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January 30, 2023, Following our indepth analysis of SCWorx business and opportunity Stock Spotlight: 2023 SCWorx transforms hospital businesses, today the Company released an announcement of signing a Texas based 8,000 bed healthcare provider. This news affirms our belief in SCWorx business and industry leading SaaS software. Also interesting to note is their expansion south delivering solutions to a substantially underserved region for data management and systems interoperability. SCWorx describes the issues hospital face and their solution- “the underlying supply data within the hospitals is loaded with incomplete detail caused by the rapid changes to item data. The second problem is that all other projects rely on this data. For example; MMIS migrations, mergers and acquisitions, Clinical integration to EMR systems, and financial systems all rely on accurate data. Once we establish this ‘foundational data’ we can then help the hospital with other high-profile projects such as cost savings initiatives, ERP migrations, and implementations like Oracle Cloud, Infor Cloud, and Workday implementations. Read original post here: https://www.lionseeker.com/insights/update-on-scworx-healthcare-tech-announces-signing-of-8000-bed-hospital-system
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At the time of writing this article, the S&P is down -13% year to date. The NASDAQ is down -33%, give or take. In a market such as this with the downturn we’re currently experiencing, We see selective high-quality microcap stocks outperforming exactly for the reasons people have shied away from the sector in the past.
It’s easy to invest in a market that only goes up. For the last 6 or 7 years, we could just buy large-cap, make 35%, and have less drawdowns year after year. As market environments change so does portfolio composition and where you find the best opportunities. We are extremely excited about some microcap companies such as SCWorx (Nasdaq: WORX)As an investor in equities with a focus on small and microcap stocks, we analyze this vast investment universe of under-researched stocks looking for good companies that have been ignored, overlooked or temporarily beaten up. We believe the fact that most institutional money isn’t even looking in the microcap space allows us to identify stocks that offer superior performance potential. My grandmother used to call it “digging where the taters are”. An enormous advantage to investing in microcap is you are 100% a stock picker, you dig deep into the company, the management, competitive advantage, client base, valuation, etc. You can choose what companies you want to invest in within a microenvironment. In this sandbox you have control. When you lose control is when all of your portfolio positions are dependent on which way interest rates are going, whether there is inflation, a war, or if exposure is contingent on global economies. In markets such as the one we are currently in you niche down and get laser focused. To win with microcap you should look for a company with a domestic focus, and identify these companies that serve markets in need of disruption where their customers can’t live without their products in any economic environment. Niche down in researching these smaller companies with large total addressable markets that have seemingly been overlooked in the previous run yet are still building good businesses as the carnage of big tech envelops the business news cycle. We consider these smaller domestic stocks to be a defensive posture as well. The OpportunityBecause there is less liquidity involved, the valuation of a microcap stock may be disjointed from its stock price. Microcap stocks tend to be an under-researched area. Larger-cap stocks dominate the overwhelming majority of US equity trading and as a result, the brokerage firms commit their research capabilities in that direction, leaving the microcap space largely unattended. This is where the opportunity to identify, research and accumulate a position lies. The confluence of being under-researched, and low trading volume is a unique opportunity that increases the odds of discovering and profiting from attractive investment opportunities. With microcap stock investing, our goal is outsized gains. We don’t believe this is achieved through an index. We look for a single business that meets my initial screening and then we get granular. They must be unique in their business. This reduces the risk of competition bringing a pricing race to the bottom. We look for a valuation where it can at least double my money or at least we feel like I could double my money within three years. The company must have great leadership that has a track record of success in the space. SCWorx is an example of a strong candidate for inclusion in my portfolio.SCWORX is a NASDAQ company- symbol WORX which provides SaaS solutions to hospitals that directly impact operational efficiencies for accurate billing, cost savings, and revenue capture. Their proprietary software solutions allow hospitals to use existing systems to build a single source of truth for their data. This data can then be used to establish interoperability between their critical business systems (Supply, Clinical, and Finance). Over 1,300 hospitals are currently using SCWorx