Returns At Veeva Systems (NYSE:VEEV) Appear To Be Weighed Down
If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'd...
Has the U.S. Healthtech Industry valuation changed over the past few years?
|Date||Market Cap||Revenue||Earnings||PE||Absolute PE||PS|
|Wed, 17 Aug 2022||US$89.5b||US$17.0b||-US$10,440,030,813.00||36.6x||-8.6x||5.3x|
|Fri, 15 Jul 2022||US$89.6b||US$17.4b||-US$8,004,455,621.00||58.4x||-11.2x||5.1x|
|Sun, 12 Jun 2022||US$113.1b||US$23.2b||-US$7,415,282,621.00||48.2x||-15.3x||4.9x|
|Tue, 10 May 2022||US$115.4b||US$23.9b||-US$7,203,881,919.00||57x||-16x||4.8x|
|Thu, 07 Apr 2022||US$140.2b||US$23.4b||-US$645,602,428.00||74.9x||-217.2x||6x|
|Sat, 05 Mar 2022||US$134.9b||US$23.6b||-US$572,796,262.00||78.4x||-235.5x||5.7x|
|Mon, 31 Jan 2022||US$147.5b||US$23.7b||-US$1,724,466,532.00||94.5x||-85.5x||6.2x|
|Wed, 29 Dec 2021||US$169.4b||US$23.3b||-US$1,605,286,566.00||102.2x||-105.5x||7.3x|
|Fri, 26 Nov 2021||US$177.0b||US$23.0b||-US$1,126,772,240.00||105.2x||-157.1x||7.7x|
|Sun, 24 Oct 2021||US$196.5b||US$22.1b||-US$1,254,921,150.00||91.3x||-156.6x||8.9x|
|Tue, 21 Sep 2021||US$204.0b||US$22.0b||-US$1,255,851,452.00||107.5x||-162.5x||9.3x|
|Thu, 19 Aug 2021||US$183.1b||US$21.9b||-US$1,229,889,348.31||90.1x||-148.9x||8.4x|
|Thu, 03 Jun 2021||US$165.1b||US$20.3b||-US$1,350,712,571.31||90x||-122.2x||8.1x|
|Sun, 07 Mar 2021||US$178.3b||US$19.1b||-US$2,268,547,711.31||82x||-78.6x||9.3x|
|Wed, 09 Dec 2020||US$156.4b||US$17.5b||-US$1,421,801,372.31||114.4x||-110x||8.9x|
|Tue, 01 Sep 2020||US$113.4b||US$14.9b||-US$1,221,637,016.31||43.5x||-92.8x||7.6x|
|Fri, 05 Jun 2020||US$94.7b||US$14.2b||-US$1,262,828,818.31||43.5x||-75x||6.7x|
|Mon, 09 Mar 2020||US$76.4b||US$13.7b||-US$340,557,575.31||54.8x||-224.3x||5.6x|
|Sun, 01 Dec 2019||US$72.1b||US$13.4b||-US$260,928,522.31||53.2x||-276.3x||5.4x|
|Wed, 04 Sep 2019||US$70.4b||US$13.1b||-US$84,708,776.31||52.7x||-831.2x||5.4x|
Which industries have driven the changes within the U.S. Healthcare industry?
Which companies have driven the market over the last 7 days?
Tabula Rasa HealthCare
The shares of Teladoc Health (NYSE:TDOC) lost ~4% in the pre-market trading Wednesday after Guggenheim downgraded the telehealth company to Sell from Neutral, giving it the first sell-equivalent rating on Wall Street. The analysts led by Sandy Draper argue that TDOC’s revenue growth will remain under pressure due to a range of factors, including “a challenging macro environment that is elongating sales cycles in enterprise decisions.” In addition, the firm highlights the impact of the strong dollar, albeit to a lesser extent, and notes that the company is reliant on the consumer, generating 40% of its revenue from the segment. Guggenheim cuts the 2023 - 24 revenue and EBITDA estimates for the company to a level at the low end on the Street and hands TDOC a $25 price target, its lowest among analysts, according to Bloomberg. Read: Teladoc (TDOC) gained last Friday after DA Davidson launched its coverage with a Buy recommendation, noting that its current multiple and the share price offered significant upside.
