By Winston Minor, BPN Analyst
The Covid-19 pandemic accelerated the awareness and use of telehealth visits due to shutdowns, capacity limitations, social distancing trends, and improvements in remote technologies. For consumers, telehealth visits have replaced traditional office visits, particularly for primary care physicians. On the professional side, the development and adoption of virtual reality training has led to time and cost efficiencies in training medical professionals across a variety of fields. Telehealth is a major shift in a constantly transforming industry.
BPN senior analyst, Dan Gahagan, notes, “In the US, there's >1B office-based physician, urgent care, and ER visits, collectively. Covid accelerated telehealth's penetration of those visits, and the heightened awareness and availability of these platforms as a result of the pandemic expanded the market. Questions investors need to think through include how big can this market be, how long will it take to reach that peak, and which providers in this extremely competitive field have the highest odds of standing out among the rest?”. While these can be tough questions to pin down answers to, it is vital to understanding the growth of this rapidly evolving industry.
Currently, BPN engages with a leading telehealth provider, anonymized as Project Mend. Given lower barriers for payment providers, interstate licensing, and higher consumer willingness to receive virtual care, Project Mend has realized increased traction in 2020. The chart below captures all 100 scenarios for growth, profitability, and scale and projects equity value forecasts for Project Mend. Over the 5 year horizon, we project a mean MOIC of 4.7x. On the high end, we see a 10% chance for Project Mend achieving a >10x return in 5 years, with a ~$10 billion equity value. Conversely, our scenarios produce a 14% chance of losing the entirety of your investment.
Percentiles highlight skew in equity value over a 5 year horizon:
Figure 1: Taken from the Interactive Strategic Model, these percentiles for Project Mend's future equity value incorporate all 100 scenarios produced by BPN's modeling software.
While virtual care providers have been in the spotlight throughout the pandemic, there are other verticals within telemedicine which have begun to rise. Virtual reality training simulation is another telehealth trend BPN thinks is worth watching as we traverse the pandemic. Virtual reality training simulators, particularly in emergency services, acquired noticeable traction in 2020 for training improvements for advanced cardiovascular life support (ACLS), pediatric assessments, and obstetrics, to name a few. There are many efficiencies already proven in this space. Evidence suggests that compared to traditional team based, experience training, VR training is 9x more efficient on the learners time and 18x more efficient administratively. Due to improved training competency and lower costs, many companies have entered the space.
Leading VR training providers have improved VR based learning through implementing natural language processing. By moving away from menu driven actions to voice driven commands through use of NLP (natural language processing), the VR more accurately mirrors real life and increases immersion significantly. Additionally, a business model that sells content, rather than classroom seats, shortens its sale cycle and lends itself to much higher scale and adoption potential. Below, you can see real statistical results of VR training’s efficiencies over traditional health care training.
Virtual Reality Training Solution Performance:
Figure 2: Real statistical results taken from a a leading virtual medical training company's website.