ASX health sector falls in line with broader markets on macroeconomic factors and global geopolitical tensions
\nHealth imaging stock Volpara announces fourth consecutive quarter of operating cashflow
\nSeveral ASX healthcare names with positive news fail to excite investors<\/p>\n
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.<\/p>\n
Do you go for walks and follow a Mediterranean diet? Researchers are exploring whether individuals who adopt the \u201cMedWalk intervention\u201d can lower their chances of experiencing cognitive decline and various forms of dementia, such as Alzheimer\u2019s disease.<\/p>\n
The research from Australia, New Zealand, and the UK, remains ongoing, with interruptions caused by the COVID-19 pandemic with authors have shared their data on their methodologies and ongoing analysis in the Journal of Alzheimer\u2019s Disease.<\/a><\/em><\/p>\n The primary focus of the study\u2019s authors centres around assessing the 12-month changes in visual memory and learning among the participants.<\/p>\n Previous research has connected both the Mediterranean diet and walking with brain health. The new study aims to confirm the benefits of the combined MedWalk intervention.<\/p>\n The researchers also have a keen interest in examining the effects of the intervention on various aspects, including mood, quality of life, health expenses, cardiovascular health, and arterial flexibility.<\/p>\n Study participants comprise people aged 60 to 90 living in South Australia and Victoria. Significant attention is dedicated to monitoring biomarkers associated with cognitive decline, encompassing parameters like glucose regulation, inflammation, nutrients, and oxidative stress.<\/p>\n Participants were sorted into either the MedWalk intervention group or the control group, maintaining their regular diet and activity levels.<\/p>\n The intervention combines dietary adjustments with a supervised walking program and incorporates psychosocial behavioural change techniques. Intensive support is provided for the first six months, with ongoing assistance for the subsequent six months to keep participants on track.<\/p>\n \u00a0<\/p>\n And the ASX healthcare sector looks like it could do with a \u201cMedWalk intervention\u201d to improve its wellbeing this week. At 12.30pm (AEDT) on Friday the S&P\/ASX 200 Healthcare index (ASX:XHJ) was down 1.64% for the past five days, while the benchmark S&P\/ASX 200 (ASX:XJO) fell 2.11% for the same period. The XHJ is now down ~15% YTD.<\/p>\n \u201cIt\u2019s the same things we\u2019ve been talking about with higher interest rates, question marks over the China recovery, war in Ukraine and now the Middle East conflict has thrown a spanner into the works,\u201d Power says.<\/p>\n \u201cPutting all that together it\u2019s a bit hard to see the market moving higher anytime soon which flies in the face of what we\u2019ve been hoping for which is a strong end to the year.<\/p>\n \u201cWe have to soften our stance a little bit I think but having said that there\u2019s some key events for healthcare companies coming. Just how the market responds we will see.\u201d<\/p>\n \u00a0<\/p>\n Leader in obstructive sleep apnoea and other sleep-related respiratory disorders ResMed (ASX:RMD)<\/strong><\/a> has today reported a strong start to FY24 with revenue up 16% to US$1.1 billion for Q1, which Power says came in above consensus but in line with Morgans\u2019 forecast.<\/p>\n The dual ASX and NYSE listed RMD reported adjusted NPAT for Q1 FY24 up 9% to US$241 million, above consensus of $239 million but slightly below Morgans\u2019 9% US$243 million.<\/p>\n RMD says sleep and respiratory sales in Americas were up 10% to US$638 million, with a small 2% increase in device sales and 23% jump in mask sales.<\/p>\n SaaS revenue\u00a0grew 32% to US$139 million,\u00a0primarily due to RMD\u2019s recent acquisition of Medifox Dan and continued growth in the home medical equipment vertical.<\/p>\n RMD says its ability to meet global demand with technologies, including its best-in-class AirSense 11 platform, has positioned the company well to continue growing across global markets, with particularly strong growth this quarter in Europe, Asia, and beyond.<\/p>\n The company has begun rolling out AI-driven software products into its digital health ecosystem, which it says will create a new class of offerings that will drive long-term, profitable growth.<\/p>\n \u00a0<\/p>\n Health imaging stock Volpara Health Technologies (ASX:VHT)<\/strong><\/a>\u00a0 is down in the past five days despite announcing its fourth consecutive solid quarter of operating cashflow.<\/p>\n Specialising in the early detection of breast cancer, VHT reported cash receipts of NZ$11.6 million up 32% on pcp and represents the first quarter over NZ$11 million. Cash receipts YTD were NZ$22.6 million.<\/p>\n Net operating cash inflow was NZ$1.2 million, which Power says was largely driven by strong quarterly cash receipts.<\/p>\n He says VHT\u2019s fourth consecutive positive cashflow quarter is a full year and a half ahead of guidance, meaning it is no longer required to provide Appendix 4C quarterly reporting updates but can do half-yearly results.<\/p>\n Annual recurring revenue (ARR), which now represents annualised recurring revenue on a 12-month trailing basis, was US$22.5 million (NZ$36.6 million) up from US$21.5m in Q1 FY24.