In this episode of Industry Focus: Wildcard, Motley Fool analysts Jason Moser and Brian Feroldi take a closer look at a new IPO in the healthcare space that aims to fix all the pain points plaguing today's primary healthcare model. We find out about its business strategy and how it aims to address the needs of both consumers and providers. Jason also reviews his Healthcare and Wealthcare basket to check how the stocks are performing.
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This video was recorded on March 4, 2020.
Jason Moser: It's Wednesday, March 4th. I'm your host Jason Moser. On today's Wild Card show, we're going to talk a little more Healthcare. Austin made the point earlier, this is, I think what, four weeks in a row now for Healthcare. But you know what, we used to be nothing but Healthcare on Wednesdays, and it's kind of a Healthcare time right now with all of this coronavirus stuff going on. And so, hey, why not? We'll take another Wild Card Wednesday, and we'll do some Healthcare today.
We're going to dig into a new IPO; a company called 1Life Healthcare (ONEM). We're also going to check in on my Healthcare and Wealthcare basket to see how things are going now that we've gotten through the gist of earnings season. And joining me today, to make sense of it all, it's my friend and colleague, Brian Feroldi. Brian, you know, you just made the point before we started taping, this is the first Industry Focus that we've ever done together, which is bizarre to me, but it's nevertheless true.
Brian Feroldi: Jason, so great to finally be chatting with you in a recorded manner, this is wonderful.
Moser: Well, I was looking forward to it and I'm glad we get to do this. Before we get started, yesterday was a bit of a, let's just call it a volatile day in the markets. How are you handling yesterday's big plummet?
Feroldi: Yeah, the funny thing for me is that, I was actually away yesterday on a field trip for my son's fourth grade school. We actually went out to a local wilderness place that we have that's owned by our local university here. And we were out there until eight o'clock at night. And after the sun went down, we were recreating what it was like to travel on the Underground Railroad in the pitch black, and we were walking around, and these kids were terrified because we ran into some seedy characters along the way, but history came alive for me. So, it was very fun to come back. And I say, "Well, how about the markets on the day that I took off?" "Oh, another fun day." So, I had a great time and didn't give one lick or care about what was happening with the markets.
Moser: Nice. It sounds like you were just getting them prepped for that Halloween hayride, a little bit early this year. [laughs]
Feroldi: Yeah. Oh, we had some kids that were absolutely terrified. It's so funny how you just -- when it's dark out, if you're walking around outside, kids get scared fast.
Moser: Yeah, they certainly do. Well, probably best that you just ignore yesterday anyway. These days it seems like we're just waiting for the headline to sort of dictate how the market's going to behave any given day. And today it's certainly the better day. We wanted to dig into what's a pretty new company here to the public markets. And, you know, it's an interesting business model, particularly, as healthcare is under the microscope here during this election season.
The company 1Life Healthcare, the ticker is ONEM. Talk to us a little bit, Brian, about 1Life Healthcare. You've been able to dig in now. What is this business 1Life Healthcare? What do they do?
Feroldi: Yeah, I'm glad that, I believe, one of our listeners brought this company to our attention, and I had never heard of it before, but this is a company that just came public in January of this year. And their mission is to transform healthcare for all through a human-centered technology-powered model. And this company was founded in 2007 by a healthcare entrepreneur named Tom Lee. And what they've pioneered is a membership-based primary care platform.
And just some quick stats on the stock. So, this company, again, came public in January. They raised $245 million. They priced their IPO at $14. And even though the markets have been crazy volatile, this stock is about at $20 today. So, they popped on their first day and they've actually held up pretty well even through these volatile couple of weeks.
So, the big problem this company is trying to solve is to fix everything that's wrong with the primary care system in the U.S. So, in the United States we only spend about 5% to 7% of our healthcare dollars on primary care. And if you compare that to, you know, the average developed nation, they spend about 14% of their budget on primary care. And the reason that that matters is every dollar that you spend on primary care and preventive care can lead to about $13 in cost savings down the road on specialty care. I mean, with healthcare, you know, intervention and upfront investments can really payoff.