Convey Health Solutions Holdings
Doximity went public in June 2021, raising approximately $606 million in gross proceeds in a U.S. IPO. The firm operates a digital collaboration and communication platform for physicians in the United States. Doximity has grown revenue and produces impressive free cash flow and earnings. But Doximity's shares may be fully valued at their current level, so I'm Neutral on DOCS in the near term. A Quick Take On Doximity Doximity, Inc. (DOCS) went public in June 2021, raising approximately $606 million in gross proceeds to the company and a selling shareholder from an IPO that priced at $26.00 per share. The firm operates a digital platform for medical professionals in the U.S., providing them with collaboration tools, telehealth solutions and related capabilities. Doximity appears well-positioned for a "new normal" of hybrid work environment for physicians, but I'm not convinced the shares are a good value here. I'm on Hold for DOCS in the near-term. Doximity Overview San Francisco, California-based Doximity was founded to help physicians to be more productive by providing them with information and tools for their practice. Management is headed by co-founder and CEO Jeffrey Tangney, who was previously co-founder of Epocrates, a mobile medical reference app company. The company's primary offerings include: Physician Communication Network Marketing Solution Hiring Solution Telehealth Solution Doximity/Enterprise Dialer The firm pursues a "land and expand" strategy to grow its business with each physician practice and health system. DOCS launched its Telehealth Solution in 2020 and said it delivered more than 63 million telehealth visits in FYE 2021. Doximity's Market & Competition According to a 2022 market research report by Grand View Research, the market for telehealth solutions and services was an estimated $62.4 billion in 2021 and is forecast to reach $551 billion by 2028. This represents a forecast CAGR of a very high 36.5% from 2022 to 2028. The main drivers for this expected growth are a growing penetration of internet broadband and increasing adoption by healthcare providers in the use of telehealth solutions for certain aspects of their service delivery options. Also, below is a chart showing the historical and projected future growth trajectory of the U.S. telehealth market: U.S. Telehealth Market (Grand View Research) Major competitive or other industry participants include: Teladoc PointClickClare Technologies Doctor Anywhere Cerner American Well Doctor on Demand GlobalMed MDLive Others Doximity's Recent Financial Performance Total revenue by quarter has grown but more recently dropped somewhat: 5 Quarter Total Revenue (Seeking Alpha) Gross profit by quarter has followed a similar trajectory to that of total revenue: 5 Quarter Gross Profit (Seeking Alpha) Selling, G&A expenses as a percentage of total revenue by quarter have been creeping up in recent quarters: 5 Quarter SG&A % Of Revenue (Seeking Alpha) Operating income by quarter has dropped materially in the past two quarters: 5 Quarter Operating Income (Seeking Alpha) Earnings per share (Diluted) have also dropped in line with operating income: 5 Quarter Earnings Per Share (Seeking Alpha) (All data in above charts is GAAP) In the past 12 months, DOCS' stock price has fallen 22.7% vs. the U.S. S&P 500 index' drop of around 4.7%, as the chart below indicates: 52 Week Stock Price (Seeking Alpha) Valuation And Other Metrics For Doximity Below is a table of relevant capitalization and valuation figures for the company: Measure [TTM] Amount Enterprise Value $6,960,000,000 Market Capitalization $7,730,000,000 Enterprise Value / Sales 19.26 Revenue Growth Rate 48.7% Operating Cash Flow $138,150,000 Earnings Per Share (Fully Diluted) $0.68 Net Income Margin 41.7% (Source - Seeking Alpha) Below is an estimated DCF (Discounted Cash Flow) analysis of the firm's projected growth and earnings: DOCS DCF (GuruFocus) Assuming generous DCF parameters, the firm's shares would be valued at approximately $33.45 versus the current price of $41.21, indicating they are potentially currently overvalued, with the given earnings, growth and discount rate assumptions of the DCF. The Rule of 40 is a software industry rule of thumb that says that as long as the combined revenue growth rate and EBITDA percentage rate equal or exceed 40%, the firm is on an acceptable growth/EBITDA trajectory. DOCS' most recent GAAP Rule of 40 calculation was 80% as of FQ1 2022, so the firm has performed quite well in this regard, per the table below: Rule of 40 - GAAP Calculation Recent Rev. Growth % 49% GAAP EBITDA % 31% Total 80% (Source - Seeking Alpha) Commentary On Doximity In its last earnings call (Source - Seeking Alpha), covering FQ1 2023's results, management highlighted beating its revenue and EBITDA guidance along with record high physician engagement. However, management also said its upsell rate for its pharmaceuticals clients slowed due to greater discretion by clients that can result in budget reductions. In response, CEO Jeff Tangney said he is shifting his focus from the firm's EHR integration efforts to its pharmaceutical products and partnerships, as he views the pharma market downshift as temporary in nature. The firm believes that its platform is well-positioned for the new 'hybrid' work model, which applies to physicians as their follow-up with patients can be from their office or home, so is increasingly virtual.
The Department of Justice argued that a 2021 internal audit of UnitedHealth Group's (NYSE:UNH) data practices demonstrates that the health insurer's proposed acquisition of Change Healthcare (NASDAQ:CHNG) should be stopped, Bloomberg reported. Evidence presented in an antitrust trial on Wednesday said that the audit found "no effective means of enforcement if or when data misuse is discovered or reported." CEO Andrew Witty, under questioning, said he received a report about the audit but that he wasn't aware of any changes made as a result of it. But he added that he wouldn't use Change's (CHNG) data and analytics -- including that of rivals -- to provide advantages to UnitedHealth's (UNH) insurance division. "I would absolutely not expect that to happen," he said. "If it ever did, it would be hugely destructive." The trial is set to end on August 16.
Augmedix press release (NASDAQ:AUGX): Q2 Revenue of $7.3M misses by $0.03M. Shares +11%. GAAP Net Loss was $7.4 million compared to $4.6 million. EBITDA losses were $6.8 million compared to $3.8 million. Adjusted EBITDA losses were $5.3 million compared to $4.0 million, which excludes the Stock-based compensation expense in both periods, the Loss on extinguishment of the prior debt facility in 2022, and the negotiated reduction of previously invoiced transaction-related expenses, related to the October 2020 transactions, and lease provision write-off in 2021. Cash and restricted cash as of June 30, 2022, was $30.8 million compared to $16.7 million as of June 30, 2021.
Streamline Health Solutions
Streamline Health Solutions (NASDAQ:STRM) stated Wednesday it has signed a contract with a 50-hospital health system in the Southwest. Financial details of the transaction were not disclosed. The company told the system will use its eValuator’s automated pre- and post-bill coding analysis technology to help improve revenue integrity and financial performance from their inpatient, outpatient and professional fee services. “Our newest client is a nationally recognized leader in care delivery, and we’re honored to partner with them in optimizing revenue integrity and financial performance prior to billing,” stated Tee Green, President and Chief Executive Officer, Streamline Health Solutions. Stock is up 12% premarket, Wednesday, to trade at $1.55. Earlier: Streamline Health GAAP EPS of -$0.06 in-line, revenue of $5.94M beats by $0.75M