• ASX health stocks rise 2.27% this week after finishing up 3.9% in January in strong start to 2023
  • Mach 7 posts a record quarter in sales after landing its largest ever contract in December
  • EBR System’s pivotal trial into WiSE on schedule, with headline results due for release in H1 2023.

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.

How good are you at finding your way? What about using a map or compass? Have you ever thought about taking up orienteering?

Researchers from McMaster University believe skills used during the sport relying on navigational skills could act as a prevention or intervention therapy for dementia.

Published in the journal PLoS ONE, the study tested whether orienteering experts have better hippocampal-dependent cognitive function than active, non-orienteering controls.

In the study, 158 healthy adults between the ages of 18 and 87 with varying experience in orienteering (none, intermediate, advanced, elite) reported on their spatial processing, spatial memory and episodic memory using the Navigational Strategy Questionnaire and the Survey of Autobiographical Memory.

Orienteering experts reported greater use of allocentric and egocentric spatial processing and better spatial memory than controls.

In contrast, episodic memory was not associated with orienteering expertise.  Significant effects of orienteering on spatial cognition remained even after controlling for age, sex, and physical activity, suggesting the sport may be an effective intervention to prevent age-related cognitive decline in spatial navigation and memory.


To markets….

And ASX health stocks are heading in the right direction this week.  At 1.45pm (AEDT) the S&P/ASX 200 healthcare index (ASX:XHJ) was up 2.27% in trade for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) was up 0.96% for the same period.

Furthermore, the XHJ rallied 3.9% in January as the XJO was up 6.2% in January, its best month since March 2022 and start to the year since the index’s creation in 2000.

Power said despite a bit of profit taking coming into the smaller end of  the healthcare sector the heavyweights led by CSL (ASX:CSL)  have pushed the index higher this week.

“After a stellar run so far this year a few of the companies we have been talking about have seen some profit taking,” Power said.

He said among names which have rallied in the past month but fallen this week is health imaging company Volpara Health Technologies (ASX:VHT), focuses on the early detection of breast cancer.

VHT soared ~55% in the past month after announcing its first net cash flow positive quarter but is down 3.53% for the past five days.


M7T posts record quarter in sales orders

M7T posted a record quarter in sales orders, aided by the signing of its largest contract to date in December with Nasdaq-listed Akumin Inc.

Sales orders for Q2 FY23 were a record $22.4 million (TCV), up 280% on $5.9 million in Q2 FY22 (or up 240% on $6.6 million in constant currency).

M7T said while the $16.7 million Akumin capital contract accounted for much of total quarter sales orders, the contract only included professional service fees for initial project stages, with future stages requiring separate contracts.

“Overall, a strong quarter which we expect to translate into positive EBITDA at the H1 FY23 result this month and sets up a positive raft of quarterly reports with higher cash collections and stronger operating cash flows,” Power said.

“M7T is the baby brother to ProMedicus and like ProMedicus, getting some very good deals, so I think we will see the share price much higher as the year progresses.”

Morgans maintains its 12-month target price of $1.34 and Add rating.


ImpediMed missing milestone but not all lost

Medical software technology company ImpediMed (ASX:IPD) saw its share price slip ~16% in the past five days after announcing the section on lymphoedema remains unchanged in the latest version of the National Comprehensive Cancer Network (NCCN)  Clinical Practice Guidelines in Oncology for Breast Cancer.

The NCCN in the US sets the guidelines for care and IPD had been awaiting the new guidelines after a meeting last year.

Headquartered in Brisbane with US and European operations, 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.

“We were expecting or hoping for a wording change … and an objective measurement of lymphoedema using technology such as IPD’s device,” Power said.

He said this was a key milestone Morgans and many investors were focused on that would have increased the rate of adoption of the technology.

“Having said that, the NCCN Survivorship Panel submission which also has guidelines in relation to lymphoedema treatment, will make its determination in the next two months,” he said.

“A change in the wording as noted above would have a similar impact on the rate of adoption of IPD’s technology  so we need a little more patience. ”

Meanwhile, IPD also reported its Q2 FY23 cashflow results highlighting growth in the core SOZO business, higher costs resulting from a management reorganisation and continued success with the private payors.

Morgans have lowered its FY23 revenue forecasts and reduced its 12-month target price to 18 cents from 19.5 cents/share but maintains a speculative buy.


The CSL, M7T, VHT & IPD share price today:



Micro X well prepared to support growth

The mobile mini X-ray company Micro X (ASX:MX1) delivered its Q2 FY23 result with modest cash receipts for its mobile DR unit.

“However we anticipate the company now has the distribution partnerships in place and the inventory to support growth in sales in the coming quarters,” Power said.

MX1 is branching out from the medical sphere with Power confident its bomb detection Argus X-ray camera commercial launch will be a key catalyst for the company.

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

“Customer demonstrations are likely in the coming months with customer testing and feedback expected in Q4 FY23 and commercial launch thereafter,” Power said.

“They have also been trying to get through the approval for their portable X-ray equipment in Europe and that’s a taken a very long time and again they’re hopeful in the coming months they’ll get that certification and can start selling.

“Micro X are already doing a good job in the US and other parts of the world so I think it’s one you can start building a position ahead of what looks like a pretty interesting year for them.”

“Morgans have made no changes to our forecasts and retain our 33 cents/share 12-month price target and speculative Buy rating.”


Other health stocks worth noting

Clinuvel Pharmaceuticals (ASX:CUV) posted its Q2 FY23 results with cash receipts of $10 million, which Power said was a bit less than expectations.

“Probably some seasonality involved,” he said.

ProMedicus Limited (ASX: PME) this week announced its wholly owned US subsidiary Visage Imaging Inc has signed a $12 million, eight-year contract with US Oregon based Samaritan Health Services, a community-based, integrated delivery network (IDN).

Samaritan has five hospitals in the mid-Willamette Valley and Central Oregon Coast.

Sleep disorder device company Resmed (ASX:RMD) reported revenue growth of 16% on pcp to $1.03 billion for Q2 FY23. RMD is a pick of Morningstar for 2023.

The company also declared a quarterly cash dividend of 44 cents/share, and announced that CEO Michael Farrell will take over the role of chairman from his father, Peter Farrell.

“The numbers were pretty good but there was a bit of a sell off but we are not too concerned and in fact provides an opportunity to add to positions,” he said.


The MX1, CUV, PME & RMD Share price today:



ScoPo’s powerplay – EBR Systems

EBR Systems (ASX:EBR), which has been working on a new kind of leadless pacemaker system called WiSE, is Power’s stock of the week.

EBR said its pivotal SOLVE-CRT trial into WiSE is progressing according to schedule, with headline results on track to be released in H1 2023.

“We have a high degree of confidence that it will be positive and if it is you will see the share price lift significantly higher,” Power said.

EBR has also released its Q4 FY22 results with cash burn  in line with expectations, with operating cash outflow of US$7.9m due mainly to staffing and manufacturing/clinical/regulatory costs.

Cash sits at US$65m, with 8 quarters at current expenditure, with access to US$50m in additional capital via a venture-backed debt facility secured in July-22.

Morgans makes no changes to its forecasts and maintain its 12-month target price of 99 cents/share and speculative Add rating.

The EBR share price has risen more than 30% in the past month.


The EBR 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.