The Advanced Health Intelligence Ltd (ASX: AHI) share price is taking a steep tumble today after a meteoric rise yesterday.
The AHI share price is currently 17 cents, down 57%. Yesterday it roared 370.6% higher to 40 cents on news of a capital raising.
Let's review what's happening.
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What's going on with the AHI share price?
The human imaging company went into a trading halt yesterday before announcing a $5 million private placement with international institutional investor Orca Capital GMBH.
AHI will issue 20 million new shares to the venture capital firm at a price of 25 cents per share.
The issue represents a 194% premium to the closing AHI share price on Friday of 8.5 cents.
Hence the massive spike in the AHI share price yesterday to a new 52-week high of 40 cents.
Why is this investor paying a premium?
There has been no formal explanation for the price premium from AHI or Orca. However, as Orca is a venture capitalist firm, it clearly sees a bright future for this ASX micro-cap share.
Advanced Health Intelligence owns a patented digital healthcare technology app that enables the diagnosis of various conditions on a smartphone using artificial intelligence and data science.
The app can scan a body and assess risks of diabetes and cardiovascular disease and can recognise 588 skin conditions, including melanoma.
It's worth noting that while 25 cents is a premium today, AHI appears to expect its share price to rise over the next two years if its deal with book manager Evolution Capital is anything to go by.
Evolution acted as the sole book-running manager for the capital raise. Part of its remuneration is 2.5 million options at an exercise share price of 35 cents to expire two years from the date of issue.
What will AHI use the funds for?
According to a statement, AHI will use the funds for business development and marketing, general corporate purposes, working capital, and possibly investing in or acquiring other businesses "that are synergistic with or complimentary to our technologies … .
Advanced Health Intelligence is raising a further $10 million in funds via a convertible note facility. These plans were announced to the market on 28 April.
The company says it has raised $1.976 million via the facility so far.
