ScoPo’s Powerplays: Strong quarterly results boost confidence for shareholders
Health & Biotech
Health & Biotech
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 24 years, explains what the movers and shakers have been doing in health and gives his ASX powerplays.
High doses of Vitamin B6 has been found to reduce feelings of anxiety and depression.
University of Reading scientists measured the impact of high doses of Vitamin B6 on young adults, who reported feeling less anxious and depressed after taking the supplements every day for a month.
Published in the journal Human Psychopharmacology: Clinical and Experimental, the study provides valuable evidence to support use of supplements thought to modify levels of activity in the brain for preventing or treating mood disorders.
Dr David Field, lead author from University of Reading School of Psychology and Clinical Language Sciences said the brain relies on a delicate balance between the excitatory neurons that carry information around and inhibitory ones, which prevent runaway activity.
“Recent theories have connected mood disorders and some other neuropsychiatric conditions with a disturbance of this balance, often in the direction of raised levels of brain activity,” he said.
“Vitamin B6 helps the body produce a specific chemical messenger that inhibits impulses in the brain, and our study links this calming effect with reduced anxiety among the participants.”
The study focused on the potential role of Vitamin B6, which is known to increase the body’s production of Gamma-Aminobutyric Acid (GABA), a chemical that blocks impulses between nerve cells in the brain.
More than 300 participants in the trial were randomly assigned either Vitamin B6 or B12 supplements ~50 times the recommended daily allowance or a placebo and took one a day with food for a month.
The study showed that Vitamin B12 had little effect compared to placebo over the trial period, but Vitamin B6 made a statistically reliable difference.
Raised levels of GABA among participants who had taken Vitamin B6 supplements were confirmed by visual tests carried out at the end of the trial, supporting the hypothesis that B6 was responsible for the reduction in anxiety.
Subtle but harmless changes in visual performance were detected, consistent with controlled levels of brain activity.
“It is important to acknowledge that this research is at an early stage and the effect of Vitamin B6 on anxiety in our study was quite small compared to what you would expect with talking therapies such as Cognitive Behavioural Therapy to boost their effect,” Dr Field said.
Where economic and market volatility still has investors a little anxious. By 2pm (AEST) on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) had fallen 0.76% for the past five days, while the S&P/ASX 200 (ASX:XJO) index was up 2.26%.
It’s the first time this month that healthcare index has seen a weekly fall, after a much-needed July rally to kick off FY23.
Last week’s stock of the week, health imaging company Volpara, which specialises in the early detection of breast cancer, saw its share price rise 6.20% to 68 cents on Thursday after it reported strong quarterly results.
Volpara record quarterly cash receipts of NZ$8.7 million, up ~35% compared to Q1FY22 or more than 26% constant currency.
Subscription based receipts also rose with contracted annual recurring revenue (CARR) now ~US$23.7 million (~NZ$34.7 million), up almost US$1.5 million on Q4 FY22.
Volpara recorded its first deal over US$1 million in the quarter as it focuses on larger enterprise deals – the “elephants”.
It will focus on profitable regions US and Australia, and will exit Japan, Korea, and Singapore.
IPD remains on track to achieve cashflow break-even over the next two years on Morgan’s forecasts.
“The key catalyst is the outcome of the National Comprehensive Cancer Network NCCN) meeting of end of August, where it will be determined if the IPD technology is included in cancer treatment guidelines,” Power said.
“A positive result here will increase the rate of adoption.”
The sleep-related diagnostics device company saw its share price rally 10% on Tuesday after it announced record Q4 FY22 results.
SOM achieved record quarterly revenue of $21.3 million for the quarter, up 32% on previous corresponding period (pcp). On an underlying basis, when excluding Q4 FY21 Covid-19 related HIC allowance, Q4 FY22 was up 36% (+37% in constant currency) versus pcp.
Full year unaudited revenue was $72.6 million, up 16% (+17% in constant currency) versus pcp and above guidance of +15% growth for FY22.
Heavily shorted medical device company provided a positive trading update with revenue for FY22 expected to be $120.3m — 17% higher than the previous financial year.
Power said the results beat expectations and has raised confidence the company has transitioned smoothly to a new sales model.
He said said operationally many of the health companies are doing very well but the rotation out of growth to value stocks has seen them out of favour.
“We are looking now for the market to get in behind them after being not interested in six to nine months,” he said. “But we are starting to see the market take a bit more confidence in these companies.”
Power said it is worth noting Amazaon’s $4 billion bid to buy the primary care organisation One Medical in the US in a growing list of the tech giant’s making a play on the healthcare sector.
“Amazon is increasingly getting itself into healthcare and have strong links into pharmacy already but this is getting into the GP market which is very interesting,” Power said.
“Some of the big conglomerates are also splitting into more focused components so GE for example is splitting into healthcare, energy and aviation so they can be more targeted which is an interesting thematic.”
US multinational conglomerate 3M Co has also announced plans to spin off its multibillion-dollar healthcare operations.
Power said these big companies are trying to make the best returns out of a more focused business, which is a change from 10-15 years ago.
“It was all about putting businesses together and big conglomerates grew but now that’s starting to unravel,” he said.
“But the IBM, Google, Amazons are trying to muscle in on healthcare which is ongoing.”
Power said the repercussions for Australia is that it’s becoming more difficult for smaller, independent operators to survive.
He said the healthcare sector is also having to become more efficient with themes such as hospitals without walls to monitor conditions remotely and better use of resources happening at an increasingly faster rate.
Medical supplies distributor EBOS Healthcare (ASX:EBO) is Power’s stock of the week.
According to its website, for more than 95 years EBOS has been supplying medical organisations including doctors’ surgeries and hospitals with products from around the world.
Power said the biggest part of their business is as a pharmaceutical wholesaler and major supplier to companies like Chemist Warehouse and Terry White.
“They also have an animal health business and medical device business,” Power said.
He said EBOS has a strong history of delivering strong earnings and dividend growth for shareholders and despite volatility its share price has remained fairly stable.
“We are confident they will deliver a good set of numbers at the August result,” Power said.
The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financialproduct advice contained in this article.