Digital Healthcare Stocks: The IPO Market in This Under-the-Radar Industry Is Heating Up

Digital healthcare stocks have been left out of the IPO party. But, that's about to change.

The alternative, plant-based meat industry has taken its latest leap forward.

IPO Going Public
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On August 8, Burger King rolled out the “Impossible Whopper” at all 7,200 of its locations nationwide. But this isn’t your typical burger. The Impossible Whopper uses an Impossible Burger patty — a plant-based meat alternative that looks and supposedly tastes like the real thing.

Burger King isn’t the only chain to sell the Impossible Burger. White Castle, Qdoba, and Red Robin also sell it — among many others. You can even order it at Disney theme parks.

And recently, the FDA said that soy leghemoglobin (the ingredient that allows the burgers to “bleed” like real meat) is safe, opening up the opportunity to sell the Impossible Burger directly to consumers. So, you can expect to see them popping up in grocery stores in the coming months.

Burger King rolling these burgers out nationwide is proof to many that the fake meat trend is more than just a fad. But I disagree — I think it’s a fad that will end badly.

I’ve tried plant-based burgers myself. They’re better than I had expected … but certainly not something I’d enjoy regularly.

Whole Foods CEO John Mackey said it best: “If you look at the ingredients, they are super, highly processed foods … I don’t think eating highly processed foods is healthy.”

I agree, as I’m a fan of whole foods as well. And I think the trend is overrated, too. Still, Wall Street has jumped on the fake meat bandwagon … and that’s reflected in the IPO market.

Beyond Meat (NASDAQ:BYND), a direct competitor of Impossible Foods (the company behind the Impossible Burger) that sells various plant-based meat alternatives, went public in May and had the best IPO of the year so far. The shares soared 163% on their first day of trading, and overall they’re up 500% from their IPO price of $25.

BYND Stock Chart

Beyond Meat isn’t the only winner in this year’s IPO market. IPOs as a group are outpacing the broader market 2-to-1. So it’s definitely a hot market right now.

But not every industry has joined the party. In fact, there’s one in particular that has been left out completely in recent years, but that trend has started to change.

A $2.4 Trillion Opportunity

Digital healthcare companies have been attracting a lot of venture capital (VC) money over the last few years. In fact, 2019 is on pace to be the best year on record for this industry.

Since 2011, $36.3 billion have been invested in digital health startups. Until recently, the one way for early investors to get their money out of these investments was for the private company to be bought out by a larger firm. Through the first six months of 2019, there were 43 merger-and-acquisition transactions.

Rock Health, a seed fund for digital health startups, did a deep dive into the sector’s exits, in which the early investors who got in pre-IPO are able to cash out once the company goes public. The numbers show that $29.4 billion — or 81% of the funding since 2011 — is still looking for a liquidity event.

But that’s finally starting to change … Now, these digital healthcare companies are going public.

Over the last three years, zero digital healthcare companies had IPO’d in the U.S. stock market. But since June 27, four such businesses have gone public.

Today, the total value of those four companies is $7.1 billion. Prior to their IPOs, they received $1.7 billion in funding. That means early investors have made 4.2X their initial investments!

Those are the kinds of profits that my Early Stage Investor subscribers go after (and more). We employ a venture capital-style approach to investing … getting in early BEFORE the big money is made, then riding the waves higher.

These IPOs are just the beginning. The $3.6 trillion healthcare market is finally changing after years of falling behind in technology.

I’m talking about telemedicine … personalized and precision treatments … next-generation health monitoring … and so much more. The end result will be a better experience for patients and doctors. And along the way, trillions of dollars in potential profits.

That’s right. Trillions … with a “T.”

U.S. healthcare spending is expected to increase from $3.65 trillion in 2018 to $6 trillion by 2027. That’s 64% growth — or $2.4 trillion! — in just eight years.

I’m not the only one who has noticed the huge upside potential in this massive trend. Some of the biggest names in technology have taken notice, too:

  • Last year, Apple (NASDAQ:AAPL) bought Tueo Health, a company that provides apps and sensors for the monitoring of children’s asthma.
  • Nest, the smart home company owned by Alphabet (NASDAQ:GOOGL), recently purchased Senosis, which provides health monitoring services.
  • Amazon (NASDAQ:AMZN) bought PillPack in 2018.
  • And JPMorgan Chase (NYSE:JPM) bought InstaMed, a healthcare payments company.

Early stage investing in all about following the big money … BEFORE the masses catch on. And to stake our claim in the next generation of healthcare, I’ve uncovered one newly public digital health company that is set up for big gains in the years ahead.

This company is all about the management of chronic illnesses. It already has a strong presence in the treatment of diabetes — a disease that affects nearly one-third of the entire U.S. population — and it intends to expand into the monitoring of other chronic conditions as well. That business plan is a no-brainer.

The company made its market debut in July to great fanfare — it had to increase the number of shares available and raise their price before its IPO! But recent action has pushed it back down to a price that is a screaming long-term opportunity.

I just issued my buy recommendation on this stock last week, and it’s not too late. Click here to find out all about it.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.


Article printed from InvestorPlace Media, https://investorplace.com/2019/08/digital-healthcare-stocks-ipos-heating-up/.

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