So, 1Life Healthcare is on a mission to, kind of, fix all the pain points that exist in the primary care model today. So, as I'm sure our listeners know, that see a family medicine, there could be enormous wait times to get in to see a doctor, you show up and there's often a long wait to just get into to see them. Your touchpoints with your physician are very infrequent. And these stresses also lead to huge dissatisfaction on the provider side as well.
So, about 50% of primary care providers report burnout. And a big reason why is that our entire system is incentivized around fee-for-service, so they have huge pressure on them to just see patient after patient after patient throughout the day, and they also have this enormous number of administrative tasks that they have to handle on a daily basis too. About half of primary care report burnout. So, 1Life is, kind of, pioneering a solution that addresses all of these problems and is trying to fix the primary care system to just make it better for everyone.
Moser: Yeah. And that primary care system, that's really where it all starts, right? I mean, if you have something that you need to go to the doctor for, as you mentioned earlier, something specific, you have to go see a specialist. Typically, that requires a referral or a consult with the primary care physician anyway to get that ball rolling. So, I can certainly understand where that burnout comes into play.
And when you consider the fact that we are in fact running into a shortage of doctors, along with, really, a global population at this point that is demanding more and more healthcare services, you can see how the supply and demand continuum works there. I mean, we're going to start running into some problems. And certainly, it's not just the bandwidth of the number of physicians to actually service patients but then also the economics behind it all.
And speaking of economics, how does 1Life make their money? I mean, how does the money flow through their system? What do they do to generate revenue?
Feroldi: Yeah. So, these guys primarily open up primary care offices. And right now, they're in nine markets throughout the U.S. So, all of the big cities, like, San Francisco, L.A., Seattle, New York, Boston, etc., they're in nine major markets. And their model is to charge each of their members an annual fee of $199 per year. And what that fee buys them is the ability to use any of 1Life (sic) Healthcare clinics and they also get access to their technology platform. And this platform makes it very easy for patients to get in touch with a provider quickly, so they can actually, once you're in their system, you can book an appointment with your physician that same day or the next day. You compare that to the average family practice, it's an average wait time of 29 days, so we're talking about very fast care.
And they also state that their providers only service about half the number of patients that the average provider sees. So, that allows them to really spend quality time with each patient and also help to make sure that their appointments actually start on time. And I'm sure that is something that appeals to every single person that is listening to this show. I mean, how much would you be willing to pay if your provider started your appointment actually on time.
And the way that this model works for the physicians is that, on the physician side, physicians are just paid on a salary, there's limited bonuses and there's no extra compensation. They're not compensated on a fee-for-service basis; which is just rampant in the industry. So, that reduces a huge amount of financial pressure, so that providers can actually spend that quality time with their patients.
And the platform, the health records platform that 1Life has created in the background, supposedly reduces the administrative tasks that is placed on the physicians by almost half, so it's a really attractive model for primary care providers because they're seeing less patients on a daily basis, get to spend more time with them and has a lower administrative burden. So, this model is really designed, again, to appeal to both consumers and healthcare providers.
Moser: Yeah. It makes me think a little bit of a country club. It's almost like, you're paying your annual or your monthly membership fee to be a member at a club and you get to go play golf and you can play ten times a month or five times a month or one time a month and it's just going to cost you what it cost you in the form of a membership fee. And in this case, we're talking about healthcare.
And it seems to be something aimed at solving, ultimately what is becoming a big problem going back to that whole supply and-demand problem, in figuring out a way to scale healthcare. I mean, to bring healthcare to more people and to make it more efficient, more -- I don't want to say enjoyable, but at least tolerable.
And it's a company that has the backing, obviously, of some very important partners, not to mention a strong insider presence as well. So, let's talk a little bit about the Founder here, Tom Lee; the CEO, Amir Rubin, they hold stakes in the company that are fairly respectable. Not to mention, some other big partners that we may have heard of as well, right?
