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Of all the changes the ongoing coronavirus pandemic forced on us, the change in healthcare has got to be one of the most profound.
Whether we're managing a chronic condition, like high blood pressure, say, or an acute illness like strep throat, the market demand for these healthcare needs hasn't decreased a bit, but COVID-19 has made getting in to see a primary and specialist physician a lot more complicated and, in some cases, a lot more risky.
That means telemedicine, and the broader field of digital healthcare, are the name of the game right now. The $20 billion Teledoc–Livongo merger is proof of that.
That merger opened the floodgates, but the truth is the entire sector is taking off, thanks in part to the pandemic, but mostly because of an inevitable, long-term trend of increasing digitization across medicine as a whole.
And as we've seen so many times before when it comes to technology, the best profits go to savvy investors who recognize and ride the right trends.
I know one small digital healthcare firm that's in a great position right now...
Taking Healthcare into the 21st Century
One of the reasons digital healthcare "works" so well is because it empowers patients – people. Time was, if you needed, say, an electrocardiogram, you'd go to a specialist, wait, wait some more, take the test, and then hear back eventually.
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These days, of course, you can do it yourself with an app on an Apple Watch. You can check your blood oxygen levels – a critically important indicator for COVID-19 patients – with your Samsung Galaxy phone. If you need to talk to a primary care doc to manage diabetes, you can do that online. You can pull up your medical charts and records anywhere, anytime.
That's the essence of digital healthcare. It's keeping people healthier and improving medical outcomes, and it's lowering costs, to boot.
It's also going to be worth an estimated $72 billion before long.
This is an exciting, emerging industry in early innings, which makes DarioHealth Corp. (NASDAQ: DRIO) a classic "ground floor"-style play.
It's built a complete, constantly evolving digital healthcare platform, thanks to savvy acquisitions and an uncanny understanding of the marketplace. (Check out my sidebar interview with CEO Erez Raphael, and you'll quickly see for yourself how thorough this understanding is.)
DarioHealth was originally a business-to-consumer company (B2C), but the firm has recently pivoted; it's made a company-defining transition and now works in the business-to-business (B2B) space, directly with employers and health plans – entities with tens or even hundreds of thousands potential users – to get its products into consumers' hands.
This was a turning point for the company, and the proof is in its sales pipeline, which fattened by 75%, soaring from $200 million to $350 million last quarter.
DarioHealth Is in Three Gigantic Healthcare Markets
The company has its sights set squarely on three major digital therapeutics markets that address big chronic conditions for Americans – diabetes, hypertension, and musculoskeletal care. Those first two conditions alone represent a $108 billion global market. Dario's savvy, acquisitive leadership team recently purchased Upright Technologies for $31 million; Upright is a leading digital chronic condition management company that specializes in musculoskeletal problems.
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The Upright deal and the pivot to B2B has helped Dario grow a user base of some 150,000 users, all of whom can get a personalized, "curated" user experience. That large number is important; Dario has the ability to cross-sell, given user overlap, and it enables it to leverage health data.
According to the U.S. Centers for Disease Control (CDC), around 30 million American adults are living with diabetes. To address that market, DarioHealth provides a small piece of hardware that plugs directly into a user's phone and talks to a simple app that helps the user manage blood sugar. The app includes advanced analytics, of course, but interestingly, it gives users the ability to contact a coach to help with the process.
In the broader telemedicine space, where we've seen high double-digit growth since the start of the pandemic, DarioHealth has partnered with MediOrbis to bring mobile telemedicine to app users; virtual primary care, acute care, chronic disease management, and specialist consultations will all be available through the app. App users can arrange or, in some cases, even perform some tests, track the results, and go over them with their doctor.
This particular platform is highly scalable, and naturally, DarioHealth has a plan to continue to achieve superior average revenue per user.
The shares, which occupy the micro-cap space, aren't far off their 52-week high of $31, but they've been on a streak lately, to put it mildly, as the market has reacted positively to news of the Upright acquisition. Revenue is up 9.3% year over year. This is a speculative, somewhat volatile play; make sure you're aware of your risk tolerances and manage your position accordingly, but it's a great way to capitalize on the digital healthcare trend during the pandemic and well beyond.
Digital healthcare is just one lucrative tech trend we cover in our Nova-X Report investing research. Truth is there's extreme profit potential across the entire sector. My colleague, Michael A. Robinson, for instance, is looking at a special kind of cryptocurrency – specific-use coins – that's producing rare, exceptional returns right now. You can get a look at Michael's research here…
About the Author
Alex Kagin is the Director of Technology Investing Research at Money Map Press. He has spent the last decade working in equity research, most recently with Energy Capital Research Group (ECRG), where he led technology stock research along with working as part of a team developing a customizable financial data platform for securities analysis.
Prior to joining ECRG, Alex spent 8 years at DeMatteo Research, a boutique primary research firm and broker-dealer servicing the institutional investment community. He managed the Tech, Media, and Telecom vertical where he spent time connecting with hundreds of tech executives and hedge funds to get the pulse of the market.
Alex has a B.S. in Economics from American University and previously held Series 7 and 63 security licenses.