The $12 TRILLION healthcare industry is on the verge of a massive transformation towards direct-to-consumer (DTC) telemedicine platforms.
What does that mean?
Well, in short, the healthcare industry is (finally) being modernized and digitized.
The era of antiquated physical pharmacies, lengthy doctor visits, unclear pricing schemes, and sky-high drug prices is coming to a close.
It is being replaced by a new generation of ultra-fast cloud pharmacies, hyper-convenient telemedicine consultations, super-transparent pricing schemes, and affordable drug prices – all rolled into end-to-end platforms that look, act, and feel a lot like “Amazons for Medicine”.
In other words, healthcare is shifting online, and in so doing, this troubled industry is getting fixed.
This multi-trillion-dollar shift starts now.
Technology has advanced to a point where telemedicine consultations provide just as much expert medical advice as in-person doctor’s visits…
At the same time that the Covid-19 pandemic has forced both consumers and healthcare providers to more widely adopt telehealth plans…
At the same time that a rise in high deductible health plans (HDHPs) is causing consumers to demand price transparency and lower costs…
At the same time that a new generation of digitally-native Gen Z and Millennial consumers are turning into the backbone of the global economy.
All the stars have aligned. This multi-trillion-dollar shift started in 2020. It will accelerate over the next decade. And it won’t stop until DTC telemedicine is the global norm.
Today, we will give you one way to play this transformative “Digital Healthcare” revolution. It’s by buying an up-and-coming DTC telemedicine platform that has the potential to turn the healthcare industry upside down – and become something all of us use every month.
The Solid Second Fiddle in Tomorrow’s Biggest Market
My regular readers know about the world’s favorite, largest, and most widely used DTC telemedicine platform: Hims & Hers (NYSE:HIMS).
We firmly believe that thanks to its first-mover’s advantage, technology lead, robust portfolio of physicians, strong branding, and fully verticalized proprietary supply chain, Hims & Hers will remain the largest DTC telemedicine platform for the foreseeable future and ultimately turn into the “Amazon for Medicine”.
But… much like the multi-trillion-dollar e-commerce revolution… the multi-trillion-dollar digital health revolution will produce multiple winners.
This is not a winner-take-all market. Just look at healthcare today. There are multiple hospitals. Multiple pharmacies. Multiple doctors. Multiple treatments. So on and so forth.
To that extent, the digital health industry of tomorrow will likely comprise a handful of very large and successful DTC telemedicine platforms – not just one.
Hims & Hers will be first – the Amazon of the space. But a small, $600 million company by the name of Conversion Labs (NASDAQ:CVLB) will be second – the eBay or Alibaba of the space, if you will.
For all intents and purposes, Conversion Labs is just a mini-version of Hims & Hers.
The company operates a fully-verticalized, technology-driven DTC telemedicine platform, with a cloud pharmacy, telehealth consultations, a robust portfolio of physicians, and digital prescription capabilities.
Conversion Labs’ current product lines are focused in men’s health and hair loss. The company plans to launch new product lines in skin and primary care soon.
And the company is in hypergrowth mode today. Revenues are expected to more than triple year-over-year in 2020.
Sound a lot like Hims & Hers? It’s almost a carbon copy.
- The branding. Hims & Hers has created a very friendly brand for its products. Its products could honestly be mistaken for candy based on the packaging. Conversion Labs, meanwhile, has created a more traditional-looking pharmacy brand. We believe most folks will opt for the friendly brand – but understand that there’s a sizable market for the more professional-looking brand, too.
- The size. Hims & Hers is going to do about $140 million in sales this year. Conversion Labs is going to do just $38 million. Obviously, this size discrepancy is to Hims & Hers’ advantage, since both operate digital marketplaces that benefit from network effects. Still, Conversion Labs is creating its own network effects … just at a smaller scale… and should leverage that flywheel to cement itself as a the unchallenged “second fiddle” in DTC telemedicine.
- The valuation. Based on current market caps, Hims & Hers stock is trading at over 30X 2020 estimated sales, while Conversion Labs stock is trading at just 15X 2020 estimated sales. Obviously, that means Conversion Labs is the “discounted” play on the digital health revolution.
In essence, the digital health revolution will be so big that there’s more than enough room for both of these companies to lean into their own specific advantages and each do very well over the next decade.
We see Hims & Hers emerging as the enormous, unrivaled leader in DTC telemedicine… and Conversion Labs emerging as the almost-as-enormous, unrivaled second fiddle in DTC telemedicine.
Buying these stocks today could be like buying Amazon and eBay stocks a decade ago.
It could lead to enormous life-changing wealth as we change the way we do healthcare – and that’s why you should consider buying Conversion Labs stock today.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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