Is Tabula Rasa Healthcare Stock A Buy?

Tabula Rasa HealthCare Inc (NASDAQ:TRHC) is a healthcare technology company that helps pharmacists, hospitals, and other healthcare businesses better serve their patients.

From prescription management to risk management, scheduling, and more, its suite of technology tools is fundamental to modern organizations. The question investors are pondering: is Tabula Rasa Healthcare stock a Buy?

The market crash of 2020 was just the beginning of problems for the company. Two large health plan contracts signed in January were delayed by the pandemic, and the company faced slowing patient engagement as it continued.

Fewer people made medical appointments and visits in the early stages of the pandemic, and an estimated 1.5 million healthcare jobs were lost from February through April.

Healthcare spending on backend risk management and technology also dipped. This ultimately impacted Tabula Rasa Healthcare, but it’s confident it will grow over the next decade.

Can Tabula Rasa give investors a clean slate for their portfolios?

What Does Tabula Rasa Healthcare Do?

Tabula Rasa Healthcare developed and maintained two main healthcare technology platforms:

·       CareVention HealthCare is an end-to-end platform that integrates electronic health records, health plan management, and PACE program support into one centralized database. This helps healthcare organizations trace a patient’s progress through the entire medical supply chain and provides accountability and transparency to the process.

·       MedWise HealthCare is the company’s medication platform that helps medical professionals track a patient’s drug use. This is helpful in determining dosages, medication interactions, and more. Prescription drug overdose is a common problem in the U.S. this platform is designed to solve.

PACE (Programs of All-Inclusive Care for the Elderly) is a comprehensive medical and social services program for the elderly. It stacks with Medicare and Medicaid to provide the best possible care, and net enrollments sharply increased in the winter of 2020.

It also spent an undisclosed amount to buy Personica in October 2020. The company’s PerconifilRx and Pharmastar platforms are expected to increase the bottom line and help with expansion.

This has some bullish investors wondering if now is the best time to buy this healthcare technology stock.

Is Tabula Rasa Healthcare Stock A Buy?

Tabula Rasa HealthCare had a market cap of $1.25 billion to start 2021. Its share prices fell to a 52-week low of $30.12 in November, long after the March market nosedive. The company’s stock struggled to maintain until 2021, when it rebounded to around $50 per share.

Its third quarter 2020 earnings report showed total revenue of $70.5 million for the quarter and guidance for $295 million for the full year. Still, it had a GAAP net loss around $68 million for the year.

Management believes it will grow its bottom line by 20 percent in 2021 with sales pipeline growth across all segments. PACE enrollment trends and its contracted backlog could justify these expectations.

CareVention revenue increased by 9 percent to $50.3 million in the third quarter, while MedWise revenue decreased 28 percent to $20.2 million. This is a mixed bag for investors seeking constant upward motion.

The company expects sales to pick up as the COVID-19 vaccine rolls out. There’s interest among schools, government entities, and corporations in using MedWise to track people’s vaccination schedules. This could be a pivotal tool in helping stop the spread of infectious diseases.

It held debt of $232.7 million heading into the 2020 holiday season, compared to $38.8 million in cash reserves. This uneven balance represents higher risk for more bearish investors.

Cyber Crime A Concern For Tabula Rasa Share Price

The biggest risk to Tabula Rasa Healthcare is its debt. The company owes nearly $200 million more than its cash on hand, and it can’t depend on the pandemic to pad its numbers for long. Indebted companies can barely afford to keep their staff, much less pay for expensive software fees.

And because it’s a software platform in healthcare, it’s at high risk for cyberattacks. Cybercrime rates jumped 30 percent, and healthcare businesses are among the hardest hit.

Any data breach in healthcare is expensive for the companies involved. It involves violations of not only personal data, but medical data that’s protected by the Health Insurance Portability and Accountability Act (HIPAA).

Major companies like Banner Health are peanuts when one considers how much data could be accessed by breaching the centralized platform widely used throughout the industry. This is the way modern sophisticated attacks work.

Outside dangers aside, the company also sits in a competitive landscape.

Tabula Rasa Healthcare Vs Evolent Health

Tabula Rasa’s healthcare platforms are widely used, but it’s not the only player on the block. Evolent Health, The Bridge, and NHP Rhode Island are among the companies with similar healthcare and pharmaceutical software platforms.

And companies like Mindbody serve similar industries within alternative wellness that could see a pickup in usage too. This is true of medical marijuana dispensaries too, which use systems like BioTrack for their seed-to-sale.

While they may seem like completely different markets, they perform similar processes. This means any rival could come in and take some market share from Tabula Rasa’s existing user base.

It needs to continue updating and innovating to create a seamless experience for pharmacies, patients, providers, and insurers to fully succeed. That’s a tough pill to swallow, and Tabula may not be up to the task.

Is Tabula Rasa Healthcare Stock a Buy? Summary

Tabula Rasa Healthcare is a healthcare technology platform that helps optimize the medical supply chain. From doctor’s visits to medication interactions, it keeps data straight across providers, pharmacists, and more. This makes it an integral part of the healthcare supply chain.

Except it’s not alone – dozens of companies offer similar solutions. It’s a high-tech business that’s full of cybercrime, and that means it’s risky. Investors should be aware of potential consequences before investing in Tabula as a cure-all.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.