Following insider buying at smaller companies can be a very profitable trading strategy. Smaller companies are less researched than larger companies, meaning that they offer greater potential for outperformance.
In this report, we are going to highlight an insider purchase at a small US-listed company, Augmedix Inc (AUGX:US). Augmedix provides automated medical documentation and data services to the healthcare industry. Its services are used by medical offices, clinics, hospitals, emergency departments, and telemedicine businesses. The company is listed on the Nasdaq and currently has a market cap of $200.5 million.
Our insider transaction data shows that on June 14, board member Margie Traylor purchased 26,530 AUGX shares at a price of $4.51 per share. This trade cost the insider around $120,000 and increased her holding to 47,331 shares.
This trade is notable for several reasons.
Firstly, Ms. Traylor – who has a technology background – has made well-timed purchases in the recent past. In May last year, for example, she picked up 7,305 shares at a price of $1.98 per share. Since then, the stock price has more than doubled.
Secondly, Ms. Traylor has boosted the size of her holding by 128% with this trade. The fact that she has increased her position significantly, and increased her average purchase price, suggests that she is very confident the stock is set to keep rising.
38% Revenue Growth
Augmedix’s recent Q1 results showed that the company continues to grow at a rapid rate.
For the quarter, total revenue came in at $9.6 million, up 38% year on year. Dollar-based net revenue retention was 136% for its Health Enterprise customers compared to 133% in the first quarter of 2022 and 126% in the fourth quarter of 2022.
GAAP gross margin increased 100 basis points to 45.6% while GAAP net loss was $5.2 million compared to $6.0 million a year earlier.
During the period, the company completed a $12.0 million equity raise with HCA Healthcare, Inc. and Redmile Group, LLC. The company believes that this will enable it to reach cash flow sustainability with the capital and liquidity on its balance sheet.
“Augmedix begins 2023 with continued commercial momentum, increasing operating leverage, and a landmark strategic partnership and financing with HCA Healthcare, Inc., one of the nation's leading healthcare providers,” commented CEO Manny Krakaris.
“We look forward to continuing our momentum as we progress toward our goal of reaching operating cash flow breakeven before net interest expense as we exit 2024,” he added.
In light of the strong growth here, we see this insider buying as a bullish development.