This healthcare company beat earnings estimates last quarter, posting EPS of $0.35 vs. the $0.16 that Wall Street forecasted. The company is expected to grow at an annual rate of 25% over the next five years.
BioTelemetry, Inc. (BEAT)
From Investor Advisory Service
BioTelemetry came public as CardioNet in 2008. The company provides remote cardiac monitoring for medical diagnostics and clinical trials and is pushing into other outpatient monitoring markets. It launched a blood glucose monitoring system in 2018 and acquired Centene’s remote patient monitoring subsidiary earlier this year. It also owns Geneva Health Solutions, a software product that helps physicians keep track of their patients remotely.
Following the $250 million acquisition of Swiss competitor LifeWatch in 2017, BioTelemetry is the clear leader in the cardiac market. Physicians prescribe heart monitors to track cardiac arrhythmias. In clinical trials, the company demonstrated superiority of its devices compared to older technologies in diagnosing atrial fibrillation.
The company’s newest Mobile Cardiac Telemetry (MCOT) patch is a wireless heart monitor which communicates with a receiving device by Bluetooth radio. MCOT was approved in 2016 and launched at the end of 2017. Its rapid success led to a stock price increase of more than 100% in 2018, but the stock has weakened significantly as the company has seen deceleration compared to its spectacular 2018 growth rates.
Drug and device companies also partner with BioTelemetry to screen for cardiac events during clinical trials. This market provided 12% of 2019 revenue.
With the strong launch of the MCOT patch, the company should remain nicely profitable, barring any bad surprises out of the blue. Recent growth has been juiced by the successful MCOT launch, which produced greater than 50% revenue growth on more than 30% patient growth in 2018. We project low-double-digit growth going forward.
COVID lockdowns caused volumes to fall throughout the entire medical system, leading to fewer cardiac diagnosis and reduced revenue for BioTelemetry. Volumes are returning, but analysts expect 2020 sales growth to be flat or slightly down, with a robust bounce back in 2021.
We model 16% compound EPS growth, with a P/E range of 20 to 35. Our forecast low price is 16.4, the product of $0.82 per share in trailing GAAP EPS and the aforementioned low P/E of 20. Our forecast high price is 144. The upside/downside ratio is 4.2 to 1.
Doug Gerlach, InvestorAdvisoryService.com, 1-877-33-ICLUB, October 2020