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By Jeff Nielson

As investors endure a steady stream of red ink across global indices, it is clear that these tough market conditions require new thinking.  

Aggressive, “offensive” investing strategies are out. Playing defense is in.

One sector that continues to serve as a bellwether is healthcare. Even as the Covid pandemic seems to have receded, a tidal wave of other maladies is now beginning to deluge healthcare systems.

Soaring demand for mental health treatment has been exacerbated by the impact of Covid. This has led to an even larger backlog of neglected or untreated conditions.  Consultations and procedures were postponed or cancelled due to either patient anxiety or simply a lack of available clinical resources.

The healthcare system now needs to deal with this new wave of medical treatment demand while facing the increasing shortage and scarcity of primary care and mental health providers.

What is a problem for the healthcare system may be an opportunity for investors. Identifying healthcare players who are able to deliver strong organic growth and driving robust revenue increases in this challenging environment is key.

One company that fits that description perfectly is CareSpan Health Inc. (TSXV: CSPN).

CareSpan is using its proprietary digital care platform (“Clinic-in-the-Cloud”) and Nurse Practitioners (NPs) to deliver high-quality healthcare with greater efficiency, and improve medical treatment access for underserved populations.  Their formula to address the shortage:  empower NPs with integrated digital technology for more efficient, lower-cost delivery of high-quality care.

CareSpan hits organic growth milestone

On April 25, 2022, CareSpan announced it had passed a key milestone in its organic growth: over 100 clinicians now signed as healthcare providers on CareSpan’s Clinic in the Cloud™ digital healthcare network.

With ~81 million Americans living in Health Professional Shortage Areas (HSPAs), CareSpan is bringing Nurse Practitioners and its digital care platform to reach these HPSAs, via both remote and in-person treatment.

Currently Nurse Practitioners have been licensed by 26 U.S. states to provide independent primary care.  This number has been growing, as states recognize the urgent need to address the shortage in primary care and mental health

According to the Kaiser Family Foundation, there are now 80,000 licensed and practicing NPs across these states. In 2023, California will add ~25,000 more NPs to this population of independent practitioners.

This is a large and growing addressable market that CareSpan is targeting with its asset-light business model.  The Company has just passed an important milestone.

CEO Rembert de Villa put the announcement into context for investors.

“Reaching the 100-clinician milestone is important for three reasons. First, it illustrates the Company’s commitment to address the underserved population and empower independent NPs by providing a fully integrated solution that helps them drive better health outcomes for their patients.

Second, this milestone signals our ability to scale and drive growth in our high-margin services, such as Remote Patient Monitoring (“RPM”). Third, as we continue to expand the reach of our network, we expect to address the needs of organizations such as self-insured employers, payors/health insurance companies, and government agencies who are looking to acquire health services for their employees or members.”

With 50 registered practitioners as of the end of 2020, CareSpan has more than doubled its practitioner base in 15 months.  The Company expects this rate of growth to continue in 2022 and beyond.

CareSpan reports record revenues and robust revenue growth

On May 6, 2022, CareSpan announced record revenues of US$5.75 million in calendar year 2021, up 67.4% over 2020

On May 30, 2022, it announced continued strong Q1 growth rate of 60% from Q1 2020. Among the highlights from that release are:

  • Revenues of US$1.765 million for Q1-2022 compared to US$1.105 million for Q1-2021, an increase of 60% that was primarily driven by an 80% jump in patient visits.
  • The number of providers in CareSpan’s network more than doubled to 103 practitioners as of March 30, 2022, compared to 50 at the end of 2020.
  • Operating loss has decreased by more than two-thirds y-o-y, from US$2.022 million in 2020 down to US$0.671 million in 2021.

CEO de Villa framed the outlook for CareSpan’s shareholders.

“CareSpan has positioned itself to address a significant problem in the U.S. healthcare system: the shortage of primary care and the escalating cost of chronic care. Nurse Practitioners are being recognized by more and more states as an important solution to this problem and CareSpan is one of the few companies to have designed its ‘Clinic-in-the-Cloud’ offering to equip Nurse Practitioners and other clinicians with cost-effective, integrated digital tools necessary to deliver the best care.”

Investment summary

CareSpan Health Inc. is capitalizing on two of the highest-growth trends in the healthcare industry today:

  1. The digital care and digital therapeutics revolution in healthcare.
  2. The rise of the Nurse Practitioner in the U.S. healthcare system (at a time of a major shortage in primary care practitioners).

As its recent operating results indicate, this has been a successful strategy to date. However, savvy investors may be looking for even better numbers going forward.

With CareSpan’s base of NPs more than doubling, thus more than doubling treatment capacity, CareSpan could see even stronger revenue growth through the balance of 2022. Perhaps even see its operating loss flip to a profit earlier in 2023.

Biotech stocks have been hammered through most of 2021 and into 2022. CareSpan has been caught in this downdraft as well.

The bottom line is that shares in CSPN can be purchased today for a fraction of the price they were at one year ago – despite the strong organic growth.

For investors looking to play defense in these difficult market conditions, CareSpan’s strong financial performance and huge growth potential will make it an attractive candidate in the eyes of many investors.

FULL DISCLOSURE: This is a paid article by The Market Herald.

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