Zacks Industry Outlook Highlights Definitive Healthcare, Clover Health and Augmedix
For Immediate Release
Chicago, IL – July 10, 2023 – Today, Zacks Equity Research discusses Definitive Healthcare DH, Clover Health Investments CLOV and Augmedix AUGX.
Industry: Medical Info Systems
Link: https://www.zacks.com/commentary/2118030/3-medical-info-systems-stocks-to-consider-from-a-prospering-industry
The past three years of health crisis have led to exponential growth in the Medical Info Systems industry, thanks to the growing demand for contactless services. Even in the post-pandemic era, the popularity of distant treatment options and a paperless environment has not dropped. In fact, artificial intelligence (AI) and the Internet of Medical Things (IoMT) are advancing, leading to a tremendous upsurge in demand for digital healthcare options in hospitals and other healthcare settings.
Going by Precedence Research data as published by Binariks, the global market for healthcare information systems was worth $287.8 billion in 2022 and is projected to double in size by 2030. Subsequently, 80% of health systems claimed to have plans to increase their investment levels in digital health over the next five years (a HIMSS report).
The growing demand for all kinds of digital healthcare support, including telehealth, cloud computing, artificial intelligence, robotics and analytics, has created a unique opportunity for companies like Definitive Healthcare, Clover Health Investments and Augmedix. However, with the continued opening up of the global economy despite COVID waves, this trend might get disrupted going forward.
Industry Description
The Zacks Medical Info Systems industry comprises companies, which develop and market healthcare information systems. These companies offer software and hardware solutions to healthcare providers with secure access to real-time clinical, administrative and financial data in a time-efficient manner. Focus on patient satisfaction, security of patient data and administrative cost control has increased the need for big data, 3D printing, blockchain and AI.
Industry players like Omnicell and Allscripts are raking in millions from the sale of software and related hardware, professional services and IT outsourcing services, recurring service contracts for software maintenance and transaction processing services.
4 Trends Shaping the Future of the Medical Information Industry
Growing Demand for Contactless Services: During the pandemic, the need for contactless services grew enormously. But even when it was over, within the medical information systems space, the telehealth and remote patient monitoring segments continued to grow at a fast rate. Going by a Forbes article of 2022, telehealth is likely to stay for long, beyond the pandemic, and will likely be embedded into the healthcare vernacular.
A Startechup report in 2023 stated that the use of AI in healthcare is helping medical professionals in several ways, such as speeding up the diagnosis process and automating hospital workflows through robotics, AI-driven chatbots to check symptoms and so on. Per a Markets and Markets report, the global remote patient monitoring market is projected to reach $117.1 billion by 2025 from $23.2 billion in 2020, seeing a CAGR of 38.2%.
Remote Healthcare and Insurance Coverage: While COVID-19 has introduced an all-new era of virtual healthcare service, there are some associated pitfalls. A Wall Street Journal report stated that major insurers have been rolling back the terms of this virtual care coverage, upon which customers are facing out-of-pocket charges on certain virtual visits.
Going by a Healthcare Finance report, insurers are still speculative about how virtual care will look in the post-pandemic era. Meanwhile, considering telehealth and remote healthcare as the new normal, many insurance companies are now coming up to alter their coverage area.
EMR and Blockchain Gain Ground: Among the long-term trends, electronic health records (EHR), electronic medical records (EMR), predictive analytics and real-time alerting have been gaining prominence. These have led to the emergence of the Internet of Medical Things, which has enabled the use of a number of wearables, including ECG and EKG monitors, apart from other common medical measurement devices, to determine temperature, glucose level and blood pressure readings.
The evolution of telemedicine and blockchain is another megatrend worth mentioning here. Leading healthcare companies like Humana, MultiPlan, Quest Diagnostics and UnitedHealth Group's Optum and UnitedHealthcare formed an alliance to launch the Synaptic Health Alliance pilot project on blockchain.
Rising Instances of Cyber Attacks: As healthcare becomes more wired and interconnected, cybersecurity is the primary concern of hospitals. In fact, security flaws are being increasingly found in electronic medical device operating systems or other devices like ECG machines, imaging scanners, infusion pumps and telemetry systems. Indeed, the pandemic has led to growing cyber dependency, which has made the space vulnerable to cyber-attacks.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #107, which places it in the top 43% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
We will present a few stocks that have the potential to outperform the market based on a strong earnings outlook. But it's worth taking a look at the industry's shareholder returns and current valuation first.
Industry Underperforms S&P 500 and Sector
The industry has underperformed the Zacks S&P 500 composite as well as the sector over the past year.
The industry has declined 32.3% compared with the Zacks Medical sector's decline of 6.9%. The S&P 500 has risen 15.7% in the said time frame.
Industry's Current Valuation
On the basis of forward 12-month price-to-sales (P/S), which is commonly used for valuing medical stocks, the industry is currently trading at 5.92X compared with the S&P 500's 3.79X and the sector's 2.52X.
Over the last five years, the sector has traded as high as 22.33X, as low as 1.60X, and at the median of 5.11X.
3 Medical Info Systems Stocks to Bet On
Definitive Healthcare, as a medical technology company, transforms data, analytics and expertise into healthcare commercial intelligence. Together with its subsidiaries, the company provides software as a service (SaaS) healthcare commercial intelligence platform in the United States. Its SaaS platform provides information on healthcare providers and their activities to help its customers in product development to go-to-market planning, and sales and marketing execution.
Definitive Healthcare currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2023 revenues indicates a 13.4% improvement from 2022. The company has a long-term expected growth rate of 18.3%.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Clover Health, as a physician enablement company, is committed to bringing access to advanced healthcare to everyone on Medicare. This includes a health equity-based focus on seniors who have historically lacked access to affordable, high-quality healthcare. The company provides Medicare advantage plans in the United States. The company's software platform Clover Assistant is designed to aggregate patient data from across the healthcare ecosystem to support clinical decision-making and improve health outcomes.
Clover Health currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2024 revenues indicates 2.5% growth from 2023. The company has a long-term expected growth rate of 10.9%.
Augmedix delivers advanced, ambient medical documentation and data solutions to healthcare systems, physician practices, hospitals and telemedicine practitioners. Augmedix's proprietary Notebuilder Platform extracts relevant data from natural clinician-patient conversations and converts that data into medical notes in real time, which are seamlessly transferred to the EHR.
Augmedix carries a Zacks Rank #2 at present. The Zacks Consensus Estimate for 2023 sales indicates year-over-year growth of 37.2%. The company has a long-term expected growth rate of 10.9%.
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Clover Health Investments, Corp. (CLOV) : Free Stock Analysis Report
Augmedix, Inc. (AUGX) : Free Stock Analysis Report
Definitive Healthcare Corp. (DH) : Free Stock Analysis Report
