The Admedus Ltd (ASX: AHZ) share price fell 8% to 0.049 cents today after the healthcare business reported another quarter of blowout costs dwarfing its revenues.
For the quarter ending December 31 2018 Admedus reported revenues of $6.4 million, but operating costs around $11 million to lead to an operating cash loss of $5.8 million.
Of the costs $6.3 million went on staff costs and $2.5 million on “corporate and administrative” over the quarter.
Worse news is that the group is forecasting cash outflows of $15.5 million in the current quarter which look unlikely to be offset by much more than the $6.4 million it earned in the current quarter.
Of the $6.4 million in last quarter’s sales, $3 million came from its ADAPT business and $3.5 million from its Infusion division.
The group now has cash on hand of just $12.036 million despite conducting multiple capital raisings from long suffering retail speculators over the last 5 years.
It also looks likely Admedus will have to raise more money or take on debt within about a year if its current cash burn trajectory continues in a gloomy sign for anyone continuing to hold shares.
The company even managed to raise $19 million over the recent quarter from “investors” who will likely be feeling underwhelmed by today’s update on cash flows.
It’s hard to find anything positive to say about this business given its track record and large costs have returned huge losses to unsophisticated retail investors seemingly buying into its story oblivious to the reality of the cash flows.
I’ve warned repeatedly over the past 4 years about the danger of large losses to shareholders in this business and I don’t expect that status quo to really change unfortunately.
The stock is down 95% or more in 4 years and Admedus is not alone in blowing up shareholder capital at the speculative end of the market, with others like Yojee Ltd (ASX: YOJ) and ResApp Health (ASX: RAP) also letting down a lot of less-sophisticated retail investors.
Serious investors avoid speculative capital sinkholes in favour of companies making profits and paying rising dividends, as that’s how you create real wealth for you and your family….
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
You can find Tom on Twitter @tommyr345
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.
- On a serendipitous day, Tom Richardson is leaving the building – December 17, 2019 11:55am
- Why Aerometrex shares have doubled their IPO price – December 16, 2019 4:32pm
- Why the National Veterinary Care share price is going nuts today – December 16, 2019 3:39pm