My new Rule Breaker - Medco Health (MHS)
This isn't an actual Rule Breaker recommendation (I don't think so anyway -- quick check -- nope), but I am thinking about them that way and it is why I just opened a position (100 sh MHS for 5,358.82 @~ 10% of Helical port).
Sure, there is the core business of pharmacy benefit management and meds by mail. Those are nice, growing, and have their own catalysts such as the continuing wave of new generics (Lipitor). But I see the company as a bit more.
There is the mandated push right now for electronic medical / health records to become the norm over the coming years (with the stages of 'meaningful use' criteria still being defined). To companies like Medco, electronic records are nothing new, and pharmacy will be a piece of individual records meaning a contribution of companies like Medco.
There is also personalized medicine and companion diagnostics gaining increasing traction in both use and therapeutic development. Here too Medco has a role. A recent round table discussion at Bio Europe discussed companion diagnostics. This forum was a bit different due to the presence of Medco, which talked on the role their company is taking to drive adoption of diagnostic technologies. Here is some commentary on the discussion from the blog of the first presenter, Harry Glorikian of Scientia Advisors (a friend and former collegue who gets a well deserved shout out as one of the most forward looking people I know). I'd encourage watching the hour long video of the discussion session (scroll to bottom). It was a surprise to me to hear from Medco how infrequently diagnostics, even those that are clear directors of prescriptions, were employed by prescribing physicians.
Lastly there is the informational sweet spot on which pharmacy benefit managers sit regarding comparative effectiveness data. I noted over a year ago the 'surprising at the time' role Medco played in the evaluation of Effient vs. Plavix, a comparison that directs prescription (and reimbursement) decision. As health records move more and more to electronic platforms, data mining (and then confirming) effectiveness data could become a norm, and one that moves control of such information away from the pharma firms.
A good investment based on its current business model and with the potential of being much more involved with the future healthcare model than it is now is just what I'm looking for here. I believe that resides in Medco, and perhaps in a more focused form than with CVS-caremark. That the company provided an opportunistic drop in share price due to questions of impropriaty and the loss of the CalPERS contract bears watching, but I beleive is worth the risk at this time (at least to me).
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