- ASX health stock rise in past five days in line with broader markets
- Morgans sees ImpediMed selldown after Q2 FY24 result as overreaction
- MicroX soars on priority to commence meaningful sales of Argus in 2024
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 Powerplay.
Fancy a swim in cold water? Dipping into chilly waters might alleviate menstrual and menopausal symptoms, according to a recent study published in Sage Journals.
The research involved 1,114 women, with 785 experiencing menopause. All participants engaged in cold-water swimming to assess its impact on menopausal symptoms.
Key findings include:
- ~47% noted a reduction in anxiety symptoms
- 34% observed an improvement in mood swings
- 31% reported an enhanced overall mood
- 30% experienced a decrease in hot flashes
The majority of participants expressed swimming specifically to address stress and anxiety, deeming it a therapeutic exercise providing immediate relief.
The researchers also explored whether cold water swimming helped menstrual symptoms and also found benefits including:
- 46% saw improved anxiety
- 37% noted it helped
- 37% reported improved irritability
“Cold water has previously been found to improve mood and reduce stress in outdoor swimmers, and ice baths have long been used to aid athletes’ muscle repair and recovery,” says University College London professor of reproductive science and a senior author of the study Joyce Harper in a media release.
“Our study supports these claims.
“Meanwhile, the anecdotal evidence also highlights how the activity can be used by women to alleviate physical symptoms, such as hot flashes, aches, and pains.”
To markets…and a volatile quarterly reporting season
And its been a bit of a volatile and chilly week of reporting season for ASX health stocks. At close on Thursday the S&P ASX 200 healthcare index (ASX:XHJ) was up 1.1% for the week, while the benchmark S&P ASX 200 (ASX:XJO) barely moved up 0.4% for the same period. The ASX health sector rose 4.28% in January.
“We’re certainly seeing a fair bit of volatility, which perhaps we weren’t expecting at the beginning of the year,” Power says.
He says last week wound care company PolyNovo (ASX:PNV) rallied on the back of a positive H1 FY24 trading update. However, conversely in the wound care space Aroa Biosurgery (ASX:ARX) has seen its share price drop ~24% after its Q3 FY24 result.
“That share price was marked down significantly over the week, which we were disappointed about,” Power says.
“But having said that looking forward the expectation is the next quarter they’ll have a positive EBITDA result and subsequent to that they should be positing positive quarterly results.
“That is an example that if you are going to downgrade the market is going to punish you and Polynovo is an example of where if there’s a positive trading update you’re going to get rewarded.”
Micro X prioritises meaningful sales of Argus in 2024
Adelaide-based cold cathode X-ray machine manufacturer for health and security markets globally Micro-X (ASX:MX1) is up ~19% this week after released its December quarterly report.
Power says the key focus for MX1 was getting their bomb-detection system, the Argus, into customer’s hands, which they appear to be doing.
In its report the company noted compliance testing was close to being finished and it’s ramping up marketing and customer engagement as it build towards first Argus sales and the official market launch. Production ready Argus devices are now being demonstrated.
In its ASX announcement MX1 says “commencement of meaningful sales” of Argus in 2024 remains its “highest priority”.
“We are looking forward to getting some sales of that device as it has been a long time coming but looks very close now,” he says.
Other highlights of MX1 include $3.7 million in mobile digital radiology customer receipts, the best quarter in MX1’s history and includes major orders delivered for the Australian defence sector and the Australian Government.
The company’s First Rover unit sold has also been Europe, expanding the global footprint of the mobile X-ray machine.
Mach 7 Q2 FY24 results show positive shift to subscription sales
Health imaging stock Mach7 Technologies (ASX:M7T) released its Q2 FY24 result, including record contracted annual recurring revenue of $26.8 million, up 5% on Q1 FY24.
The company noted another strong quarter of sales orders which reflected the ongoing shift to subscription sales and its large renewal program in FY24.
CEO Mike Lampron says in the ASX announcement the “sticky” nature of its existing customer base was highlighted again with Sentara Healthcare signing a new $10.2 million, five-year subscription agreement, which will generate an additional $1 million in ARR from January 1, 2024.
“The new orders they’re signing up have a more subscription slant to them rather than capital sales,” Power says.
“Capital sales tend to be quite lumpy but subscription tend to be much steadier.
“More of their customers are opting to sign up to multi-year subscription type arrangements, which has seen the revenue numbers slightly down in the near term however, the long-term profitability looks much better and the market has taken that very positively.”
The PNV, APX, MX1 & M7T share price today:
ScoPo’s Powerplay – Impedimed sell down an ‘overreaction’
Brisbane-based medical software technology company share price has fallen 22% in the past five days after release of its Q2 FY24 cashflow report which was below expectation.
IPD recorded unaudited total revenue of $2.3 million for Q2 FY24 compared with $2.5 million for the preceding quarter.
However, in a note to clients Morgans says they believe the selling pressure was an “overreaction” with excellent progress being made with private payor coverage and it was always going to be a difficult quarter given recent board and management changes.
Power says IPD appears to have put the board stoush behind them in 2024 with new leadership including the appointment of Dr Parmjot Bains as managing director and interim CEO.
He says IPD is also starting to capitalise on inclusion in the US National Comprehensive Cancer Network (NCCN) of Bioimpedance Spectroscopy (BIS) as an objective measurement tool to identify early signs of lymphoedema.
IPD focuses on non-invasively measuring, monitoring, and managing fluid status and tissue composition using BIS medical technology with its SOZO device.
IPD highlight that 13 States in the US have reached critical mass with 80% of population covered for reimbursement from private payors or Medicare, which is up from two States in Q1 FY24.
The target is that 85% of the US will be providing coverage by the end of FY24. The company had a cash balance at December 31 of $36.9 million.
“There second story was below expectation but that’s not really the story and it’s all about the future and the next number of quarters,” he says.
“They have identified 11 critical States they need to focus on and already have seven where there is more than 80% coverage between Medicare and the private payors.
“They expect to have the remaining signed up April and 85% of the US signed up by June so these are key milestone we’re looking at and see the weakness in the share price as a terrific opportunity to build positions.”
Morgan’s maintains its speculative buy recommendation but reduced its 12-month target price to 20 cents from 22 cents.
The IPD share price today:
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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 author held shares in Mach 7 Technologies at the time of writing this article.