Innovators in the Booming Pharmacy Services Space (WBA, RXMD, CERN, MDRX, CVS)
The market is ripping higher. But one of the most important leadership areas isn’t what most retail investors generally think about when they think of big capital gains growth. The pharmacy services space is the focus here. It’s a staple. Demand is inelastic within the context of the market cycle – these stocks generally won’t get hurt if the market tanks. But that doesn’t mean they can’t also provide massive growth during the cycle upside. With that said, here are five of the most interesting names in the space: Walgreens Boots Alliance Inc (NASDAQ:WBA), Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Progressive Care Inc. (OTCMKTS:RXMD), Cerner Corporation (NASDAQ:CERN), and CVS Health Corp (NYSE:CVS).   Walgreens Boots Alliance Inc (NASDAQ:WBA) trumpets itself as a pharmacy-led health and wellbeing company that operates through three segments: Retail Pharmacy USA, Retail Pharmacy International, and Pharmaceutical Wholesale. It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, WBA is net flat, and looking for something new to spark things. Shares of the stock have powered higher over the past month, rallying roughly 12% in that time on strong overall action. The company’s Retail Pharmacy USA segment sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable, and general merchandise products through its retail drugstores and convenient care clinics. It also provides specialty pharmacy services and mail services; and manages in-store clinics. As of August 31, 2019, this segment operated 9,277 retail stores under the Walgreens and Duane Reade brands in the United States; and 6 specialty pharmacies. The Retail Pharmacy International segment sells prescription drugs; and health and wellness, beauty, personal care, and other consumer products through its pharmacy-led health and beauty stores and optical practices, as well as through boots.com and an integrated mobile application. This segment operated 4,605 retail stores under the Boots, Benavides, and Ahumada in the United Kingdom, Thailand, Norway, the Republic of Ireland, the Netherlands, Mexico, and Chile; and 606 optical practices, including 165 on a franchise basis. The Pharmaceutical Wholesale segment engages in the wholesale and distribution of specialty and generic pharmaceuticals, health and beauty products, and home healthcare supplies and equipment, as well as provides related services to pharmacies and other healthcare providers. This segment operates in the United Kingdom, Germany, France, Turkey, Spain, the Netherlands, Egypt, Norway, Romania, the Czech Republic, and Lithuania. Walgreens Boots Alliance Inc (NASDAQ:WBA) managed to rope in revenues totaling $34B in overall sales during the company's most recently reported quarterly financial data -- a figure that represents a rate of top line growth of 1.5%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.2B against $25.8B, respectively).   Progressive Care Inc. (OTCMKTS:RXMD) may be the most interesting name in this list. The company just reported 91% y/y top-line growth in Q3 and is already reporting even faster growth in Q4. The CEO, S. Parikh Mars, said: “The annualized pace we set in October equates to new records across the board as we continue to see broad-based top-line expansion on improving margins. Our $3.4 million in overall sales for October is an understatement because it leaves out the cash flows we took in during the month related to third-party billing activity. With all factors included, the number of gross billing would be closer to $4.2 million. And our 46k prescriptions filled puts Q4 on pace to handily supass our breakout Q3 performance already. Execution continues to be tremendous, and I am very proud of our talented and dedicated team.” According to that release, the Company achieved over $3.4 million in overall October sales (not including an additional $800,000 third-party related billing activity), representing 78% annual growth in sales compared to October 2018, and 10% monthly growth in sales on a sequential monthly basis. The Company is also excited to report over 46,000 in filled prescriptions during the month, representing a 48% annual growth rate, and a 12% sequential monthly growth rate. In addition, the Company continues to see expanding bottom-line results, with gross margins tracking over 24% for October operations. The company is also very innovative and has a unique vision for the future, as discussed in its latest quarterly earnings press release, noting that a dramatic realignment toward a scalable model with national reach is in progress, including a transformation from a pharmacy model to a comprehensive health services model that includes significant expansion in products and services, including RXMD Therapeutics branded products in the CBD and nutraceutical space, as well as a defining expansion into the Telehealth marketplace. According to that release, “The Company believes its vision for monetization in telemedicine has the potential to be disruptive in the healthcare space, and will have powerful synergies with its existing legacy pharmacy business and its emerging RXMD Therapeutics. The opportunity to capitalize on its in-house expertise to expand through disruptive technology while providing needed care and services to underserved populations is a powerful step that will drive shareholder value while achieving a tremendous positive social impact. Targeting a leadership position in this market will be a signature objective for the Company in 2020.”   