Category: Stock Market

Something very interesting is happening right now in the United States (US).

The CEOs of some of the largest US tech companies are testifying before an antitrust hearing in the US House of Representatives.

Yes, Facebook’s Mark Zuckerberg, Alphabet’s Sundar Pichai, Jeff Bezos of Amazon.com and Apple’s Tim Cook are fronting a congressional committee examining whether these companies should be broken up using US antitrust laws. It’s quite the show.

What are antitrust laws?

‘Antitrust’ is an American term that we would translate into ‘anti-monopoly’. The US has had antitrust laws for more than a century, and they have been wielded once in a way that impacted the world.

More than a century ago, the Standard Oil empire of John D. Rockefeller was determined a monopoly and forced to break up into several smaller companies.

Incidentally, these companies now form most of the major oil companies in the world today. It’s also worth pointing out that the antitrust process massively increased Rockefeller’s wealth.

Will this mean a big tech breakup?

Well, it can’t be ruled out yet. The tech company CEOs have been peppered with tough questions.

The US congressional committee noted that Facebook purchased Instagram back in 2012 because it saw the then-fledgling company as a potential rival.

It noted that Apple charged a substantial fee for third-party transactions on its App Store platform.

It criticised Alphabet for curating a “walled garden” of the internet and “weaponising” its Google search function.

And the committee accused Amazon of being misleading when Bezos denied the company used data from third-party sellers to boost sales of its own products.

The accusations all point to the misuse of market position and power. And that is technically grounds for antitrust action (potential tech breakups).

All in all, it has been an episode of high drama.

But I don’t think too much will come of these hearings.

Even if it does, and Facebook was split into Facebook, Instagram and Whatsapp, or Alphabet into Google and YouTube, what happened with Standard Oil shows this could lead to even more wealth for the company owners.

However, if even one of these big tech companies is broken up, it will be a momentous day. Watch this space!

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, and Facebook and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, and Facebook. 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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The Aroa Biosurgery Ltd (ASX: ARX) share price has closed 7.69% higher today after announcing it has secured United States Food and Drug Administration (FDA) clearance for one of its products, ‘Symphony’. In addition, the company received European approval for its product, ‘Myriad’, and released an investor presentation today.

The New Zealand-based Aroa is a soft tissue regeneration company focused on improving the rate and quality of healing in complex wounds and soft tissue reconstruction. 

Symphony FDA clearance

Symphony is designed to reduce complex wound healing time in the proliferative phase where normal healing is impaired due to disease.

Its pending commercial launch in 2021 presents a major expansion in Aroa’s product portfolio in the US. Pleasingly, the launch will take the company’s addressable market to more than $2.5 billion, up from $1.5 billion previously.

Aroa CEO Brian Ward said “Symphony will give clinicians a new option to treat some of their most hard to heal patients, in what we estimate is a US market size of US$1.15 billion for the product”.

European approval for Myriad

Aroa’s product, Myriad, has received the ‘CE mark’ to allow commercialisation in the European Union. Myriad supports rapid tissue growth for dermal tissue reconstruction. The company expects the launch of the product to occur in 2021. 

The FDA clearance in June 2017 led to first sales earlier this year. Additionally, it is estimated the total addressable market size for the product globally is US$350 million.

July investor presentation

According to its investor presentation, all Aroa’s products are based on its proprietary Endoform platform technology which is a unique Extracullular Matrix (ECM) derived from sheep forestomach.

Additionally, the company says its technology offers superior regenerative performance at a significantly lower cost than other biologics enabling more patients to have access to the benefits of regenerative healing.

The company’s products have competitor protection due to the patents it owns. This includes 10 patents and 25 pending patent applications across 6 patent families. Aroa has 5 patented products selling across the US alone.

Pleasingly, the company’s revenue has grown from $8.43 million in FY18 to $21.92 million in FY20. Furthermore, its product gross margin of 71% in FY20 has expanded compared to 36% in FY18. It is earnings before tax, depreciation and amortisation (EBITDA) positive in FY20 on a proforma basis.

