TRHC Stock: Leading in the Medication Safety Space

TRHC Stock: Leading in the Medication Safety Space
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TRHC Stock Poised for More Gains

Healthcare technology is advancing by leaps and bounds. There are a few companies using it in a unique way and strengthening their competitive positions. Investors stand to make handsome gains by investing in such stocks.

One of those stocks is Tabula Rasa HealthCare Inc (NASDAQ:TRHC). The healthcare technology company is disrupting the field of medication safety. Its products and services are built around its proprietary “Medication Risk Mitigation (MRM) Matrix.” This software helps minimize adverse drug events (ADEs).

The company’s technology enables clinicians and healthcare organizations to optimize medication regimens. With the help of the MRM Matrix, various factors like drug absorption, distribution, metabolism, and reactions between multiple drugs and the patients’s genes.

Tabula Rasa HealthCare partners with health providers to operate comprehensive medication management programs. Its cloud-based software provides prescribers, pharmacists, and other healthcare employees with advanced tools to better manage the medication-related needs of their patients.

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Previously, clinicians only had tools that offered a binary view of drug-to-drug interactions. They could assess the reaction of one single drug against another single drug. However, there are many patients who take more than two medications. In such cases, it becomes more difficult to assess the associated risks.

After understanding the relevant factors, clinicians can prescribe the best medication schedules to their patients. This helps the patients get the maximum benefits of their medicines while reducing unwanted side effects.

Studies show that expenditures on medications will continue to grow.

A report issued by the QuintilesIMS Institute says that the total spending on prescription medications in the United States will increase by four to seven percent through 2021—from $580.0 billion to $610.0 billion.  (Source: “Form 10-K,” Tabula Rasa HealthCare Inc, March 14, 2018.)

Moreover, according to the Centers for Disease Control and Prevention, in any given month, 48% of Americans take at least one prescription medicine and 11% take five or more. (Source: Ibid.)

Hence, demand for Tabula Rasa’s products will likely continue to go up. This bodes well for the future of TRHC stock.

Tabula Rasa HealthCare’s business has been growing as the awareness of its products increases.

A few months ago, the company announced strong third-quarter results, with an increase of 66% year-over-year. The following table shows the revenue growth for the past four quarters:

Quarter 9/30/2017 12/31/2017 3/31/2018 6/30/2018 9/30/2018
Revenue (Millions) $33.3 $43.9 $43.9 $48.6 $54.4
Growth 32% 0.02% 10.6% 12%

(Source: “Investors – SEC Filings,” Tabula Rasa HealthCare Inc, last accessed January 25, 2019.)

Net income was $10.4 million, compared to $6.2 million the same prior-year period. Cash at the end of the third quarter was $13.9 million, compared to $10.4 million as of December 31, 2017. (Source: “Tabula Rasa HealthCare Announces Third Quarter 2018 Operating Results,” Tabula Rasa HealthCare Inc, November 6, 2018.)

The company’s revenue guidance for 2018 was also increased.

Tabula Rasa HealthCare stock’s value has gone up phenomenally since its initial public offering (IPO) in October 2016. TRHC stock gained about 70% over the last year and almost 90% since we covered it in Profit Confidential in March 2018.

Tabula-Rasa-Healthcare-Stock-Graph

Chart courtesy of StockCharts.com

Analyst Take

Tabula Rasa HealthCare Inc is a pioneer in the medication safety space. Its MRM Matrix software helps patients make the most of their medicines while reducing the risk of adverse drug effects.

Medication safety represents a big market opportunity, and Tabula Rasa is well positioned to gain from it. Investors interested in the healthcare technology sector might want to consider TRHC stock for the long term.