including world-class centers such as Mayo, NY Presbyterian. Over 12,000,000 items in the hospital supply chain are tracked by SCWorx. We have a thorough overview of Healthcare SaaS tech here. Covid forced hospitals to realize that the supply chain in the health system is broken with supply shortages, staff shortages, and cost increases bringing an essential mandate of technology and processes to the forefront for greater automation, digitization, and analytics. SCWorx is solving the most critical component which is access to real-time, accurate data across the entire hospital organization. Another key to $WORX positioning is its ability to replace the management consulting industry’s foothold on healthcare operations. No longer does a hospital need to hire outside high priced consultants to tell them how to save money or become more efficient. SCWorx Displacing Management Consultants like Mckinsey is discussed here. SCWORX has the ability to see revenue per client increase as its clients grow with them. Recently, a major New England hospital system renewed its contract with SCWorx from an annual to a four-year term and increased its investment in SCWorx services by nearly double. In addition, SCWorx also announced they have enhanced its sales model with a tiered access solution allowing for shorter sales cycles, higher margins, greater adoption, and increased lifetime value per client. A SaaS business that provides outsized benefits to hospital administrations which can exponentially increase its supply chain visibility, pricing, contract bidding, and more through the hospital activating(and paying) for additional SCWorx features is a B2B business with an opportunity for growth and lower marketing and sales cost. From a valuation perspective, a typical health tech SaaS valuation in this market is around 7x ARR which would value WORX significantly higher than current levels. Researching the company, its history, and learning the nuance of its past 2 years while building its sustainable business has brought me to an understanding as to what role the lack of announcements and coverage, low trading volume, and the pandemic has played in its share price. SC Worx is a business that can grow through a recessionary environment. The hospital and healthcare industry is a quagmire that is evolving rapidly where costs are increasing and transparency becoming critical to survival. Data is the lifeblood of this evolution. The hospital information systems market is expected to grow to $151.21 billion in 2026 at a CAGR of 8.6 percent. according to Healthcare Facilities Today. SCWorx is well positioned within this expanding market to execute its strategy. Looking at management, CEO of SCWorx Tim Hannibal has 30 years of experience in building SaaS companies including a successful exit to a public company. The independent board consists of respected corporate finance executives, C-suite, and healthcare officers. Microcap companies are intriguing. They are often in growing industries, with greater room for growth and a higher return than their large-cap counterparts. These companies can benefit from the Law of Large Numbers. They can expand their business tremendously with a small market share. Large markets also reduce their risk profile. Microcap companies like SCWORX that serve large markets can experience tremendous growth with only a small market share. Is this the best microcap stock to buy now? We believe WORX valuation is significantly below its current revenue, intellectual property, data monetization upside, and growth potential. Coming off the pandemic, WORX is poised to continue its dominating position in a market that must spend to survive. Source: https://www.lionseeker.com/insights/why-you-must-have-microcap-stocks-to-outperform-the-market Healthcare tech stocks have had a good run this year, with many outperforming the broader market. The pandemic has led to increased adoption of virtual care services and other technology-driven healthcare solutions. Teladoc, for example, saw its growth slow as life returned to normal, but its post-pandemic prospects are still very good thanks to demand from individuals, employers, and governments looking to control healthcare costs. The best-performing healthcare tech stocks have been those that have kept up with technological advances.
Analysts remain optimistic about the sector's prospects over the next few years. A study projects that healthcare company earnings will grow 6% annually from 2021 through 2025, which would be a 20% increase producing an additional $31 billion in profits. It is also worth noting that healthcare stocks are typically considered to be defensive stocks because they provide steady returns regardless of the overall direction of the stock market. All these factors make healthcare stocks an attractive investment option now. SCWorx is an example of a strong candidate for inclusion in a portfolio for 2023. SCWORX is a NASDAQ company- symbol WORX, which provides SaaS solutions to hospitals that directly impact operational efficiencies for accurate billing, cost savings, and revenue capture. It’s proprietary software solutions allow hospitals to use existing systems to build a single source of truth for their data. Over 1,300 hospitals are currently using SCWorx including world-class centers such as Mayo, NY