ASX stock of the day: Why ResApp Heath (ASX:RAP) shares are soaring

The ResApp Health Ltd (ASX: RAP) share price is soaring today, up more than 9.7%. Here's why this ASX share might be in good books today

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The Resapp Health Ltd (ASX: RAP) share price is soaring today. ResApp shares are up 8.33% at the time of writing to 7.8 cents a share. The company closed at a price of 7.2 cents yesterday but opened at 7.3 cents this morning before rising as high as 8 cents.

Despite this healthy move today though, this is a company that has been on struggle street in recent months. ResApp is still down around 71% from its 52-week high of 23 cents, and down nearly 80% from where it was in mid-October last year. Saying that, the company is also up 58% from the 52-week low of 5.2 cents a share that we saw just a fortnight ago on 5 March (timing can be everything).

So who is this company? And why are ResApp shares soaring today?

Res-who?

ResApp was founded in 2014 and listed on ASX in 2015. As its name implies, ResApp is a digital healthcare company. It aims to develop digital healthcare solutions for both doctors and patients, specifically in the area of respiratory disease. The company develops software exclusively for smartphones, which are designed to be integrated into existing telehealth services. ResApp's products can assist with diagnosing some of the most common repository illnesses. These include everything from common colds and the flu to sleep apnoea, asthma, and chronic obstructive pulmonary disease.

The company has developed algorithms that assess 'lung sounds' from breathing and coughing to accurately diagnose diseases. Using this machine learning, ResApp can provide a far more accurate diagnosis than a traditional stethoscope.

Why is the ResApp share price shooting higher today?

A number of events have transpired in quick succession for ResApp over the past week or so that might be influencing the company today.

Firstly, last week the company announced it was commencing a clinical study in the United States to assess the links between COVID-19 and coughing for its app. It's aiming to develop an algorithm to identify COVID-19 through cough sounds recorded on a smartphone. The ResApp share price responded well to this announcement at the time.

Additionally, in a separate release last week, ResApp announced that it had inked a deal with pharmaceutical giant AstraZeneca (whom you might know as the maker of a COVID-19 vaccine). This deal is unrelated to COVID though. It instead involves AstraZeneca's Japanese subsidiary using ResApp's technology to support asthma patients. As we reported, the ResApp share price responded very positively at the time.

Further, ResApp was, as of last Friday (and effective yesterday) kicked out of the All Ordinaries Index (ASX: XAO) by its administrator S&P Global. Normally, exclusion from an index does not bode well for an ASX company. But somewhat perversely, this logic doesn't seem to apply for this particular All Ords rebalance. Yesterday, we covered how a similar phenomenon was occurring with Ainsworth Game Technology Limited (ASX: AGI). The same thing seems to be happening to ResApp today.

Finally, before market open this morning, we were treated to an interesting insight into the company's directors. According to ASX notices, three company directors have loaded up on ResApp shares over the past few days. That's an obvious vote of confidence in the company from management which investors typically love to see.

It's likely that one or a combination of these factors are pushing up the ResApp share price today.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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