Healthcare Buzz: ResApp Health, Sigma Healthcare, EBOS Group

  • Nov 29, 2019 AEDT
  • Team Kalkine
Healthcare Buzz: ResApp Health, Sigma Healthcare, EBOS Group

Australian healthcare system is vast, and it has many healthcare service providers with their roots in drug development, imaging solutions, pathology, medical devices, distribution, among other areas. The healthcare system in Australia is registering strong growth, on the back of development of new therapies for rare diseases and introduction of new technologies for the diagnosis/determination of several disease conditions.

Australian governments including federal, state & territory and local governments have a strong role in providing a universal healthcare system in the country. According to the government, in 2016–2017, the healthcare expenditure in Australia was reported at approximately $181 billion.

The Australian government supports clinical trials for the research and development, as well as improvement of treatments for rare diseases, especially cancers and other unmet medical needs. As per the Australian government, as on 27 November 2019, the total investment for stimulating activities related to clinical trials and registry stands at approximately $75 million.

In Australia, pharmaceutical and biotech companies are focusing on R&D for a secured growth in the upcoming years. Let us discuss three ASX listed healthcare stocks, which are contributing towards the healthcare system in Australia.

ResApp Health Limited (ASX: RAP)

ASX listed digital healthcare player ResApp Health Limited (ASX: RAP) offers smartphone applications for the management and diagnosis of diseases related to the respiratory system. The machine learning algorithms of ResApp diagnose and measure the severity of the condition by the cough sound of the patient without the need of any additional hardware. ResAppDx-EU, the acute respiratory disease diagnostic test (smartphone-based) of ResApp, is Therapeutic Goods Administration (TGA) approved in Australia and CE marked in the European Union.

On 28 November 2019, ResApp updated the market with its annual general meeting presentation, highlighting the product portfolio and upcoming milestones of the company. The key highlights from AGM presentation are-

  • ResApp has completed the US-based SMARTCOUGH-C-2 study.
  • The company has reported positive results from the pivotal Breathe Easy adult clinical study.
  • Positive results reported from the pivotal at-home sleep apnoea study.
  • ResApp published pivotal Breathe Easy paediatric clinical study in Respiratory Research.
  • Partnership with Coviu to deploy ResAppDx-EU on Coviu’s telehealth platform

ResApp and Coviu Partnership

ResApp and Coviu have entered into a non-binding memorandum of understanding (MOU) for the integration of ResAppDx-EU into the browser-based telehealth platform of the latter.

After this integration, ResAppDx-EU would become available to more than 5,500 clinicians, who are using the Coviu platform and would have the ability to diagnose respiratory conditions accurately in a telehealth setting. Both the companies would work together for the next four months under a joint development agreement.

Let’s now have a look at ResApp’s stock performance on ASX. The company’s stock was trading at $0.280 on 29 November 2019 (AEST 02:29 PM), with a market capitalisation of $217.25 million. The total outstanding shares of the company are 790.01 million, with fifty-two weeks high and fifty-two weeks low price of $0.415 and $0.069, respectively. The stock has delivered a positive return of 150.00% and 57.14% on a YTD basis and in the last six months, respectively.

Sigma Healthcare Limited (ASX: SIG)

ASX listed pharmacy wholesaler, Sigma Healthcare Limited (ASX: SIG) is engaged in providing a range of quality along with private & exclusive label products and is a leading network of independent as well as franchised pharmacy stores such as Amcal, Chemist King, Discount Drug Stores (DDS), Guardian, and PharmaSave.

Investor’s Presentation

Sigma Healthcare Limited updated the market recently with its investor’s presentation on 26 November 2019 and highlighted the overview and future plans of the company.

  • Sigma Healthcare grew non-CW sales at 6.9% in the first half of the fiscal year 2020.
  • Its brand partners like Pharmacy Alliance are growing continuously.
  • The company has a robust pipeline for new branded opportunities and independent wholesale customers.
  • Project Pivot is on track to deliver more than $100 million efficiency gains.

Supply Agreement with My Chemist/Chemist Warehouse (MC/CW) Group

Sigma Healthcare Limited announced to have signed an agreement with the MC/CW Group for the supply of Fast-moving consumer goods (FMCG) products. This agreement would be effective from 1 December 2019 and is expected to achieve a full run rate by July 2020.

With the expected sales of approximately $700-800 million in the first full year of operations, the arrangements secure the first-line supply contract for 4.5 years.

Distribution Agreement between Cronos and Sigma Company

On 15 November 2019, Sigma Company Limited, a subsidiary of Sigma Healthcare Limited, and Cronos Australia – Operations Pty Ltd, a wholly-owned subsidiary of Cronos Australia Limited (ASX: CAU), signed a distribution agreement for national distribution of medicinal cannabis products in Australia. PEACE NATURALSTM (medicinal cannabis products), which Cronos Australia is likely to import from Canada through Cronos Group Inc., is expected to be the first products for distribution as part of the deal.

The company is scheduled to update the market with guidance for FY21 at the FY20 results announcement due for 26 March 2020.

The company’s stock was trading at $0.690 on 29 November 2019 (AEST 02:31 PM), with a market capitalisation of $752.2 million. The SIG’s stock has delivered a positive return of 26.79% on a year to date basis.

EBOS Group Limited (ASX: EBO)

EBOS Group Limited (ASX: EBO) is the most diversified marketer and distributor of healthcare products, selling its products in 57 location across Australia and New Zealand. The company’s contract logistics businesses provide a wide variety of services to medical device suppliers, pharmaceutical manufacturers and consumer healthcare companies in Australasia. EBOS Group employs over 3,600 employees.

UBS Australasia Conference highlights

  • The company’s healthcare segment generated revenue worth $6,548.3 million in FY19 ended 30 June 2019, down by 0.9%, while underlying EBITDA was reported at $226.6 million.
  • Revenue from contract logistics businesses stood at $518.0 million in FY19, up by 14.0% and a GOR of $67.2 million.
  • Institutional Healthcare revenue was noted at $2,292.7 million in FY19, up by 2.4% and a GOR of $209.7 million.
  • Community Pharmacy division of the company generated revenue of $3,704.1 million, which was down by 4.3%.
  • Revenue from the consumer products division stood at $113.9 million in FY19, representing an increase of 4.9% year on year.
  • EBOS Group’s animal care segment registered revenue of $382.0 million in FY19, which was up by 1.0% and an EBITDA of $48.3 million, a rise of 5.7%.

Sale of EBOS Shares

Sybos Holdings Pte Limited, which is the largest shareholder of EBOS, recently unveiled plans to sell 15 million of its shares in EBOS Group Limited to investors invited in the bookbuild. Sybos, on 19 November 2019, announced to have signed an agreement with a financial institution for the sale of the shares via on a fixed price bookbuild, which was due for completion on the same day.

The company’s stock was trading at $21.750 on 29 November 2019 (AEST 02:44 PM). EBOS Group Limited has a market capitalisation of $3.58 billion with outstanding market shares of approx. 162.12 million. The EBO’s stock has delivered a positive return of 13.18% on a year to date basis.


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