Guess which small cap ASX stock is jumping 12% despite the market selloff

Let's find out why investors are buying this small cap today.

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The market may be a sea of red on Monday, but not all shares are falling today.

One small cap ASX stock that is jumping this morning is 4DMedical Ltd (ASX: 4DX).

At the time of writing, the advanced respiratory imaging technology company's shares are up 12% to 55.5 cents.

Why is this small cap ASX stock jumping?

Investors have been buying the company's shares this morning after it won a contract with the United States Department of Defense (DoD).

According to the release, the contract will see the DoD pilot 4DMedical's CT Ventilation-Perfusion (CT VQ) technology to assess lung health in a fixed cohort of active duty personnel.

The company notes that the contract builds on the success of 4DMedical's earlier agreement with the DoD for the deployment of its CT Lung Ventilation Analysis Software (CT LVAS) in a clinical pilot program.

Management believes that the new arrangement reflects the DoD's recognition of the utility and impact of 4DMedical's technology in delivering critical health insights for active military personnel. It adds that the contracted arrangement with the DoD is best characterised as a commercial pilot, involving the delivery of a fixed number of scan analysis reports on full commercial terms.

Is this a big deal?

It could be a very big deal depending on how things go.

The release highlights that DoD operates one of the largest and most comprehensive healthcare systems in the world. It serves over 9.6 million active-duty service members, their families, and retirees across the Military Health System (MHS).

With over 200 military hospitals and clinics globally, the MHS is tasked with providing high-quality, integrated healthcare to ensure the readiness and resilience of the U.S. Armed Forces.

Under the agreement, the small cap ASX stock will leverage its CT VQ platform to conduct assessments of lung health, on 80 active-duty personnel within the DoD.

It highlights that the imaging solution will provide unparalleled insights into ventilation and perfusion abnormalities, assisting in the early detection and monitoring of a wide range of pulmonary conditions. This includes COPD and chronic thromboembolic hypertension. The technology is also relevant for personnel exposed to hazardous environments during military service and potentially living with associated deployment-related lung diseases.

'Disrupt a billion dollar segment'

The small cap ASX stock's CEO and founder, Andreas Fouras, said:

We are honoured to receive continued interest in the use of our technology from the DoD as a new pathway to enhance lung health outcomes for military personnel. This new contract underscores the value of 4DMedical's imaging solutions in addressing the unique health challenges faced by service members. We look forward to working closely with the DoD to deliver actionable insights that contribute to the readiness and well-being of the U.S. Armed Forces.

CT:VQ is set to disrupt a billion dollar segment of respiratory diagnostics by displacing Nuclear VQ imaging with a technology that is faster, safer, cheaper, more convenient and more accessible. We have been working for some time, leveraging hard fought experience with existing products, to build an aggressive market adoption strategy, and this contract win with the DoD, prior to FDA clearance, is testament to that work and the clear competitive advantages of our product.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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