With the world undergoing a state of lockdown amidst a medical emergency, digital health stocks appear to be benefiting from the need to remain isolated
Whether you turn on the news or scroll down your Twitter feed, it’s practically impossible to avoid reading or hearing about the various industries which will “never be the same” after the world emerges from its self-imposed COVID-19 lockdown. Though it’s too early to tell which predictions will actually prove prophetic, it seems safe enough to say that the healthcare industry — already the focus of worldwide attention, praise, and scrutiny — is uniquely poised for change.
Healthcare software is an exceptionally exciting business, dealing as it does in highly sophisticated digital technologies yet serving a basic and eternal human need — the need to be well. These two stocks are attractive picks for any investor looking to buy into an industry that strives for the best of both worlds.
Founded in 2005, Phreesia (NYSE: PHR) provides easy-to-use software that enables healthcare workers to better manage patient intake and payments. From its best-known product, PhreesiaPad, to the patient management apps it has pioneered, the company has positioned itself as a must-have brand in every doctor’s waiting room.
Naturally, recent coronavirus-related events have drastically changed the traditional healthcare check-in experience, which partly explains the worrying dip in the share price we saw in March. The stock has been making a recovery in April, however, after CEO Chaim Indig reported strong financial results. In fiscal 2019, Phreesia saw its revenue grow 25% to roughly $125 million compared to just under $100 million the previous year. What’s more, the company continues to generate about 80% of its sales from recurring revenue streams, suggesting its products carry an encouraging level of “stickiness” for users.
Also encouraging is Phreesia’s response to this most dramatic of healthcare crises. In February, the company gained significant praise from the medical community after the launch of a new screening module for its clients. The module uses state-of-the-art technology to identify risk factors in patients and thereby allow medical staff to take appropriate action. Furthermore, the company has reiterated its dedication to creating a fully remote patient check-in procedure. “We are preparing for a future that is less reliant on the physical waiting room,” Indig has said.
Developed rapidly in response to the COVID-19 outbreak, and updated regularly in response to shifting CDC guidelines, the two new services nicely illustrate Phreesia’s commitment to remaining at the cutting edge of this dynamic industry.
One of the best-performing stocks to date in MyWallSt, Teladoc (NYSE: TDOC) is both the oldest and the largest telehealth company in the world. With almost 37 million paid members in the US, the company strikes a highly appealing balance for investors — extremely popular, yet still staring down an enormous total addressable market.
Teladoc has received a lot of positive attention since the early days of the COVID-19 crisis. With industry-recognized apps and software solutions that are designed to literally put physical distance between doctor and patient, the company’s relevance can hardly be overstated in the current climate. Prior to the pandemic, the idea of a remote doctor’s visit, while attractive, was understood primarily as a convenience — the healthcare equivalent of an Uber, perhaps. Nowadays, with medical staff risking their lives in ICUs across the world, Teladoc’s offering already seems essential.
Although this pandemic will eventually subside, the world is undergoing a number of potentially permanent cultural changes that may prove a long-term benefit to Teladoc. It seems unlikely that anyone will be as tolerant of needless physical proximity as they were before, especially young people. It’s even harder to picture tech-savvy, app-oriented Millennials, or their younger Gen Z cohorts, returning to the germ-ridden hospital or doctor’s office if they can avoid it. Into this generational mindset shift, telehealth offers the simplest alternative, and in this space, Teladoc, for now, is king.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold positions in companies mentioned above. Read our full disclosure policy here.