Digital Ally, Inc. (NASDAQ:DGLY) was one of the biggest gainers on Tuesday. The stock has been gaining momentum over the past week with a gain of 25%.

Major Trigger:

Digital Ally Forms New Business Unit to Pursue Healthcare Market Opportunities

Key Highlights:

• announced the formation of Digital Ally Healthcare, Inc. (“Digital Healthcare”) to pursue opportunities in the healthcare industry. This business initiative is part of the Company’s strategic plan to diversify its product and service offerings to address larger target markets that have significant growth prospects. Digital Healthcare’s goal is to create recurring sources of revenue, expand its profit margins, achieve sustainable positive cash flow and fuel future growth.
• On June 4, 2021 Digital Healthcare, a wholly-owned subsidiary of the Company, entered into a venture with Nobility LLC, an eight-year old revenue cycle management (“RCM”) company servicing the medical industry. Digital Healthcare is capitalizing the venture with $13.5 million to support the venture’s business strategy to make acquisitions of RCM companies.
• Digital Healthcare owns 51% of the venture that entitles it to 51% of the distributable cash as defined in the venture’s operating agreement plus a cumulative preferred return of 10% per annum on its invested capital. Nobility will receive a management fee and 49% of the distributable cash, subordinated to Digital Healthcare’s preferred return.

Key Quote:

“Healthcare represents approximately $3.5 trillion or 18% of the US economy annually”, said Stan Ross, CEO of Digital Ally. “Last year we added the Shield Health Protection Products line to address parts of the health and wellness market. The Shield line includes Shield Cleansers, a highly effective, yet safe, disinfectant and sanitizer for use against SARS-CoV-2, a non-contact thermometer/controlled-entry device, an electrostatic sprayer for fast and efficient disinfecting of large areas, and a variety of personal protective equipment including face masks, gloves and sanitizer wipes.”

Market Reaction

On Tuesday, DGLY stock ended higher by 14.44% at $2.14. Volume was hefty with more than 21.27 million shares traded hands, compared to its average volume of 4.30 million shares. The stock opened at $2.03 and moved within a range of $1.5100 – 5.9700.