Three Ways to Play the Healthcare Services Growth Boom (MDRX, RXMD, CERN)
Healthcare is always in the spotlight these days. Companies that manage to find a way to add value while increasing the efficiency equation can do society a great deal of good. But the growth numbers we see in the space right now mean that this space is also set to do a lot of good for niche investors focused on this group. Today, we take a look at three stocks that each represent a very different thesis on future potential in the space: Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Progressive Care Inc. (OTCMKTS:RXMD), and Cerner Corporation (NASDAQ:CERN).  Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) recently announced its financial results for the three and nine months ended September 30, 2019. According to the release, Bookings were $236 million in the third quarter of 2019. This result compares with $198 million in the third quarter of 2018. Contract revenue backlog totaled $3.9 billion as of September 30, 2019. Third quarter 2019 GAAP revenue was $444 million, up 3 percent year-over-year. Third quarter 2019 non-GAAP revenue totaled $445 million, up 1 percent year-over-year. “Our third quarter results show continued strength in new bookings, reflecting how our award-winning solutions resonate with both longtime clients as well as those new to Allscripts,” commented Paul M. Black, Chief Executive Officer of Allscripts. “We were proud to extend our Sunrise partnership with our largest client, Northwell Health, and we’re excited to jointly develop the next-generation electronic health record with Northwell. Looking ahead, we believe revenue growth will improve as we benefit from the strategic investments we’ve made and the platforms we’ve created across both our Provider and Veradigm businesses.” 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. 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. Allscripts Healthcare Solutions, Inc. was founded in 1986 and is headquartered in Chicago, Illinois. Even with that news, the action hasn't really heated up in the stock, with shares moving net sideways over the past week. 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).   Progressive Care Inc. (OTCMKTS:RXMD) is one of the most speculative, but possibly most promising plays in this space, particularly in terms of growth. The company recently put out an update showing further growth year-over-year in revenue and number of prescriptions filled for September 2019. According to the release, September 2019 sales continued to increase with $3.1 Million in gross revenue and over 42,000 prescriptions filled between the 4 locations in Florida. Gross revenue does not include PBM clawbacks for DIR or other fees. Revenues increased by 94% over the same month last year and prescriptions filled increased 73%. “September’s performance was better than expected,” said S. Parikh Mars, Chief Executive Officer of Progressive Care Inc. “During the month sales were impacted by the hurricane threat and observed holidays. We are pleased with the resilience of the business and are optimistic about the future outlook.” The company has also garnered a great deal of earned media coverage, appearing on the Pot.Live podcast, and receiving coverage in Huffpost and Fast Company publications. That suggests the RXMD narrative has legs. But perhaps the most exciting news besides the huge sales growth underway is the company’s announcement of the formation of its wholly owned subsidiary, RXMD Therapeutics Inc., which specializes in cannabinoid-based and alternative therapy product lines. “We are excited to make this official announcement, RXMD Therapeutics Inc. has been in the planning stages this past year” said S. Parikh Mars, CEO of Progressive Care Inc. “We believe we have finally found a pathway where we can provide cannabinoid and homeopathic products that meet our strict quality requirements while also being able to manage these therapies from a health and wellbeing perspective.” According to the release, “Progressive Care Inc. will develop and produce proprietary cannabinoid and homeopathic products that will be solely offered from RXMD Therapeutics Inc. The first line of production will consist of tinctures, skin creams, roll-ons and gel capsules which are the dosage forms most easily managed by retail patients. RXMD Therapeutics brands will be tested for consistency and quality assurance prior to release and periodically thereafter.” The stock is testing key support as the company banks massive revenues (over $22M on a trailing twelve month basis) on huge top-line growth (37% last quarter on a y/t basis). This is the time to give it some serious attention.   Cerner Corporation (NASDAQ:CERN) is another interesting play in the space. The company managed to rope in revenues totaling $1.4B in overall sales during the company's most recently reported quarterly financial data -- a figure that represents a rate of top line growth of 6.7%, 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 ($632.7M against $1B, respectively). Cerner Corporation (NASDAQ:CERN) trumpets itself as a company that provides health care information technology solutions and tech-enabled services 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. Read the full article
