Inovalon: Data-Driven Healthcare

12/24/2020 5:00 am EST


Adam Johnson


Inovalon Holdings (INOV) focuses on what I like to call, The Holy Grail of Healthcare — facilitating superior care for patients at lower cost to providers, explains Adam Johnson, growth stock expert and editor of Bullseye Brief.

The firm offers one of the world’s largest and most comprehensive cloud-based platforms empowering data-driven healthcare. The company offers real-time diagnostic solutions to patients and providers, informed by analysis on 58 billion previous medical events from 325 million patients.

It’s an ecosystem that looks a lot like blockchain, where all parties have realtime access to encrypted datasets, and each sees what the others are doing to ensure continuity.

The company makes money by charging health providers a per member per month (PMPM) subscription fee to access Inovalon’s metadata and harness its AI-powered analytical tools for addressing patient needs in real-time.

The more modules of the Inovalon ONE Platform engaged, the higher the fee charged across the relevant patient base. Adding modules is not only easy, but logical due to the synergy effect of having more access to more data. This becomes a virtuous cycle of expanding value, driving an exponential network effect for all users.

From payers and providers to life sciences organizations and pharmacy benefit mangers, Inovalon generates benefits for virtually any organization which participates.

Health metadata is still at a very early stage, with Inovalon revenues at about $750 million. Despite Covid headwinds, Inovalon’s earnings are growing 13% in 2020 and will likely accelerate to 23%-25% during 2021-22.

If anything, Covid has accelerated the business of collecting and analyzing health data, with so many seniors afraid to go out and staying at home. As this so-called Aging in Place trend accelerates, Inovalon stands to gain significantly.

Arguably, Inovalon’s unique position and scale argue for a premium valuation, especially longer term. I think Inovalon could also prove invaluable to a tech-centric acquirer.

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