Below is an excerpt from a complimentary research note by our Healthcare Team of Tom Tobin, William McMahon, and Justin Venneri. We are pleased to announce our new Sector Pro Product Health Care Pro. Click HERE to learn more.
An underlying theme that has grounded our thesis work as of late is the potential for pent-up demand within the health care system to be released as the COVID-19 vaccines bring the rain and the pandemic cools off.
From what we can see in the data that we are tracking, the week-over-week distribution looks steadier and the doses administered are trending positively. It seems that the roll-out is more hinged on bottlenecks within manufacturing and poor execution (we get it, it's hard to coordinate across ~3,000 counties).
In the next few weeks, we will be looking for commentary on what max production is but are hopeful that President Biden’s Defense Production Act will be effective in speeding the process.
As many of us have experienced in our own lives during the initial national lockdown in order to “flatten the curve” - and subsequent regional lockdowns - many patients kept essential appointments, but postponed "electives" like checkups (or, outside of healthcare, haircuts).
Due to the obstacles in the roll-out process, we are still seeing people deferring care in order “to let the vaccine take hold.”
When these people return to care, there is going to be a "snapback plus" owed to higher acuity with some percentage of the group. As a result of these thesis points, we turned our attention to names like National Vision Holdings ($EYE) which we think is poised to capitalize on the return to in-person care.
Try to make an appointment at your local eyeglass store to be seen for a prescription check.
We just did, and it's 3 months out.
Will they add hours or open 7 days a week? It's all TBD.
But in the past week, we have reached a comfortable place with material upside in our model based on individual forecast algorithms for EYE’s two main lines of business, America’s Best and Eyeglass World.
From our estimates, the comp structure in 4Q20, as well as 1H21, provides a favorable set-up for the company to execute upon. We will be calling around our network today for anecdotes on the percentage of demand pre-COVID and scheduling within these specific lines of business.