In this article, we present to you the 12 best telemedicine stocks to buy now according to hedge funds. If you’re in a hurry you can skip ahead to the 5 best telemedicine stocks to buy now.
The World Health Organization defines Telehealth as the delivery of health care services, where patients and providers are separated by distance. Telehealth uses ICT for the exchange of information for the diagnosis and treatment of diseases and injuries, research and evaluation, and for the continuing education of health professionals. Telehealth can contribute to achieving universal health coverage by improving access for patients to quality, cost-effective health services wherever they may be. It is particularly valuable for those in remote areas, vulnerable groups and aging populations. Basically, telemedicine gives access to remote patient and provider health care.
Prior the COVID-19 pandemic, telemedicine has already been thriving in the US. Based on a study conducted by the American Medical Association, from 2010 to 2017, the number of US hospitals that connect with patients through the use of telemedicine has increased from 35% to 76%; and the pandemic has only strengthened the industry. The U.S. Centers for Disease Control and Prevention saw a 154% increase in telehealth visits during the last week of March 2020 compared to the same period in 2019.
As we continue to adapt to the new normal and the advancement of technology as a convenience, the telemedicine industry will remain positive. American Telemedicine Association’s CEO, Ann Mond Johnson mentioned that with the Biden administration, support for the expansion on telehealth will continue,
“Telehealth has been and will remain a bipartisan issue and the ATA will continue to work with the federal government to improve policies to expand access to telehealth. We are very encouraged that President-elect Biden has been on the record in support of telehealth and its continued expansion, and we look forward to working with his administration and with Congress in 2021.”
Telemedicine has become so widely popular that tech giants have been entering partnerships to create their own applications relating to the industry,
Recently, Google (GOOG) announced its partnership with Amwell where they invested $100 million to evolve and scale healthcare solutions to healthcare organizations around the world. Thomas Kurian, CEO of Google Cloud mentioned,
“This is a critical partnership for the healthcare industry and has the potential to dramatically transform the telehealth space through the use of modern cloud technologies,”
For Apple (AAPL) Watch users the HealthNow DocNow App launched during 2014 allows users access to top US doctors with just a tap on the wrist.
Based on a study conducted by BIS Research, the global telemedicine market is estimated to grow over $123.0 billion by the end of 2030. The market is projected to grow at a compound annual growth rate (CAGR) of 17.16% during the forecast period from 2020 to 2030.
In order to identify the 12 best telemedicine stocks to buy now, we started with the 40 holdings in the Global Telemedicine & Digital Health ETF (EDOC) as of December 31, 2020, and we were able to narrow down our list to 12 stocks by using our hedge fund sentiment scores.
Our in-house analysis shows that we can use the sentiment information gathered from the hedge fund filings to classify in advance a select group of stocks that can beat the S&P 500 index by double digits annually on average. For instance, the portfolio of our monthly newsletter’s stock picks has beaten the market by over 88 percentage points since March 2017 (see the details here). Some of the portfolio holdings of our monthly newsletter have been shared online too. In October, we shared this real estate stock and since then, it’s been up nearly 50 percent.
Based on our hedge fund sentiment data, we present to you the 12 best telemedicine stocks to buy now, among the 800+ hedge funds tracked by Insider Monkey:
12. Cerner Corporation (NASDAQ:CERN)
No of HFs: 34
Total Value of HF Holdings: $789 Million
We start the list of the 12 best telemedicine stocks to buy now with Cerner Corporation. The company is known for supplying health information technology services, devices, and hardware. Recently the company announced their collaboration with GetWell Loop to offer a new COVID-19 digital care plan based on the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO) guidelines. An insider recently purchased 9,000 shares at around $67. The stock is up more than 16% since then.
In an article, Cooper Investors talked about the stock where they mentioned that it was a an advantaged business with a net cash balance sheet.
“Early in the quarter, the portfolio established a position in Cerner, a leading Healthcare IT vendor which provides software and related services to hospitals and physicians.
Cerner was founded in 1979 and until a few years ago the company was run and managed by its founders. Whilst they did a fantastic job building a global leader in Healthcare IT there was evidence that the company had started to lack some of the necessary disciplines around appropriate growth avenues and focus on the cost base.
Current CEO Brent Shafer was appointed in 2018 and this coincided with a handful of high calibre appointments to the Board and a significant refresh of the senior management team. Cerner are now holding themselves accountable in getting operating margin expansion to levels in line with peers, improvement in Free Cash Flow via reduced capex and a more appropriate capital return program, which includes initiating a dividend.
In summary, we see an advantaged business with a net cash balance sheet and a refreshed management team looking to execute value latencies across growth, margins, capital efficiency and capital return.”
