GOeVisit – Premier Diversified Holdings Invests In Telemedicine

Premier Diversified Holdings Invests in Telemedicine

In this post I talk about telemedicine and an investment Premier Diversified Holdings has made in MyCare Medtech/GOeVisit. A company and product in the telemedicine space.  In this post I will cover:

  • The structure of Premier’s investment.
  • What is telemedicine?
  • The potential size of the telemedicine market?
  • GOeVisit and how is it different than traditional telemedicine?
  • GOeVisit’s execution.
  • Outstanding questions and concerns I have.

The Structure of Premier’s Investment

Premier Diversified Holdings owns 33.05% of MyCare Medtech Inc per the MD&A published 8/29/2018 (available on CEDAR). Premier has made two investments in MyCare to date. The first was 200,000 units at $70K CAD and the second was 371,428 units for $130K CAD. That gives us a per unit cost basis $0.35 CAD. Each unit is comprised of a common stock share and 0.5 purchase warrant per common share. A whole warrant allows them to purchase shares at $0.50 CAD per share before December 31st 2018. As a result Premier has until the end of this year to decide if they will purchase an additional 285,714 shares of common stock at $0.50 CAD for a total cost basis of 142,857. If Premier decided to exercise the warrants they would be paying 70% premium to the price of their original investments.  

Since Premier’s investment MyCare reached a funding agreement with an unknown entity for up to $3,000,000 of which $800,000 has been funded per the latest MD&A. MyCare did not sell common stock in this case. Instead they issued units consisting of senior unsecured convertible debentures and warrants. Unfortunately we do not have detailed information about the securities. So I can’t comment on the conversion feature of the debentures.  

What is Telemedicine?

In a nutshell Telemedicine enables virtual visits with medical professionals. How many times have you slogged through traffic, sat in a waiting room just to spend 5 minutes talking to your Doctor? Imagine being able to do that virtually via an smart phone app or video conference. 

Here are a few of the benefits telemedicine provides:

  • Access to care for patients in remote locations or patients with mobility issues.
  • 24 hour access to care.
  • Saving patient’s time by reducing the travel and waiting overhead associated with visits.
  • Leveraging artificial intelligence to increase care efficiency.
  • Reduced care delivery costs.

How Big Is The Telemedicine Market?

It should be no surprise that telemedicine is growing fast. One report I came across estimates the market is almost $30 Billion. Further it estimates a CAGR (compounded annual growth rate) of 19% from 2017-2022.

GOeVisit Smart Exam

GOeVisit Smart Exam is a telemedicine product from MyCare Medtech. According to their Frequently Asked Questions, the Smart Exam platform can be used for diagnosis, treatment and prescriptions:

GOeVisit SmartExam can diagnose, treat and prescribe for more than 300 minor illnesses ranging from coughs, colds and flu, to general medical concerns, minor injuries and pediatric care, all through a mobile app

https://goevisit.com/about/faq/

Further they explain that they use artificial intelligence to as part of the patient interview process to get more thorough information than traditional physical visits or video based telemedicine visits due to the adaptive nature of the platform:

The intelligent software dynamically interviews patients, using the patient’s answers to gather more, relevant information and support providers in the care delivery process. SmartExam’s artificial intelligence capabilities result in more thorough patient interviews than in-person, or video-based remote care solutions.

https://goevisit.com/about/faq/

From what I remember this is a shift from GOevisit’s original strategy. I first looked at their website after reading about Premier’s investment. If my memory serves correctly there was mention of video based telemedicine. I found an old copy of the company’s website on the wayback machine. But unfortunately they only have the front page. I was unable to find an archive of the page that describes the process for a virtual visit. Clearly though they have pictures of video sessions all over the place.

A shift in strategy in of itself is not a red flag for a startup. In my experience it is pretty common. After executing on the idea you get more information which can influence strategy. A few benefits to this new strategy are:

  • Forcing patients to go through the adaptive interview app will likely result in more consistent data that can used to drive the back end AI.
  • Easier to scale the number of patients you can support when you don’t need a human directly interacting with every patient in real time.
  • Overall you will be able to quantify the patient experience better. Doing that type of analytics on a video stream is a hard problem on many fronts. By simplifying it to interview questions and data entry you can get meaningful info out of the data such as the responses and response times. 
  • Video conferencing can be intimidating. I have noticed that some people are reluctant to use video conferencing apps such as Apple’s Face Time. On the flip side video for some can feel like a more personal experience and similar to an old school visit.

To drive this strategy shift GoEvisit is leveraging a platform built by Bright.md. Smart Exam is Bright.md’s AI backend. If you have first hand experience with Smart Exam please contact me with details of the experience. I imagine that a typical experience looks likes this:

  • Patient answer questions in Smart Exam about symptoms or issues.
  • Smart Exam adapts questions based on patient response to zone in on a diagnosis.
  • Smart Exam sends data along with diagnosis to medical professional.
  • Medical professional reviews data and diagnosis to confirm.
  • Once medical professional approves the results are sent to the patient.

