Rennova Health Inc (OTCMKTS:RNVA) has served up the right catalyst if a 70% plus spike in share price in recent weeks is anything to go by. After imploding in 2017, the stock is showing signs of bouncing back as turnover in shares traded continues to hit the roof in what appears to be a reversal in direction of trade.Renewed investor interest in recent weeks can be attributed to the acquisition of a second rural hospital and CEO, Seamus Coleman, touting the company’s long-term prospects. A look at the chart below, it is clear the stock could soon break out, after feeling the full force of short sellers last year. RNVA Daily ChartThe stock has seen an influx of trading interest in recent weeks seen by 300% increase in trading volume. A rise and close above the $0.03 mark should affirm the emerging uptrend as bulls slowly take over control from short sellers.However, given the long-term bear trend, the stock remains susceptible to drop on failing to hold on to gains above the $0.02 handle.Before carrying out a detailed analysis of what is in store for the year, let first understand what Rennova Health actually does.Rennova Health bills itself as a vertically integrated Public Company focused on providing industry-leading diagnostic and supportive software solutions to healthcare providers. The company operates in three main segments of Laboratory Services, Supportive Software Solutions and Decision Support and Informatics Operations.Why Is the Stock Surging?Rennova Health is climbing up the charts on growing investor confidence about the potential impact of recently completed rural hospital acquisitions. Confidence is high that the two hospitals will open the door for more revenue generation opportunities crucial to generating long-term value.
“Our current target is to take ownership on May 1st, and at this time we do not see any reason that this date cannot be maintained. This acquisition complements our hospital in Oneida, 38 miles away, and we look forward to the synergies helping to deliver growth in revenue and profits in both hospitals for many years,” said CEO, Seamus Lagan.
The second hospital that Rennova Health is acquiring is a fully operational 85-bed facility with a 24/7 emergency department. In addition, it has a radiology department, surgical center, and wound care. It also comes with a 90,000-sq. Ft hospital building on 8 acres piece of land.Rising number of patients to the company’s other hospital in Oneida is already fuelling suggestions that the company could be in for an impressive year on revenue generation front. The acquisition of a much bigger hospital is thus expected to further strengthen the company’s revenue generation capabilities.Epic Reference Lab AccreditationThe stock’s outlook has also received a boost on the company’s flagship Laboratory Epic Reference Labs receiving accreditation from the College of American Pathologists. The lab has been approved to conduct testing services not limited to Hematology, immunology Toxicology, Urinalysis, and Special chemistry.The laboratory which has been in operation since 2015 has already secured a number of in-network contracts with payers over the last two years. It currently has 13 contracts with various payers including United Healthcare having registered with Medicaid in 26 states.
“This accreditation is a testament to the standards of quality and accuracy that we deliver to our diagnostics customers and is evidence of the capabilities of our laboratory division staff. We believe that growth in our diagnostics business will be based on the quality of service we provide combined with payer contracts,” said Mr. Lagan.
Capital RaiseThe industry-leading diagnostics and supportive software solutions provider recently entered into an issuance agreement with institutional investors. Pursuant to the agreement, the company is to issue $2.5 million worth of senior secured convertible debentures due in 2019.The capital raise is a testament to growing institution investors’ confidence about the company’s long-term prospects, despite underperforming over the past 12 months. The raise provides the company the much needed financial muscle to advance its operations as it continues to expand its fleet of hospitals in pursuit of reliable streams of revenues.What next For Rennova HealthRennova Health is headed in the right direction if the acquisition of two rural hospitals in a short period is anything to go by. After a poor showing over the past twelve months, things are starting to look up as the company moves to strengthen its streams of revenue.A turnaround appears to be in play if a surge in trading volumes in recent weeks is anything to go by. Traded shares can only continue to increase as investors’ confidence in the stock continues to grow. In return, the share price should edge higherHowever, the management needs to prove that the company can generate revenues with consistency if it is to keep investors happy, to accelerate a bounce back from the all-time lows.Disclosure: We have no position in RNVA and have not been compensated for this article.
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