For Immediate Release
Chicago, IL – January 17, 2022 – Today, Zacks Equity Research discusses AMN Healthcare Services AMN, Apollo Medical Holdings, Inc. AMEH and LifeMD, Inc. LFMD.
Industry: Medical Services
Link: https://www.zacks.com/commentary/1851984/3-medical-services-stocks-to-buy-despite-near-term-industry-woes
Since the onset of the COVID-19 crisis, with digital healthcare treatment becoming indispensable, the medical services industry has been witnessing significant demand for telemedicine-focused online medical and AI-powered technology services. Companies in the remote healthcare space have seen their stocks rally amid the economic volatility. AMN Healthcare Services, Apollo Medical Holdings, Inc. and LifeMD, Inc. are a few such stocks. The resurgence of COVID-19 cases has dealt a blow to the manual workforce and healthcare infrastructure as patients are once again deferring their non-essential procedures and hospital stay.
At the same time, with the highly contagious Omicron variant leading to rising COVID hospitalizations, hospital staffing shortages are being reported across the nation disrupting healthcare services. Further, COVID-19 has taken a staggering toll on the National Health Expenditure (NHE) plan, resulting in a massive commotion in terms of health care spending, utilization and employment trends.
Industry Description
The Zacks Medical Services industry comprises third-party service providers and caregivers appointed by core healthcare companies for economies of scale. The industry includes pharmacy benefit managers (PBM), contract research organizations (CRO), wireless MedTech companies, third-party testing labs, surgical facility providers, and healthcare workforce solutions providers among others.
Over the past years, this industry has strategically moved from volume- to value-based care. This changing pattern of care calls for advanced facilities, thus increasing the need to appoint specialized external service providers. With the growing importance of effective healthcare management, the medical service industry has become an integral part of the modern healthcare system.
5 Trends Shaping the Future of the Medical Services Industry
COVID-Led Procedure Disruption: The fast-mutating SARS-CoV-2 has raised questions about the sustainability of the ongoing economic rebound. Seeing the recent resurgence of cases nationwide in the form of Delta and Omicron, the non-COVID healthcare infrastructure is once again in the soup leading to a significant drag in their revenues.
At the same time, with continued COVID-19 led hospitalization, hospitals are currently running at excess capacity leading to enormous staff shortages. According to a Medical Device and Diagnostic Industry (MD+DI) report, the American Nurses Association recently reported to the Department of Health and Human Services that nursing shortages are being reported all over the country. MD+DI, in another report dated Jan 4, stated that “compared to a year ago, on average, about 16% of nurses and 12% of allied health professionals have left the respondents’ respective facilities.”
Disruption in Healthcare Spending: Going by a Health Affairs report, CMS’ annual update to the National Health Expenditure Accounts (NHEA), released in December 2021, clearly showed that NHE increased 4.6% in 2019, showing a relatively stable trend of annual growth since 2016. However, this consistency was upended by COVID-19 beginning March 2020, resulting in massive short-term health sector spending and employment disruptions.
Digital Revolution Amid the Pandemic: