Authentidate (ADAT) shares are on the move, with volume almost five times higher than normal.
More than 760,000 shares have traded today, while the three-month average is around 160,000 shares. Authentidate is a New Jersey-based company that provides health information exchange solutions. This means that physicians can use their software for workflow management, making their medical records electronic. They also have solutions in patient discharge and telehealth devices. There are a few recent developments that might be playing a role in Authentidate's activity.
* In December, they raised $3.4M of capital. They issued 3.4M common shares, along with 3.4M 90-day warrants at a $1 strike. This volume requires sellers, and it's very likely the warrants are now being exercised.
* As of the last quarterly call, we learned that their Liberty contract for Inscrybe solutions is back again. Liberty's contract significantly impacts their financial results and had ended. In the past, it was a customized solution, however now it's the standard software.
* Authentidate's 2010 fiscal year began July 1, 2009. This means that we are now in the second half of fiscal 2010. From their January Investor Presentation file (http://www.authentidate.com/index.php/content/view/60/131/), you can see this on Page 14: "Initial sales for the telehealth and hospital discharge solutions are expected in the second half of fiscal 2010."
* Telehealth devices have been around for a while -
has been in the market for 10 years, and now we're seeing more competition.
are in the market. Intel and GE recently pushed their partnership from just the United States into the United Kingdom.
* In addition, there are more reasons to suspect that something may be right around the corner, which were outlined in a previous commentary titled
There is no doubt speculation going on, but we should remember that management bought 990,000 shares themselves last year.
We also have a healthcare bill being passed that has provisions penalizing those who don't implement the electronic medical records and other digital solutions offered by companies such as
The government wants to ensure that once patients leave the hospital, they are well taken care of and don't need to be readmitted, because that is a very large cost involved in healthcare.
With over $19 billion being allocated for health information technology, Authentidate is one of the many companies set to benefit.
Disclosure: Gupta was long ADAT at the time of publication.
Ankit Gupta is a private investor who blogs about his stock picks at
. Gupta focuses on undervalued companies, with a strong margin of safety, but also a strong case for why they will make a better investment than others. Ankit used to run his own business, later selling the client base, and is now on the board of Purdue?s Publishing Foundation while finishing his degree at Purdue University.