The Covid-19 crisis has brought a number of changes in the way healthcare providers do business, including the incorporation of digitalization, resulting in a significant rise in the valuations of telehealth companies. The purchase of digital health devices and monitoring systems is becoming more common at a consumer level with the long-term goal of lower healthcare costs.
However, despite high valuations in bigger names, there are several emerging med-tech companies that are offering highly innovative solutions within this domain without getting the attention they deserve from market participants. One such med-tech company that has received several relevant regulatory approvals for its innovative devices and has already started generating revenues is G Medical Innovations Holdings Ltd. (GMVD, Financial).
G Medical Innovations is an early commercial-stage healthcare player that offers FDA-approved mobile, digital medical equipment and monitoring services. Its healthcare equipment particularly focuses on the chronic health conditions affecting over 60% of American adults as per the management presentation. The diagnostic data transmitted through highly specialized devices support real-time monitoring, resulting in improved outcomes for doctors and patients.
The combination of its physical device offerings and services results in a steady and recurring revenue flow from health insurance reimbursement. Moreover, their products and services are approved by over 150 healthcare insurers such as Medicare, BlueCross BlueShield, Medicaid, etc. Headquartered in Rehovot, Israel, the company runs its core operations primarily in the U.S., with some presence in Israel and China as well.
Strong product offerings
G Medical Innovations offers a number of mobile remote monitoring devices, including cardiac diagnostic contentious monitoring, chronic remote patient monitoring and data collection. Their products generate revenues through CPT-coded insurance compensation. The company offers two core products to its customers – Prizma and Extended Holter Patch System.
Prizma is a U.S. FDA-approved data and monitoring device that measures vital signs with electronic medical records (EMR) functionality and clinical-grade reporting standards. It is known to be a remote, user-controlled device offering 24/7 online clinical monitoring and a call center facility for data interpretation as well as doctor engagement. Every month, the device generates $55 per patient in terms of revenues for every 30-day Recording Patient Monitoring (RPM) report. Besides, it also helps users collect and store their own health reports that doctors can use for interpretation and assessment for telehealth and telemedicine.
The other key product offering of G Medical is Extended Holter Patch System, a multi-channel patient-worn biosensor that captures ECG data round the clock. The device is typically based on two models, including an extended Holter type device that continuously records and monitor cardiac results for 14 or 30 days. This cardiac data and telemetry device offers various features, including auto-detect as well as auto transmission capabilities, and supports third-party device connectivity. G Medical Innovations earns approximately $300 per patient if this device is activated for 14 days of monitoring and $750 per patient if it is activated for 30 days of monitoring. The management expects the Extended Holter Patch System market to grow at a CAGR of 11.3% from 2020 to 2027.
Apart from these offerings, the company also has a Wireless Vital Signs Monitoring System that provides continuous real-time monitoring of vital signs and biometrics.
Revenue model and product adoption
G Medical Innovations generates the largest chunk of its revenues come from services, especially from their cardiac monitoring services such as CEM and MCT, as well as Extended Holter services and CPT reimbursement from their medical call center. Moreover, its continuous monitoring device leverages insurance approvals into trials and implementations at U.S. hospitals and clinics.
However, the speed of implementation depends on the size of the hospital or clinic network. Their data collection, as well as a remote monitoring device, encompass more cost-effective monitoring and care options with faster implementation service. It is worth highlighting that the pandemic has increased awareness of preventive healthcare, which is why the demand for over-the-counter, diagnostic and monitoring solutions has increased rapidly.
G Medical Innovations has also become renowned in the field and recently, 17 university hospitals approved its offerings for inpatient and outpatient care. The company also collaborated with LiveCare to integrate the Prizma device and monitoring facilities into LiveCare Remote Monitoring System. G Medical's increasing growth of its products and brands helped generate over $12 million in revenues from its offerings, which are only expected to grow with time.
G Medical Innovations recently had its IPO, where it offered 3 million shares at $5 per share to raise $15 million. The stock witnessed a heavy post-listing selloff and is currently trading below the $2.50 mark. Its current enterprise-value-to-revenue ratio is 4.09 and its forward enterprise-value-to-revenue ratio is as low as 0.76, both well below the average for the medical technology industry.
The company intends to continue investments in R&D in order to move forward with the development of their next-generation products along with the clinical trials and other regulatory approval processes. Overall, I believe that G Medical Innovations could be an excellent med-tech investment for microcap investors with immense potential for value unlocking over the coming quarters.