Presbyterian. Over 12,000,000 items in the hospital supply chain are tracked by SCWorx. We have a thorough overview of Healthcare SaaS tech here. Hospitals are facing financial challenges for a variety of reasons, including rising operating costs, decreasing reimbursements from payers, and increasing numbers of uninsured patients. Additionally, hospitals struggle with inefficient processes and outdated technology, which contribute to financial losses. For example, manual record-keeping, duplication of services, poor supply chain management, and communication breakdowns can all contribute to inefficiencies that drive up costs and hinder hospitals' ability to provide high-quality care. Hospitals often operate on thin profit margins, making it difficult for them to absorb any financial losses. These factors contribute to the financial struggles faced by hospitals today. The external factors of running a hospital such as increased costs of supplies, medication, and staffing make it essential for hospitals to run their businesses in a more “information first” manner using data and analytics to identify and address internal operational defects as well as forecasting to mitigate continued and compounding financial maladministration. For over 10 years, SCWorx has been immersed in transforming the business of hospitals by addressing the greatest single contributing factor for healthcare administration success- truth in data. SCWorx solutions provide accuracy in a hospital’s data across all systems in real time with on demand analytics. Providing a single source of truth allows hospitals access and reliability in advanced tools to redesign, restructure and expand operations and processes leading to significant savings. 7 ways SCWorx is transforming the business of hospitals 1- Healthcare profitability achieved through data accuracy by SCWorx providing evidence-based and data-driven best practices The truth is, most hospitals don't have accurate data which causes them to spend excessively. SCWorx improves data accuracy considerably and provides integration and interoperability which is proven to help hospitals realize greater savings and recapture revenue lost in inaccurate and misleading data inputs. On an individual basis by using accurate data, hospitals can reduce total supply chain costs by 17.8 percent, or up to $9.9 million per year by decreasing variation in pricing, product use, and clinical outcomes garnered from data analytics. This is a massive saving that can be invested in improving care delivery. With the data and the analytics solution, SCWorx empowers healthcare providers to maintain comprehensive access and visibility to advanced business intelligence that enables better decision-making and reductions in product costs and utilization, Bad and disconnected data is a core problem exacerbated by the constantly introducing new supply chain. SCWorx resolves this by helping hospitals have accurate data, and the ability to easily and in real-time analyze and take action. Missed charges alone can account for a shortfall of over 10%. 2- SCWorx enables increased efficiency in supply chain operations When a hospital buys a product, typically entering the new item into a hospital’s system is cumbersome and fraught with errors. SCWorx has over 12,000,000 items in its Master List of hospital products each with over 250 attributes collected(description, SKU, GTIN, weight, sterile, dimensions, etc.). SCWorx allows the hospital to simply enter the product SKU and their systems populate with all of the information from the SCWorx database. The information is constantly being tested for accuracy and updated on the product attribute level. This automated process eliminates hospital administration redundancy, provides greater product visibility, and facilitates the easy sharing of information for systems such as finance, surgery, and supply chain. SCWorx provides this on demand solution which is far quicker than the current error prone manual entry while ensuring accurate data. 3- Eliminates the reliance on consultants and the hourly fee professional services model with SCWorx SaaS model The SaaS model of SCWorx provides hospital administrations with a straightforward annual subscription cost structure based on guaranteed results rather than the current industry norm of open ended management consulting engagements where a typical one month strategy case costs between $500,000 and $1,250,000. By using the SaaS solution, hospitals create an internal team with ownership from within. The internal hospital team is built with shared values of achieving the highest quality and what is best fiscally for the hospital. In contrast, having a consultant come in one day with recommendations on how the rest of the country does things doesn’t necessarily set the hospital up for success. Consultant fatigue is real and frankly, SCWorx SaaS solutions are more robust, less expensive, and allow for the hospitals to maintain their focus by empowering their teams with accurate data and analytics. This is a game changer in an industry where traditional professional services providers and consultants promise to deliver savings and efficiency without the ability to address the core problem of data integrity. The old adage “garbage in, garbage out” is currently the rule in hospital data as