Osprey Medical Inc

OSP Details

Osprey Medical Inc (ASX: OSP) aims to make heart imaging procedures safer for patients with poor kidney function. Its proprietary dye reduction and monitoring technologies are designed to help physicians minimize dye usage and monitor the dose of dye real-time throughout the procedure. The Company’s DyeVert™ System reduces contrast while maintaining image quality in a self-adjusting easy-to-use design that monitors dye usage. It has a market capitalization of $41.05 million as on 22 June 2021.

Q1 FY21 Trading Update:

In its Quarterly Cash Flow Report for the period ending 31 March 2021, OSP highlighted that its business remains well capitalized with a cash balance of US$13.6 million as of 31 March 2021. The company emerged from the COVID-19 with double-digit growth in units sold and revenues. In the US market, it had added seven new Independent Sales Agency (ISAs) in the regions outside of its direct salesforce. It is expecting to ramp up sales in the US region going forward. The company is looking to hire more ISAs and train them. It now has 8 ISAs covering 26 new states. Net revenue stood at ~US$586k (up 21% on the previous quarter).

Operating Cash Flows (Source: Company Reports)

FY20 Results Performance (Year ended 31 December 2020)

Revenue of the company from ordinary activities stood at ~US$1.7 million, a decline of ~54.4% on the previous year. Loss after tax attributable to members stood at ~US$13.38 million, a decline of ~26.0% over the prior year. Net tangible asset per share stood at US$0.005, as compared to $0.037 in the previous year. No dividends were paid for the period.

FY20 Financial Summary (Source: Company Reports)

Outlook:

OSP has signed a four-year strategic agreement with GE Healthcare for sales of Osprey’s portfolio across Europe and parts of Asia. In addition, Osprey has entered the ANZ market for the first time through the Regional Health Care Group. Moreover, the company was involved in cost-effective expansion across the US with ISA agreement with BioCore covering eight new states, with more to be finalized in the near term in addition to its direct coverage over existing states.

Stock Recommendation:

OSP has delivered 3-month and 6-month negative returns of ~16.67% and 25.00%, respectively. It is currently trading below the average of the 52-week low price of $0.009 and the 52-week high price of $0.063, implying an opportunity for accumulation. As the pandemic subsides and hospitals explore ways to improve coronary angiography patient outcomes and reduce costs, DyeVert provides the solution as it has been proven to reduce CI-AKI. Overall, Osprey faces a potential market opportunity of ~US$1.1 billion and is committed to expanding its reach globally to protect patients from CI-AKI. Considering the cost-effective expansion plans in the US through ISAs, distribution tie-ups with renowned brands, healthy cash balance, and the current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.015, down by ~6.251% as on June 22, 2021.

OSP Daily Technical Chart, Data Source: REFINITIV 

Resapp Health Limited

RAP Details

Resapp Health Limited (ASX: RAP) develops smartphone applications such as ReAppDx and SleepCheck to diagnose respiratory diseases. As of 22 June 2021, the market capitalization of RAP stood at ~$38.66million.

Q3FY21 Update:

RAP received cash receipts of $48,000 via advanced payments from AstraZeneca and for SleepCheck downloads from Apple and Google. It received $859,000 via tax rebate and government grant. RAP net cash outflow from operations stood at $957,000 in 3QFY21. During the quarter, Medgate AG started a pilot trial of the ResAppDX respiratory test spanning its telemedicine services for three months in Switzerland. During Q3FY21, RAP received The TGA approval and CE mark certification for its Class I wearable medical accessory for sale in Australia (ANZ) and Europe. It held a cash and cash equivalents balance of $3.2 million at the end of the period.

H1 FY21 Result Performance:

The company reported revenue of $46k from its customer contracts in H1FY21. It incurred a net loss of $3.13 million, down by ~18% YoY for H1FY21. It held a cash and cash equivalents balance of $4.21 million at the end of the reporting period.

Financial Summary (Source: Company Reports)

Recent Update:

The company’s ResApp’s smartphone-based acute respiratory diagnostic test pilot study has been extended by two months. Medgate initially commenced a pilot trial in March 2021. The additional time will be utilized to optimize ResAppDx across its telemedicine services.

Outlook:

RAP will undertake a pilot evaluation of its ResAppDx application at five partner sites in Kenya. It expects the preliminary study data for the COVID-19 Cough Study by the next quarter. The company will launch its ResAppDx into Medetective, a wellness and health management program as per its software licensing contract with Workplace Medicine Australia Limited. The launch is now expected by Q4 of CY2021.

Key Risks:

The company faces the risk of launching new products, industry competition, and the threat of new technological disruptions. It is exposed to the risk of lesser patient enrolment, due to the pandemic situation.

Stock Recommendation:

RAP has delivered 3-month and 6-month negative returns of ~37.50% and ~45.78%, respectively. It is currently trading below the average of the 52-week low price of $0.041 and the 52-week high price of $0.190, implying an opportunity for accumulation. Considering the traction in pilot studies for its respiratory test products, foray into Australia and Europe market with recent approval for wearable products, healthy cash balance, commitment from institutional investors for fundraising to the tune of $5.5 million, and the current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.045 as on June 22, 2021.

RAP Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

• Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

• Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

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