MyHealthChecked PLC (LON: MHC)  

MyHealthChecked PLC is an FTSE AIM All-Share index listed Company offering at-home testing brands including MyHealthChecked and Mylo. Moreover, MyHealthChecked brand offers a diverse range of at-home DNA & RNA tests, and Mylo targets the personalized mobile health market.

New Launches

Launch of COVID-19 Rapid Antigen Test: MHC had launched two home testing services for travellers entering and departing the UK on 24 November 2021. With this, the Company had begun selling a rapid antigen test and a verification service for residents and vaccinated travellers arriving in England from a non-red list country. In addition, the Company had collaborated with medical specialists Mediskills, who will provide fully trained NHS professionals to verify test results as part of this service.

Growth Prospects (also covers trading update released on 13 December 2021)

• Commercial Relationships: The Company had secured contracts with the UK's top pharmacy retailers, Boots and Lloyds. Furthermore, MHC completed a second acquisition in July 2021 - Nell Health Limited. It will broaden the range of a validated saliva-based DNA tests.
• Key Strategic Focus: The focus of the MHC is on accelerating UK sales growth, developing the next-generation product, expanding into new markets, and widening the portfolio. Myhealthchecked is a market-leading product and has a strong foundation in fertility tracking and pregnancy self-testing, which will help more and more women and couples through their fertility pathway.
• Strong Cash Position: MHC anticipates business to remain cash generative at the end of FY21 and the Board expects cash balances to be at least £4.6 million (31 Dec 2020: £0.47 million).

Key Risks

• Compliance Risk: The Company operates in a highly regulated market, and any non-compliance with rules could lead to penalties and loss of reputation.
• UK GDP: The UK economy witnessed a slowdown as the GDP grew quarter-on-quarter by around 1.1% during Q3 FY21, which remained merely lower-than-expected growth of around 1.30%.
• Rise in Interest Rates: The recent interest rate hike of 15 basis points announced by the Bank of England may keep investors’ away from the UK Equities.

Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of MyHealthChecked PLC.

Mercia Asset Management PLC is the most significant shareholder as it holds nearly 205.76 million shares as of 30 September 2021.    

H1 FY21 Financial Highlights (for the six months ended 30 June 2021, as of 29 September 2021)

(Source: Company Results)

• Top-Line Business: MHC had achieved a top-line revenue of £3.27 million during the period.
• Improvement in Profitability: The Company had managed to bring down the EBITDA loss to a negative £199,670 during H1 FY21.
• Decent Cash Balance: MHC had cash & cash equivalents of £2.21 million as of 30 June 2021, while it was £1.35 million at the end of H1 FY20.
• Significant Contracts: The Company had secured contracts with both UK’s top pharmacy retailers, Boots and Lloyds, during H1 FY21.
  

Share Price Performance Analysis

(Source: Refinitiv; Analysis done by Kalkine Group)

The last traded price on LSE was GBX 2.30 at the closing of 22 December 2021 and remained at the same level as on 23 December 2021, at 08:00 AM GMT due to thin liquidity and muted volume. Stock 52-week High and Low were GBX 7.45 and GBX 1.21, respectively.

In terms of technical indicators, MHC's stock price is trading between the lower Bollinger band and the middle Bollinger band, indicating an upside direction for the stock.

Over the last one year, MHC’s stock price has delivered a positive return of ~76.92%, and it has outperformed the FTSE AIM All-Share index (benchmark index) with a return of about 6.29% and FTSE All-Share Pharmaceuticals & Biotechnology (benchmark sector) with a return of around 27.29%.

Valuation Methodology: Price/Sales Approach (NTM) (Illustrative) 

Business Outlook

After demonstrating a strong top-line business performance during H1 FY21, MHC delivered a further revenue growth during Q3 FY21. Moreover, MHC achieved a positive EBITDA position and quarterly cash generation for the first time during Q3 FY21. However, the Company had highlighted of a lower travel volume for Q4 FY21. Nevertheless, the Company aimed to achieve strong trading performance during Q4 FY21 due to the high levels of demand for the recently reinstated PCR Day-2 test kits and associated laboratory services. Furthermore, the Company had anticipated FY21 revenue to remain around £16 million and expected an adjusted EBITDA profit of at least £2.1 million. However, the stock price may undergo sizeable corrections because of the penny nature and ongoing investors’ worries regarding the Omicron variant of coronavirus. Thus, it would depend on the risk appetite of the investors to take a reasonable position on this company having strong revenue visibility over the medium term.

Considering the decent financial performance during H1 FY21, strong revenue visibility, improved cash position, recent launches, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on MyHealthChecked PLC at the current market price of GBX 2.30 (as of 23 December 2021 at 08:00 AM GMT), with lower-double digit upside potential based on 1.42x Price/NTM Sales per share (approx.) on FY21E sales per share (approx.).

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peer information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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