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Health See other Health Articles Title: Stock Gumshoe id's company that will make big bucks terminating America's #1 killer Stock Gumshoe...We haven’t heard from Dr. Mark Skousen for a while, so when a few folks asked me about his latest biotech pitch I decided to jump in… let’s see if the Thinkolator can get us some answers. Do keep in mind that these pundits (and their copywriters) are in the business of creating urgency. Every good ad from a newsletter includes a sharp reason to immediately subscribe, because those copywriters are fully aware both that most of us suffer from a severe case of FOMO (Fear Of Missing Out)… and that the longer you take to think over a purchase, the less likely you are to hand over your credit card. So now let’s see if we can ID the favored stock here… some clues from Skousen (and yes, it’s still the same stock he was teasing in that “August 15 deadline” a while back… so some of the hints may be a bit stale, despite the fact that the ad hit my inbox today): “How this Single Company Will Save Hundreds of Thousands of Lives… And Reward Its Shareholders with a Massive Payday in the Process…. ...they have three separate revenue streams. “The first focuses on diagnosing and preventing heart rhythm disorders. “The second generates cash by selling their cardiac imaging technology to pharmaceutical companies. “And the third is through equipment sales to hospitals and healthcare providers.” So, hoodat? This is, sez the Thinkolator, very likely BioTelemetry (BEAT), which has been an active “story stock” for a couple years… and just so happened to have a big move today, thanks to their partnership with Apple to provide cardiac monitoring services in conjunction with the Apple Heart Study. That’s a study that hopes to use Apple Watch tracking (they’re launching a special app for that) to find undiagnosed irregular heart rhythms… and it makes sense that they’re partnering up — that’s right in BEAT’s wheelhouse as a provider of mobile heart monitoring equipment and services — though that doesn’t necessarily mean that it’s going to have a near-term impact on BEAT’s revenue or income (this is a “study”, after all). But still, getting associated with Apple is great for little companies, at least in the heady days of the first press releases, and BEAT popped by about 10% today on the news (it closed a little below that, but still up very nicely). That was a fine balm for BEAT shareholders, I imagine, since they’ve been suffering through a weak share price since last Summer — I don’t know why the shares have been weak after they surged in 2016 and earlier this year, but the two likely causes are the recent acquisition of the Swiss company LifeWatch and, perhaps more importantly, the fact that the widely decision decision by Anthem in 2016 that helped to raise expectations has not yet created the ludicrous growth that perhaps some shareholders expected. They have clearly become a better company over the past few years (they had some disastrous years in the past, particularly back when they were still called CardioNet), both with the approval of their last remote monitoring device last year (the MCOT, Mobile Cardiac Outpatient Telemetry, a little device you can wear over your heart for a month that uses a smartphone to monitor you 24/7 for cardiac irregularities — with BioTelemetry being paid for the monitoring service), and with the LifeWatch merger that they hope will help them to consolidate the market, but the stock also went up rapidly, so perhaps it just got too expensive. Sometimes the lack of more exciting good news is enough to slow down a growth stock, so it could be anything… and there was also a “bear attack” on the stock when it was near the highs over the Summer, so that didn’t help. That Anthem decision, by the way, is where the “40 million” number comes from — that’s about how many customers Anthem has, and analysts and investors were excited last year when Anthem decided to start covering remote real-time cardiac monitoring, which would presumably drive a lot more business BEAT’s way if doctors start signing lots of people up. And yes, BEAT does routinely say that they’ve served a million patients to date, so it checks those boxes… and at times it has had a ROE of 49% (it was 49.75% for 2016, though over the past four quarters it’s now at 25%, perhaps more reason for the stock to have fallen). The one clue that stops me from saying this is a 100% certain match is that crazy 1,341% revenue growth number — BEAT has never reported revenue like that in its quarterly filings, though perhaps some sort of adjusted revenue or product revenue has hit that number in the past. If you want a little more certainty, Skousen also says this: “It has three separate revenue streams when it comes to heart disease. “But it’s also created a new treatment for Diabetes that we haven’t even mentioned yet.” Those three streams are their three major divisions, of which mobile heart monitoring is the one that gets the most attention and the real focus of the company — and the diabetes stuff is not particularly important to them, though they did acquire a diabetes management platform last year. And, for those who like to follow the Clown Prince of CNBC, Jim Cramer also covered them a few times in recent months — he liked the stock last I saw, and if you want a bit of background he did have a decent interview with the CEO last month that you can see below… So what’s going to happen? That I can’t tell you — the stock is still up nicely over the past year, though well off the highs in the mid-$30s back at the Summer peak, and analyst expectations are pretty impressive for near-term growth, so it’s not irrationally priced on the face of things. The expectation is that adjusted earnings (not GAAP) will come in at 84 cents this year and grow pretty markedly to $1.20 next year and $1.44 in 2019, so that’s solid 40% growth followed by 20% growth over the next two years. If that comes to pass, then paying 24X next year’s earnings is not ridiculous… but do note that these kinds of little device/diagnostics companies can be very volatile around news of insurance reimbursement and competitive products, and I know nothing about those things here. And with that, dear friends, I’ll leave you to chew on BioTelemetry — think this surge from the Apple deal will be sustained, or that they’ll stake a strong position in the growing cardiac monitoring business? Think other competitors will lap them, or that they’ll get swamped in the big move to “collective health?” Post Comment Private Reply Ignore Thread
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