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Health & Biotech
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 26 years, gives his take on the ASX health care sector for the week and his ‘Powerplay’ stock pick.
Speaking with Stockhead, Morgans analyst Scott Power said markets appear to be suffering from US pre-election jitters not helped by a mixed quarterly reporting season and AGM commentary.
At 2.15pm (AEDT) on Friday the S&P/ASX 200 Health Care index (ASX:XHJ) was down 2.15% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) fell 1.42% for the same period.
“The key is going to be getting a clear result next week at the election,” Power said.
“A dispute over who is the winner dragging on for weeks or months won’t be helpful for the markets but if there’s a clear result then hopefully everyone will get back to work pretty quick.”
MedAdvisor (ASX:MDR) dropped ~30% on its quarterly result, which included Q1 FY25 operating revenue up 3.5% to $26.3m, US operating revenue rose 4.1% to $20.4m attributable to continued support of omnichannel chronic medication and vaccine programs.
The company’s Australia and New Zealand revenue rose 1.7% to $5.9m after a deduction of $400k of refunds and reallocations.
MDR gross profit dropped 2.5% to $15.3m in Q1 FY25, which was attributed to a shift in health program product mix in the US, adjustment in cloud-related platform expenses in Australia and New Zealand and the US, along with other adjustments associated with program execution.
“MedAdvisor’s share price fell significantly as investors were concerned that revenue growth and margins were lower than expected with the cash position looking tight,” Power said.
MDR provides pharmacy-driven patient engagement solutions to help remove barriers of care. The company works with more than 33,500 pharmacies in the US to deliver programs to help patients take their medication safely and effectively.
In Australia, more than 95% of Australian pharmacies use MDR software to improve pharmacy workflow and to connect with more than 3.7 million patients.
Adelaide-based cold cathode X-ray machine developer for health and security markets globally Micro-X (ASX:MX1) is down more than 11% for the past five days after releasing its quarterly results.
During the quarter MX1 achieved the final milestone under a license agreement with Varex, which was completion of a technology transfer for high-voltage multi-beam x-ray tubes.
The deal included a work program for MX1 to transfer the licensed technology to Varex across five milestones, equipping it to design and manufacture multi-beam NEX Technology tubes for their customers, which are ultimately enabled by MX1’s proprietary high-voltage generator.
The completed final milestone saw a payment of US$1m (A$1.5m). Varex has subsequently ordered $100k of MX1 high power generators to support their high-voltage multi-beam x-ray tubes, with discussions advanced for additional orders by the end of 2024.
“MicroX’s result was ho-hum and we’ve been keen on that for quite a while but the traction they’re getting with their portable X-ray mobile DR is still pretty luke warm,” Power said.
Power said while faith had been put in MX1’s bomb detection camera the Argus it was still at the stage of demonstrations with potential customers.
“They’re still not at the point where purchase orders are rolling in and at this point we were hoping to have some early sales so its been disappointing,” he said.
Morgans has a speculative buy on MX1 with a 12-month target price of 21 cents.
Specialising in innovative medical imaging software solutions the M7T share price dropped more than 10% on its latest quarterly result.
The company reported contracted annual recurring revenue (CARR) or $27.5m, a 2% increase QoQ wth an annual recurring revenue (ARR) run rate of $22m, up 3.5% QoQ.
Sales orders of $2.2m in Q1 FY25 compared to $32.8m in the pcp. The company said sales orders during the quarter reflected the sales cycles involved and it was focused on converting a new pipeline of opportunities.
Power said there was no significant surprises in the result outside of the share price reaction and Q1 was always a seasonally weak quarter.
“Operationally, they are doing alright and have reaffirmed FY25 guidance of 15-25% growth in CARR and revenue,” Power said.
“But if you look at the share price response to the quarterly investors have really lost interest.”
Morgans has an add rating on M7T and is happy to buy on weakness with a 12-month price target of $1.36.
There have been several AGMs held this week – which Power has described as “uneventful” – including for blood products giant CSL (ASX:CSL), Ansell (ASX:ANN), which operates in the personal protective equipment space (PPE) space, and hearing-tech company Cochlear (ASX:COH).
“Probably the standout was Ansell, which increased the lower end of their FY25 guidance and indicated their first quarter was looking quite good,” Power said.
“Nothing much came out of Cochlear which has maintained their FY25 outlook and the same for CSL.”
Dual Nasdaq-listed wound-care company Avita Medical (ASX:AVH) is Power’s pick for the week, with the company due to report its Q3 FY24 results after the close of the US markets on November 7.
In a note to clients Morgans healthcare research analyst Iain Wilkie said the broker supported the view that FY24 guidance (albeit revised) was achievable.
He said shares have been under pressure over the last six months following a longer-than-expected process to finalise approvals through the hospital system for broader use of its RECELL GO treatment, which was approved by the FDA in May for thermal burn wounds and full-thickness skin defects.
“We are encouraged by the recent uptick in approvals moving through the pipeline which should see a material uptick in sales over this quarter,” he said.
“Key target here is sales guidance of US$19-20m.
“We view achievement of this target will bring confidence back to the stock for a re-rate.”
Morgans has an add rating on AVH and 12-month target price of $4.56.
Some Aussie mothers regard navigating their personal health care in between pregnancies – known as interconception care – confusing, inconsistent, and hard to access, new research by a Monash University-led team has found.
Researchers found focus of consultations between pregnancies was mostly on babies and children, while the health needs of mothers could be neglected with potentially negative consequences for women and their future children.
Published in the journal BMJ – Sexual and Reproductive Health, the study was led by Sarmitha Kodavaluru as part of her Honours research.
“The interconception period is a critical time where issues including breastfeeding difficulties and mental health concerns may occur,” she said.
“Women are often also juggling childcare and employment.
“A stronger focus on women’s health during the interconception period provides an opportunity to significantly improve the health of women, infants and subsequent pregnancies.”
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 financial product advice contained in this article.
Disclosure: The journalist held shares in Mach7 at the time of writing this article.
Health & Biotech
Health & Biotech
Health & Biotech
