Healthcare costs and spending are getting out of control. As the de facto insurer of Americans over 65 years old through Medicare & Medicaid, the U.S. government is the largest spender on care in the nation. The government is working hard to bring costs down through technology solutions that are mostly designed to keep patients out of the hospital. This updraft is fueling new companies and technology in the healthcare marketplace. Outpatient surgical centers have been a big beneficiary do their often lower costs; virtual telemedicine is lowering costs, and remote patient monitoring has allowed patients to get home quickly and often diagnosed remotely. Remote monitoring technology companies have caught a major bid over the last few years: cardiac technology company IRTC is up 4X, and BEAT up over 25X in about 5 years. BTCY is the latest entrant in this booming $25B market and considering recent stock performance and the relatively small $35 million market valuation, it could be set for a big move in 2019 as they continue to grow market share.
NEW YORK, NY / ACCESSWIRE / January 25, 2019 / The U.S. could be on a collision course with catastrophe. Healthcare costs are skyrocketing and insurance companies – let alone individuals – are scrambling to figure out how to keep their healthcare expenses down. As the de facto insurer of millions of older Americans through Medicare, and with a blossoming 65+ generation of Baby Boomers entering the ranks of Medicare beneficiaries, the U.S. government has a huge problem on its hands.
Thankfully the government is making efforts to bring costs down. Their efforts focus on keeping patients out of the hospital, where costs rack up quickly, and three approaches stand out: virtual care (telemedicine), using outpatient surgical centers, and remote patient monitoring (RPM). Combined, these could save billions in the coming years.
This move is fueling technology-driven startups that will ride the economic wave generated by this government initiative. It’s rare to see this kind of sectoral updraft, and the rewards could be big for the companies who capitalize with the right timing and products. Biotricity Inc (BTCY) could be one of these, with a growing portfolio of RPM devices in the large cardio monitoring space. This year will be their first full year as a commercial business and their stock has underperformed in the last 10 months as they transitioned from development to commercial organization. As they begin to emerge from every startup’s ”trough of sorrow”, BTCY could be poised for a big 2019. Other companies in the same vertical and a few years ahead in the commercial process have market valuations of $1-2 billion, compared to BTCY’s $35 million. 2019 could be a very big year for BTCY, and this could mean double-digit returns or more for investors.
Outpatient Procedures, Remote Monitoring and Virtual Care Can Fuel Billions in Shifted Healthcare Dollars
The Centers for Medicare & Medicaid Services (CMS) administer Medicaid to Americans who need assistance due to their income level, and Medicare to those over 65. Combined, they acted as insurance in one form or another for about 130 million Americans during 2017. That year, CMS spent $1.11 trillion. As more baby boomers age, CMS expenditures are only going higher, and the government may have a crisis on their hands if they can’t manage expenditures.
This ”insurance company” does a LOT of negotiating to get prices down. They play a major role in determining how procedures and medicines get covered, and for how much. They also have the power to point patients in the direction of cheaper or better healthcare solutions, and it’s a major initiative in the coming years.
They’ve found quick success in lowering costs with a few precise technologies and processes. Keeping patients out of the hospital, where costs pile up quickly, is a top priority. Three key initiatives are driving this: moving to ambulatory outpatient care centers for surgery, using remote patient monitoring, and enlisting the help of virtual care products, also called telemedicine. A study from the Ambulatory Surgery Center Association suggested that the health system could save as much as $55 BILLION annually if more procedures are moved to outpatient surgical settings.  And a 2015 Accenture report found that virtual health solutions in primary care could save $10 billion annually when applied to regular patient visits and self-care. 
The potential cost-savings from using technology that gets patients out of the hospital is staggering, and you can see it beginning to manifest in the way CMS pays for many of these processes. In early 2018, CMS significantly enhanced the way they reimburse doctors for RPM services and devices through certain billing codes to make it faster for patients and easier for doctors to get paid for using these services. In other words, regulations are creating incentives for doctors to use RPMs and similar.
Cardiology Remote Monitoring Is A Massive Market Where Most Longs Have Already Made A Fortune
Cardiac monitoring and management is one of the fastest growing RPM segments, with this total market set to reach over $25 billion by 2022 according to research from Markets and Markets.
A few public companies have taken off as this market has grown. IRhythm Technologies’ (IRTC) small patch device Zio, used to diagnose heart arrhythmias, launched nine years ago and is now generating over $100 million in annual sales. The company IPO’d in 2017 at $17 and hasn’t been near that price since; it’s a $80 stock recently and with a $2 billion market capitalization.
BioTelemetry Inc. (BEAT) is today a $65 stock and $2.2 billion company, from a low of $2.50 in 2013.
The newer Biotricity Inc. (BTCY) just launched their own diagnostic device called Bioflux and plans to launch another small patch device, similar to Zio, in 2019. Because Biotricity is a more recent entrant into this market, they haven’t received as much attention as their more established peers like IRTC. The company’s public stock didn’t fare well in 2018 as they moved from a development-stage company to commercial, but now they’re in the market and selling the award-winning Bioflux in the U.S. The sales organization is growing, and at the end of 2018 the company said that new device placements increased 182% from Q2 2018 to Q3 2018.
Now, Biotricity has a big year ahead of them as they launch their new Bioflux Patch and continue to expand their commercial organization. That’s often when public investors lose interest in healthcare companies, but for the right equities and can be the right time to own. BEAT was left for dead in 2013 as they built out their RPM portfolio, and the stock languished at $2.50. Today, with increasing success, it’s become a monster $60 equity, and those investors who bought that dip have done well. As BTCY emerges from a similar period, it’s an interesting name to know considering the valuation relative to these peers.
Government Fuel On The Fire Can Drive Entire Sectors
The government is making an effort to use more RPM and other cost-saving measures through CMS, which will likely act as fuel for this entire space. It’s not dissimilar to the cannabis sector, where government deregulation and embrace of medical and recreational use (in Canada for example) has spurred a renaissance of this entire industry. Companies like Aphria Inc (NYSE:APHA) and HEXO Corp. (TSX:HEXO-TO.TO) rising to fame from seemingly out of nowhere in the last few years. The rise of cardiac giants like IRTC and BEAT hasn’t had the same amount of investor attention, but considering the upside potential, it’s worth keeping an eye on these and BTCY as Medicare essentially pushes patients into their open arms.
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