One group stands out as an interesting and potentially dramatically undervalued area of the market in the wake of the pandemic and its historical footprint: Medical device stocks.
The healthcare system has been forever changed by the pandemic, which accelerated several core healthcare industry trends that were already poised to become important at some point with or without two years of socio-cultural and epidemiological hell around the world.
The main trends increasingly set to define the future of healthcare are Telemedicine and Decentralization.
Stocks related to the first of these have already been run to the moon and back in an orgy of speculation. But the second trend, which may be even more important, has yet to have its day.
The decentralization theme includes a coming potential boom for satellite clinics and more proactive home healthcare consumer trends. In both of these cases, it’s a windfall for medical device companies because the total end market for major devices increases exponentially – a hospital may only need one or two devices in a given therapeutic niche, whereas ten new satellite health clinics will all need their own.
And many healthcare devices will be increasingly sold to consumers for home use, ratcheting up the size of the end market astronomically further.
That has enormous implications for medical device stocks such as Novocure Ltd. (Nasdaq:NVCR), Medtronic PLC (NYSE:MDT), Zynex Inc. (Nasdaq:ZYXI), Intuitive Surgical Inc. (Nasdaq:ISRG), electroCore Inc. (Nasdaq:ECOR), Zimmer Biomet Holdings Inc. (NYSE:ZBH), and Tivic Health Systems Inc. (Nasdaq:TIVC).
However, one smaller, more speculative name could be the most interesting of the group given its tiny market cap and potential to scale up into a massive and growing market: Electromedical Technologies Inc. (OTC US:EMED), a pioneer in the development and production of bioelectronic devices designed to relieve chronic, intractable, and acute pain by using frequencies and electro-modulation.
The company produces the WellnessPRO-Plus device, a self-administration tool for bioelectronic medical treatment of chronic pain that holds the potential to replace opioid-based treatments, offering hope to millions of people and stalling the epidemic of addiction, overdose, and suicide that has plagued society over the past decade. It is now working toward commercializing its new WellnessProPlus POD prototype device as a next-generation product with significant advances.
Note, the backdrop here is important because the EMED technology is really a substitute for Opioid prescriptions.
The market opportunity for a drug-free medical solution for pain relief has, if anything, only continued to grow in the past two years. As a result of the pandemic, people are becoming increasingly conscious of their health and the importance of pursuing a healthier drug-free lifestyle. According to the National Center for Health Statistics, the opioid epidemic grew by 31% in 2020. Almost 100,000 people died as a result of related overdose and drug interaction issues. The situation seems to have worsened in 2021.
Electromedical Technologies Inc. (OTC US:EMED) hit the wires this morning with its 2021 annual financial and operational highlights, including news that the company’s sales jumped 23% year over year on strong unit sales volume growth and gross margins powered higher to an impressive 78% mainly on the back of efficiency gains in shipping and distribution costs.
"We are very pleased with our 2021 operating results, which featured strong topline growth, better margins, and key investments that have started to bear fruit as we plan to scale up in 2022 and beyond,” noted Matthew Wolfson, Founder and CEO of Electromedical. “Our newly implemented sales and marketing initiatives are starting to pay off, as indicated by significant growth in both unit sales volume and revenue. We will continue to emphasize these initiatives going forward to provide an enhanced foundation for our outreach efforts, driving potential repeat orders from partners and distributors.”
Among the company’s operational achievements, EMED reported critical development milestones achieved in 2021 for its WellnessProPlus POD prototype, which is now reportedly in its functionality testing stage. Once complete, management sees big things ahead. In addition, the company reports onboarding 110 new independent sales representatives, completing online medical representative training program to improve and expedite the training process, and strengthening its financial position by obtaining an equity line capable of providing necessary capital to drive product R&D, with better terms than its prior financings.
Electromedical Technologies Inc. (OTC US:EMED) CEO Matthew Wolfson added, “This is an extremely exciting time for the Company. Last year was critical to laying a foundation for future growth through key investments in personnel and product development. Looking ahead, our progress toward the market for our POD design is our most important objective. However, we are also driving toward gains in governance and logistics as we plan for operations on an expanding scale.”
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