Spire Healthcare Group Plc – Offering Virtual Consultancy to Patients

Spire Healthcare Group Plc (LON: SPI) is a Hospital Group. It operates around eight clinics and 39 hospitals across England, Wales, and Scotland. 

AGM Statement and Agreement with NHS (National Health Service)
On 14th May 2020, Spire Healthcare Group released a statement for annual general meeting and agreement with NHS. As per the agreement, the Group’s facilities will be used by NHS in Scotland, Wales and England as extra capacity for critical and urgent medical treatments related to coronavirus outbreak. The Company is also entitled to cash cost recovery by NHS for services provided, and the contract will last till 28th June 2020, with a notice period of one month before the contract end. To provide further flexibility, SPI lenders have agreed to waive two covenant tests on 30th June 2020 and 31st December 2020. The Board expects agreements with lenders, and NHS will bring financial stability with sufficient liquidity, which will help the Company to return to normal operations. The Care Quality Commission has upgraded the Spire Hartswood rating to Good, which shows an increased focus on patient safety and clinical quality. The Groups’ management team will be taking a salary cut of 20 per cent for the next three months.

Share Price Performance

Daily Chart as of June 19^th, 2020, before the market close (Source: Refinitiv,Thomson Reuters)

Spire Healthcare Group Plc shares were trading at GBX 92.30 at the time of writing before the market close (at 9:05 AM GMT+1) on 19^th June 2020 and were up by 0.54% versus the previous day closing price. Stock's 52 weeks High is GBX 145.00 and Low is GBX 51.10.

Valuation Methodology


Growth Catalysts & Key Risks
The Group has been providing comprehensive services on patient safety, while progressively generating revenue, profitability, and cash flow over the years. The landmark partnership with NHS across Scotland, Wales and England reflects the strength of its portfolio and services. The Group is exposed to the effects of political and economic risks, as the market expects macro-economic uncertainty or downturn in the UK economy.

Conclusion
The financial year 2020 is progressing in-line with the Board’s anticipations, while coronavirus (COVID-19) is creating uncertainty. At present, the Group is unable to predict the potential impact of the coronavirus. The Company is actively managing the situation on a daily basis and following Public Health England guidelines. For the full year 2019, the Company made decent progress, particularly in private revenues, driven by strong sales growth momentum. The Group saw growth in both self-pay and private insurance, with a mainly robust result in private insurance. SPI expects agreements with lenders, and NHS will bring financial stability with sufficient liquidity, which will help the company to return to normal operations. 

Based on the decent growth prospects and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation at the current market price of GBX 90.27 (as on 19^th June 2020, before the market close at 8:58 AM GMT+1), with lower-double digit upside potential based on 18.50x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).

Sensyne Health Plc – Improving Patient Care using Clinical AI

Sensyne Health Plc (LON: SENS) is a health care equipment & services company, engaged in the business of development and discovery of new medicines and refining patient care.

Recent News
On 19^th May 2020, Sensyne Health announced the launch of CVm-Health™ in the United States. The app helps in creating a health diary and is supported by Cognizant and Microsoft.

In September 2020, the Company will report its audited full-year 2020 results.

Update on Trading and Business Performance
On 14^th May 2020, Sensyne Health released an update (unaudited) on the trading and business performance for the financial year 2020 ending 30^th April 2020. The Group witnessed strong revenue of GBP 2.1 million for the period versus GBP 0.136 million in FY2019. Driven by consistent investment in R&D, cash balance stood at approximately  GBP 31.6 million. The Company witnessed an increase in demand for its remote monitoring products, and it supplied products such as CVm-Health, BPm-Health and GDm-Health for free to NHS in the coronavirus pandemic. SENS also signed a commercial research agreement with Alexion during the period. The Company also appointed Professor Sir Bruce Keogh KBE as board’s permanent Chairman. The Group expect to trade in line with expectations for FY2021.

