It is very possible by now that many adults have had a telehealth conference or checkup. As we have learned over the last four months, COVID-19 and the pandemic have changed everything for everybody, and the health care sector has been right at the forefront.
The effort to keep older, more vulnerable patients out of doctors’ offices and away from potential infection has led to a surge in an industry that was somewhat nascent prior to the pandemic. Numerous companies will benefit from this change, and in a new and very comprehensive research report, the analysts at Jefferies take a long look at the industry and the stocks that should be benefactors of the change.
The report noted this:
Covid-19’s biggest impact on telehealth adoption has been mass provider acceptance into practice workflows. Increasing patient demand was very slow pre-Covid-19, where telehealth was made available through payers. That model provides on-demand care at a reasonable price, but does not satisfy a key patient preference … access to their own doctor vs a series of one-off interactions. With broad provider adoption, patients can have both. We think the long-term persistence of this trend hinges on reimbursement.
Note that this isn’t just for COVID-19 care. Other treatments and tests are being done remotely and are part of the telehealth family. Jefferies zeroed in on seven companies that should be boosted by significant telehealth adoption, and here we focus on four on which the analysts have positive near-term and long-term views.
This rather off-the-radar clinical play has solid upside to the Jefferies price objective. CareDx Inc. (NASDAQ: CDNA) is a leading precision medicine solutions company focused on the discovery, development and commercialization of clinically differentiated, high-value health care solutions for transplant patients and caregivers.
CareDx offers testing services, products and digital health care solutions along the pre- and post-transplant patient journey, and it is the leading provider of genomics-based information for transplant patients. The company’s products include AlloMap, AlloSure and Laboratory products.
Jefferies had this to say:
We continue to be impressed with the company’s ability to pivot to address social distancing restrictions with the introduction of RemoTrac, its remote home-based blood draw & monitoring solution with >10,000 mobile phlebotomist, which already accounts for ~50% of volume just 3 months post launch. From a patient perspective, we’re not sure why anyone would prefer going back to the transplant center 3-4x/year for routine monitoring tests (95% of transplant patients indicated they’d prefer RemoTrac post CV19). Longer term, we see its remote platform facilitating closer patient interactions, driving higher compliance with recommended protocol testing & further expanding CDNA’s moat in the $2 billion + transplant market.
Jefferies has a $40 price target on the shares, and the Wall Street consensus target is $41.60. CareDx stock was last seen trading at $34.14, after surging 8.35% on Monday.
This is a solid value buy in the health care sector. Cigna Corp. (NYSE: CI) is a major health services organization that provides insurance and related products and services in the United States and internationally. All products and services are provided exclusively by or through operating subsidiaries of Cigna, including Cigna Health and Life Insurance Company, Life Insurance Company of North America, Cigna Life Insurance Company of Canada and their affiliates.
The health care giant offers an integrated suite of health services, such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits and other related products, including group life, accident and disability insurance. Cigna maintains sales capability in 30 countries and jurisdictions, and it has approximately 86 million customer relationships throughout the world.