While this article focuses on the share market during the pandemic, it in no way seeks to minimise the very real human tragedy that is occurring.
MedAdvisor Ltd (ASX: MDR) fell 9.8 per cent on Friday, and also disclosed that Regal Funds Management has been a net seller. The fundie has sold over $1.8m in MedAdvisor shares since 11 February.
The healthcare technology provider has been experiencing some of its highest ever trading volumes and price volatility on the back of ongoing uncertainty about its role in the Covid-19 pandemic response. In spite of these circumstances, its share price reached Friday’s market close at roughly its six-month average of 36.5 cents.
MedAdvisor looks to be strategically positioned to expand its operations throughout the Covid-19 pandemic, with a good chance of maintaining that position once the crisis resolves.
The MedAdvisor app allows patients to remotely order a repeat prescription from their GP, though usage of this service has historically been inconsequential, due to a lack of government subsidy for telehealth. With recent announcements, that may change.
After their telehealth appointment, app users can then place an order for the medication with a pharmacy, with the ability to message the pharmacist during the order process to ask questions. Recently, MedAdvisor has added the ability for them to then have their medication delivered to their home. While it has become a cliché to describe a business as “the Uber of whatever”, MedAdvisor does appear to fill an obvious niche in the healthcare system.
The race to fill that niche is only going to accelerate given the self-isolation and social distancing protocols demanded by Covid-19. In fact, some observers might wonder whether the announcement of the Regal sale on Thursday evening was motivated by a changed view of the stock or the need to fill redemptions. We thought that the announcement earlier that morning that the Australia Federal Government is committing $25 million to facilitate medication delivery during the pandemic would be considered a positive. MedAdvisor already has commercial agreements with many of Australia’s pharmacies.
That said, it may also be important to continue evaluating MedAdvisor against a criteria of risk appropriate to a start-up. The company continues to operate on negative free cash flow of A$2.37m over the past quarter, and with international expansions planned on multiple fronts (US, UK and Southeast Asia), the days of steady profit look to be some way off still.
Given their negative cash flow, it was fortunate that MedAdvisor was able to complete a capital raising of $17 million in October 2019 before the expected recession.
In A Rich Life’s “Framework for Sorting Investment Opportunities during a Pandemic”, we described MedAdvisor as a potential long-term beneficiary of the pandemic. But with the government backing of pharmacy-to-home deliveries, and the broader emerging turn to greatly expanded government spending, MedAdvisor could arguably become a short-term beneficiary as well.
Christian Tym does not own shares in MedAdvisor Limited.
This post is not financial advice, and you should click here to read our detailed disclaimer.
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