acquisitions, mergers, incompatible and old systems, and lack of standardization in suppliers play a significant role to overcome this challenge of accurate data. SCWORX has dynamic connections that automatically structure, repair, synchronize, and maintain hospital data. 4- Rebate reimbursements capture missed savings with SCWorx A rarely talked about game in hospital purchasing is that prices rarely get discounted but the use of product rebates is the norm. The fact is, manufacturers, do not want the market to know their bottom line price. Approximately 60% of all rebates don’t get redeemed. This is for a few reasons- the redemption process is too cumbersome, unaware there is a rebate, or due to disorganization. SCWorx single source of truth, helps hospitals successfully navigate this process. In addition, many manufacturers discontinue products and replace them with the same product under a different SKU. The hospitals typically don’t reconcile the association of the products due to poor data accuracy which leads to missed rebates. SCWorx provides accurate data on a granular level. With a report run through SCWorx, connects the new product with the rebate and makes it easy to know if there is a rebate. 5- Deliver on the promises of the HITECH Act by making EPIC smart and interoperable No trend has been more consequential to the healthcare industry than its adoption of information technology in the delivery system. In 2009, the HITECH Act (Health Information Technology for Economic and Clinical Health) as part of the American Recovery and Reinvestment Act set in motion the adoption and use of information technology to structure, collect and exchange data about patient care from every touchpoint. In short, it forced electronic medical records(EMR) to become accessible to and used by providers and patients to “improve health and reduce costs”. The leader in patient care delivery records access is a system EPIC. EPIC is used by hospitals and health systems to access, organize, store and share EMR. Epic holds information on a per patient basis. The problem is, they need to tie the patient to the utilization whether it's a procedure or an office visit or whatever. There can be a hundred different locations within a hospital for utilization. Hospitals need to be able to tie all to one source. You can't tie it back in one system to a person's name, another system to the product, and another to the insurance. EPIC creates a patient ID where everything ties back. The problem with that is it only ties back to a central point of utilization. It doesn’t tie back to supply and it doesn't tie back to the general ledger. It doesn't tie to reimbursements or rebates or anything else. When the Act came in to digitize health records, that was the main goal and till now it has failed horribly. SCWorx solves this problem. There is a significant amount of slippage and inefficiencies from supply chain, over purchasing and lost charges. Each disparate hospital system has its own code. Supply has its code. The patient has their code and finance theirs, as does the operating room and the cath lab because they’re separate as well. There is an overwhelming amount of actionable data that is being lost due to not being able to look at it in totality or with confidence that it is accurate. SCWorx improves the flow of information quickly and accurately between the existing systems allowing for supply chain cost reductions, decreased A/R aging, cost visibility, and accelerated and more accurate billing. Individual clients of SCWorx have reported saving over $3 million dollars in annual cost savings and revenue capture. 6- SCWorx gives hospitals the ability to use granular data for true cost analysis When someone goes to have knee replacement surgery with a doctor, the hospital can't really tell you what it's going to cost because the hospital doesn't know. They don’t know how many products they're going to use, they don’t know what is going to happen once they are cut open nor do they know how long the operation will take. This is understandable. The hospital doesn’t perform just one knee replacement, They do hundreds of these procedures annually. Utilizing SCWorx SaaS solution, the hospital on a procedure level can benchmark all of their procedures to hundreds of procedures at other hospitals which allows them to reign in costs, identify inefficiencies and be able to better forecast. On a doctor level, SCWorx can take the data from the hospital’s financial system, and the clinical system about the patient and tie that into what products they’re using. With this new ability, the hospital can also do a comparison between doctors. For example, A hospital with seven doctors that do hip and knee surgeries can do an analysis- Doctor A’s knee replacement surgery is costing on average $15,000. Doctor B is $20,000. You can start looking at time- Doctor A took eight hours for the procedure. Doctor B took four hours. And you can start to tie together the financial piece. What products did that doctor use? What is the brand of that product? How many did they use? Things like that. You can now compare procedures on a doctor level for a total basis of what that cost was. This type of understanding by the hospitals could not be achieved prior to SCWorx. Tying it all together into mini buckets is very difficult both by procedure