Pacific Edge's shares fell 37.8 per cent to 48.5 cents. Photo / Supplied
Pacific Edge shares sank by almost 50 per cent on the possibility its cancer tests will no longer be covered by a major US health insurance company after the cancer diagnostic company's trading halt was lifted as the market opened today.
But Pacific Edge's bad news wasn't enough to drag the market down thanks to infrastructure group Infratil lifting the main index higher on the news of its US$300 million ($476m) deal with a German insurer.
The S&P/NZX 50 Index rose 33.2 points, or 0.29 per cent, to 11,525.87. Turnover was $89.6m.
Pacific Edge told the NZX this morning that its cancer tests could be dropped by a major US health insurance company that is considering a new way to choose which tests are covered.
Medicare provider Novitas currently reimburses the use of Cxbladder – but won't under a new process it has proposed.
If the proposal is adopted, Pacific Edge said Cxbladder would no longer receive reimbursement from Novitas, which makes up "a significant part" of current testing revenue. Shares in the company almost halved when the trading halt was lifted at market open, falling 48 per cent to just 40 cents – their lowest price since 2020.
Peter McIntyre, an investment adviser at Craigs Investment Partners said it would be a "major blow" for the company if that avenue of US revenue was taken away.
He said it wasn't surprising how the market had responded to the news and commented that Pacific Edge had seemed "quietly confident" in its announcement – so all hope wasn't lost.
Pacific Edge's shares made up a scrap of lost ground by the end of the day but were still down 37.8 per cent to 48.5 cents.
It was Infratil's Longroad Energy investment announcement that helped haul the market higher after the infrastructure group told the NZX it had agreed to sell a 12 per cent stake to German insurer Munich Re for US$300m. The deal puts a pre-money valuation of US$2 billion on the renewable energy developer.
Infratil's shares were up 6.7 per cent to $8.94 by the end of the day.
Plexure Group shares also rose 77.6 per cent to 32.5 cents – rising 14.2 cents today – on the five-year contract renewal to its biggest customer, McDonald's.
Chief executive Dan Houden said he was excited about the continued partnership with the fast-food chain and was looking forward to working towards their mutual goal of delivering "excellent experiences" for McDonald's customers.
On the building front, Fletcher Building was down 1.9 per cent to $5.06 and land development company CDL Investments also fell 3.5 per cent to 84 cents.
Statistics NZ's new building consent data this morning said that the year to June's 50,736 residential consents were slightly less than the previous month of the year to May with 51,015 consents – but still marked the fourth consecutive month where the annual number of new homes consented had surpassed 50,000.
"Home consents have remained near historically high levels, with a decrease in stand-alone houses being largely offset by high levels of consenting activity for multi-unit homes," construction and property statistics manager Michael Heslop said.
The number of standalone houses consented to in June fell 5.5 per cent, following a 1.6 per cent drop in May 2022.
Since June 2021, standalone house consents have decreased by 21 per cent. Aged-care provider Ryman Healthcare was up 0.8 per cent to $9.35 but Third Age Health Services was down 12.2 per cent to $1.94 by the end of the day.
Third Age Health Services* told shareholders on Friday that the high court in Napier had placed Third Age Digital Health into liquidation over outstanding loans owed by the digital health firm to the aged care firm. Damien Grant and Adam Botterill of Waterstone Insolvency were appointed as liquidators.
Fonterra Shareholders' Fund Units were down 1.6 per cent to $2.97 by early evening trading. Fonterra is closing its milk powder plant at its Brightwater site near Nelson in April 2023, with a loss of 30 jobs, as it grapples with declining milk supply. The small ageing plant processes about 0.25 per cent of Fonterra's overall milk supply into whole milk powder.
The NZ dollar was trading at 62.92 US cents at 3pm in Wellington, down from 62.95 cents on Friday. The trade-weighted index was at 71.27, from 71.10 on Friday.
The Reserve Bank of Australia is set to release its cash rate decision tomorrow afternoon and CMC analyst Tina Teng said it was "almost certain" that the RBA will raise the cash rate by another 50 basis points to 1.85 per cent.
"The strong employment data will not hold back the reserve bank on its pace for rate hikes," she said.
"But less aggressive rhetoric from the Fed last week could encourage a slowdown by the RBA after September."
* Postscript:
Third Age Health Services has underlined its differences to a digital health firm with a very similar name, which it had tipped into liquidation over an unpaid debt. The NZX-listed aged care provider said it's not involved in supplying any services to Third Age Digital Health and, while they have some common shareholders, their only link is an outstanding debt owed by the digital firm.
"The similarity in the name of Third Age Digital Health is an unfortunate legacy," the company said. The statement follows yesterday's 12% decline and a further 9.8% drop in early trading today, with the firm recently trading at $1.94. The slump in share price comes after Third Age Health Services said on Friday that the high court in Napier appointed liquidators to Third Age Digital Health over a $313,000 loan owed by the digital firm to the aged care company.
Third Age Digital Health's major shareholders are Michael Haskell and Bevan Walsh, who are also major shareholders of Third Age Health Services. Walsh said on Friday that his fellow Third Age Digital Health shareholder refused to restart payments to Third Age Health Services and that he was willing to help recapitalise the digital firm to help meet its obligation to the aged care company.
Third Age Health Services said the liquidation of the digital company has no impact on the aged care firm's ongoing viability. "Apart from seeking repayment of the loan owed to it, Third Age Health Services has no interest in Third Age Digital Health," it said.
- BusinessDesk
BGH's tilt at Tourism Holdings has sparked more merger and acquisition speculation.