Government urged to continue MBS-funded telehealth services: ResMed, Resapp to reap the benefits

Summary

• Telehealth consulting is playing a pivotal role in reducing health anxiety and ailment in the COVID-19 struck society with social distancing and fears of catching the infection refraining people to visit public places including hospitals
• The pandemic times has proven opportunistic for many healthcare players engaged in providing medical assistance through electronic medium or using latest technologies such as Artificial intelligence or machine learning algorithms.
• ResApp and ResMed are two healthcare providers who have achieved significant milestones with respect to their products during COVID-19

The Australian government had extended temporary Medicare Benefit Schedule (MBS) telehealth items on 13 March 2020 to assist in reducing the risk of community transmission of COVID-19 and protect patients and health care providers. The new temporary telehealth items were meant for out-of-hospital patients’ consultation providers include GPs, medical practitioners, nurse, midwives, allied health providers and dental practitioners in the practice of oral and maxillofacial surgery. By early April, Australian government provided access of Medicare-funded telehealth to every Australians, which was earlier only limited to chronic patients.

Since the Government’s emphasis on availing telehealth services, consultation on health-related services and information via telecommunications technologies has really sky rocketed. Various companies are operating under the telehealth regime by assisting in transmission of images, voice and data using telephone, videoconferencing and other electronic mediums.

Preference for telehealth has also boosted the business prospects of companies operating in the telehealth space. Let’s scan through two companies to understand how they are faring during the covid-19 outbreak

ResApp Health Limited (ASX:RAP)

ResApp Health Limited provides diagnosis and management of health condition associated to respiratory system through smartphone apps. The Company uses machine learning algorithms to identify and quantity the severity of respiratory conditions. The Company’s products include ResAppDx-EU and SleepCheck, both regulatory approved and clinically proven.

Within a month, ResApp’s share price increased by 8.82% to hit AU$ 0.185, up 5.714% from its previous close on 26 June 2020. The price rally was primary driven by a series of announcements on partnerships and product updates.

On 18 June 2020, ResApp signed a memorandum of understanding with RB, a global health, hygiene, and nutrition products manufacture, to develop a prototype app that uses its ResAppDx-EU respiratory test for customers to identify their respiratory symptoms.

On 16 June 2020, ResApp signed a two-year, non-exclusive commercial software licensing agreement with Phenix Health Pty Ltd, Australia based virtual super clinic, to use ResApp’s acute respiratory diagnostic test, ResAppDx-EU, in Phenix’s telehealth smartphone app.

On 2 June 2020, ResApp announced that Sana Klinikum Lichtenberg, a German hospital, has received an ethics approval to perform a health-economic evaluation of ResAppDx-EU involving an initial workflow assessment and quality assurance unit of 50 subjects, followed by recruitment of up to 300 subjects.

On the same day, the Company also announced an update on its Indigenous Australian chronic obstructive pulmonary disease (COPD) screening clinical study which started since December 2019. However, due to COVID-19 restrictions, access to the facility was limited with recruitment in the study not yet started

On 11 May, the Company announced that Health Hub Doctors Morayfield, a federal government-funded COVID-19 respiratory clinic in Brisbane has obtained a license from ResApp for the clinical use of ResAppDx-EU at zero cost till 1 September 2020.

On 6 May, RAP obtained final design files for handheld and wearable gadgets being developed by Avanti Med Limited and OSI Electronics.

On 30 April, the Company provided highlights of its third quarter ending March 2020 with ResAppDx-EU receiving approval from Australian Therapeutic Goods Administration (TGA) in February for adult use, an addition to the paediatric TGA approval received in the prior quarter. Currently, ResApp is seeking FDA approval for its De Novo classification request for ResAppDx-US.

In March, initial integration of ResAppDx-EU into Coviu’s telehealth platform took place with both the companies agreed to levy a per test fee (range of AU$ 5-10 per test) for the use of ResAppDx-EU.

RAP further updated that the Company is set to launch its CE Marked and TGA approved SleepCheck, a clinically-validated at-home sleep apnoea screening app on the App Store in Australia and the UK during Q4FY20.

At quarter end, RAP also raised ~ AU$ 5 million to expedite its European market entry and held AU$ 6.9 million cash.

ResMed Inc (ASX: RMD)

San Diego, CA, based ResMed Inc is a medical equipment company treating patients with sleep apnea, chronic obstructive pulmonary disease (COPD), and other respiratory conditions through cloud-connectable medical devices such as CPAP devices and masks. The Company serves health authorities, governments, physicians, hospitals and other health providers.

On year till date basis, ResMed’s share price increased by 8.47% to hit AU$27.160, up 2.298% from its previous close on 26 June 2020. The price rally was primary driven by a series of announcements on partnerships and product updates.

On 14 May 2020, the Company announced a quarterly dividend distribution at US$ 0.039 per share to be paid on 18 June 2020.

On 30 April 2020, ResMed reported third quarter results ending 31 March 2020 with revenues up by 16% to US$ 769.5 million. On a constant currency basis, the revenue increase was by 17%. The company also reported an increase of 31% in non-GAAP operating profit.

There was 12% rise in revenue in the United States, Canada, and Latin America. Revenue in combined Europe, Asia, as well other markets increased by 27% (constant currency basis). The increased sales were backed by increase in sales across the mask and device product portfolios.

The software as a Service (SaaS) revenue of RMD increased by 12% backed by the consistent growth in the Brightree as well as MatrixCare service offerings.

Net income grew by 55% to reach US$ 163.1 million. Cash flow of US$ 239.7 million from operations was recorded for the current quarter. Diluted earnings per share grew by 53%. During the period, the Company paid US$56.4 million in dividends.

The Company also highlighted few business and operational milestones-

• ResMed introduced its first tube-up CPAP (full face) mask, AirFit F30i, designed to make users sleep with comfort at any position. Under nose cushioning of mask avoids soreness and irritation on the nasal bridge.
• ResMed collaborated with ATS Foundation and gave the third US$100,000 research grant to conduct a research on how remote monitoring can enhance patient management with COPD.
• The Company launched a COVID-19 resource page providing links on latest information from global and regional health organisations and frequently asked questions on the use of ResMed’s devices pertaining to COVID-19 and information for healthcare professionals.