Feroldi: Yeah, so these guys have been funded by Carlyle Group, some other major venture capitalist firms, and they also have financial backing from the Alphabet. So, these guys have attracted a deep bench of committed long-term, well-capitalized investors, and that has really allowed them to invest a lot of money upfront to build the platform from the ground up the way they want it to be.
And more recently, after they came public, this company currently has a cash balance of about $410 million that it now has access to continue to fund to build out this network across the country. And that's important, because when you're building out this model, it's very expensive. I mean, they're hiring doctors. They're building out the clinics. They're hiring like crazy, and they're simultaneously making this big investment into this custom platform to manage all of the patients' health records and the technology that, kind of, goes behind that, so a lot of investment upfront. But when you see that these guys have the backing of these huge deep-pocketed investors, that certainly has given this company a big edge.
Moser: Yeah, you know, what this reminds me of this, makes me think of, in a couple of our flagship services here, our Stock Advisor and Rule Breaker services -- which are the stock recommendation services, as I'm sure most, if not all listeners know -- you know, we have features in those services. Every year we talk about our core stocks, you know, the core holdings that we feel like, if anybody is going to follow these services and you're looking to get invested, these are the core bedrock holdings that we think you ought to own.
And those core stocks change year-to-year and they change by virtue of the team going in there deliberating and figuring out what they believe the core stocks should be. But it's about starting from the ground and working your way up, it's not about replacing one core stock with the other, it's about essentially starting over again and building something today with the knowledge that we have today.
It does seem like, in 1Life's case, they're not trying to unwind or unravel all of this red tape that has ultimately plagued our healthcare system. It's like they're trying to start fresh with a new concept, a new idea, to see, "Hey, what if we just decided, what if we chose to take healthcare in this direction, how could that work?" I mean, this could be the start of something really important in the landscape of our healthcare system, don't you think?
Feroldi: Yeah, I think so too. And I do like your point there. And it is worth pointing out that 1Life does work with your existing insurance provider. So, this is not, like, totally out of left field and it's just purely a $199 fee for the year, these guys do bill your current insurance company for their range of services. They've just pioneered a different model, really, behind the scenes, especially on the provider side with the compensation, to make sure that the model, kind of, works better for everybody.
And it's also worth pointing out that these guys do have active partnerships with big healthcare systems that want access to 1Life's growing network of primary care physicians. So, they've already struck deals with some UCSF Health systems in San Francisco, UC San Diego, Dignity Health, Providence St. Joseph. So, these big health platforms are now plugged into 1Life's EHR system to provide the primary care and get their members access to those additional services through their health network. So, these guys are really solving pain points across the board.
And from a financial perspective, this is proven to be very attractive for employers, because it's a very high-touch model on the primary care side. One of the stats that 1Life touts is that there's a 41% reduction in emergency room visits for its members once they join the platform. So, that leads to huge potential cost savings. The overall cost savings that they're reporting, when employers switch to them, is about an 8% drop in total cost savings, but that does not include the potential for employees that are sick to get back to work faster, so there could also be some other knock-on effects down the road.
So, again, their model is supposed to appeal to consumers, employers, health systems and providers, and the growth that we've seen thus far, does show that there is something to this.
Moser: Okay. So, let's talk about that growth for a second, because while I think we've painted a pretty neat picture of this company and I'm certainly interested in learning more, I mean, there are no investments that come without risks, right? I mean, there are going to be risks involved with this business, particularly, given that it is so new to the public markets. What are some of the key risks for a business like this today?
Feroldi: Yeah. So, before we talk about the risks, I'd like to talk about just how fast this company is growing to give our listeners some perspective. So, for the first nine months of 2019 -- that's the data that we have when they filed their regulatory filings to go public -- this company reported 29% top-line growth. So, total revenue was about $199 million. And they report a fun metric called their "care margin," which is basically their gross margin, and that number came in at 40% and that figure was up 500 basis points over the year ago period. So, we're seeing decent top-line growth, especially for a primary care focused facility, as well as a good margin, a margin that I was actually pretty impressed with.