11. Ehealth, Inc. (NASDAQ:EHTH)
No of HFs: 35
Total Value of HF Holdings: $372 Million
Ehealth, Inc. is licensed in all 50 states and the district of Columbia. The company offers a wide variety of health insurance plans over the internet. Their telemedicine platform allows users to compare details of coverage and prices for health insurance policies. An insider recently purchased 950 shares at around $78. The stock is down 10% since then.
Alger Small Cap Focus Fund mentioned in an article, that EHTH experienced higher-than-expected results during the second quarter of 2020.
“eHealth is a leading health insurance marketplace primarily focused on Medicare plans. Its technology and service platform provide consumer engagement, education and enrollment services. The marketplace offers consumers a broad choice of insurance products, including thousands of options for Medicare Advantage, Medicare Supplement and Medicare Part D prescription drug plans eHealth also offers non-Medicare options from a diverse mix of health insurance carriers in the U.S. In July eHealth reported better-than-expected financial results for the second quarter, but its stock still underperformed. eHealth has faced increased investor scrutiny of customer churn and its estimates of the lifetime value of an approved member. During its July report of its second quarter results, the company said it experienced higher-than-expected churn among customers who selected programs during open enrollment periods occurring in the fourth quarter of 2019 and the first quarter of 2020.”
10. Veeva Systems, Inc. (NYSE:VEEV)
No of HFs: 38
Total Value of HF Holdings: $733 Million
Veeva Systems, Inc. is a cloud-based business solutions company that focuses on pharmaceutical and life science industry applications. An insider recently purchased 202 shares at around $270. The stock is up 2% since then.
In an article, Alger Small Cap Focus Fund mentioned that Veeva will still have the legal duty to maximize shareholder value and that the change could potentially create greater trust in Veeva to properly handle proprietary customer data
“Veeva Systems is a leading provider of cloud-based solutions for the global life sciences industry. Veeva’s key solutions are Commercial Cloud products, offering multi-channel customer relationship management software, and Veeva Vault, offering regulated content management for pharmaceutical and biotechnology companies. Shares of Veeva performed strongly after the company reported better-than-expected fiscal second quarter 2021 results and raised its fiscal-year 2021 earnings and billings guidance. Veeva’s key growth driver continues to be strong adoption of Veeva Vault, with particular strength in the fiscal second quarter in its Quality Suite and Clinical Trial Management system. Veeva is making good progress on its recent acquisitions of Crossix, which provides a platform for optimizing health care marketing, and Physicians World. which provides a physicians’ speaker bureau. Since the earlier days of the pandemic in March, Veeva has offered its Veeva CRM Engage products to life sciences customers for free to enable virtual sales visits. Veeva intends to convert a large portion of these new customers into annual subscription contracts next year, as virtual selling has become more important during Covid-19. Finally, Veeva announced the formation of a board committee to explore the conversion of Veeva into a for-profit public-benefit corporation. Veeva would be the first public company to make this change. We believe this potential change would align well with Veeva’s existing culture and operations, that Veeva will still have the legal duty to maximize shareholder value and that the change could potentially create greater trust in Veeva to properly handle proprietary customer data.”
In a separate article, Brown Capital Management Small Company Fund mentioned that the stock delivered strong revenue growth and cash-flow generation, with little impact from COVID-19 related shutdowns.
“Veeva Systems provides cloud-based software to the global life-sciences industry. Veeva’s modern Customer Relationship Management (CRM) solution offers greater functionality and integration than competitors’, and has a dominant market position in the pharmaceutical market. Veeva Vault is an open ended content management and collaboration platform on which the company has launched multiple successful products for the clinical side of life-sciences companies. These include eTMF (electronic Trial Master File), CTMS (Clinical Trial Management System), CDMS (Clinical Data Management System), regulatory, quality and safety-management solutions, all of which have significantly expanded the company’s market opportunity over time. Finally, Veeva has begun to sell solutions outside of life sciences in recent years, further growing its target market. Going forward, we see a large opportunity for cross-selling, continued innovation and market expansion.
During the quarter, Veeva again delivered strong revenue growth and cash-flow generation, with little impact from COVID-19-related shutdowns. The company’s customers, who are mostly in the life-sciences vertical, have been relatively unscathed in recent months, and continue to expand their use of Veeva products. The company’s outperformance during the quarter was likely driven by strong execution and growth, enhancing its position as a best-of-breed software company.”
9. Insulet Corporation (NASDAQ:PODD)
No of HFs: 38
Total Value of HF Holdings: $1.15 Billion
Insulet Corporation offers health care services to patients with diabetes and other conditions. The company created the platform Omnipod Insulin Management System which is the first commercially available “patch pump” that provides a unique alternative to traditional insulin delivery methods.
