Innovations from the Healthcare Sector
09/11/2013 6:00 am EST
There are some exciting developments in the healthcare sector that Chris Versace feels are the best plays for investors right now.
CHARLES: Welcome to the MoneyShow.com Video Network. I’m Charles Githler here with Chris Verscace.
CHRIS: Hi Charles.
CHARLES: Now, drill down a little bit on a couple of your best ideas, in your publication.
CHRIS: So, there’s two names that we’ve added recently to the publication. One is a company called Vivus Inc; VVUS is the ticker, and another one is Allscripts, MDRX, and they both really play on the aging the population, but they also have ties into the medical arena as well. Vivus, they manufacture an obesity drug, and the reason I added this to the portfolio is one, there’s a huge pain point out there in obesity. If we look around, the people are getting heavier. It’s a real problem not only for the weight itself, but indirectly, on all the incremental costs for treating the weight and related diseases.
CHARLES: What does Vivus do to correct that problem?
CHRIS: Well, they have a drug that’s going through the process and it’s available in Europe and it’s available in the US now.
CHARLES: It’s a diet – it’s a hunger inhibitor?
CHRIS: It doesn’t curb the hunger, it actually helps fight the fat, as it were, and it’s now being able to be prescribed by doctors in the US, and that’s a huge change. If you think about obesity before, we would have thought about oh, Weight Watchers and NutriSystem, kind of work yourself, but obesity has now been recognized by the American Medical Association as a disease. That means now doctors can start prescribing drugs to help fight obesity. It also means that obesity fighting drugs and counseling could be open to insurance reimbursement. That’s a huge opportunity for those stocks.
CHARLES: Indeed. The cost of treating people with diabetes is…
CHRIS: Oh, billions of dollars. I mean, whether it’s diabetes, issues with your heart, and other issues, it is a huge, huge killer end cost.
CHARLES: So that’s your main reasons for investing in Vivus.
CHRIS: For Vivus, that’s right, yes.
CHARLES: And the company’s got good fundamentals?
CHARLES: Good looking chart.
CHRIS: Good balance sheet is what I would say. To me, the chart – I use charts to kind of hone in on a position, where I want to enter or exit, but all the fundamentals have to be in place.
CHARLES: Good, have you got another one?
CHRIS: Allscripts, MDRX. This is a little different. If you think about looming issues with Obamacare; not a lot of people like it; personally, I’m not a fan of it, but there are some pain points in there that can cause opportunities for investors. One in particular starts with 2014 and eMedical records. What we’ve seen before is there’s been a real push to get doctors and medical groups and hospitals onto eMedical records. In 2014, that carrot goes away and it becomes a stick, and those customers will start seeing their Medicare/Medicaid reimbursements garnished until they are on eMedical record systems. That’s a boom for Allscripts.
CHARLES: Excellent. Any more from Power Trends?
CHRIS: Well, on the medical side not so much. There is one I will tell you that I am looking at. It’s called eHealth. EHTH is the ticker and they’re kind of like an online portal for insurance plans, so if we think of what’s going to happen with the Affordable Care Act and bringing people who are uninsured to be coming insured, that’s a pretty interesting way to do that, and you think of the success we’ve seen with Facebook, LinkedIn, Trulia, and others shifts to online businesses. This could be one to watch.
CHARLES: Will it allow policy holders to actually review their…
CHRIS: Yes, yeah, you can actually go on and you can compare different plans and see what you’re getting.
CHARLES: So it’s like the Yelp of insurance.
CHRIS: That’s a fair way to put it, Charles, yes.
CHARLES: You’re just starting to…
CHRIS: Starting to do my work. Stocks had an interesting pop recently. They’re working with the federal government again to help insure some of these guys. They don’t have a contract yet with the federal government, but they’re in negotiations, so the stock had a nice pop and it’s drifting down. It could be interesting very soon.
CHARLES: Very good. We’ve been speaking with Chris Verscace at the Power Trends Newsletter.