Aroa Biosurgery share price performance

The Aroa Biosurgery share price closed today’s trade at $1.54 which represents a 14.07% increase since it listed on the ASX just last Friday.

More reading

• Aroa Biosurgery surges 80% on ASX IPO. Is it still good value?

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Pilbara Minerals Ltd (ASX: PLS) share price is up by 8.7% to 38 cents per share at the time of writing, after the company announced it has secured a new US$110 million (A$153 million) low-cost debt facility.

What’s moving Pilbrara Minerals share price today?

According to today’s announcement, international bank BNP Paribas and Australian clean energy investors Clean Energy Finance Corporation (CEFC) are providing the new financing. Both are long term Pilbara supporters.

The new debt facility will largely go towards the early redemption of Pilbara’s existing US$100 million Nordic Bond, which was used to support the financing of Stage 1 of the Pilgangoora Lithium-Tantalum Project in 2017.

According to the announcement, the average all-in interest rate for the new facility currently comes in at approximately 5%, which represents a substantial cost saving when compared to the Nordic Bond.

The company expects the new financing to increase cash flows and decrease its funding costs.

What does Pilbara Minerals do?

Pilbara is an Australian lithium-tantalum producer. It owns 100% of the Pilgangoora Project in Western Australia. The region is believed to contain some of the largest deposits of hard-rock lithium-tantalum deposits in the world.

With lithium helping power electric vehicles and the wider transition away from carbon-based fuels, Pilbara Minerals aims to become one of the biggest producers in the world.

A word from Pilbara’s CEO

In announcing the refinancing of its existing debt facilities to support its long-term growth plans for its Pilgangoora Project, managing director and CEO, Ken Brinsden noted:

This landmark refinancing of our long-term debt facilities … reflects the quality and scale of the Pilgangoora Project, as well as our success in building, commissioning and ramping-up the Pilgangoora Project to secure our position as a sustainable and reliable long-term supplier of lithium raw materials to some of the key players in the global lithium battery supply chain. Both BNP Paribas and the CEFC have been key contributors and partners in the development journey of the Pilgangoora Project.

Investors appear pleased with the news, with the Pilbara share price up 8.7% in late-afternoon trading.

Pilbara is an S&P/ASX 300 (INDEXASX: XKO) listed company, with a market capitalisation of $834.28 million at current prices. 

More reading

• Up 38% in July! Is the Orocobre share price a buy?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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If you’re in search of a source of income in retirement, then I think the share market is a great place to look.

Especially given how the interest rates on offer with income-generating assets like term deposits are yielding just 1% right now.

Two dividend shares that I think would be great options for retirees are listed below. Here’s why I like them:

BWP Trust (ASX: BWP)

The first option for retirees to consider ahead of term deposits is BWP Trust. It is the largest owner of Bunnings Warehouse sites in Australia with a portfolio of 68 stores leased to the hardware giant. BWP withdrew its distribution guidance in March at the height of the pandemic, but soon brought it back after being able to collect rents as normal despite the economic downturn. I believe this is a testament to the quality of its tenant, which has continued to thrive during the crisis.

Last month management revealed that it currently expects to pay a second half distribution of 9.27 cents per unit, bringing the full year distribution to 18.29 cents per unit. This represents a 1% increase on the prior financial year and is in line with its previous guidance. The good news is that due to the strength of the Bunnings business, I believe this growth can continue over the coming years. As a result, based on the current BWP share price, I estimate that it offers a generous 4.7% FY 2021 distribution yield.

Rural Funds Group (ASX: RFF)

Another option for retirees to consider buying is this agriculture-focused property group. I like Rural Funds due to the quality of its portfolio of assets and its positive long-term distribution outlook. The latter is a big positive for income investors and is thanks to its long-term tenancy agreements and periodic rent increases. In respect to the former, at the last count Rural Funds had a weighted average lease expiry profile of 11.5 years.

