The Companies Making Health Care Easier and Cheaper

Remember your 'No. 1 asset'... The companies making health care easier and cheaper... The biggest costs in the system... At-home care, artificial intelligence, and more... The drug that could change the weight-loss game...

Editor's note: Today we bring you a special guest essay from our Prosperity Investor team of Dr. David "Doc" Eifrig, Thomas Carroll, and John Engel. The trio launched a new advisory focused on the health care world last summer – for a variety of reasons.

For one thing, history shows that leading health care stocks have famously beaten inflation over the decades... What's more, the health care industry touches everyone's life in one way or another. This group is passionate about showing you how to navigate the system to take care of your health... and showing you ways to get more healthy, happy years out of your life.

As Tom likes to say, our health is our "No. 1 asset."

The health care system dictates a lot of the treatments we receive. So learning about it is critical to finding and affording the care you need... And the team's expert knowledge can give you a leg up on other investors who don't understand – or are afraid to touch – this "boring," complicated sector.

In this essay – adapted from the December 2022 issue of Prosperity Investor – Doc, Tom, and John share a look at some little-known companies in what they call the platinum age of health care.

These companies are on the cutting edge of breakthroughs in the industry. And the things they're doing could revolutionize treatments in the industry.

Then our team will show you what could be one of the biggest growth stories in health care – or in any sector – over the next decade.

The difference seems trivial until one shape means you die in six months...

Dr. David Nguyen spent his entire college career studying biology. A tumor biologist by training, his passion is using technology to better understand disease, how it develops, and what its structure looks like in a physical sense.

While in grad school, Nguyen suffered from depression that drove him to suicidal thoughts. And he wasn't alone... His roommate struggled with bipolar disorder – a mental illness characterized by periods of severe depression offset by episodes of elation.

While Nguyen was able to get help, his roommate eventually took his own life.

Nguyen was devastated. He committed himself to finding a better way of diagnosing and treating mental health problems. But he wasn't sure how he would be able to do that in a lab.

It was the starting point that led him to a breakthrough innovation that could revolutionize the way that professionals diagnose certain diseases... But it wasn't the last tragedy that led to his disruptive new technology...

A couple of years later, the high-school teacher who inspired Nguyen's career in science died of colon cancer. Consumed by the loss, Nguyen pivoted from his lab work on tumor biology to studying colon polyps... small growths along the colon lining that can become cancerous.

For days, he focused only on analyzing images and scans of polyps...

Existing analysis techniques looked only at the size and shape (volume and area) of polyps. But Nguyen wanted to be able to analyze complex shapes with an MRI. Looking at it this way would make a diagnosis less invasive. And it can reach a much larger population more easily at a substantially lower cost.

Nguyen used his training in tumor and computational biology to develop a novel way of looking at a tumor. He called it Linearized Compressed Polar Coordinates ("LCPC") Transform analysis. In layman's terms, he overlays vertical lines like you see on a map of a continent (hence the name polar).

Think of a globe of the Earth. Each pole – North and South – is connected by a series of lines covering the planet. This is what Nguyen overlays on a tumor.

Then, he takes measurements of the stuff inside the tumor along those lines. With the help of a powerful computer, Nguyen is able to create a new "picture" that analyzes complex shapes of the tumor outside of just area and volume. As he explains...

Think about two strands of cooked spaghetti on a dinner plate. You know they are both squiggly, but you can't quantify it. Measuring area and volume aren't going to help you. Their difference in squiggliness seems trivial until one shape means you're going to die in six months.

Those colon polyps proved to be a 'light bulb' moment for Nguyen...

He took what he learned and applied it to an organ that is much more difficult to invasively screen: the brain.

From his formal training to the loss of his roommate to mental illness and a beloved teacher to colon cancer, Nguyen founded BrainScanology.