However, we did talk about this company is funding a number of growth initiatives, and that is very expensive. They're also hiring like crazy. So, the net loss that this company produced, in just the first nine months of 2019, was $46 million. You annualize that, you're probably talking about a $60 million to $65 million loss. So, it is obvious why they went public, they do need access to capital. And they do have $410 million in cash after the IPO, so that buys them a decent amount of runway. But there's no doubt that this company is probably going to be operating at a loss for the next couple of years as they continue to invest and build out the network.
Moser: So, given what we know today and given the risks involved, particularly on the growth side there, what's your bottom-line takeaway with a company like this?
Feroldi: Yeah, I think this company is definitely interesting. I mean, once we started to dig into it, I think that I do like their model, I do think that it's, kind of, solving a number of pain points. And the one that I'm the most impressed with is actually the healthcare provider pain point, because that's something that is almost never talked about, but I know that burnout is definitely real. So, if I was a provider, I would definitely find this system to be far more attractive -- if I was a primary care provider -- than the alternative.
And then there's also -- we haven't touched upon the valuation yet, but this company became public at a pretty rich valuation. They are currently trading about 9X sales. Their estimated growth for next year is about 22%. So, that's not the fastest growth rate that we've talked about in the show before. And 9X sales certainly is a rich valuation. So, my takeaway after, kind of, digging in is, I think there's a lot to like here. I'm personally not interested, given the valuation and the sales numbers, but I do think that this company is in a great position to consolidate a very fragmented industry and could grow at a double-digit rate for many, many years. How about you?
Moser: Yeah. I mean, to me, it's a fascinating business, I love the idea of trying to make the healthcare system better, and for that, I just gave them the tip of the cap. As with most IPOs, I'm going to adopt my rule of, I'm going to at least give them a couple of quarters to report earnings and understand better how management communicates the vision, communicates the strategy, communicates the results. So, I would say, it's safe to say, we just keep this one on the radar, definitely follow it, want to learn more about it. And, hey, who knows, a year from now, this may seem like a little bit more of an obvious idea.
Feroldi: Yeah, I think that's a great point, with when it comes to IPOs, there's so many factors that can affect the share price in the short-term, then you're talking about, you know, insiders get locked, they can't sell, but after a certain number of days, they can sell. So, kind of, crazy things can happen to the stock price after the IPO. We also don't know what this company is going to be like once they have the pressure of the public eye and Wall Street estimates are over their head and all that, kind of, stuff. So, it is always a trying time, but that's one of the reasons that we do preach, wait a couple of quarters, see how they're doing, see how they handle being public, and then, if you're still happy, dive in.
Moser: Well, it's always nice to get another stock idea on the radar. And as a reminder for all of those out there looking for more stock ideas, because let's face it, if you're listening to the show then you're probably always looking for more stock ideas. So, why not check out our Stock Advisor service. You'll get stock recommendations from David and Tom Gardner every month, Best Buys Now and a whole lot more. Just go to IF.fool.com to take advantage of a special 50% discount we have for our listeners. Make sure to check it out at IF.fool.com.
Okay, Brian, let's jump into the Healthcare and Wealthcare basket. For those out there who are familiar, then you know what I'm talking about, for those who are not, this is a basket of stocks that I put together a little while back in order to try to capitalize on the healthcare market opportunity that exists out there today. And this was a basket, we put it together back in February of 2018. The date of inception is actually February 9th, 2018. That's where we're tracking returns.
And the basket itself, it's much like that War on Cash basket I always talk about, this is just a Healthcare focused basket and it consists of UnitedHealth Group (UNH -0.23%), Teladoc (TDOC -0.84%), Masimo (MASI -0.03%) and Idexx Laboratories (IDXX -0.52%). And that last one, Idexx, if you're not familiar with it. Yeah, I mean, listen, pets matter too, right. This is a pet healthcare company and pets matter too. One of my favorite market opportunities out there.
