Overview
We'll be hosting our 3Q21 Health Care Themes Call on Thursday. As we get into the post-COVID environment, the separation between Macro and Fundamental, long and short, winners and losers is getting easier to identify. We see some solid long- term themes and names to be harnessing on the long and short side as we get into 2H21.
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3Q21 Health Care Themes | Post Pandemic Winners and Losers Please join us on Thursday, July 15, 2021 @ 12:30 PM ET - Add to Outlook Calendar Participating Dialing Instructions Toll Free: Toll: UK: 0 Confirmation Number: 13720678 Healthcare Subscribers CLICK HERE for event details (includes video, dial-in and materials link) |
Key Themes for 3Q21
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Advanced Primary Care (OSH, ONEM, CANO) | We've continued to push into the New Health Care Economy theme, consumer-centric, in- person and virtual hybrids, data driven, risk pricing, among other attributes. It's early days but it looks like to us that legacy fee for service models will be coming under continued pressure and Advanced Primary Care is an early mover, with the necessary data and analytics to take risk, new entrants are creating a head start in a number of areas within health care. Lately, we have been coming up the curve on our ability to analyze and track key players in the market.
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Digital Health 1.0 (TDOC, AMWL, DOCS) | Just as quickly as telemedicine became a household term, new and fast growth is now on the back side of the adoption curve. The environment seems lousy with apps who want to manage your weight, write a script, deliver talk therapy. The 2020 version of digital and virtual health big TAMs and fast growth. The 2021 version is competitive and well capitalized where simply having an app and hosting a virtual visit is no longer good enough. What was new is now old and as telemedicine is absorbed into the US Medical Economy, the core players and their models need to be sorted out. We currently have TDOC and AMWL on our short bench.
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Wage inflation (AMN) | Prices within health care have been elevated following initial lockdowns and remain so. With the end of unemployment benefits approaching, will we begin to see employment rise and wages decline to pre-COVID levels? We're expecting patient demand to remain high into 2022 which makes it unlikely that we'll see much relief from wage pressure. This isn't just a positive for AMN, but also a headwind across the US Medical Economy, including some of our longs.
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Cancer Testing Rebound, Liquid Biopsy (NTRA, GH, NEO, NVTA, EXAS) | We continue to hear anecdotes about increasing volume of cancer testing. There is ample evidence that COVID delayed screenings and as vaccination rates rise and patients return to in-person care, we're now seeing a catch up in cancer diagnosis although at a later stage. More volume of patients at a later stage means more testing for our names. With underlying acceleration, we think the value of liquid biopsy, now in the earliest stages of growth, can add significantly to valuations.
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Pent-up Demand/Re-Opening (ATIP, EYE, USPH) | The data on reopening has had an uneven 1H21. It started out weak in 1Q21 with lingering COVID and weather impacts, and maybe even federal stimulus checks. Prescription demand has been flat in recent months so we pushed GDRX to the Long Bench, but Physical Therapy and Vison Care look strong and we've got both ATIP and EYE at or near the top of our Best Idea Longs. We'll show you what we've been tracking and why we're seeing some key critical differences. We'll also cover the Delta variant and the current outlook for a return of lock downs and disruption come cooler weather Fall 2021. We'll also look at the revision cycle, Macro Quads as we stare down Quad 4 in the coming months, and the performance of our MicroQuad indicator. Whatever happens, we're long our MicroQuad2 names, or companies with revenue estimates with steep and accelerating slopes, or in other words, up and to the right.
