The shutdown has accelerated the growth of the do-it-from-home paradigm, and even medical treatments are now part of that trend, asserts Mike Cintolo, editor of Cabot Top Ten Trader.
1Life Healthcare (ONEM) is also called One Medical, but it’s all the same operation; the firm, operates a chain of more than 85 primary healthcare clinics based on a subscription model, charging $199 per year in exchange for allowing access to in-person primary care, online resources and remote doctor visits.
It partners with over 7,000 employers, accepts most health insurance and has 455,000 members, which is up 25% from a year ago. All in all, it proves to be a win-win for everyone, with greater access for consumers and cost savings for the healthcare system and employers.
For big investors, the attraction here is the rapid and reliable growth the firm has produced and should continue to crank out — Q1 revenues grew at the same rate as subscriptions (up 25%).
Given its historical retention rate of nearly 90% for members and 97% for corporate clients, it’s a good bet One Medical will grow ever-larger going forward.
Indeed, management meaningfully hiked membership growth expectations following its quarterly report (it expects to end the year with 510,000 or so, up more than 20% year-on-year).
Earnings are deep in the red as One Medical focuses on expansion, but the EBITDA loss is much smaller, and partially thanks to the recent IPO, the company has a ton of cash ($375 million) and just $2 million of debt. Given the trends in healthcare, it’s likely One Medical will grow much larger in the years to come.
After IPO'ing in February, ONEM spent its first three months building a base between the 15 (its lows during the March crash) and 28 (which was repeated resistance over many months).
The blastoff happened in early May, and the stock raced ahead to 40 within just a few days before finally deflating some over the past three trading days. Expect big volatility, but if you want in, we think the recent drop is buyable.
