Mesoblast Limited

Potential pathway approval for Revascor: Mesoblast Limited (ASX: MSB) is into innovation of cellular medicines while developing off-the-shelf cellular drugs.  It has a diversified portfolio of cell-based and most clinically advanced products. The company has its technology platform of mesenchymal lineage adult stem cells.

The company on its latest announcement, on 14 January 2019, mentioned that it has drawn down a further amount of US$15 million for using the fund to ramp up the commercialization of its products.


Consolidated Income Statement (Source: Company Reports)

On the financial front, the company has reported total revenue of $17.34 million in FY18 compared to $2.41 million in FY17 implying a significant rise of 619.50% on a Y-o-Y basis, primarily driven by the milestone segment followed by the commercialization of revenue.The net loss improved by 54.1% Y-O-Y to stand at $35.29 million in FY18 vs. $76.82 million in FY17, primarily on the back of higher sales. Among the key ratios, the current ratio stood at 4.21x in FY18 compared to 1.73x in FY17, primarily driven by an increase in receivables on a Y-o-Y basis.

What to Expect from MSB Moving Forward: Going forward in FY19, the company plans to work diligently with the FDA to submit a rolling Biologics License Application.This will help Mesoblast Limitedfor using remestemcel-L in treating aGVHD in children as well as will execute on the product candidate’s market access and commercialization strategy. Furthermore, in the first half of 2019, it will discuss a potential pathway approval for Revascor, in patients with final stage heart failure and left ventricular assist device.  

The stock, however, is currently trading at $1.305 which implies the fall of 2.612% during the day’s trade with a market capitalization of ~$668.16 million. It has generated a YTD return of 3.16% and posted a 25.48% return in the last one month.

We believe that the company may benefit from the Biologics License Application and pending approval for Revascor. Thus, we maintain our “Hold” recommendation on the stock at the current market price of $1.305 per share.
 

HealthScope Limited

Look at Financial Performance: HealthScope Limited (ASX: HSO) is a leading private healthcare provider in Australia. It has a market leading international pathology operation in New Zealand. The group, since its listing in 2014, has established various skin cancer clinics and breast diagnostic clinic in Australia.

On 21 January 2019, Brookfield Capital Partners has given an indication to the company that it is in the process of finalizing the due diligence analysis & debt commitments and has an intention to seek the necessary internal approvals required to submit a complete binding offer by 31 January 2019, which is required for advancing the acquisition deal.


Financial Performance Summary (Source: Company Reports)

On the financial front, the group revenue was up 3.7% Y-O-Y to $2,340.8 million in FY18 as compared to $2,256.5 million in FY17, driven by a 10.2% revenue growth from completed brownfield developments, which continues to provide confidence that capital is being invested in the right catchments.The operating EBIT from continuing operations saw a 7.8% Y-O-Y decline and stood at of $265.9 million in FY18 which was driven by lower operating EBITDA and an increase in depreciation and amortization which was mainly because of the hospital expansion program. Healthscope’s net profit primarily declined because the large number of Australians has ceased to continue the private health cover.

What to Expect From HSO: In FY 2019, the company has projects which are underway in New South Wales, Queensland, Victoria, Western Australia and the ACT which are planned to deliver an additional 560 beds and 29 operating theatres.

Stock Performance: The stock, however, is currently trading at $2.390 per share with a market capitalization of $4.18 billion. It has generated a YTD return of 9.13% and posted a 11.16% return over the last one month.

With scope for growth and synergies with Brookfield Capital Partners post 100% acquisition, we maintain our “Hold” rating on the stock at the current market price of A$2.390 per share.
 

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