Hear what our experts say for this weeks top trades.
Veeva Systems (VEEV US)
Veeva is the leading provider of cloud-based software solutions for the healthcare and life sciences industries with its core CRM solution complemented by newer products like Vault and Network that are poised to drive company growth going forward. The Company offers enterprise applications, multichannel platform, customer relationship, and content management solutions. Veeva Systems is breathing new life into software for the health care industry.
Its cloud-based software and mobile apps are used by pharmaceutical and biotechnology companies to manage critical business functions. Veeva Systems' customer relationship management software uses Salesforce's platform to manage sales and marketing functions. Its Veeva Vault provides content management and collaboration software for quality management in clinical trials and regulatory compliance for new drug submissions. Its software is used in 75 countries and available in more than 25 languages, but North America is its largest market.
Veeva is a play on the digitization of healthcare- specifically the life sciences and biotechnology industries as they migrate their mission critical operating activities to the cloud. A key advantage for Veeva is that it serves biopharmaceutical companies and its focus is on care providers. That's a sector of the industry that may not be prone to significant economic adversity and is seeing a significant uptick in sales as healthcare companies work around the clock to contain the coronavirus pandemic.
In fact, Veeva CEO Peter Gassner outlined in a CNBC interview on March 26, that one of Veeva’s products involved in the process is Veeva Engage, a customer relationship management platform tailored to life sciences companies. The system offers online video conferencing and content sharing applications. Health-care professionals are using the program to connect with doctors remotely to deliver care to patients.
The video conferencing tools for Veeva Engage are supplied by Zoom Video Communications, of which Gassner is a board member. Some of Veeva’s clients include Biogen, Eli Lilly and Gilead Sciences, three of many biotech companies in the race to develop a COVID-19 treatment.
“We’re offering that free to the whole industry until September. So, we have had more than 100,000 licenses provisioned, and the usage of that product is up 10x in just two weeks,” he said.
I can’t think of a better way to gain product visibility and credibility. Veeva is a buy at current levels and a great name to own going forward as some have called the ongoing discoveries in biotechnology and life sciences the “Third Industrial Revolution”. Clay Carter, Head of Investments, Macrovue.
Teladoc Health (TDOC US)
Teladoc Health provides remote access to healthcare services. The Company diagnoses, recommends treatment, and prescribes medication for routine medical issues through phone and video consultations. Teladoc Health serves patients worldwide. There is a significant market opportunity for telehealth services (Teladoc estimates a total addressable market of ~$57 billion, including ~$17 billion on the ambulatory care side and ~$12 billion in behavioural health), which help to solve two key issues affecting the U.S. healthcare system: lack of access to care and rising costs.
Analysts believe that the telehealth market is virtually untapped at this point. Teladoc is well positioned given the company’s established brand and other competitive advantages, including an innovative and scalable technology platform and a high-quality physician network. With 80% of revenue currently generated from subscription access fees, this leads to a high degree of visibility. It also has partnerships with over 12,000 health plans, self-insured employers, and hospitals and health systems. The network includes more than 50,000 board-certified doctors.
Teladoc is a classic COVID-19 stock. But longer term it is also in keeping with the long-term trend of cloud collaboration and the digitization of healthcare. During the current crisis, a virtual meeting with a health provider is of critical importance but, other than that, many routine visits to doctors' offices, with their associated long wait times and other inefficiencies, can be replaced by telehealth.
On March 17, the Centers for Medicare & Medicaid Services (CMS) announced that President Trump had expanded Medicare telehealth coverage, allowing seniors to communicate with doctors without taking the risk of office visits, for an expanded variety of care scenarios. As well, the recently signed fiscal stimulus package has include substantial funding for telemedicine options.
Teladoc said on March 13 that it had facilitated about 100,000 U.S. virtual visits in seven days, which was a 24% increase from a year earlier, and a 50% jump from the previous week. I expect the company will be significantly upgrading these numbers over the coming weeks as coronavirus numbers swell in the U.S.
These two stocks are from Macrovue’s top performing thematic portfolio (or “Vue”) “The Genomics Revolution / 21st Century Medicine” This portfolio has gained 26% over the last 12 months (to 30/03/2020). In contrast the ASX 200 has declined some 20%.