SCWorx Corp (NASDAQ:WORX) is the latest small cap stock to capitalize on the cororavirus epidemic. NASDAQ:WORX climbed over 434% on Monday to capture investor interest. With many jumping in late, traders and investors are asking if the rally is for real and still has more room to run. In this article, we will take a look at what’s next for WORX stock.
First up, here’s a little background info for those that aren’t familiar with the stock. SCWorx has created The Power of One Platform, an advanced attributed Virtualized Item Data Warehouse utilizing Machine Learning (ML) and Artificial Intelligence (AI) in order to offer a suite of SaaS based solutions for healthcare providers. The value proposition for customers revolves around all solution modules being fully integrated with the Virtual Data Warehouse platform. The solution modules include Virtual Item Master, Contract Management and RFP Module, Automated Rebate Management Module, Data Interoperability (EMR, MMIS, Finance) Module, Automated Item Add Portal, Virtual General Ledger (GL), and the Data Analytics module. SCWorx Platform of One™ creates a single source for accurate information for the healthcare providers’ data governance and data analytics for executives.
Monday’s big move higher should not come as a surprise to those following the coronavirus sector. Last month, NASDAQ:WORX announced that a newly formed wholly-owned subsidiary, Direct-Worx, was founded to provide health care providers with access to critical personal protective equipment (PPE) to help protect their well-being as they manage the influx of infected patients within the healthcare system. The company said at the time that it was working with more than 1,000 hospitals, state municipalities, and foreign governments in the sourcing and delivery of these incredibly hard to find items. Marc Schessel, CEO of SCWorx, who is also serving as CEO of the new Direct-Worx subsidiary, stated:
“SCWorx is in the unique position to provide immediate assistance to our hospital and healthcare provider clients as we have all the necessary healthcare products in our large data array, a list of functional equivalent products and the connections to sourcing vendors for the core PPE our hospitals need, even as certain critical brand name products are sold out via normal sourcing routes. We are proud of our team’s ability to react immediately and provide added benefits to our clients at this time.”
Rethink My Healthcare Deal
SCWorx announced on Monday that the company received a committed purchase order from Rethink My Healthcare, a U.S.-based virtual healthcare network, for two million COVID-19 Rapid Testing Units, with provision for additional weekly orders of 2 million units for 23 weeks, valued at $35M per week. Under the Order, SCWorx will supply Rethink My Healthcare with IgM/IgG Rapid Detection Kits. SCWorx anticipates receiving the first 2 million rapid detection kits within approximately two weeks.
Reasons to be cautious
Now we are aren’t trying to throw cold water on the rally, but there are a few things to keep in mind.
- The test kits are not made by NASDAQ:WORX. They are made by an Australian company Promedical.
- Rethink My Healthcare is just a startup.
- SCWorx has just $1 million in cash. The company will most likely do a capital raise due to the higher share price. We know shareholders don’t want to hear this because of the dilution, but it’s the smart move. Management should take advantage and boost the company’s coffers.
- The company’s registered address is a Regus location.
NASDAQ:WORX is a low float runner with a market cap of only $15 million. The headline of $35 million per week got investors excited and fuelled a massive rally. We believe that once investors dive in, the share price will come back down. For those that are looking to play the COVID-19 outbreak, we believe there are better names to invest in. To find out which ones, sign up today!
Disclosure: We have NO position in NASDAQ:WORX and have NOT been compensated for this article.