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Looking at the current scenario, it can be said that there is bloodbath going on in the financial market of Australia. The Australian equity market has tumbled down by 6% to 7% in the past two weeks period, which is primarily due to the outbreak of COVID-19 (Coronavirus) and plunge in the prices of crude oil globally. Most of the sectors in the Australian equity market have witnessed rigorous fall within the period.
As every coin has two sides, let’s now look at the Healthcare sector, which rises very efficiently in the bull market and falls more than any other sector in the bearish market. At the time of writing, by the end of the trading session, S&P/ASX 200 Health Care (Sector) rose by 10.6% to close at 43,645.9 points, as on 13 March 2020. In the following article, we will look at the five healthcare companies on ASX. Further, we will be having a look at the impact of COVID-19 on the business:
PolyNovo Limited (ASX: PNV)
PolyNovo Limited (ASX: PNV) is involved into development and commercialisation of innovative medical devices by using its NovoSorb technology for the treatment of burns, surgical wounds etc.
Recently, Director Max Johnston has made a change to his holdings in the company on 9th March 2020 by acquiring 22,500 fully paid ordinary shares at a consideration of $49,772.50.
Granted Breakthrough Technology Status by US FDA
PNV, recently notified the market with the operational and financial performance for the six months ended 31st December 2019:
- For the first half of financial year 2020, sales for NovoSorb BTM witnessed a rise of 129% as compared to 1H 19. Moreover, BTM sales in January 2020 were over three 3 times the sales of January 2019.
- On the back of performance in 1H 20, the company anticipates NovoSorb BTM sales for FY20 should comfortably be two times more than financial year 2019.
- PNV has been awarded a breakthrough technology status by US FDA, which would assist its BARDA PMA burn study. It received CE Mark approval along with a quick entry into the UK/Ireland and DACH region.
Marginal Impact from Coronavirus
PolyNovo, recently updated the market on the impact of coronavirus and outlined the following:
- As per the recent letter to shareholders, the company expects a direct impact of coronavirus on its business or sales going forth.
- Also, PNV does not procure raw materials from the Chinese region as it has various supplier redundancy created into its supply chain division.
- PNV anticipates that the surgeries would keep on taking place in a virus challenged world as the majority of the processes are not elective surgery.
At the close of trading day on 13th March 2020, the stock of PNV last traded at $1.785 per share, with a rise of 5.621% The stock of PNV delivered returns of -2.59% and -21.76% in the span of three months and six months, respectively.
CSL Limited (ASX: CSL)
Australia based CSL Limited (ASX: CSL) is engaged in the production and marketing of pharma and diagnostic goods.
For the 1H 20 period, the company delivered strong growth in profit with reported net profit after tax amounting to $1,248 million with a rise of 11%. This increase primarily reflects (1) Strong growth in immunoglobulin products, (2) Transition to own distribution model in China is progressing well, (3) Continued evolution of the haemophilia therapies portfolio, and (4) Seqirus influenza vaccines business delivering another strong performance.
Net Profit Guidance for FY20
Recently, the company has revised its guidance for financial year 2020 and notified with the steps related to coronavirus (COVID-19):
- The company is well placed for sustainable growth in FY20 period. It experienced continuous exceptional demand for its differentiated therapies.
- It anticipates outperforming the market in expanding plasma collections and its objective to open 40 new collection centers are on track.
- CSL is expecting net profit after tax in the ambit of around $2,110 million to $2,170 million for FY20 at constant currency, which is reflecting the growth of around 10%-13% over FY19.
- Also, with respect to vaccine development program of COVID-19, the company has entered a partnership with University of Queensland, wherein, it would provide technical expertise and also donate MF59®, which is a proprietary adjuvant technology of Seqirus.
At the close of trading day on 13th March 2020, the stock of CSL last traded at $313.830 per share with a rise of 11.878% The stock of CSL delivered returns of 0.47% and 21.12% in the span of three months and six months, respectively.
Ramsay Health Care Limited
Ramsay Health Care Limited (ASX: RHC) is a globally known hospital group, which owns and operates numerous healthcare facilities throughout Australia, France, Indonesia, Malaysia as well as the United Kingdom.
Growth in Payment of Dividend
- For the six months ended 31st December 2019, the company reported Group Core Net Profit After Tax amounting to $273.6 million with Core EPS of 132.5 cents.
- Ramsay Health Care Limited had declared a dividend for the 6 months amounting to 62.5 cents per share, which was fully franked, reflecting a rise of 4.2% as compared to the previous corresponding period. RHC will be paying the dividend on 27th March 2020 with record date of 6th March 2020.
- During 1H FY20, RHC’s businesses in Continental Europe, Asia and UK performed decently, but it was partly counterbalanced by difficult circumstances in the Australian region.
The company expects coronavirus might create an impact for its global business and it is monitoring the impacts on supply chain and admissions.
At the close of trading day on 13th March 2020, the stock of RHC last traded at $62.500 per share with a rise of 6.874% from its last close. The stock of RHC delivered returns of -18.10% and -9.67% in the span of three months and six months, respectively.
Fisher & Paykel Healthcare Corporation Limited
Fisher & Paykel Healthcare Corporation Limited (ASX: FPH) is a well-known leader in medical devices and systems that is utilised in procedures like respiratory and acute care, surgery etc.
The company through a release announced the rollout of F&P Evora™, which happens to be new nasal mask for the treatment of obstructive sleep apnea. Currently, this product is available in Australia and New Zealand.
For the financial year ended 31st March 2020, the company in expecting operating revenue to be around $1.2 billion. FPH anticipates net profit after tax in the vicinity of around $260 million to $270 million. These forecasts are on back of assumption that NZ:US exchange rate will be 64 cents for the remaining year.
The company does not operate any manufacturing facility in China, but it has some suppliers for raw material, who are based out of China. As of now, FPH, does not anticipate any major material impact from Coronavirus.
At the close of trading day on 13th March 2020, the stock of FPH last traded at $24.050 per share with a growth of 3.753% compared to its last close. The stock of FPH delivered returns of 10.54% and 50.13% in the span of three months and six months, respectively.
Regis Healthcare Limited
Regis Healthcare Limited (ASX: REG) is engaged in the provisioning of residential aged care sector, which officially got listed on Australian Securities Exchange in 2014.
Recently, on of REG’s directors Matthew James Quinn has made a change to his holdings in the company by acquiring 6,000 and 20,000 ordinary shares on 9th March and 12th March 2020, respectively.
Positive RAD inflows generated net operating cash flow
Recently, REG updated the market with the financial results for the first half of financial year 2020 and outlined the following:
- The company reported underlying revenue amounting to $332.2 million with a rise of 4.4% as compared to pcp. While underlying EBITDA for the period stood at $44.4 million, reflecting a fall of 21.7% over pcp. The results for the six-month period represents an ongoing challenging condition in the industry along with a pressure on occupancy and continuing insufficient funding indexation to cover the corresponding inflation in operating costs.
- For the 1H FY19, underlying net operating cash flow stood at $74.0 million, which includes net RAD and entry contribution receipts amounting to $46.1 million.
For FY20, the company expects underlying EBITDA and underlying NPAT of around $92 million and $28 million, respectively. Regis would continue to focus on disciplined balance sheet management.
At the close of trading day on 13th March 2020, the stock of REG last traded at $1.175 per share with a rise of 6.335% from its last close. The stock of REG delivered returns of -60.54% and -58.77% in the span of three months and six months, respectively.