But we figured, with earnings season wrapping up here and with the four components of this basket having reported, we go ahead and just take a look at the status, see how the returns are doing, talk a little bit about the companies in the basket, things that are doing well, maybe areas where we'd like to see them do better. But to give a quick look at the returns picture. Since inception, February 9th, 2018, the basket itself has returned in total 116.5%, and that compares to the market's 21.2%. So, we can see that the Healthcare and Wealthcare basket is outperforming nicely, it's done very well for investors in the short time that it's been in existence.
And thankfully, I can say, Brian, that it is contributions from all four components, all four components of the basket are in positive return territory. They're all four outperforming the market. And so, I figured we could jump in here and talk a little bit about some of these companies today, just to give a review for listeners, what they do and why we like them.
And let's go ahead and just start with the one that I've just been fascinated with ever since they went public about five years ago, Teladoc Health. I think that when we talk about changing the healthcare system, telemedicine is certainly a topic of discussion that is taking up more and more time these days and rightly so, because it is really helping bring more efficiency into the healthcare system and scale healthcare, which is, as we're seeing, is a big concern.
Feroldi: Yeah. And anybody that's listening to you for a long time knows that you've been beating the drum on Teladoc Health basically for the last couple of years, so you've really nailed this one so far. So, Teladoc is the leading provider of telemedicine. So, just video conferencing with a doctor to get symptoms done. And obviously, the interest in this company has just skyrocketed in the last couple of weeks given the huge epidemic of coronavirus, the idea that you can interact with a healthcare provider without leaving your home, without risking anything, that has really caught Wall Street's attention.
But this company has just been on fire. They just reported really great quarterly results. We saw U.S. paid members grow 61%. So, now almost 37 million Americans have access to this platform. Total visits, so the number of people that are actually using the platform, grew 57% to 4.1 million during the quarter. That's great to see. Revenue grew 27%, and the bulk of that was organic in nature, which means, that it was just natural to the platform, it wasn't acquired growth, because Teladoc has been quite acquisitive in its history to drive that top-line higher.
And for 2020, we basically saw that they're calling for more of the same big top-line growth, big growth in member visits, and Wall Street just ate it up. This stock has been red hot.
Moser: Yeah, it does seem like this is a point in time in history where we're getting, I think, some pretty reasonable buy-in from all parties involved regarding the merits of telemedicine. Again, it's not meant to replace our current healthcare system, it's simply meant to make it better.
What they always talk about is this concept of the front door. They feel like they are better positioned to be the natural first step in pursuing your healthcare transaction, whatever may be wrong. And clearly telemedicine isn't meant for every ailment, but there are certainly plenty of them where it works out very well, as being that first step you take in going to the doctor. And so, yeah, you're seeing more and more healthcare systems, more HMOs, more insurance companies adopting these services.
And Teladoc is certainly not the only company out there doing it, but you mentioned the point about being rather acquisitive, and there's no question they have been acquisitive over the past few years, and I think a lot of that is really in an effort to build out what they just consider to be the most comprehensive offering out there.
So, yeah, so far so good. We'll keep our eyes on it, but I like what I'm seeing so far.
Let's take a look at Masimo real quick. And a company that probably -- not a lot of people are as familiar with Masimo. I ran across this company back in 2011, when we were running our Real Money Portfolios here on fool.com, and it just struck me as a fascinating business because of what they do. And it's this working in pulse oximetry which is what sparked my interest in it. Ultimately, pulse oximetry is just -- they're tools that measure the oxygen levels in your blood. And if you're in the hospital, then you need to have that measurement kept track of. And so, the Founder, Joe Kiani, came up with the technology that he developed and built out in his garage, turns out it worked pretty well, and now he's got, what looks like, a $1 billion revenue business at this point.