<\/p>\n Average revenue per account (ARPA) for the quarter was US$40.4k and has been growing at a compounding rate of more than 20% since 2022.<\/p>\n \u201cVolpara is going from strength to strength and continuing to move into profitability which will attract a broader range of investors,\u201d Power says.<\/p>\n \u00a0<\/p>\n Australia\u2019s biggest healthcare name\u00a0CSL (ASX:CSL)<\/strong><\/a> is down this week despite management expressing confidence in the company\u2019s resilience to hype around GLP-1 class of drugs, such as Ozempic, which are continuing to gain attention as\u00a0 weight loss drugs with potential to reduce obesity-related conditions such as chronic kidney disease (CKD) and sleep apnoea.<\/p>\n Morgans healthcare analyst Dr Derek\u00a0 Jellinek wrote in a note to clients that CSL\u2019s recent inaugural capital markets day offered investors the opportunity to better understand the strategic direction across core franchises including Behring, Seqirus, Vifor,\u00a0 vet its growing R&D portfolio and glimpse at information and digital initiatives.<\/p>\n He says management expressed confidence in CSL\u2019s resilience with no material impact from GLP-1s and competitive advantages in scaled operations, reiterating FY24 guidance and annual double-digit earnings growth over the medium term.<\/p>\n Morgans maintains an Add rating for CSL with a 12-month\u00a0 target price of $328.22.<\/p>\n \u00a0<\/p>\n Botanix Pharmaceuticals (ASX:BOT)<\/strong><\/a>\u00a0 is down this week despite inking an exclusive deal with UpScriptHealth to provide the digital platform and telehealth services for the commercial launch of its trademarked Sofdra to treat\u00a0excessive sweating.<\/p>\n BOT says the deal with UpScriptHealth is an important step towards building the commercial infrastructure for the successful launch of Sofdra following US FDA approval, which is now expected mid CY24.\u00a0 The FDA has conditionally approved\u00a0Sofdra as the company\u2019s proposed trade name.<\/p>\n \u201cThe approval will be a very important milestone for the company,\u201d Power says.<\/p>\n Health imaging company ProMedicus (ASX:PME)<\/strong><\/a> continues to win deals, securing a $16 million, eight-year contract with South Shore Health, the largest independent health system in Southeastern Massachusetts.<\/p>\n South Shore Health includes the 393-bed South Shore Hospital with more than 5,600 employees, and has renowned clinical affiliations at academic and cancer centres across Massachusetts that also use PME\u2019s cloud-engineered Visage 7 Enterprise Imaging Platform.<\/p>\n \u00a0<\/p>\n Wound care company\u00a0Avita Medical (ASX:AVH)<\/strong><\/a>\u00a0has hit its Q3 FY23 revenue guidance of US$13.5 million and confirmed full year guidance of US$51 to $53 million.<\/p>\n Additionally debt funding of US$90 million has been secured with OrbiMed, with the first US$40 million able to be accessed immediately. There\u2019s an additional US$50 million in two tranches available based on certain revenue goals.<\/p>\n Power says the funds will be used to execute strategic growth initiatives with more detail expected to be provided at its Q3 briefing in early November.<\/p>\n \u201cIt takes the funding question right off the table for them,\u201d he says.<\/p>\n He says achievement of revenue guidance is a good and shows sales momentum is continuing. He says the market should view AVH\u2019s aim of achieving profitability in CY25 as a positive.<\/p>\n \u00a0<\/p>\n \ufeff<\/span><\/span><\/p>\n \u00a0<\/p>\n Another wound care company, Aroa Biosurgery (ASX:ARX)<\/a><\/strong>, is Power\u2019s pick of the week, with the company due to report its Q2 FY24 results on October 31.<\/p>\n Power says he expects to hear a cashflow improvement from Q1 FY24 for New Zealand headquartered ARX, with the quarter expected to be strong.<\/p>\n \u201cI think they will say that the sales momentum is picking up and their key product Myriad is doing well together with positive commentary that their distribution partner in the US TelaBio is on track to hit guidance,\u201d he says.<\/p>\n \u201cI think they will also suggest that they will have a stronger second half, bearing in mind they have a March year-end so we are already into their second half of the financial year.\u201d<\/p>\n \u00a0<\/p>\n \ufeff<\/span><\/span> 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.<\/em><\/p>\n At Stockhead, we tell it like it is. While Arora is a Stockhead advertiser, it did not sponsor this article.<\/em><\/p>\n Disclosure: The author held shares in CSL and Resmed at the time of writing this article.<\/em><\/p>\n <\/span><\/p>\n The post ScoPo\u2019s Powerplays: Who fancies a \u2018MedWalk intervention\u2019? Oh, and ASX healthcare stocks can\u2019t catch a break<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"To markets\u2026<\/h2>\n
ResMed reports solid start to FY24<\/h2>\n
Volpara drops despite another solid quarter<\/strong><\/h2>\n
CSL down despite positive investor day<\/h2>\n
Good news fails to excite cautious investors<\/h2>\n
Avita Medical building sales momentum<\/h2>\n
The RMD, CSL, BOT, PME & AVH share price today:<\/h2>\n\n
ScoPo\u2019s Powerplay \u2013 Aroa Biosurgery<\/h2>\n
The ARX share price today:<\/h2>\n\n
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