Two Stocks That Could Benefit As Healthcare Goes Digital

Marc Lichtenfeld
by Marc Lichtenfeld, Chief Income Strategist, The Oxford Club

Two Stocks That Could Benefit As Healthcare Goes Digital

by Marc Lichtenfeld, Investment U's Healthcare Specialist

Friday, January 14, 2011: Issue #1428

Editor's Note: To round off the week, our resident healthcare expert, Marc Lichtenfeld, brings you his second and final report from the J.P. Morgan Healthcare Conference in San Francisco. If you read yesterday's column, you'll known that Marc has identified three key trends for the sector this year - one, healthcare reform; two, the "patent cliff" and three... well, take a look below to find out...

Talk about an all-star panel of high-tech heavyweights...

As I filed into the room, the stage boasted:

  • Aneesh Chopra, the United States' Chief Technology Officer.
  • Todd Park, Chief Technology Officer at the Department of Health & Human Services.
  • Eric Schmidt, Chairman and CEO of Google (Nasdaq: GOOG).

They were there for a fascinating discussion on healthcare information technology - one of the most important themes this year. And the moderator was John Doerr, the brilliant venture capitalist from Kleiner Perkins.

The debate centered on a key theory: that a patient in possession of his or her electronic medical records will trigger better value and improved care. They even speculated that one day, all of your medical information will be available to download on your mobile device and by your doctor.

But let's put the futuristic talk to one side for a second and look at what's happening right now in order to move the process forward...

Embracing the Digital Age... Finally

Currently, 80% of doctors' offices have closed systems when it comes to medical record keeping. But the government is finally forcing the industry to be inter-operable. It's making $20 billion worth of incentive payments available for doctors to implement healthcare IT in a meaningful way.

One of my favorite names in this area is athenahealth (Nasdaq: ATHN). The company helps doctors get paid both faster and accurately, thanks to its real-time updates to any changes in payment codes and regulations.

Todd Park, the above-mentioned CTO of the Department of Health & Human Services, is a co-founder of the company. Having suffered from an accounting scandal last year, athenahealth has rebounded sharply - from a low of $21.51 on July 22, 2010 to $42.82 today.

Another company that expects to see growth in its IT business is Oxford Trading Portfolio member, McKesson (NYSE: MCK). Watch for this one over the second half of the year, in particular, as the stimulus funds get put to work.

Along with the three big trends for this year - healthcare reform, the patent cliff and healthcare IT - investors are always keyed into the latest developments in the biotech sector, too.

Here are three other companies to put on your radar this year...

Three Biotechs That Should Have a Strong 2011... And a Message for the Economic Naysayers

The biotechnology sector and the stocks within it are always a hot topic of discussion. These are the firms involved in developing groundbreaking new drugs and medical devices - true pioneers within the healthcare space.

Companies like Seattle Genetics (Nasdaq: SGEN), ImmunoGen (Nasdaq: IMGN) and Lexicon Pharmaceuticals (Nasdaq: LXRX) generated a huge buzz at the conference.

For example, Seattle Genetics recently reported very strong data on its lead drug candidate for Hodgkin's lymphoma. And just last week, Lexicon also reported strong results for its diabetes drug.

The keynote speaker on Tuesday was J.P. Morgan CEO Jamie Dimon, who gave his thoughts on the U.S. economy - and provided a lift for the conference attendees, with an optimistic picture: "Corporations are in fantastic shape," he declared, and went on to note that he sees "very little that's worse than a year ago."

In support of his assertion, he pointed to a few things:

  • The fact that JPM's small business loans are up 40% over last year.
  • Consumers are in better financial shape.
  • We're two-thirds of the way through the housing collapse.

And for the doomsayers, who believe the economy is going down in flames and that a "black swan" (an unexpected event) is around the corner, he laughed them off: "There's a black swan everywhere you look and everyone is an expert on black swan risk management."

Sounding like a true contrarian, he said the ones with negative views merely add to his confidence that the economy is about to start growing in a meaningful way.

Good investing,

Marc Lichtenfeld

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