This company has revolutionized how neurologists and mental health professionals diagnose brain disease. His technique looks at the complex shapes and patterns in an MRI of the brain and has successfully diagnosed ADHD and Alzheimer's disease.

It's a faster, more accurate way to diagnose mental health conditions. With its algorithm, BrainScanology can clarify diagnoses within 24 hours – rather than waiting months for meetings and assessments.

Imagine getting a new look at your brain each year...

... in a way that is totally different than what modern medicine uses today.

BrainScanology is seeking U.S. Food and Drug Administration ("FDA") approval for its revolutionary technique. When that happens, it would sell its easy-to-use platform to hospitals, health systems, managed care organizations, and potentially large employers.

This would improve the quality of life for patients... and could one day create immense wealth for investors.

BrainScanology's story is just one of the many we came across at the November 2022 HLTH conference in Las Vegas. HLTH (pronounced "health") is one of the largest, best-attended health care conferences. It brings the brightest minds and thousands of companies across the industry.

This time, 10,000 guests attended, with more than 100 formal presentations and panel discussions. And there were thousands of incredible new stories in health care like Dr. Nguyen's. We (the Prosperity Investor team) dispatched our senior analyst Thomas Carroll to see it in person and bring back the best stories and investment ideas.

Today, we're sharing this boots-on-the-ground coverage...

We'll show you some of the companies that we met at the conference that are transforming the industry. They offer new technologies that you could use to make your own health care experience better.

What's more, while these are still private, early startups, these are companies to keep an eye on for their investment potential in the future... and are already making a difference in health care today.

For example, anyone who has been in the hospital for an inpatient stay knows it's a miserable time. It's boring, it takes forever, and at the same time, you're dealing with health problems that can be scary and painful.

It's one of the worst experiences in life... and then you get charged for parking on the way out.

The average family of four spent more than $30,000 on health care in 2022, according to the Milliman Medical Index, which analyzes insurance claims to see how much money we can expect to spend on health care. This was the first time the measure exceeded $30,000. This is up 18% from 2020, just two years before. If we go back 10 years to 2012, average family spending is up 46%.

And the biggest piece of the health care pie is hospitals.

The chart below shows exactly where your "health care dollar" went in 2022...

Between inpatient and outpatient care, hospitals account for about half of total health care spending annually. They're the reason that costs rise so much each year.

Historically, it has been impossible to get this component of health care spending under control. One of the main reasons is that hospitals are typically the largest employer in their geographic area. They provide a lot of jobs. So any politician trying to lower hospital costs is going to get a lot of pushback.

The costs are eating the system up... At the HLTH conference, we talked with some companies that are taking on the huge task of disrupting hospital spending. We need a better system. And a company called Medically Home is working to provide just that...

Getting health care at home...

Medically Home runs "Hospital at Home" (HaH) services. The company has developed a model that essentially replicates all the care, monitoring, testing, and oversight a patient would receive in the hospital – but in the comfort of their own home. It's like traditional home health care, but on steroids.

Medically Home does this through a complex framework it has built. The company calls it the "chassis of care." This structure includes everything that a hospital would provide but without the cost, risk, and annoyance. As of December, it had cared for more than 14,000 HaH patients and 5,000-plus emergency-room patients who would have been admitted.

Studies have shown that this system works as well as, if not better than, a hospital stay.

Consider a study published in the American Journal of Managed Care. It looked at an HaH model for eligible patients and compared their experience with a very similar group treated inpatient.

These were not "healthy" admissions. They had illnesses ranging from chronic obstructive pulmonary disease, asthma, and pneumonia infections. They all would have had to stay inpatient if the HaH model wasn't available.

Results showed that using two-way televideo, virtual physician visits, and diagnostic testing, caring for patients over a 34-day episode is safe, feasible, and highly satisfactory for patients. Results also suggested being treated at home may be associated with substantial reductions in hospital readmissions.

This should be music to everyone's ears (except big, old, inefficient hospitals).

Here's the best part: This study was conducted in 2010 and 2011. Telemedicine technology is far better today... especially after the pandemic.

Medically Home operates in 18 states and we expect it to expand. The company's model is about 30% less costly than a traditional hospital stay. Applying this savings to our pie chart above, the hospital slice would fall to 40%. That doesn't sound like much... But this would equate to about $130 billion in less health care spending every year.

Fast-tracking critical screenings...

Remember making your last appointment with a dermatologist? Most likely you had to wait months before they could see you. And that's not helpful when you have a serious problem...

According to the American Academy of Dermatology, skin cancer is the most common type of cancer in the U.S. One in five people (or 20%) will develop skin cancer in their lifetime.

There are a number of kinds of skin cancer... but melanoma is by far the most serious. It results in the majority of deaths from skin cancer. In the past decade, the number of new invasive melanoma cases diagnosed annually increased by 31%.

As you can see, the risk of developing an invasive melanoma has increased substantially over the past 90 years...

With these numbers so high, it's imperative to be able to see a dermatologist quickly when something is off. Modern Ritual Health is helping connect dermatologists and patients quicker – and in a much more convenient way...

Simply speaking, the company pairs a smartphone-compatible dermoscope with telehealth viewing of the mole or spot in concern. Everything is linked to a dermatologist or physician assistant that is trained to review the results.

The images are 90% to 95% accurate when confirmed by a dermatologist. That compares with visual screening of unusual moles or spots at 60% to 65% accuracy.

That's because the images are polarized and can see deeper into tissue. This reveals more of the vascular structure underneath.

Modern Ritual sells its products to primary care doctors, pharmacists, and other clinicians... making routine screening easy and accessible. It's much better to monitor an unusual spot on a regular basis, rather than once a year.

A.I. meets health care...

A company called Soundable Health uses its technology to analyze sound to create audio biomarkers. These markers – essentially datapoints – power artificial-intelligence ("AI") algorithms that can detect illness or disease just by listening.

One of the most innovative products we came across at HLTH is a Soundable product called proudP.

The product pairs technology with established treatments for male urological screening. It puts it all on your smartphone.

What exactly is proudP? It is an FDA Class II uroflowmetry that you can use yourself. It listens to a man urinate (the "P" in proudP) and makes a preliminary assessment of the urinary system and symptoms. Specifically, it listens for how fast or slow the urine stream is, how long it takes to finish, the amount of urine, and the entire speed profile of the flow.

AI analyzes the sounds and provides clinically meaningful and actionable information about prostate and bladder health. The alternative is doing the same thing at the urologist's office... which we highly encourage for men as they age. However, this lets users keep track of their urological health as often as they wish.

This digital health company is a perfect example of what we've seen come out of the woodwork during the Digital Health Care Revolution. It's making treatments much more accessible, convenient, and less costly. And it's something we love to see here at Prosperity Investor. Doc Eifrig, especially, is a huge fan of measuring biometrics.

We launched Prosperity Investor because we've entered the platinum age of health care...

That means an explosion of new drugs, streamlining the system to make it easier, and overall better outcomes. And we want to help you navigate this confusing and – at times – overwhelming system.

That's why we focus on things like helping you live healthier for a longer time – increasing your "healthspan." And we also want to show you things that will make you a better health care consumer.

That means making your health care better, easier to use, and cheaper... and taking advantage of investment opportunities in the very companies that are making breakthroughs in the health care industry today.

To this point, we've just put together a brand-new, timely presentation...

It's about a company that has developed a weight-loss drug that could be one of the biggest health care breakthroughs of our time. The potential market for a drug like this cannot be overstated, given the obesity epidemic in this country and the world.

As we recently told Prosperity Investor subscribers and Stansberry Alliance members in a special report, the World Health Organization estimates that around two-thirds of adults in Europe are overweight or obese, or more than 200 million people. And U.S. Centers for Disease Control and Prevention numbers show around 100 million obese Americans.

