This under-the-radar ASX tech company’s shares are up 150% since March

Medical imaging and data management company Mach7 Technologies Ltd (ASX:M7T) has delivered some impressive shareholder returns this year. Despite all the commercial headwinds from COVID-19.

After falling to a 52-week low of just 37 cents in late March, the ASX small cap company’s share price has rallied strongly. In recent months, the Mach7 share price has soared more than 150% higher to 96 cents at the time of writing. This puts its shares up more than 45% so far this calendar year.

What has driven the gains?

Results for FY20 were positive across most financial metrics. Revenues surged 102% higher year-on-year to $18.9 million. The company also reported its first full year of profitability: earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $3.3 million, while net profit after tax was $0.2 million. Most of the uplift in revenues came from licensing fees, either from new customers or existing customers repurchasing licenses.

Annualised recurring revenues also jumped 35% to $9 million. These are subscription and support services revenues received from customers who are “live” on the Mach7 platform. The company will want to continue to grow this category of revenues in particular, as the more revenue the company can “lock in” each year, the less variability there will be in its financial results.

First quarter FY21 results haven’t been quite as strong. Annualised recurring revenues increased by $0.9 million, while the company generated $3.3 million worth of new sales orders. It also completed the acquisition of Client Outlook during the quarter, at a cost of $40.8 million. Client Outlook is a Canadian technology company servicing the healthcare industry, which specialises in medical imaging.

What does Mach7 actually do?

Mach7 develops a centralised software platform for healthcare professionals, with a focus on medical imaging. Patient data can be stored in multiple formats across multiple different systems. Mach7 aims to create a single, integrated source of reliable patient data that can be used by doctors and other healthcare professionals to deliver better results for their patients. The company already has a diverse range of clients, including Singapore General Hospital, Massachusetts General Hospital, and the Hamad Medical Corporation in Qatar.

When releasing Mach7’s first quarter results, company CEO Mike Lapron said: “We have very experienced individuals who are bullish about the product potential and confident in our ability to become a dominant player in the imaging market.”

Our Foolish analysts agreed with Lapron’s bullish outlook, and Mach7 earned itself a place on the Motley Fool’s Hidden Gems scorecard back in June. Our analysts liked the company’s strong business momentum and global market opportunities. 

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Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MACH7 FPO. The Motley Fool Australia has recommended MACH7 FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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