The coronavirus pandemic has turned into a black swan event for several businesses. And the digital health industry is one to have witnessed significant growth amid the global health scare. Thanks to the new normal trend of social distancing, people are adapting to telehealth practices to avoid the risk of getting infected.
Additionally, strict regulations imposed by the government during the pandemic and advancement of technology have boosted the telehealth industry.
Remote Patient Monitoring Spurs Digital Healthcare
For long, telemedicine has tried to pitch itself, but even in 2019 only about 10% of Americans actually used telemedicine to make a virtual visit. The pandemic could change that for good now. With acute measures imposed by the government, telehealth is finally under the spotlight. In fact, telehealth is now part of the new normal, with prospects even post-pandemic.
During the pandemic, telehealth giants are guiding patients with coronavirus-related appointments, allowing doctors to monitor COVID-19 patients remotely. Several hospitals in the United States are using telehealth applications to diagnose the severity of cases and make arrangements for patients even before they reach the hospital.
Telehealth has now become and essential as spike in new cases put constant pressure on hospital logistics especially shortage of beds. For patients who are asymptomatic or show minimal symptoms, their health can be monitored remotely, saving hospital space and lowering the burden on healthcare systems during the crisis.
The digital health market has undergone various strategic and technological initiatives to gain a competitive edge in recent times. Launch of digital programs have enabled doctors to support patients’ healthcare needs. They can now guide patients and treat them remotely.
For instance, Philips that has ventured into enterprise telehealth for both inpatient and outpatient intends to cover a variety of needs. Recently, the company has launched a national portal for digital exchange of COVID-19 patient data in Netherlands in April 2020. The launch will expand their customer base and revenue generation in the market.
Mergers Boosting the Space
Additionally, the increasing importance and demand for digital health and technologies have led to diversified investment in this industry. In fact, in the first quarter of 2020, venture capital investments for digital health start-ups accounted for $3.1 billion, which is about 1.5 times the investment compared to the same quarter of 2019.
Along with that, major M&A deals are boosting the industry. In first-quarter 2020, Teladoc Health, Inc. TDOC acquired InTouch Health for $600 million. The deal will help Teladoc expand its presence across hospitals and health systems.
In the same quarter, Masimo Corporation MASI acquired NantHealth's Connected Care business for $47 million. The acquisition will help Masimo provide hospitals with automation, connectivity, and innovative non-invasive monitoring technologies.
In the first quarter of 2020, the telemedicine industry witnessed 41 M&A deals. In fact, per a StartUp Health report, telemedicine funding is up 1,818% and remote patient monitoring platforms by 168% year over year, compared to first-quarter 2019. Additionally, the report shows that health startups poised to support pandemic-response solutions saw a surge in funding in the beginning of this year.
4 Stocks to Buy
Per a Fortune Business Insights report, the Global Telehealth Market was valued at $49.8 billion in 2018 and is estimated to reach $266.8 billion by 2026, at a CAGR of 23.4%.
Given the emergence of COVID-19 and technological advancements that have fueled demand for telehealth services across the world, we have shortlisted four stocks that are sure to tap the boom. What’s more? These stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Teladoc Health provides virtual healthcare services on a business-to-business basis. The company’s expected earnings growth rate for the next quarter is 35.9% compared with the Zacks Medical Services industry’s estimated earnings growth of 26.1%. The Zacks Consensus Estimate for its current-year earnings has climbed 0.9% over the past 60 days.
UnitedHealth Group Incorporated UNH offers virtual visit facilities, arranging visits with a doctor, anytime, day or night, by phone or video platform. The company’s expected earnings growth rate for the current year is 7.9% against the Zacks Medical - HMOs industry’s estimated earnings decline of 1%. The Zacks Consensus Estimate for its current-year earnings has climbed 0.4% over the past 60 days.
Veeva Systems Inc. VEEV provides cloud-based software for the life sciences industry. The company’s expected earnings growth rate for the current year is 16.4% compared with the Zacks Internet - Software industry’s estimated earnings growth of 5.4%. The Zacks Consensus Estimate for its current-year earnings has climbed 2.8% over the past 60 days.
Humana Inc. HUM offers telemedicine and telehealth toolkit for healthcare providers to support patient adoption of virtual channels of care. The company’s expected earnings growth rate for the current year is 5.3% against the Zacks Medical - HMOs industry’s estimated earnings decline of 1%. The Zacks Consensus Estimate for its current-year earnings has climbed 0.3% over the past 60 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
Humana Inc. (HUM) : Free Stock Analysis Report
Masimo Corporation (MASI) : Free Stock Analysis Report
Veeva Systems Inc. (VEEV) : Free Stock Analysis Report
Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research