And obesity is associated with all kinds of bad health consequences, like Type 2 diabetes and an increased risk of developing heart disease. More than 500 million people have diabetes around the world.

There is no simple limit to demand for obesity treatments...

In just a few weeks, an announcement about this new drug could move hundreds of billions of dollars in the market and enable one company to dominate this emerging health care market. Sales could go from zero to potentially tens of billions, with this company's stock exploding higher and higher along the way.

If you don't already subscribe to Prosperity Investor, be sure to check out our new presentation to hear more about this opportunity and how to get started. And existing subscribers and Stansberry Alliance members, be sure to get caught up on all the details and our actionable advice about this business right here.

New 52-week highs (as of 6/9/23): Apple (AAPL), ABB (ABBNY), Adobe (ADBE), Aehr Test Systems (AEHR), iShares MSCI Emerging Markets ex China Fund (EMXC), W.W. Grainger (GWW), inTEST (INTT), Eli Lilly (LLY), MSA Safety (MSA), and Pure Storage (PSTG).

In today's mailbag, feedback on a suggestion about taking control of your crypto holdings that we published last week... and thoughts about Dan Ferris' latest Friday essay about the "worst investors in history"... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Thanks so much for the timely advice to take custody of our crypto holdings instead of leaving them on the exchange. Your Wednesday headline 'How to Not Lose Your Crypto' definitely grabbed my attention.

"I spent an hour or so yesterday educating myself on how to set up an Exodus wallet and transfer my Bitcoin and the few other cryptocurrencies I own from Binance. About three hours after I got everything transferred to my new wallet, I got an email from Binance stating that due to the [U.S. Securities and Exchange Commission] lawsuits, they will suspend all deposits and withdrawals of fiat currency as of June 13th.

"Just as you warned us, dealing with the exchanges is about to get messy. I feel much better knowing that I have control of my crypto assets and can watch from the sidelines to see how the exchange's war with the SEC plays out. Thanks again for the heads up." – Paid-up subscriber L.B.

Corey McLaughlin comment: Thanks for the note, L.B., and I'm glad you were able to get your crypto holdings squared away on a self-custody wallet. What you referenced with Binance is exactly why I wanted to share the warning and suggestion about moving your crypto holdings off the exchanges... If it helped one person, I'm happy to hear it.

If you want some more detail, Crypto Capital editor Eric Wade and his team ran through much more detail on the topic of the SEC crackdown and protecting your crypto ownership in their weekly update on Friday for subscribers and Stansberry Alliance members. This included a few "offramps" folks could use as part of the advice to set up a self-custody wallet.

"Wow, Dan. You sounded like a tea kettle that finally got to full heat. Next week, tell us how you really feel about all of the connivers in the market." – Paid-up subscriber David T.

"The U.S. has a different definition of a bear market from the U.K., and it seems a different definition of a bull market.

"The problems that Dan describes don't happen with the British definitions, and it's great to debunk an idea via a real example, the American definition of a bear market is where prices drop 20% (or is it 25%?), and evidently, the American definition of a bull market is when prices rise 20%, (the article says rise 20% above the bear market lows).

"Now for the British definition: A bear market is where the local highs are descending, and a bull market is where the local lows are ascending. Basically, a bear market is where the best times are worsening. The best times are the local highs. If the best things are worsening, then it's all-round bad!

"And a bull market is where the worst times are improving, the worst times are the local lows. It's like as you move from the winter solstice to the summer solstice. The coldest days generally get warmer, and as you move from the summer solstice to the winter solstice, the hottest days generally get colder.

"These two definitions don't reference any percentage such as 20% or 25%, but the definitions are geometrical." – Anonymous paid-up subscriber

Here's to happy and healthy returns,

The Prosperity Investor Team
Dr. David Eifrig, Thomas Carroll, and John Engel
June 12, 2023