TRHC Stock: Disrupting the Medication Safety Space

TRHC stock

Tabula Rasa Stock to Grow with Evolving Healthcare Industry

Today’s stock relates to one of our favorite strategies for investing in growth stocks. The picks-and-shovels method involves investing in stocks of companies that provide solutions to a rising technology trend. Investors who detect the potential early on stand to earn superlative returns. The popular trend, in this case, is healthcare technology, and there are few good stocks that stand to gain from this sector.

Case in point: Tabula Rasa HealthCare Inc (NASDAQ:TRHC), which provides solutions and technology driven by data and focused on patients. The company enables healthcare organizations to optimize medication regimens.

Tabula Rasa aims to disrupt the field of medication safety through its fresh approaches to healthcare, which improve patient outcomes, reduce hospitalizations, and lower healthcare costs. TRHC stock has posted triple-digit gains over the last year as its innovative solutions enjoyed good demand.

The most important aspect of Tabula Rasa is its focus on risk management. The healthcare company delivers its solutions through a comprehensive suite of technology-enabled products and services for medication risk management, which involves minimizing adverse drug events (ADEs).

The section of the population that is subjected to a medication profile of more than two medications is typically at high risk of ADEs. The incidence of ADEs is highly correlated to the non-adherence to prescribed regimens. Thus, it is particularly relevant to populations with complex healthcare needs, like the elderly, chronically ill, and those with behavioral health challenges.

In cases where the patient takes over 10 different medications a day, the current technologies are not adequate to optimize safety and minimize risk.

The company’s proprietary medication risk mitigation (MRM) matrix delivers a simultaneous, multi-drug review that identifies risks related to medication across a variety of safety factors. It analyzes a combination of clinical and pharmacological data, population-based algorithms, and extensive patient-specific data to deliver “precision medicine.”

As mentioned in the company’s latest annual report, 4.7 billion prescriptions were filled in the United States in 2016, which makes medication treatment the most common medical intervention in the country. However, its imprecise use represents the fourth-leading cause of death and contributes to an estimated 45 million to 50 million ADEs annually, with 2.5 million to 4.0 million of those ADEs considered serious, disabling, or fatal.

And the rise in prescriptions is expected to keep going up. According to a report released by Iqvia Holdings Inc (NYSE:IQV), formerly known as Quintiles IMS Holdings, Inc., total spending in the United States on prescription medicines is likely to increase four percent to seven percent through 2021, reaching $580.0 billion to $610.0 billion. (Source: “U.S. prescription drug spending as high as $610 billion by 2021: report,” Reuters, May 4, 2017.)  

As the U.S. healthcare market evolves from fee-for-service to value-based models of care, healthcare organizations require new technologies to optimize treatment and manage risk on a patient-specific, customized basis. Tabula Rasa Healthcare is well-positioned to gain from the evolving healthcare landscape.

The company is continuously penetrating the market for existing and new at-risk clients. It dominates the market in providing medication risk management to Programs of All-Inclusive Care for the Elderly (PACE).

Its suite of cloud-based software solutions provides prescribers, pharmacists, and healthcare organizations with tools to better manage the medication-related needs of patients. The company’s approach is designed to increase patient safety and promote medication regimen adherence.   

Tabula Rasa’s financial performance has been improving. The company announced strong third-quarter results in November 2017. Reported revenue was $33.3 million, an increase of 38% year-over-year. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $4.6 million, an increase of 43% from the previous year. (Source: “UPDATE — Tabula Rasa HealthCare Announces Third Quarter 2017 Results and Revised Financial Outlook,” Globe Newswire, November 7, 2017.)

In early September 2017, Tabula Rasa announced the acquisition of SinfoniaRx, a leading provider of medication therapy management technology and services for Medicaid, Medicare, and commercial health plans. The results of its integration efforts should be visible in late 2018 or early 2019.

Tabula Rasa stock made its debut in 2016 and has been gaining impressively since then. Over the last year, TRHC stock has gained more than 100%, as depicted in the following chart.

TRHC stock chart

Chart courtesy of

The U.S. healthcare industry is witnessing significant changes, and the market for technology-enabled healthcare products is just picking up. Although Tabula Rasa appears to be in a strong position, the future demand cannot be predicted with certainty, and this could result in a rough patch for Tabula Rasa stock. However, the long-term prospects appear to be bright if the company continues on its growth path.

Analyst Take

Tabula Rasa is a healthcare technology company that aims to optimize medication safety through innovative software solutions. The prevailing approach to prescribing medications is often uncoordinated and non-personalized, which results in inconsistent and ineffective medication regimens for the patient. The company wants to change that to a personalized approach utilizing its proprietary MRM matrix.  

Tabula Rasa has a competitive edge, on account of its analytical capabilities, healthcare industry expertise, and the size and quality of its underlying data sets and benchmarks. This all should bode well for TRHC stock in the coming years. Investors could consider this picks-and-shovels stock for the long term.