Share Price Performance

Daily Chart as of June 19^th, 2020, before the market close (Source: Refinitiv,Thomson Reuters)

Sensyne Health Plc shares were trading at GBX 36.00 at the time of writing before the market close (at 9:13 AM GMT+1) on 19^th June 2020 and were down by 1.37% versus the previous day closing price. Stock's 52 weeks High is GBX 165.00 and Low is GBX 35.00.

From the technical standpoint, 14-day RSI is currently hovering in an oversold zone and carry the potential to trigger an upside bump in the stock price.

Valuation Methodology


Growth Catalysts & Key Risks
The Company signed an agreement with Bayer, which will help the company to generate higher revenues in the second half of the financial year 2020. The Group signed a collaboration agreement with the oxford and strategic research agreements with NHS would help to gain more market share in the health care sector. The company’s revenue is impacted by increased competition in the healthcare sector.

Conclusion
In the financial year 2020, the Group expects revenue to increase for the period and is continuously investing in R&D. The Company witnessed an increase in demand for its remote monitoring products and to support NHS during covid-19 by supplying free products. The Group is focusing on higher growth markets, through M&A and has achieved significant growth in the past. SENS remained a cash generative in the current financial period due to focused investment prioritisation, and tight financial management approach opted by the company.

Based on the decent growth prospects and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation at the current market price of GBX 36.00 (as on 19^th June 2020, before the market close at 9:13 AM GMT+1), with single-digit upside potential based on 8.60x NTM EV/Sales (approx.) on FY21E sales (approx.).

OptiBiotix Health Plc – Expanding Geographically through New Partnerships

OptiBiotix Health Plc (LON: OPTI) is an AIM-listed life science company. It is involved in the development and research of microbiome modulators mainly in the United Kingdom. 

Recent News

On 3^rd June 2020, OptiBiotix Health announced the warrant exercise of over 50 ordinary shares at an exercise priceper share of 8 pence.

Financial Highlights – Improved Revenue for FY2019 (31st December 2019, GBP)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, driven by improved operational performance, the revenue increased to GBP 744,883 as against GBP 514,289 in the FY2018. Due to an increase in the operating expenses for the period, the Group reported an operating loss of GBP 2,166,637 in FY2019 versus an operating loss of GBP 1,498,896 in FY2018. The loss for the period stood at GBP 2,118,388 in FY2019 versus a loss for the period of GBP 1,892,579 in the financial year 2018. The basic and diluted loss per share for the period stood at GBP 2.49 pence.

Share Price Performance

Daily Chart as of June 19^th, 2020, before the market close (Source: Refinitiv,Thomson Reuters)

OptiBiotix Health Plc shares were trading at GBX 52.07 at the time of writing before the market close (at 9:15 AM GMT+1) on 19^th June 2020 and were down by 0.82% versus the previous day closing price. Stock's 52 weeks High is GBX 87.80 and Low is GBX 23.20.

From the technical standpoint, 14-day RSI is currently hovering in an oversold zone and carry the potential to trigger an upside bump in the stock price.

Growth Catalysts & Key Risks
The large number of agreements signed with multiple partners, across multiple application areas and geographies. The Group will continue to enter new territories, develop new application opportunities, and importantly support existing partners, which will create a pipeline of new opportunities across all the platforms. Acquisitions to match rapid transformation may increase integration risks and expected synergies may not be achieved.

Conclusion
With OptiBiotix extending its brand presence and geographic reach into 119 countries, the Group witnessed robust commercial progress in the first three months of the financial year 2020.  It has signed several agreements generating revenue and a greater number of deals generating income in the first year of the agreement. The Company also witnessed a massive increase in revenues (up 928 per cent), albeit against a low base. In 2020, OPTI expects further revenue growth. Pharma and Biotechnology stocks are buzzing, showing a sign of outperformance lately.

Based on the decent growth prospects and with a significant increase in the revenue, we have given a “Speculative Buy” recommendation at the current market price of GBX 52.06 (as on 19^th June 2020, before the market close at 9:00 AM GMT+1). 
 
*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.

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