

Did you eat breakfast this morning? The first meal of the day has popularly been known as the most important, but in recent years with several studies and trends around regular fasting breakfast has also been one which has found itself on the outer.

Scientific research into the health effects of skipping breakfast are inconclusive with some studies finding regular daytime fasting, such as limiting meals to a narrow window of time or time-restricted feeding, has several health benefits.

But a new study in mice suggests fasting can also have a downside, including a rapid reduction in circulating immune cells when not allowed to eat in the hours after waking.

Published in Immunity lead author Filip Swirsk who is director of the Cardiovascular Research Institute at the Icahn School of Medicine at Mount Sinai in New York, NY said the research shows fasting should be approached with caution.

“There is a growing awareness that fasting is healthy, and there is indeed abundant evidence for the benefits of fasting,” he said.

“Our study provides a word of caution as it suggests that there may also be a cost to fasting that carries a health risk,” he adds.


To markets…

And ASX health stocks could do with a little immunity boost, not looking too healthy this week.  At 1.30pm (AEDT) the S&P/ASX 200 healthcare index (ASX:XHJ) was down 1.87% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) was fairly flat, falling 0.03% for the same period.

“Reporting season is finished now and it ended with a bit of a whimper,” Power said.

“The market is still not showing a lot of direction and it’s been a bit of a lacklustre week.”


Healius falls on H1 FY23 result as PCR testing reduces

Pathology and medical imaging stock Healius (ASX:HLS) fell 3.75% on Monday after it swung to a statutory net loss of $28.7m for H1 FY23 compared to $233.2m profit a year earlier.

HLS said the loss was mainly caused by reduced demand for Covid-19 testing, which had been a major driver of the company. PCR testing demand dropped nearly $500 million in the period from historic highs in 1H 2022.

“The drivers of base diagnostic testing remain strong and Healius expects reversion to long-term growth trends over time,” HLS said in its announcement. 

As a result HLS said it would not declare any dividend for the six months.

“There is not a lot of conviction in terms of backing what is now a very streamlined company,” Power said.

“They have sold a number of their divisions and are back to pathology and radiology.”

Morgans has maintained an add on HLS but reduced its 12-month target price to $3.02 from $3.30.


Mach 7 achieves record half-yearly sales

Power’s pick for last week health imaging company Mach 7 (ASX:M7T) has released solid H1 FY23 results with highlights including:

  • Record half-yearly sales orders of $25.8m, up 17% on the pcp
  • Annual Recurring Revenue was $20m, up 19% on pcp
  • Bottom line EBITDA for the half was $3.4m, up 13% on pcp.

However, it’s a tough gig impressing investors at the moment with the share price falling more than 11% in the past five days.

“It was a solid result but just goes to show there’s not a lot of conviction buying at the small end of the market,” Power said.

Morgans has maintained an Add rating and 12-month target price of $1.34.


The HLS & M7T share price today:


Catalysts to boost ASX health sector

Power said  several ASX health stocks have key catalysts in the next few months which could re-spark enthusiasm for the sector.

“The real theme for the week is important catalysts coming which we need to get investors focused on,” Power said.

1. Mobile mini X-ray company Micro X (ASX:MX1) is branching out from the medical sphere with its bomb detection Argus X-ray camera commercial launch due in the next couple of months, which Power said will be a key catalyst for the company.

Mx1 claims the new Argus IED x-ray camera will allow bomb disposal technicians to safely image suspect packages remotely with greater clarity than ever.

“We are watching that very closely because that is a catalyst which has been delayed but now at a point where it’s close to getting in the hands of customers,” Power said.

2. Neuren Pharmaceuticals (ASX:NEU) is counting down the days to March 12, when the US FDA is expected to decide whether it approves its trofinetide treatment for Rett’s syndrome.

All eyes are on the Aussie biotech and Power said if the drug is approved it will be a significant catalyst for NEU but also the sector at large.

3.  ImpediMed (ASX:IPD)  is awaiting a decision by the National Comprehensive Cancer Network (NCCN)  Survivorship Panel meeting to change the wording in cancer treatment guidelines to include an objective measurement of lymphoedema using technology such as IPD’s device.

The outcome from the Breast Cancer Panel saw the section on lymphoedema unchanged and continues to reference early detection as optimal for treatment taking pretreatment baseline measures.

Power said any change in wording in the Survivorship guidelines should have a similar impact on the rate of adoptions of IPD’s technology.

The medtech IPD focuses on non-invasively measuring, monitoring, and managing fluid status and tissue composition using bioimpedance spectroscopy (BIS).

Power said BIS has implications for a range of diseases with IPD initially focused on lymphoedema in patients following breast cancer treatment.

4. EBR Systems (ASX:EBR) is due to release top line results in May from its pivotal SOLVE-CRT trial into a new kind of leadless pacemaker system called WiSE, which Power said will be a major catalyst for the company.

“We are confident those results will be positive and the share price will lift significantly higher,” Power said.


The MX1, NEU, IPD & EBR share price today:


ScoPo’s Powerplay & fifth catalyst Proteomics

Power’s fifth company with a a key catalyst coming up is Power’s pick of the week Proteomics International Laboratories (ASX:PIQ).

PIQ has achieved a major milestone with US approval for its PromarkerD test for diabetic kidney disease.

The CPT PLA (Proprietary Laboratory Analyses) code has been issued by the American Medical Association, and was a key approval in getting reimbursement coverage of the PromarkerD test by both Medicare and private health insurers in America.

But the big catalyst is talk of a deal with Sonic Healthcare (ASX:SHL) to use the test in their US labs.

“It was supposed to be completed by the end of the February but it is not far away and we expect the share price to rally,” Power said.

Morgans has a speculative Buy rating on PLA with a 12-month target price of $1.77.


The PIQ share price today:


The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

Disclosure: The author held shares in Sonic Healthcare at the time of writing this article.