I believe this combination means that Rural Funds is well-positioned to grow its distribution at a solid rate long into the future. This certainly will be the case in FY 2021. Management recently revealed that it intends to lift its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a yield of 5.5%. An added bonus is that it pays its distribution in quarterly instalments, which provides investors with a regular source of income. 

More reading

• 3 ASX dividend shares with yields over 5%
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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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The Red River Resources Limited (ASX: RVR) share price is 9.09% higher at the time of writing, after the miner announced it has secured 2 high-grade polymetallic silver-indium deposits in Queensland. 

What did the company announce?

The company has been granted the Isabel and Orient Project, which hosts the highest-grade known indium deposits in Australia. The projects are located near Herberton in Queensland, approximately 500 kilometres from its Thalanga Operation. 

The Isabel Project contains the Isabel polymetallic massive sulphide zinc, lead, copper, and indium deposit. The Orient Project contains the West Orient zinc, lead, silver indium deposit and the East Orient exploration target. 

Currently, the indium price per kilogram is US$250.

Quarterly activities and cash flow report

On 28 July 2020, Red River Resources delivered an update for the period ending June 2020. 

Its Thalanga Operations delivered record quarterly copper concentrate production of 2,697 dry metric tonnes (DMT). However, its zinc and lead concentrate is down compared to Q4 FY19. 

Its mining and processing activities continue at the Thalanga Operation in northern Queensland and restart activities are progressing at its Hillgrove Gold Project in NSW.

Facts about indium

Indium is a shiny, silver-looking metal. It’s quite rare and is normally a trade element in other minerals – commonly zinc and lead. Indium is vital to the world’s economy in the form of indium tin oxide (ITO), which is the best material for LCD touch screens, flat screen TVs and solar panels. 

Red River reports that Geoscience Australia has identified indium as a critical resource. Critical minerals are considered vital for the economic well-being of the world’s major and emerging economies. The minerals labelled critical are minerals at risk due to scarcity, political, trade and other potential issues.

About the Red River Resources share price

Red River Resources is seeking to build a multi-asset operating business focused on base and precious metals, with the objective of delivering prosperity through lean and clever resource development.

Its foundation asset is the Thalanga Base Metal Operation in northern Queensland and it has recently acquired a high-grade Hillgrove Gold-Antimony Project in New South Wales.

Currently the share price is trading at 12 cents, which is up by 9.09% today’s trade. In the past year, the Red River Resources share price has dropped by 33.33%.

More reading

• Why these ASX mid cap shares could smash the market over the next 5 years
• Are the big US tech companies about to be broken up?
• Aroa Biosurgery share price jumps 8% on approvals
• Why the Pilbara Minerals share price surged 8% today
• These ASX dividend shares could be perfect for retirees

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and $63.50 price target on this banking giant’s shares. The broker notes that APRA has eased restrictions on dividend payments and will now allow 50% of earnings to be paid out to shareholders this year. It believes this means that Commonwealth Bank will pay a $1.30 per share final dividend later this year. Nevertheless, the broker continues to have issues with its valuation and retains its underweight rating. The Commonwealth Bank share price is trading at $73.13 this afternoon.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

A note out of UBS reveals that its analysts have downgraded this pizza chain operator’s shares to a sell rating but with an improved price target of $64.00. UBS notes that Domino’s has defensive qualities and is positive on its medium term growth prospects. This is thanks partly to its store expansion plans and the shift to online food ordering. However, it believes this is already priced into its shares and has downgraded them on valuation grounds. The Domino’s share price is changing hands for $74.19 on Thursday.

Paradigm Biopharmaceuticals Ltd (ASX: PAR)

Analysts at Morgans have downgraded this biopharmaceutical company’s shares to a reduce rating with a $1.74 price target. This follows the release of a fourth quarter update which revealed a sharp increase in research and development expenses. In addition to this, the broker has concerns about a number of things behind the scenes. This includes the exit of its chairman and insider selling. In light of this and recent share price gains, it has decided to downgrade its shares. The Paradigm share price is trading at $3.22 this afternoon.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited. 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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We are almost into August where reporting season will tell us about the impact of COVID-19 on many businesses. I think there are some top ASX dividend shares that are worth buying for long-term dividend income:

Future Generation Investment Company Ltd (ASX: FGX)

Future Generation is a fairly unique listed investment company (LIC). It is philanthropic – it donates 1% of its net assets each year to youth charities. It’s able to do this because there are no management fees charged by the LIC or its investments. Future Generation invests in the funds of ASX share-focused fund managers who work for free for the LIC.

