Staffing Shortages Still Plaguing Healthcare:
A Potential Opportunity
The MedTech and Biotech sector took a hit after the Theranos debacle. Events like Enron’s bankruptcy, Theranos’s downfall, and the latest FTX scandal can wreak havoc on an investment sector. As of December 7, the S&P 500 was over 17% lower in 2022. The iShares Biotechnology ETF product (IBB) has had a rough year.
As the chart highlights, IBB closed 2021 at $152.62, and at $134.16 on December 7, it has declined by over 12%. However, IBB peaked at $177.37 in August 2021 and was 24.4% lower on December 7. The S&P 500 was down 18.2% from the record high, so the biotech sector has done worse. When a scandal hits a sector member, the fallout can cause many companies to experience selling that sends share prices and valuations below logical levels, creating opportunities for investors who can see the forest through the trees. Warren Buffett once said that his approach is to “buy when everyone else is selling if you have held your fire when everyone was buying.” As the chart illustrates, selling dominated the Biotech sector from August 2021, and since hitting bottom in June 2022, the overall sector has been consolidating with a bullish bias.
According to many earnings calls from healthcare providers, most companies continue to suffer from the effects of COVID and the havoc it wrought on these systems. The stress on the system has resulted in staffing shortages. In their earnings calls, leading hospital systems, HCA Systems (HCA), Tenet Healthcare Corporation (THC), and others, mention experiencing a reduction in procedures and implementing programs to attract, hire and retain healthcare professionals. This reduction in operations has permeated broadly across the MedTech industry. We are seeing and hearing this from healthcare providers, therapeutic companies, and medical device & technology companies, all struggling with the resulting surgery cancellations and procedure backlogs. The situation impacts decisions from procedural sites of care to capital budgets and long-term procurement contracting.
Timing seems excellent for us to highlight two represented client companies offering alternative value propositions. By leveraging technology, they look to provide solutions and improve overall care.
Perimeter Medical Imaging AI (TSX-V: PINK) (OTC: PYNKF) (FSE: 4PC) is a medical technology company working to transform cancer surgery with ultra-high-resolution, real-time, advanced imaging tools addressing areas of high unmet medical need. Perimeter has an FDA-cleared Perimeter S-Series OCT (Optical Coherence Tomography) system that provides real-time, cross-sectional visualization of excised tissues at the cellular level, with 10x greater image resolution than X-ray and ultrasound and 100x greater than MRI. Why is this important? Their initial focus is on Breast Cancer and Breast Lumpectomy surgeries which have a 20-25% re-operation rate. The "real-time" operating room imaging that the PCT provides dramatically reduces the re-operation rates and connected costs.
Perimeter is significantly improving patient outcomes and reduces stress on the medical system. The company also has an advanced AI version working through a clinical trial and is experiencing the effects of procedure backlog…..the irony! The company's "PINK" ticker symbol refers to the pink ribbons displayed during Breast Cancer Awareness Month.
CardieX (ASX: CDX) is a global health technology company focusing on hypertension, cardiovascular disease, and other arterial health disorders. The company's ATCOR division is the world leader in specialist medical devices for measuring arterial stiffness and central blood pressure waveforms based on its unique FDA-cleared and patented SphygmoCor technology. Under the CONNEQT brand, the company develops wearables, digital solutions, and devices for remote patient monitoring, decentralized clinical trials, and home health.
CardieX's suite of products provides the ability to monitor health remotely and not require patients, and those in clinical trials, to travel to the hospital or clinic. Remote monitoring frees up that backlog in clinics AND provides a solution that improves compliance, ultimately improving trial results. Studies have shown improvement in trial participation and compliance if a patient doesn't have to travel repeatedly to clinics. The company's existing clinical trial business is growing at an attractive trajectory.
The company's latest product iteration, the CONNEQT Pulse, has just been selected as CES 2023 Innovation Award Honoree. CardieX will display its device for the first time at the show on Jan. 5-8, 2023, in Las Vegas, NV.
While there is a backlog in the healthcare ecosystem system, it does provide an opportunity for companies with solutions to step in and offer some advancements and breakthroughs to improve patient care and outcomes. Perimeter and CardieX are medical technology companies with products that may produce exciting clinical and financial results.
The upcoming CES conference in Las Vegas in early January could be a perfect place to find companies on the cutting edge of technological advances. We look forward to meeting attendees at this year’s event, with several of our award winning and nominated clients in attendance. In the meantime, we wish you a happy holiday season and prosperous New Year.