Buying shares on the ASX doesn’t necessarily mean the business operates solely within Australian borders – after all, the world is a big place and Australia is only a relatively small market. So to accelerate growth, many companies look across the water to other major markets such as the US, Europe and Asia.
Expanding overseas is not only about growth, however. A company that earns income in multiple countries also achieves a level of diversification, giving it some protection from any negative economic shocks from a single country or region.
For these 2 reasons, I think companies that can expand into overseas markets offer investors a great opportunity, giving the company greater room to grow while also providing some income diversification.
With that in mind, below are 3 ASX healthcare shares that are listed here in Australia, yet receive income globally.
Ramsay Health Care Limited (ASX: RHC)
Ramsay is Australia’s largest private hospital operator with a market cap of around $13 billion. However outside of Australia Ramsay also has a large presence throughout continental Europe and the United Kingdom, with a small Asian segment also. Together, this gives it a total of 480 locations with a diverse mix of facilities across 11 countries.
In fact, making a rough calculation by converting the latest earnings figures for each region into the same base currency shows us that Ramsay earned around 57% of its revenue outside of Australia for the 6 months to 31 December 2019, with Europe contributing the lions share with around 49% of total revenue.
Medical Developments International Ltd (ASX: MVP)
Medical Developments is the company behind the ‘green whistle’, less commonly known as the drug Penthrox. Penthrox sales have grown both here in Australia and overseas thanks to the product’s fast acting, self-administered and non-addictive pain relief.
In H1FY20, the company reported that Penthrox sales in Australia grew by 18%, however growth in Europe and the UK far surpassed this, growing at 42% in the UK and 35% throughout Europe during the period.
Medical Developments also plans to expand further throughout Europe, with its eyes on countries such as Germany, Hungary, Spain, and Greece. The company hopes to continue its growth in the region, which has seen its number of customers increase by around 250% over the last 2 years.
Medical Developments is also currently pursuing larger markets such as the US, China and Russia, however some clinical programs are currently either delayed or on provisional hold due to local health authorities shifting their focus toward COVID-19.
Nanosonics Ltd. (ASX: NAN)
Nanosonics develops a medical device called Trophon, which is used in hospitals to sterilise ultrasound probes. The device is automated, quick and doesn’t require any chemicals.
Currently, Nonosonics’ largest market is the US, by far, with almost 90% of its Trophon base being installed in North America. However, it has also been growing this base throughout Asia Pacific, Europe and the Middle East. Nanosonics’ strongest base growth over the prior 12 months has come from Europe and the Middle East, albeit from a much lower starting point.
Continuing its global expansion, Nanosonics also recently had its first units installed in Japan, with regulatory and distribution strategies currently also being explored for China.
I like looking for companies on the ASX which offer investors exposure to overseas markets. If a company is successful in more than one market there’s a good chance it can be in many more, which opens the gates to a much, much larger addressable market. However, it’s also important to ensure that a company’s original business remains intact and steadily growing while it is pursuing markets abroad.
I believe each of the 3 ASX healthcare companies above will continue expanding into new markets outside of Australia. Additionally, each of their initial markets are still growing, giving me the confidence to believe in a bright future for each of them.
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Michael Tonon owns shares of Medical Developments International Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Medical Developments International Limited. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia has recommended Medical Developments International 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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