In terms of the dividend, Future Generation has increased its dividend consecutively over the past few years. In FY19 it increased the dividend by 8.7% compared to FY18. At the current Future Generation share price it offers an attractive grossed-up dividend yield of 7%. I think it’s a great ASX dividend share.

Aside from the dividend, I really like two elements of Future Generation. The underlying diversification is strong with investments in a number of portfolios of shares.

I also like that it’s possible to buy Future Generation at a sizeable discount to its net tangible assets (NTA). Future Generation is trading at 11% of its June 2020 NTA. Plus, its portfolio has outperformed the ASX over the long-term.

Vitalharvest Freehold Trust (ASX: VTH)

Vitalharvest is an agricultural real estate investment trust (REIT). It owns some of the largest aggregations of berry and citrus farms in Australia. These farms are leased to Costa Group Holdings Ltd (ASX: CGC). Not only does Vitalharvest receive a solid fixed rent from Costa, it also has a profit share agreement for 25% of the profit that the farms make.

The REIT has a distribution yield of 6.2% based on the current Vitalharvest share price. If profitability returns to 2019 levels, then Vitalharvest could offer a yield of 7.3%. I think those are solid yield numbers for an ASX dividend share.

I’m attracted to the new strategy that Primewest Group Ltd (ASX: PWG) could bring as the new manager of Vitalharvest. It’s going to look at more food-related properties used for storage and processing, not just farms.

The net asset value (NAV) per share of Vitalharvest was $0.95 at December 2019, so it’s trading at a 19% discount.

Food is a very important resource, so I think Vitalharvest could be a solid ASX dividend share over the long-term.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

For dividends, I believe that Soul Patts is the best ASX dividend share available to Aussie investors.

The main reason I think that is due to dividend reliability. If you’re investing for dividends then I imagine you aren’t not looking for an unreliable dividend. Dividends may be essential for providing cashflow to fund your life’s expenses. I think dividend share picks should be reliable year to year and over the long-term, particularly when you need them most such as during this COVID-19 period. Many prior dividend favourites like ASX banks and infrastructure shares have cut dividends. 

Soul Patts has increased its dividend every year since 2000. It has provided dividend growth guidance for this year. It has paid a dividend every year in its 100+ year history.

The investment conglomerate owns a defensive portfolio of diversified businesses including telecommunications, building products, property, LICs, resources, swimming schools and agriculture.

Soul Patts is also planning to start investing in regional data centres, which opens up an interesting growth avenue for the company.

At the current Soul Patts share price it offers a grossed-up dividend yield of 4.25%. I think that’s a solid yield, given the low interest rate environment we find ourselves in.

More reading

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Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and Washington H. Soul Pattinson and Company Limited. 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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Treating your super like a child? Bit of a strong statement, you might think?

Well, I stand by it. And here’s why.

What’s the big deal about superannuation?

Superannuation is the national retirement savings scheme. It’s the main thing helping the average Australian live out their retirement without relying solely on the age pension.

There’s nothing wrong with the pension in itself, don’t get me wrong.

But the Keating government initiated compulsory superannuation based on the acceptance that we as a country couldn’t afford to rely solely on the pension as a universal retirement income scheme.

That’s unfortunately what happens when you have an ageing population. And according to the 2016–17 NSW Intergenerational Report, titled ‘Future State NSW in 2056’, the NSW Government expects that by the year 2056, there will be just 2 workers for every 1 retiree (persons aged over 65) in the state, down from a 4:1 ratio in 2016.

So you can see why a universal aged pension is not sustainable going forward.