Cerner Corporation (NASDAQ:CERN) is another interesting play in the space. The company trumpets itself as a health care information technology solutions and tech-enabled services player in the United States and internationally. The company offers Cerner Millennium architecture, a person-centric computing framework, which includes clinical, financial, and management information systems that allow providers to access an individual's electronic health record (EHR) at the point of care, and organizes and delivers information for physicians, nurses, laboratory technicians, pharmacists, front- and back-office professionals, and consumers. It also provides HealtheIntent platform, a cloud-based platform to aggregate, transform, and reconcile data across the continuum of care; and EHR agnostic platform, CareAware that facilitates connectivity of health care devices to EHRs. In addition, the company offers a portfolio of clinical and financial health care information technology solutions, as well as departmental, connectivity, population health, and care coordination solutions. Further, it provides tech-enabled services, such as implementation and training, remote hosting, operational management services, revenue cycle services, support and maintenance, health care data analysis, clinical process optimization, transaction processing, employer health centers, employee wellness programs, and third-party administrator services; and complementary hardware and devices for third parties. The company serves integrated integrated delivery networks, physician groups and networks, managed care organizations, hospitals, medical centers, reference laboratories, home health agencies, blood banks, imaging centers, pharmacies, pharmaceutical manufacturers, employers, governments and public health organizations. It has a strategic collaboration with Christiana Care Health System to provide a weight loss surgery program. Cerner Corporation was founded in 1979 and is headquartered in North Kansas City, Missouri. It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things. Shares of the stock have powered higher over the past month, rallying roughly 3% in that time on strong overall action.   Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) bills itself as a company that provides information technology solutions and services to healthcare organizations in the United States, Canada, and internationally. Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) pulled in sales of $444.5M in its last reported quarterly financials, representing top line growth of -15.4%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($148.1M against $879.8M, respectively). It offers electronic health records (EHR), connectivity, private cloud hosting, outsourcing, analytics, patient engagement, clinical decision support, and population health management solutions. The company operates in two segments, Clinical and Financial Solutions and Population Health. The Clinical and Financial Solutions segment provides integrated clinical software applications and financial and information solutions, which primarily include EHR-related software, connectivity and coordinated care solutions, and financial and practice management software solutions, as well as related installation, support and maintenance, outsourcing, private cloud hosting, revenue cycle management, training, and electronic claims administration services. The Population Health segment offers health management, and financial management and patient engagement solutions to hospitals, health systems, accountable care organizations, and other care facilities. The company serves physicians, hospitals, governments, health systems, health plans, life-sciences companies, retail clinics, retail pharmacies, pharmacy benefit managers, insurance companies, and employer wellness clinics, as well as post-acute organizations, such as home health and hospice agencies.   CVS Health Corp (NYSE:CVS) is a health services company that offers plans in the United States. Its Pharmacy Services segment offers pharmacy benefit management solutions, such as plan design and administration, formulary management, retail pharmacy network management, mail order pharmacy, specialty pharmacy and infusion, Medicare Part D, clinical, disease management, and medical spend management services. The company's Retail/LTC segment sells prescription drugs and general merchandise, such as over-the-counter drugs, beauty products, cosmetics, and personal care products, as well as provides health care services through its MinuteClinic walk-in medical clinics. Its Health Care Benefits segment offers traditional, voluntary, and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, medical management, Medicare plans, PDPs, Medicaid health care management services, workers' compensation administrative services, and health information technology products and services. The company's customers include employers, insurance companies, unions, government employee groups, health plans, Medicare Part D prescription drug plans, Medicaid managed care plans, plans offered on public health insurance exchanges and private health insurance exchanges, other sponsors of health benefit plans, individuals, college students, workers, labor groups, and expatriates. As of December 31, 2018, it had approximately 40 leased on-site pharmacies, 25 leased retail specialty pharmacy stores, 20 specialty mail order pharmacies, and 90 branches for infusion and enteral services; and 9,900 retail locations and 1,100 MinuteClinic locations, as well as operated an online retail pharmacy Websites, LTC pharmacies, and onsite pharmacies. The stock has been acting well over recent days, up something like 3% in that time. Shares of the stock have powered higher over the past month, rallying roughly 14% in that time on strong overall action. CVS Health Corp (NYSE:CVS) pulled in sales of $64.8B in its last reported quarterly financials, representing top line growth of 37.1%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($7.5B against $52.5B, respectively). Read the full article
