From keeping a backup of memories in the form of pictures to highly-confidential business information, the cloud technology is being used ubiquitously by Americans.
Per Statista, approximately 3.6 billion Internet worldwide users will have access to cloud services by 2018, up from just 2.4 billion in 2013. Clearly, cloud computing will form the core of the next wave of digital evolution.
Apart from the staggering projections, the technology is being widely adopted, healthcare organizations being no exception. North America holds the largest share of the healthcare cloud computing market now, followed by Europe. A research report by the MarketsandMarkets claims that the Healthcare Cloud Computing Market has a net worth of $19.46 billion in 2018. The market is expected to see a CAGR of 18.2% to balloon up to a value of $44.93 billion by 2023.
Given the bountiful prospects, let’s take a look at how cloud-based technologies have been creating opportunities for investors keen on parking their money in the healthcare space.
Why is Healthcare Showing Interest in Cloud?
The cost-effectiveness of cloud-based applications is the key attraction for life science companies.
Though healthcare has been slow in adopting cloud in comparison to other industries, it is gradually realizing the benefits, particularly due to budgetary constraints. Healthcare organizations now make use of cloud technology as a platform as a service (PaaS), infrastructure as a service (IaaS), software as a service (SaaS) and a recovery platform as a service (RaaS).
How is Cloud Profiting Healthcare? Cloud-Based EHR
The latest trend of electronic health records (EHR), electronic medical records, predictive analytics, real-time alerting and revenue cycle management services in the U.S. MedTech space has been gaining prominence. All of these are mostly based on the cloud technology.
In a cloud-based system, patient’s data is stored on external servers and can be accessed via the web, requiring only a computer or a mobile phone. This is also the most common application of big data in healthcare.
According to Transparency Market Research, the global EHR market is expected to see a CAGR of 5.7% from 2017 to 2025, to reach an estimated value of $38.29 billion.
Reports suggest that MedTech companies with strong exposure to cloud automated EHRs will excel in terms of operations and margins.
Other Economic Benefits
Cloud is revolutionizing healthcare by enabling app-based services, emphasizing R&D and easing out supply chain management at affordable costs.
Cloud helps easy maintenance of patient-health data, bills and medication history in a cost-effective manner. Further, heavy capital expenditure while recovering lost data can be avoided using cloud technology (as data in cloud are end-to-end encrypted).
Also, cloud computing helps cut down expenditure on staff resources.
Stocks to Buy
Against this backdrop, investors may want to take note of three healthcare companies that are riding high on cloud technologies. We have zeroed in on stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy), which make perfect investment choices for your portfolio.
Veeva Systems Inc. ( VEEV - Free Report) : Headquartered in Pleasanton, CA, Veeva Systems offers cloud-based software applications and data solutions for the life sciences industry. The stock has a Zacks Rank #2.
Veeva Systems recently introduced Veeva Nitro — a next-generation commercial data warehouse for the life sciences industry. Moreover, the company has released its advanced Veeva Commercial Cloud offering, Veeva CRM Engage Webinar, at the Veeva Commercial Summit Europe. According to the company, the product is a purpose-built application for life sciences to manage online events without the typical compliance risk.
Veeva Systems has rallied 78.8% in a year’s time. The current level compares favorably with the S&P 500's rise of 15.7%.
athenahealth Inc : Headquartered in Watertown, MA, athenahealth, through its cloud-based network athenaNet provides services that manage the administrative duties of medical providers. The stock sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here .
athenahealth launched its first machine-learning model to automate faxes. The company also piloted services like authorization management, which has been planned to expand within the company’s client base throughout 2018. athenaClinicals is the company’s first economically sustainable, Big Data-based electronic medical records system.
athenahealth has gained 10.3% year to date.
HMS Holdings Corp ( HMSY - Free Report) : Headquartered in Irving, TX, HMS Holdings provides cost-containment solutions in the U.S. healthcare space. The stock has a Zacks Rank #2.
Last year, HMS Holdings announced the acquisition of patient engagement specialist Eliza Corporation for $170 million in cash. Eliza offers SaaS services to employers, providers, health plans, hospitals, pharmacies and clinics for medication adherence. In the second quarter of 2018, Eliza completed a special project, which generated revenues of approximately $1.5 million. Management expects Eliza growth to be relatively flat in the third quarter. However, revenues are expected to grow significantly in the fourth quarter.
HMS Holdings has rallied 76.5% in a year’s time.
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