Gene Munster: Apple’s healthcare opportunity is not currently priced into AAPL shares

“Tim Cook commented in a recent interview that their impact on health will be ‘Apple’s greatest contribution to mankind.’ While ‘greatest contribution’ doesn’t necessarily mean ‘biggest business,’ it may mean Apple would pursue a path toward improving primary healthcare by leveraging wearables, AI, and their user-centric software to connect consumers, providers, and payers,” Gene Munster writes for LoupVentures. “We believe the healthcare opportunity is not currently priced into shares of AAPL.”

“Apple’s approach to the Healthcare industry is largely unknown. What we do know is the Apple Watch and eventually AirPods create new ways for consumers to track and manage wellness, notably by tracking heart rate, activity, and heart health. In the future, we expect the company to add biomarkers like blood pressure and hydration,” Munster writes. “The wearables segment represents a measurable revenue opportunity given it’s small today and foundational to Apple’s healthcare master plan. Wearables (90% of which is Watch and AirPods, 10% Beats) account for 5% of sales today, and we expect that to grow to ~8% of sales in five years.”

“We believe Watch sales have reached 67m units since the product was released in mid-2015 and estimate 85% of those are still in use, resulting in an active installed base of 57m,” Munster writes. “We can build a case that the Watch business will eventually be 4x bigger than today, which would imply $35B in annual sales, compared to $8.8B in FY18. Factoring in an asp of $300 yields 115m annual units, up from about 23m at a $375 asp last year.”

“Apple’s healthcare services opportunity likely lies in harvesting the data from Watch and AirPods, then filtering, analyzing, and making it actionable. AI will be foundational to these services given the volume of data that needs to be processed,” Munster writes. “The offering would likely start with the consumer paying ~$300 for a Watch that captures heart rate, activity, sleep, temperature, blood pressure and makes the data actionable, then the physician would pay Apple a per month per user fee (~$10).”

Much more in the full article – recommendedhere.

MacDailyNews Take: Health and wellness is a yet another (massive) among many opportunities (present and future services and products) that’s not priced into AAPL shares.

SEE ALSO:
Apple CEO Cook on Health Records privacy: I want to ‘deeply trust’ the ‘people that have my health data’ – February 28, 2019
Apple is betting big on the $7 trillion healthcare space, with its own devices the key – February 21, 2019
Apple is so serious about health, Apple Stores have started hosting heart-health events – February 12, 2019
Apple’s health records work with the VA is a big deal, and not just for veterans – February 11, 2019
Apple announces Health Records feature coming to American veterans – February 11, 2019
Apple job openings for health-related positions up 400% since 2017 – January 17, 2019
Apple’s digital health plan puts the iPhone and Apple Watch at the heart of your wellbeing – January 16, 2019
Apple’s next really big thing: Health – January 9, 2019
Study shows active Apple Watch users gain extra years of life – November 28, 2018
Apple’s profound iPhone plans for healthcare – June 15, 2017
Apple acquires Gliimpse – August 22, 2016

8 Comments

  1. I think the analysts are thinking too small.

    If Apple is trusted by consumers and industry – they are – and have unlimited deep pockets – they do – there are all kinds of ways to build themselves into the industry.

    Apple will know more about your physical health than your doctor, and certainly more than your insurance company. What’s to stop Apple from offering consumers and doctors diagnostics platforms, and offering customers health insurance?

    This could be huge in the West where physical activity and nutrition (both things Apple can help track and influence behaviour) is the biggest factor in improving health and/or controlling the cost.

    This could be even bigger in the developing world where Apple could end up owning entire markets.

  2. “Apple could end up owning entire markets”

    We have federal laws called anti-trust statutes which attempt to regulate really bad ideas like the ones you posted.

    1. From which developing country are you posting?

      If your writing from within ‘merica you’ll be interested to learn that’s not how anti-trust laws work.

      1. No, TedC has it correct. The only problem is that you need an honest uncorrupted and competent executive in office in order to enforce antitrust legislation. Americans don’t have that executive. Some would say they haven’t had that caliber of president since Eisenhower.

        1. The anti-Trump gang can even find a way to blame him for not breaking up a company that currently has zero market share. FYI, there have only been two company’s EVER broken up by anti-trust (AT&T and USSteel) and neither happened under Eisenhower. By the way, your Anti-trust laws are actually 5 different laws covering Collusion, anti-competitive behavior, M&A and monopolys. You seem to believe that this would fall under monopoly’s. Stating that Apple could gain 90-100% of the US healthcare market, which is what it would take to force Govt. action, is stupid. They’d have to overtake CVS, Milliman, Microsoft, IBM, GNX, iCarbon, McKesson, Oracle, SAP, Allscripts, Cerner, Citius, Epic, Next Health. Also, this mysterious “patient data” currently holds over 30 separate subsets… from medicare, to scripts, to diagnostics, to intervention. Exactly which would Apple control? And if they controlled one, what about the other 29 areas? One Company controlling patient data worldwide vs the US is a pipedream that could only be facilitated by the master-manipulator and man-behind-all-evil Donald Trump. See it is all Donald Trumps fault…. anti-Trump idiot.

  3. Apple will never end up owning entire markets. Their products are too expensive for that to ever happen. Apple always seems quite happy with just a small slice of a market which is usually the most profitable slice.

    It’s unlikely health-care products will pump up Apple’s share price significantly. I’m sure there will be plenty of low-cost competition to eat into whatever revenue Apple can grab. Apple might have deep pockets but is always using its cash very sparingly, allowing companies will less money to beat them. Apple might be greedy but it’s not an aggressive company when it comes to taking market share.

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