Why the Novita Healthcare share price is now up 350% in 3 days

Novita shows how penny stocks can offfer incredible gains in percentage terms. However, penny stocks are risky.

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The Novita Healthcare Ltd (ASX: NHL) share price is now up around 4.5x or 350% since last week. That's not a typo either as the early learning childhood technology business reported that its TALi Detect platform could be delivered via the the U.S. Reimbursement Code system.

TALi Detect is described as a 'digital attention deficit screening program' that helps treat children with attention deficit disorder.

The company reports that TALi Detect will now be deployed in the U.S. by Duke University Psychology, Neuroscience and Medical Centre across approximately 2,000 children. 

The market is reacting so positively to the news as it appears Novita is now well positioned to bring some revenue through the doors.

According to the announcement: "The U.S. Medicare national clinician payment is up to USD$36.04 (approximately AUD$52.67) to be allocated at a yet to be determined rate between participants delivering the service and Novita. The Company estimates each patient (child) will require a minimum of 2 (up to 3) TALi Detect screenings as part of the recommended TALi technology delivery regime. The total U.S. market opportunity for screening each year is approximately 8-10 million children."

Over fiscal 2019 the group reported a loss of $2.9 million on zero sales, with cash on hand of $341,000. 

Based on 634.8 million shares on issue at a multi-year high of 5 cents today it's market value is just under $32 million. 

Novita is a speculative business firmly in the penny stock category for now. Other businesses in the biotech space exciting investors include Paradigm Ltd (ASX: PAR) and Opthea Ltd (ASX: OPT). 

Motley Fool contributor Tom Richardson owns shares of Dicker Data Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Dicker Data 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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