3 ASX shares fighting COVID-19 and rewarding shareholders

Australia's fight against coronavirus continues with Victoria in lockdown. Here are 3 ASX shares actively involved in the fight.

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Australia's fight against coronavirus continues with Victoria in lockdown as the government battles to suppress the virus. Managing the pandemic involves a host of government and private sector resources, with many ASX shares involved in the fight. ASX companies are involved in everything from manufacturing PPE, to testing for the virus, to supplying equipment and treatments to assist COVID-19 patients.

Here we take a look at 3 ASX shares that are actively involved in the fight against coronavirus.  

Atomo Diagnostics Ltd (ASX: AT1

Atomo Diagnostics operates in the medical device space, emerging as a leader in the development of point of care devices for rapid diagnostic testing (RDT). The company's AtomoRapid RDT platforms are customisable to suit a variety of applications, including screening for chronic conditions and detection of infectious diseases. This week the Therapeutic Goods Administration (TGA) approved Atomo's COVID-19 rapid antibody test.

The TGA approval means Atomo can now sell the COVID-19 tests to medical professionals. The test is jointly manufactured with a French company, NG Biotech, which manufactures the test strip. Atomo manufactures the testing device. The test has already been approved and sold in France by NG Biotech. Atomos is in commercial discussions to assess distribution channels for the test in Australia. 

"We see strong potential use of our test across a number of channels in Australia and we believe TGA approval will accelerate these negotiations," Managing Director John Kelly explained.

"The proven ease of use of the Atomo device in the field makes our test well suited for deployment in a large country like Australia, with a variety of point of care settings," he added. 

The Atomos share price gained 17% at its peak following announcement of the TGA approval. The share price has since settled somewhat and is currently trading 11.7% up from its pre-announcement price. The company only debuted on the ASX in April, becoming the first company to do so since the pandemic took hold. Atomos raised $30 million from its IPO at an offer price of 20 cents per share. With shares now trading at 34 cents, IPO investors are already sitting on a substantial profit. 

Resmed Inc (ASX: RMD

Resmed is a medical equipment company that provides devices for the treatment of sleep apnea and chronic obstructive pulmonary disease (COPD). The company makes continuous positive airway pressure masks and machines and life support ventilators. Production of the latter was ramped up in response to the COVID-19 pandemic with the machines used to help patients breathe while their immune system fights coronavirus. Resmed pivoted its business in response to the pandemic, increasing manufacture of ventilators and mask systems for hospitals treating pandemic patients. 

Resmed's long term strategy revolves around supporting customers with digital health technologies and out-of hospital management software. This enables better care for those suffering from sleep apnea, COPD, and asthma. Over the longer term, Resmed believes its strong foundation will accelerate adoption of digital health solutions in the respiratory medicine field. In the meantime, the company is actively involved in the delivering solutions used in the treatment of coronavirus patients. 

The increased demand for Resmed products has been reflected in its results. Revenue increased 9% in the fourth quarter to $770.3 million, and 13% over the full year to $3 billion.

Mick Farrell, Resmed's CEO, commented: "Throughout our fiscal fourth quarter we continued to support the COVID-19 pandemic response through increased manufacturing of our ventilators while also supporting our customers with digital health solutions and other innovative tools to enable remote care for patients." 

In FY20, Resmed's net operating profit increased 40%, giving NON-GAAP diluted earnings per share of $4.76, up from $3.64 in FY19. But this wasn't enough for investors, who sent the Resmed share price tumbling last week when results were announced. The share price has fallen 11.7% since results were released with shares currently trading at $24.79 (at the time of writing). But the Resmed share price is still up more than 27% over the past year, so investors are looking at solid returns. 

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH

Fisher & Paykel Healthcare manufactures products and systems used in respiratory care, acute care, and in the treatment of obstructive sleep apnea. The healthcare company upgraded its earnings guidance early in the pandemic as demand for its respiratory humidifiers and consumables increased. Both are used directly in treating coronavirus patients.

Fisher & Paykel also benefitted from stronger sales in its homecare product range and a weakening of the NZ dollar, leading it to update revenue and profit guidance to $1.24 billion and $275 million–$280 million, respectively.  

Fisher & Paykel's financial year ended 31 March 2020 with the company exceeding its forecasts. Operating revenue was $1.26 billion, up 18% on the previous year. Net profit after tax was $287.3 million. The increase in revenue was largely driven by demand for products to treat COVID19 patients, as well as strong hospital hardware sales and demand for Fisher & Paykel's Optiflow nasal high flow therapy. 

"The 2020 financial year was already on track to deliver strong growth before coronavirus impacted sales," said Managing Director and CEO Lewis Gradon. "Beginning in January, the demand for our respiratory humidifiers accelerated in a way that has been unprecedented."

By adopting new processes and procedures, the company was able to double, and in some instances, triple, output for some hospital hardware products over just a few months. 

The hospital product group, which includes products in respiratory and acute care, saw operating revenue increase 25%. The homecare product group, which includes products used in the treatment of obstructive sleep apnea and home respiratory support, saw revenue rise 9%.

Fisher & Paykel's priority is to invest in the business to support long term sustainable growth. Dividends are expected to increase as earnings grow, taking into consideration the company's target gearing ratio. Investors have been impressed by Fisher & Paykel Healthcare's growth, sending the share price up 110% over the past year. 

Foolish takeaway 

These ASX shares are directly involved in the fight against coronavirus. From diagnosing the disease to treating its patients, these ASX shares are combatting the pandemic while delivering strong returns to shareholders. 

Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. 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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