Have you ever taken a look at Masimo, Brian?
Feroldi: Oh, yes, I have. And I love it when Founders are still running the show. And that is something that really attracts me to Masimo. And for our listeners, that ticket there is MASI; and they've probably interacted with this company. If you've ever been to the hospital or doctor and they've put in that little clip on your finger or toe and they've told you what your blood oxygen level is, so that is Masimo's basically bread and butter.
And this company is a razor and blade business model, that I know has worked very well for many healthcare companies and Masimo is certainly no differently ...
Moser: ... I love those models. Those are the best models ...
Feroldi: ... I completely agree, it's one of the things that I look for in any potential medical device company, is the recurring revenue. And that's exactly Masimo has in spades. And last quarter, in the fourth quarter, we saw basically a continuation of the same growth that we've seen from this company for year-after-year.
So, top-line growth was 12%, which is pretty good for a company of this size. Their gross margin is expanding and their operating margin is expanding. So, that's something that is music to my ears as investor. I love it when companies can consistently grow their top-line at a double-digit rate. And use margin enhancements throughout the income statement to just go into even faster growth on the bottom-line.
And the bottom-line here is, this is a company that's just doing what it set out to do. For next year they're basically calling for 11% top-line growth and continued margin enhancements. So, they have made some investments to build out their product offering. And I think this is a great slow-and-steady market-beater. I think this is a great pick.
Moser: Yeah, I like it too. I own it personally. I think I'll be hanging on to those shares for a while. Let's take a real quick look at UnitedHealth, this is obviously the behemoth in the space, the biggest insurer out there. Some people love it, some people hate it, but the bottom-line is that they are going to be a fixture in our healthcare system for a long time to come.
And, hey, listen, it's been a nice day for UnitedHealth thus far, I think that's probably a little bit more political in nature, given the results that we're seeing pouring from Super Tuesday, but regardless it's still a business that is doing very well, making a lot of money. I mean, 19% growth in earnings for the quarter here.
Outlook for 2020, calling for somewhere in the neighborhood of $16.40 or so in earnings per share at the midpoint. And to keep their medical care ratio in check. Lower is better, right? That means that they're able to not have to overspend on healthcare, they are being efficient and effective -- hopefully, being effective.
What do you think about UnitedHealth these days, given its size and position in the space?
Feroldi: Yeah. And to give our listeners a sense of this company's scale, I mean, this company's market cap is $270 billion; it is a monster of a company. In the land of healthcare giants UnitedHealth is the biggest giant. So, it's incredibly impressive to see a company of this size producing 19% growth.
And the really fascinating thing about this company is, over the last couple of weeks, we've seen this stock trade wildly. I mean, we're talking about double-digit moves, which is just an enormous bump in market cap, both, up-and-down basically based on the latest news out of the elections. So, whether or not there's going to be a candidate that earns a democratic ticket for -- that's pushing Medicare for all or not.
So, normally this is a slow-and-steady, doesn't move much stock, but really that volatility has been amped up. But no matter what, this is a very steady-Eddie performer, it just keeps doing, kind of, what it does to your point. Their medical care ratios are, kind of, going to bounce around, but overall this company has proven to be a steady-Eddie performer.
But there's no doubt that this year is probably going to see some big volatility for all of the health insurers based on the way that the 2020 elections go. So, that is something for investors to keep in mind.
Moser: Yeah. And given our conversation on Teladoc just a little bit earlier, UnitedHealth is making investments in telemedicine and digital as well. They've got this thing called virtual visits, of which Teladoc is actually a provider. So, I just thought that was very interesting to see that relationship. They're competitors, I'm sure, but they are also partners in that value chain and that's always fun to see.
Okay. Let's get to the last stock in the basket, one that really tugs on my heartstrings, Brian, and it's because I have three dogs at home. Idexx Labs, talk about razor and blade models, this is another one, isn't it?
