MENU

Why the ResApp Health Ltd (ASX:RAP) share price has been smashed today

The ResApp Health Ltd (ASX: RAP) share price has been one of the worst performers on the market on Tuesday following the release of its SMARTCOUGH-C-2 study results.

At one stage the digital healthcare company’s shares were down as much as 59% to 9 cents. They have since rebounded slightly but are still down a whopping 50% to 10 cents.

Why are ResApp’s shares crashing lower?

ResApp has been busy running a study for the diagnosis of childhood respiratory disease using cough sounds and its ResAppDx smartphone application.

Although management has labelled the preliminary results for the double-blind, prospective study as “positive”, as you might have guessed from the share price reaction, investors were expecting far better.

Management revealed that the study achieved a positive percent agreement (PPA) between 73% and 78% and a negative percent agreement (NPA) between 71% and 86%.

This is compared to a clinical diagnosis for lower respiratory tract disease, asthma/reactive airway disease (for children over 2 years of age) and primary upper respiratory tract disease.

These figures are really nothing to get excited about in my opinion and I can’t say I’m surprised to see its shares crash lower today. I was expecting something in the mid to high 80s.

Nevertheless, management intends to pursue FDA submissions for lower respiratory tract disease, asthma/reactive airways disease, and primary upper respiratory tract disease diseases in parallel to CE and TGA submissions for six diseases being prepared following the recent Australian study results.

Should you buy the dip?

While the SMARTCOUGH-C-2 study was by no means as disastrous as the original SMARTCOUGH study, it is starting to look as though the company has wasted a lot of time and resources on this one.

Overall, I would suggest that investors stay clear of the company and focus on opportunities elsewhere.

Small cap healthcare shares such as Nanosonics Ltd (ASX: NAN) and Volpara Health Technologies Ltd (ASX: VHT) could be great alternatives.

Alternatively, these exciting growth shares could be even better options for investors.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited and VOLPARA FPO NZ. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.