The top hedge fund holder of this stock is Ken Griffin’s Citadel Investment Group which had $450 million invested in the stock at the end of September.
8. Agilent Technologies, Inc. (NYSE:A)
No of HFs: 39
Total Value of HF Holdings: $3.22 Billion
Agilent Technologies, Inc. provides users with a high-performance cell analysis platform. During the fourth quarter of fiscal year 2020, the company reported a revenue of $1.48 billion.
The company was mentioned by Pershing Square Capital Management in an article.
“Agilent’s fiscal third quarter results were demonstrative of the company’s high-quality, resilient business model and significant margin expansion opportunity. In what the company expects to be its most challenging quarter of the year, organic revenue declined only 3%, supported by stable performance in its CrossLab service and consumables segment, which grew 1%. While the pace of recovery throughout the quarter varied by region depending on when each region faced the brunt of the pandemic, the company exited July with positive growth across all of its regions. Notably, even with a modest revenue decline, the company was able to expand operating margins by 90 basis points year-over-year by effectively managing its cost structure. Agilent’s stock has increased 16% year-to-date.
Since the onset of the pandemic, Agilent has outperformed its comparable peer group with meaningfully lower revenue declines than peers. Despite the ongoing disruption from the pandemic, the company remains highly focused on product innovation and sales efforts to drive market share gains. For example, in its service business, Agilent introduced new workflow solutions to capitalize on the trend of labs outsourcing multiple services to a single vendor. The company has recently won several large, lab-wide, enterprise service contracts. Likewise, in its instrument portfolio, Agilent launched two new mass spectrometry product lines aimed at increasing testing throughput and reducing downtime. We expect these initiatives to drive long-term sales growth as they expand the installed base of Agilent instruments, and increase the penetration of its service and consumables off erings.”
7. Guardant Health, Inc. (NASDAQ:GH)
No of HFs: 41
Total Value of HF Holdings: $1.09 Billion
Guardant Health, Inc. founded in 2013 operates a biotechnology company that focuses on helping cancer globally. An insider recently purchased 2,033,990 shares at around $9. The stock is up 1322% since then.
Baron Asset Fund recently mentioned the stock in an article.
“Last quarter, the Fund initiated a position in Guardant Health, Inc., which we added to this quarter. The company offers a liquid biopsy test to detect advanced stage cancer, and it is developing liquid biopsy tests for recurrence detection in cancer survivors and early detection of cancer in higher-risk individuals. We believe Guardant’s liquid biopsy tests are superior to tissue biopsy because they are less invasive, do not require physical access to the tumor, are more representative of the tumor’s molecular profile, enable repeat sampling, have faster turnaround times, and support real-time monitoring.
We believe that Guardant has important competitive advantages, including unique technology incorporating proprietary biochemistries and machine learning, demonstrated clinical utility, regulatory barriers, payer coverage, and commercial adoption. We believe the market opportunity for Guardant’s tests could be greater than $35 billion in the U.S. alone. This includes large markets for therapy selection in advanced cancers, recurrence detection in cancer survivors, and early-stage cancer detection among highrisk individuals.”
6. Illumina, Inc. (NASDAQ:ILMN)
No of HFs: 44
Total Value of HF Holdings: $1.37 Billion
Illumina, Inc was mentioned as one of the 12 Best Large Biotech Stock to Buy Now. During the third quarter of the fiscal year 2020, the company reported a strong revenue of $794 million.
RiverPark Advisors, LLC mentioned in an article that the stock has a significantly larger growth opportunity ahead.
“Illumina: ILMN shares were our top detractor for the quarter, as the market viewed negatively its $8 billion purchase of liquid biopsy leader GRAIL. The acquisition marks a shift in strategy for Illumina from its highly profitable selling of tools to the liquid biopsy market (among other markets) to actively participating in the development of tests themselves. This market (earlystage cancer screening via blood samples), however, is a massive long-term opportunity that can dramatically change the face of healthcare. GRAIL is a leader and should have a commercial product as early as next year.
We continue to view the company’s core genomics industry as offering one of the larger total addressable markets that we cover, and ILMN is the clear innovation leader in sequencing and array-based solutions for genetic analysis. With less than 0.02% of humans having been sequenced and 99% of the variants discovered in the genome having not yet been deciphered, Illumina, at only $3.4 billion of TTM revenue, is still in its infancy in what is potentially a greater than $50 billion genetics analysis tools market opportunity. With Illumina’s entrance into the potentially larger liquid biopsy market, we believe that the company has a significantly larger growth opportunity ahead.
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