Feroldi: Yeah, these guys are focused on the pet care market. So, if you've ever been to the vet, if you have a pet and taken them in for any kind of diagnostic tests, the odds are pretty good that Idexx Labs is making money off of you. And they have the razor and blade business model. So, they place these systems and then they get recurring revenue from these system sales.
And you want to talk about another company that has just been a steady-Eddie consistent performer. This company has just consistently grown the top-line at the low double-digits and just margin enhancements up-and-down the income statement to produce double-digit growth in the bottom-line. This has been a monster winner for investors over the long time. And we all know that spending on pets is going nowhere but up, as pets continue to become more and more seen as members of the family. So, just a steady business and a great performer.
Moser: Yeah, you know, I was just actually at the vet yesterday, taking our youngest dog in for his annual checkup shots, all that good stuff. And I mean, as you can imagine, with three dogs, I spend a decent amount of time at the vet, just taking him in for regular visits. And we've had our same vet here for the last ten years we've been here and they're just a wonderful practice.
And I always ask him about Idexx when I go in, because he uses Idexx equipment and it's always nice to get sort of that boots-on-the-ground perspective from folks using that kind of stuff. And he never wavers from this, he always comes back with, "You know what, Idexx is the best, and it's not because they are the cheapest," he says, "it's because they have the best research," their research that lets them develop new and exciting products that are making his job, ultimately, easier and helping -- you know, we talk about better outcomes in regard to patient care as far as people go, it's leading to the same type of thing, better outcomes as far as pet care goes. And so, yeah, diagnostics are a big deal because it helps see around some of those corners and prevent some problems.
And we saw another animal healthcare company, Zoetis, which is another favorite of mine. And honestly, it probably should be the Wild Card in this basket. Zoetis is focused more on the vaccines and whatnot, but they recently made an acquisition of Abaxis, which is in the diagnostics market as well. And I think that acquisition was meant to give Zoetis a little bit more competitive stance there against companies like Idexx. But clearly Idexx is continuing to lead the way.
And I think, for me, what I constantly keep an eye on with them is, just what they're spending on research and development. They have such a good business model that allows them to keep on spending on research and development. And if I ever saw that number start ticking down, that's when I would actually start worrying about this business, because there's not a whole heck of a lot out there I'm worried about with them. It just seems like veterinarians are OK with the pricing because the products and the equipment is just so good.
Feroldi: Yeah, and one thing that I personally like about Idexx, and any business that's involved with pet care, is its healthcare but there's zero insurance risk, right, you're not dealing with third-party providers, it is a cash pay business. And that is very, very attractive. So, there's much less reduced risk on anything changing in the industry; that's awesome.
Moser: Yeah, that's a really good point. I mean, we know there is pet insurance out there, but that's not really the majority of the market there. It is, for the most part, a cash business. And that's, yeah, another really attractive part of Idexx there, so.
Yeah, you know, that's a review of the Healthcare and Wealthcare basket. Again, it seems like the returns are really telling the gist of the story there. Clearly, I'm thrilled with its performance and as an owner of a number of those companies. In fact, I think UnitedHealth Group is the only one I don't own, Brian, and I think maybe this is going to be a good year to look for one of those dips and perhaps add some shares of that to my portfolio, just to have all my bases covered.
Feroldi: I would bet that you're going to get your chance this year, yes.
Moser: Alright, folks, well, that's going to do it for us this week. Remember, you can always reach out to us on Twitter @MFIndustryFocus or you can drop us an email at [email protected], let us know how you're doing. Let us know if you have any basket ideas or just tell us about the last stock that you bought.
Brian, man, listen, this was, I think, the first of hopefully many to come. Thanks so much for joining us this week.
Feroldi: Sounds good to me, Jason, you know I'm always available.
Moser: Alright, folks.
As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
Thanks to Austin Morgan for his work behind the glass this week. For Brian Feroldi, I'm Jason Moser, thanks for listening and we'll see you next week.