and even harder by the doctor. Because of the granular collection and cleaning of data from multiple systems, SCWorx uses everything from the bottom of the pyramid to build an accurate analysis. It uses their supply chain data, their clinical patient data, their financial data about rebates and more. 7- Benchmarking supply chain costs is achievable with SCWorx Supply chain costs begin at the contract level. Having the ability to perform spend comparisons is essential to reducing costs and having a better understanding of your business yet is very hard to perform without corresponding data. SCWorx Solution is uniquely positioned to provide benchmarking to compare a hospital’s spend to similar hospitals. As an example, a small hospital in New Hampshire might pay a different price for supplies than a major center in New York because the spend is that much larger. This ends up causing consolidation in the industry. There may be 15 rural hospitals in the New England area that on a consolidated basis buy through a larger Hospital for better pricing. The large hospital in an effort to take advantage of its new buying power may want to compare its spend to an even larger hospital in the Northeast. SCWorx solution allows the New England hospital the ability to compare the two entities and finds it’s costs to the comparable hospital are 20% higher on certain products. Once identified, the hospital can renegotiate its contract pricing. Contract renegotiation based on benchmarking can save a hospital upward of 20%. SCWorx positioned for growth SCWorx has been building SaaS solutions for healthcare for over a decade with a strong focus on data integrity. Its CEO is a well-known healthtech innovator with a track record of developing and commercializing successful solutions having founded a SaaS firm culminating with an exit to a public company. SCWorx and its team have a deep understanding of the various parts of the healthcare ecosystem. It’s solution is not just the result of 10 years of building one of the largest databases in the industry(which is a barrier to entry) but also comes from the team's experience and expertise gained from working in the healthcare industry, which allows them to identify problems and create solutions to fix them. As an investment, SCWorx is currently trading at around 1X sales. A customary metric used for healthcare SaaS B2B companies is between 6X ARR-14XARR which would make SCWorx significantly undervalued. The company is positioned for growth by having: • Large LTV • High client retention • Scaleable model • Proprietary SaaS software • Ability to impact multiple segments of the hospital administration business • Business model has been updated to allow for shorter sales cycles, broader adoption with add on services • Software base provides swift innovation timelines and tailored solutions for customers • No debt • As SCWorx increases the use cases of their SaaS solution, they have the opportunity to upsell incremental technology and services • Restructured Board of Directors with C-level experienced independent members • Industry has few players and none can solve the problems SCWorx does as effectively or at the price point. To pick microcap stocks start by identifying the companies that serve markets in need of disruption where their customers can’t live without their products in any economic environment. From an investment perspective, the above analysis meets such criteria for SCWorx. Microcap investing can involve significant risk due to low trading volume and lack of coverage by the analyst community however, there is the potential for outsized gains. Source: https://www.lionseeker.com/insights/2023-healthcare-stock-spotlight-7-ways-sworx-is-transforming-the-business-of-hospitals One of the most successful investors in the world, and who’s strategies have been studied by many in the industry is Carl Icahn. Carl Icahn is a renowned businessman and investor known for his successful track record in evaluating stocks and making profitable investments. Icahn's approach to stock evaluation is based on a thorough analysis of a company's financials, management and industry trends. He looks for companies that have strong financials, including consistent revenue growth, healthy profit margins and a solid balance sheet. He also evaluates a company's valuation, comparing its stock price to its earnings and revenue to ensure that it is undervalued by the market. He also takes into account the company's management. He believes that a strong management team is essential for a company's success, and he looks for leaders who have a clear vision, a track record of success and a willingness to take bold actions to improve the company's performance. He believes that understanding the industry in which a company operates is essential for making informed investment decisions. He looks for companies that are well-positioned to take advantage of trends and opportunities in their industry, and that have a competitive advantage over their rivals. What is most unique about Icahn’s strategy is his ability to identify opportunities to increase shareholder value once he is an investor and facilitate change by being an activist. His track record of success from Lionsgate Films to Chesapeake Energy is legendary. 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