AHI Back from Voluntary Suspension - Could a Large Deal be Brewing?

One of the best long term performers in our portfolio, Advanced Human Imaging ASX:AHI (formerly known as MyFiziq) is now out of voluntary suspension and has peppered the market with three announcements on its return.

We also noticed something pretty interesting about AHI’s suspension buried in the price query response from AHI...

Now we aren’t ASX lawyers but our take on the wording is that AHI had some sort of large deal brewing that needed ASX approval due to its magnitude, but AHI has now put that deal on hold so as not to interfere with AHI’s upcoming NASDAQ listing.... More on this below.

AHI has developed an accessible, advanced human imaging platform on a smartphone for the med-health, population health, fitness and insurance sectors.

AHI’s strategy is to develop and acquire human imaging tech and distribute it via partners with large audiences that would benefit from human imaging.

We added to our AHI position in March at $2.00, after first investing in April 2020 and again in September 2020.

We are long term holders as we like the technology, the health tech sector, upcoming NASDAQ listing and the company has cash in the bank after raising $5M late last year.

So what was so interesting about AHI’s price query response yesterday?

Again, we aren't ASX lawyers but If you read into AHI’s response to the ASX price query it sounds like AHI had some sort of mysterious large transaction brewing.

After the suspension and extensive submissions to the ASX about this deal they decided not to proceed "at this time" so as not to interfere with their upcoming NASDAQ listing...

We first noticed AHI’s three week suspension and price query response seemed a lot more than a usual, stock standard ASX price query.

First we need to understand what a “ASX Chapter 11” transaction is - basically when an ASX listed company proposes a deal that is so big compared to its size that it fundamentally changes the business, like a significant merger or acquisition, and they need to get approval from the ASX to do the transaction:

Here are some key points from deep in AHI’s ASX price query response yesterday:

AHI says they met with ASX on March 30 to "discuss a potential Chapter 11 transaction”.

Our interpretation of this is that AHI had some sort of early stage, big deal in the works and wanted to get an early approval from the ASX to do said deal.

AHI’s share price had a little run up on the same day (March 30th) popping up from around $1.80 to $2.05... which the ASX took exception to and slapped on the price query and suspension.

AHI then proceeds to list a few of the reasons that its price was running on March 30th and made “extensive submissions” about the potential deal - but now say they “decided not to proceed at this time” with this “Chapter 11 sized” deal as it interferes with their NASDAQ listing timing.

In its response AHI’s “Extensive submissions” about this proposed deal tell us that AHI was pretty keen on this deal, or they wouldn’t have put all the effort into the submissions.

We can only assume this mysterious deal AHI was working on (whatever it was is big enough to trigger an ASX Chapter 11 and need ASX approval) has been put on ice until the NASDAQ listing is completed, but it may possibly be off the table completely now - this is our speculation and we will find out after the NASDAQ listing.

Why we invested in AHI (Formerly - MYQ)

AHI is a health tech sector (which is currently running hot), with a timeline to list on the US NASDAQ - three factors that set them up for success.

1. Health Tech is hot global thematic. ✅
2. ESG credentials. ✅
3. NASDAQ listing coming. ✅

Also they are growing out a unique offering with compelling acquisitions to assist growth.

Here is AHI’s latest and greatest pitch deck from their website.

AHI’s new announcements after they came back from suspension

Another reason we like AHI is that it continues to globalise its technology, which is reflected in this week’s announcements:

1. Acquisition DD completed. AHI is taking a significant equity stake in Canadian based Triage Technologies Inc - the most advanced global dermatological AI system that can identify skin cancers.
2. Acquisition DD began. AHI has begun the acquisition of Israeli based Musculoskeletal Assessment (MSK) company Physimax Technologies Limited, which has developed a revolutionary video-based tracking device for musculoskeletal conditions.
3. Distribution Partnership Signed with UK tech giant. AHI technology integrated into TRUCONNECT app is set to launch this weekend and will target 1M users in the next 12 months.

How AHI makes money

AHI makes money by letting larger companies integrate the AHI 3D body scan into their products and services for a fee, so it can be used across multiple industries.

• Health: AHI’s body imaging can be integrated into telehealth - a booming sector after COVID.
• Insurance: Insurance companies can use AHI body imaging to monitor health for insurance premium pricing.
• Fitness: COVID caused a huge shift to online fitness. AHI’s app can be integrated into fitness apps to let users track their body changes. AHI already has deals with fitness apps by Conor Macgregor, Floyd Mayweather, Biomorphik, Evolt and Bearn.
• Weight management: A systematic review of multiple randomized controlled studies among overweight adults showed that greater engagement in self-monitoring using digital health tools was associated with significant weight loss - another tick for AHI.
• Online shopping for clothes: 42% of consumers said they plan to shop even more online once the pandemic ends than they do now. The number of e-commerce packages returned in 2020 rose 70% from 2019.

AHI’s functionality ranges across 4 major business verticals being Apparel, Health, Life & health Insurance and mhealth. Together representing circa USD$10 trillion in annual spending.

AHI has signed over a dozen partners with over 500,000,000 potential users in their ecosystems.

Here is all our past commentary on AHI (formerly MYQ).