Healthcare is going digital. And yet this is one case where technology is actually bringing back a little intimacy to the doctor-patient relationship.
I’m generally fascinated by the way events, such as the Covid-19 pandemic, bring about or provide a catalyst for trends that when we look at them in 10 years will seem so obvious. That’s what I feel about digital health.
For the better part of 10 years, my mother endured a number of health care scares. At various times, I was the closest of her children. And it was frustrating to not be able to communicate with a doctor in real-time. There were times when I’m sure a quick video chat could have saved an office visit or emergency room visit.
In an interview with CNBC, Brian Cuneo, global co-chair of the life sciences and health care group at the law firm Latham & Watkins made these remarks, “What we’ve seen with Covid is its been the catalyst in many ways for people to rethink lots of different areas of life, and access to and delivery of health care is one of the first and foremost.”
And how big is the market? According to Grand View Research, the global digital health market grew from $95.8 billion in 2018 to $114.5 billion in 2019. And this year that number is expected to reach $144.4 billion.
The 3 Catalysts Moving Digital Health Stocks Forward
Of course, it doesn’t hurt that the Centers for Disease Control and Prevention (CDC) is recommending patients that suspect they may have Covid-19 coordinate a telehealth visit before they go to a public facility where they could infect others.
But Covid-19 is just one catalyst for digital health. The reality is that the need for virtual health is growing important as many patients have been postponing needed services as they continue to follow guidance to stay at home.
The first catalyst for digital health stocks is that companies are questioning what their offices will look like in the future. And part of thinking about a semi-remote workplace is questioning how they can save on health plans. “Things that were 10 years away are now here,” said Jake Dollarhide, CEO of Longbow Asset Management.
As this is happening, governments are starting to relax rules that inhibited digital health. Two of those are that they are allowing doctors to practice across state lines without requiring an additional license. And second, the federal government has agreed that doctors should be compensated equally whether they meet with patients virtually or physically.
This is also due to the novel coronavirus. According to Steve Kraus of Bessemer Venture Partners it used to be what he termed a “Sisyphean task” to move telemedicine forward. But that is now changing.
The third catalyst is coming from insurance companies that are agreeing to cover these visits. This is opening up the addressable market.
What Stocks Are Pushing Digital Health Stocks Forward?
There are several privately held companies that are surging. But for the purposes of your portfolio, let’s focus on three of the biggest publicly traded companies. Shares of these companies have exploded since the beginning of 2020.
Despite the March crash, shares of Teladoc Health (NYSE:TDOC) are up more than 160%. Teladoc estimates its potential patient base at perhaps more than 1.1 billion people. That means it is only covering 1% of its massive addressable market. Because of its size, Teladoc has resources in place to match patients with licensed physicians to help investigate symptoms, prescribe tests and medications if necessary. When necessary, the doctors can make referrals to specialists or emergency departments.
Livongo Health (NASDAQ:LVGO) is doing even better. LVGO stock is up over 270% over the same period. Livongo sells its personalized coaching services to employers and health systems who extend those benefits to employees and members. The company came onto the scene with its diabetes management. Now the company is expanding into other areas such as hypertension/high blood pressure, weight management, and behavioral health. The company had a record 380 client launches in the first quarter. The company defines a client as any business that has at least one active paid Livongo contract at the end of a quarter.
And One Medical (NASDAQ:ONEM) that has only been publicly traded since January is already up over 65%. One Medical has a direct primary care model. Patients pay the company an annual fee of $199 to get access to One Medical’s primary-care physicians and services. This includes the ability to text their doctors and schedule same-day appointments.
Is This Just a Temporary Surge?
I wouldn’t bet on it. Like e-commerce, the pandemic has only moved the United States in a direction it was already moving in. The ability to access digital health has been something that patients have been asking for, but faced obstacles from employers, government, and insurers.
Now that those obstacles have been removed, it’s unlikely that they will be put back into place. And that makes digital health stocks a great way to profit not only now, but in the years to come. 7 Retailers That Are Bucking the E-Commerce Trend
Once again it appears that the death of brick and mortar retail appears to be exaggerated. First-quarter earnings are showing that many retailers that rely on in-person traffic for a considerable chunk of their business are seeing a rebound in sales. And many are planning to open stores in 2021.
This isn’t to say that e-commerce is going away. In fact, a common feature for many of these stocks is that they either developed or enhanced their digital footprint during the pandemic.
This special presentation focuses on retailers that are planning to add to their brick-and-mortar footprint in 2021. And some are planning to do so by a substantial margin. Once again, this doesn’t signal a transformative shift in the overall trend, but it does mean that for the foreseeable future, brick and mortar will have some relevance.
View the "7 Retailers That Are Bucking the E-Commerce Trend"
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