That brings me back to super. The government knows we have a demographics problem. That’s why it has allowed generous tax benefits for using super. Most earnings that go into super (a compulsory 9.5% of most workers’ salary) are taxed at 15% instead of at a workers’ marginal tax rate.

Earnings within super (such as dividends or interest) are also taxed at 15%. And once a super fund switches into ‘pension phase’ (i.e. when a worker retires and begins to live off super), then any earnings are tax free. So you can think of super as basically a legal tax haven of sorts.

Why super is so super

All of these facets of the superannuation scheme make it a highly lucrative vehicle you can use to build wealth. But raising your super fund to maturity requires years of patience and discipline (I hope you’re getting the ‘child’ reference now).

Super works so well because it enables us to harness the miracle of compound interest through investing in growth assets like ASX shares. Einstein reportedly described compound interest as the ‘8th wonder of the world’. It requires time and good returns to work its magic though — helped of course by regular, blind and automated contributions over decades. It’s how you can turn $100,000 worth of contributions earning 8% annually over 45 years into almost $1.5 million.

Minimising fees and maximising contributions is the best way to get this ball rolling. And withdrawing money early is the best way to kneecap it.

That’s why I was dismayed to hear that more than half a million Australians have now completely wiped out their super balances under the government’s program that allows early withdrawals.

Most of these people are reportedly under 35. That’s half a million of us with severely diminished prospects of a comfortable retirement. It’s not good for them, it’s not good for our budget, it’s not good for our future level of taxation and it’s not good for the country, in my view.

Foolish takeaway

If you’re one of those people who has withdrawn your super, I highly recommend topping it back up when circumstances allow. Super should be your reward of a lifetime of hard work. Don’t treat it as a bank to be raided, it needs nurturing and a bit of love instead. That’s the best shot you have of your super looking after you in old age

More reading

• Top brokers name 3 ASX shares to sell today
• 3 top ASX dividend shares for income investors in August
• 3 underloved ASX healthcare shares with strong comeback potential
• Why the Buddy Technologies share price more than doubled in a week
• Atomos share price surges 5% despite 17% revenue slump

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The healthcare industry is a solid gamble – people are going to seek healthcare regardless of the state of the economy. According to Deloitte, global healthcare spending is expected to rise at a compound annual rate of 5% between 2019 and 2023. This will present many opportunities for the sector. 

A report from the Australian Institute of Health and Welfare also found that $467 million was spent on an average day in Australia’s health system. With the aging population and increasing emergence of chronic diseases, this number is likely to grow. Healthcare is something that everyone will need at some point in their life, leading to a huge opportunity for investors. 

The healthcare industry is made up of many different types of companies that are impacted by different variables. Broadly, the sector can be divided into pharmaceutical companies, medical device companies, and healthcare provider companies. Pharmaceutical companies manufacture drugs and typically spend highly on R&D. Medical device companies create devices used in patient care, including everything from disposable gloves to pacemakers. Healthcare providers are at the front line of patient care, delivering healthcare services to patients. 

Australia boasts a significant number of listed healthcare companies, including stars such as CSL Limited (ASX: CSL). Here we take a look at 3 underloved ASX healthcare shares with the potential to make a strong comeback. 

Cochlear Limited (ASX: COH) 

The Cochlear share price remains more than 23% down from its February high, with the spread of coronavirus impacting on its bottom line. Cochlear is a medical device company which produces cochlear implants used to help the hearing impaired. The implants use electrical stimulation to replace the function of the inner ear, but require surgery to implant. 

Infection control measures introduced to combat coronavirus resulted in many implant operations being deferred. This caused a significant decline in surgeries across major markets with elective surgeries postponed across the United States and Eastern Europe. The decline in surgeries caused a 60% fall in Cochlear’s sales revenue in April. 

Implant surgeries have been restarting but the rate of recovery is unclear. In China, surgeries recommenced in late February and are now running close to pre-virus rates. Implant surgeries have also restarted in the US, Germany, and Australia.

