If you were lucky enough to own WebMD Health Corp. (NASDAQ:WBMD) before the end of last week, then congratulations - you're up 20% today. And if you didn't get into WBMD before the close of business on Friday, well, it may be too late to step into it now (unless you like buying overextended stocks), but if you believe in the ongoing convergence of healthcare and digital information though - which is what put WebMD on the map - then you may want to take a closer look at CollabRx Inc. (NASDAQ:CLRX).
Don't sweat it if you've never heard of it; most investors haven't. That's because it's a relatively new operation, only launching a revenue bearing product a couple of quarters ago. The interest has been solid so far, however, and there's a revenue projection that not only makes sense, but makes CollabRx a compelling investment opportunity.
But what is it exactly? Think of is as a WebMD Health specifically for doctors, and specifically not for the average consumer. It's a web portal, of sorts, that helps oncologists narrow down treatment options and alternatives with respect to relatively new genome testing of certain variants of certain cancers.
The amount of information that doctors can work through now that simply didn't exist before (as in less than ten years ago) is staggering, thanks to the advent of genomic testing. In fact, there's more data than even the most knowledgeable of doctors can keep tabs on anymore, and many of them need help interpreting it and then turning that data into a treatment regimen. That's what the CollabRx web-based tool does, including pointing out drug trials that a patient and doctor may want to consider if it doesn't appear the standard treatment approach is going to be effective in a particular case.
It wouldn't be fair to say there's nothing like it "out there", because there is. A company called Foundation Medicine Inc. (NASDAQ:FMI) has developed a similar/comparable app. The CLRX version of the solution appears superior in most ways, however, if for no other reason than because of the projected revenue growth the company is apt to see.
While there's apt to be something of a slow ramp-up period into high gear, once CollabRx gets there, it will be worth the wait. Research firm Taglich Brothers expects CLRX to ramp up revenue from $600,000 this year to $2.6 million in 2016 to $16.5 million by 2020.
That's big growth for a $6.2 million outfit, though not an unbelievable projection given the nature of the company's business model. Access to the portal is rented - on a monthly basis - which means revenue is recurring for as long as users remain on board. To grow the top line, CollabRx simply needs to add clients over time; it can do so at almost any pace, as operational costs are relatively flat now that the site is built and a means of populating it and updating it are in place.
And make no mistake - organizations are getting on board. Quest Diagnostics (NYSE:DGX) agreed to lease access to the tool back in November of last year for an undisclosed, but multi-year, term. CellNetix Pathology & Laboratories as well as Cynvenio Biosystems are also now renters of access to the specialized site.
The bottom line is, while WebMD Health is a big hit today based on the traction it's been getting with laypeople and typical patients, CLRX is equipped to produce similar success be melding a deluge of digital data with healthcare delivery services for the caregiver community. With no real direct competition on the horizon and a commanding lead any anybody who dares to enter the space now, CollabRx makes for an interesting opportunity that few others have uncovered yet.
For more on CollabRx, visit its corporate website here. Or, you can read the SCN research report here, or the SCN recommendation here.
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