Cochlear has significantly reduced non-essential spending and capex (capital expenditure) pending a sustained increase in surgeries. Ultimately, many of the delayed surgeries are expected to progress once hospitals resume normal operations. In the meantime, the company has strengthened its liquidity position with a $1.1 billion equity raising. 

Longer term, Cochlear says there remains a significant unmet need for cochlear and acoustic implants that should underpin its long-term growth. The company’s enhanced liquidity position will enable it to weather the temporary decline in demand caused by COVID-19 while continuing to progress the R&D pipeline. 

Ramsay Health Care Limited (ASX: RHC)

The Ramsay Health Care share price remains nearly 21% down from its February high, with the private hospital operator drafted into the coronavirus fight. Ramsay Healthcare is one of the largest hospital operators in Australia and operates more than 500 facilities across 11 countries. Ramsay has promised to assist governments in managing the pandemic and, in return, governments have guaranteed its viability. 

Covid-19 resulted in the suspension of non-urgent elective surgery in each of Ramsay Healthcare’s major operating regions. As a private hospital operator, the cancellation of elective surgeries hit Ramsay Healthcare’s bottom line hard. However, COVID-19 partnership agreements were entered into with governments under which the hospital operator agreed to retain capacity to respond to the pandemic. Under these arrangements, governments and health authorities agreed to a core principle of meeting private hospital operators’ operating costs, or in the case of France, providing 85% of revenue from the previous corresponding period. Arrangements vary from region to region and the duration of agreements also varies.

The suspension of elective surgeries resulted in an uncertain operating environment, with Ramsay choosing to raise $1.2 billion in equity in April to enhance its financial flexibility. Managing Director Craig McNally said, “the equity raising will strengthen Ramsay’s balance sheet and liquidity position, as well as increase financial flexibility during the unprecedented operating environment. More importantly, it will ensure that we can continue to pursue our growth initiatives and position us to take advantage of other growth opportunities that may arise”.

Ramsay operates 72 hospitals in Australia which have seen the controlled reintroduction of some surgeries. The effect of the government agreements is that profits cannot be generated during the period of their operation. But the very fact that governments are contributing to the ongoing viability of private hospital operators demonstrates their importance. These government initiatives will also ensure Ramsay Health Care can maintain its extensive hospital platform intact, ready to support previously deferred surgeries when the operating environment normalises. 

Nanosonics Ltd (ASX: NAN)

The Nanosonics share price is down over 14% from its February high. Nanosonics manufactures a disinfection device for ultrasound probes that is used globally. Ultrasound probes are used in many medical procedures. These include pregnancy screening, real time imaging guidance during procedures, and to diagnose and treat soft tissue injuries. 

Nanosonics saw a significant increase in Q3 FY20 sales versus the prior corresponding quarter, demonstrating continued underlying growth momentum. Nonetheless, access to hospitals became more limited as a result of COVID-19 which may extend the timeline of planned adoption by some hospitals. This may result in lower than anticipated growth in the installed base in the fourth quarter. 

Prudent measures were taken on operating expenses which were likely to decrease in the fourth quarter, without impacting underlying strategy. The supply chain is being closely managed and is currently well positioned to meet customer demand for capital equipment and consumables. Consumables sales in the third quarter were in line with pre-COVID expectations, with the impact of COVID-19 on sales in the final quarter yet to be revealed. 

Understanding and awareness of the importance of ultrasound probe decontamination is growing, which could lead to increased sales in future. “Now more than ever the importance of infection prevention has gained prominence not only within the healthcare community, but across the broader community“, CEO Michael Kavanagh said.

Nanosonics has a strong balance sheet with no debt and has been benefitting from the stronger US dollar. 

More reading

• 2 top ASX dividend shares to buy for income in 2020
• 2 must-buy ASX 50 shares to snap up today
• Nanosonics and 2 other ASX healthcare shares to buy
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Kate O’Brien owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd., CSL Ltd., and Nanosonics Limited. The Motley Fool Australia has recommended Cochlear Ltd., Nanosonics Limited, and Ramsay Health Care Limited. 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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