Bright.md’s website says that the platform can diagnose 400 different ailments and it can rolled out in 10 weeks. Other health care networks are rolling it out per Bright.md’s press releases.

GOeVisit Execution

Looking at the Apple App Store and Google Play Store reviews the results are not encouraging.

GOeVisit Apple Store ratings. Average 3.5, 13 ratings total.
Negative reviews on the Apple App Store.

The ratings look ok at 3.5 stars.  However as of this writing all the comments on the Apple App Store are negative. The negative comments could be planted by competitors or someone who has a bone pick to with the company. But the truth is only 13 people have rated it and there is not one positive comment. Although it must have mostly positive ratings to get a 3.5 stars rating. Needless to say with only 13 ratings it does not appear to have gotten many downloads.

Google Play Store GOeVisit ratings. 3.5 stars. 14 ratings total.

At first glance the Google Play store looks a little bit better. Again 3.5 star rating. Only 14 reviews. But there is a mix of negative and positive comments! Unfortunately at least one of those positive comments is from Clay Swerdelian who was VP of Corporate Development for GOeVisit at the time he wrote the comment.   

Google Play Store has a few positives comments but at least one is from someone affiliated with the company.

If we look at a GOeVisit competitor Akira it seems they are doing much better. 4.8 average rating on the Apple App Store and over 394 ratings. A big difference. 

Aikra Right Health App Store ratings average 4.8 stars and 394 ratings.

GOeVisit’s shift to leveraging Bright.md’s platform sounds encouraging. However if the app ratings or lack there of are any indication it looks like execution is lacking.  

Questions

  • Will Premier exercise their warrants at the end of this year? Sanjeev has indicated on the Corner of Berkshire and Fairfax message board that Premier has working capital and no funding commitments to existing investments. Does that mean he plans to let the warrants expire?
  • Does GOevisit have the right team to execute? On LinkedIn I can’t find any employees with significant tech experience. It is a red flag to me that I can find any full time tech people on LinkedIn. The platform and app need to work well and provide a great user experience. That can be very hard to achieve when outsourcing everything. 
  • I don’t know much about health care in Canada. As a result I have some questions about the GOeVisit model which I can probably answer after some research. For example in the US it seems that care providers are building their own experience with Bright.MD. However in the Canadian market there seems to be stand alone entities. Almost like virtual versions of the emergent care clinics you see in the us. Why is that the case? I need to do some more digging to find out.

Links

Index Fund Fees: Avoid Rydex S&P 500 And It’s High Fees

Low Index Fund Fees, An Investors Friend

Are index fund fees taking money out of your pocket?
Are index fund fees taking money out of your wallet? (Photo by rawpixel on Unsplash )

Low cost passive index funds allow investors to get exposure to a diversified basket of assets at a very low cost. Typically the funds track stock or bond indexes such as the S&P 500 Index or the Barclays US Aggregate Bond Index. Two well known funds are the Vanguard Total Stock Market Index and the Vanguard Total Bond Market Index. These Vanguard funds are the cornerstones of many “lazy” low cost portfolios.  Money saved in fees means more money to reinvest and hence increase compounding of returns. Low index fund fees are a friend to passive investors and competition between fund management companies is driving fees even lower.  

The table below shows an example of some low cost index fund ETFs along with their expense ratio and tracking index:

IssuerTickerTypeIndexExpense RatioFact Sheet/Website
Charles SchwabSCHBETFDow Jones US Broad Market Index0.03%SCHB Fact Sheet
VanguardVTIETFCRSP US Market Index0.04%VTI Fact Sheet
Focus SharesFMUETFMorning Star US Market Index0.05%Focus Shares Website

As you can see the fund’s expense ratios are between 3-5 basis points. For an investment of $10,000 a basis point represents a fee of $1 per year. Or $3-$5 per year total for these funds. That is cheap. 

Are All Index Funds Cheap?

Are all index funds cheap? The answer is no. There is at least one we have come across that is outrageously expensive. The product has plenty of cheap competitors and offers no differentiation yet it still carries high fees. That fund is the Rydex S&P 500 index fund from Guggenheim Investments. The fund comes in three share classes of mutual funds:

Mutual Fund Ticker SymbolShare ClassCUSIPExpense Ratio
RSOXClass A78356A6571.58%
RSYXClass C78356A6401.58%
RYSPXClass H78356A6321.58%

In this case the expense ratios are over 1.5% or 150 basis points. To compare apples to apples lets look at some equivalent S&P 500 index funds from competitors.

Mutual Fund Ticker SymbolFund ManagerCUSIPExpense Ratio
VFINXVanguard9229081080.14%
SWPPXCharles Schwab8085098550.03%

The Rydex fund’s expense ratio is 12x higher vs the Vanguard equivalent product and 50x high vs the Charles Schwab equivalent. In fact the Rydex S&P 500 index fund expense ratio is comparable to some actively managed mutual funds. In addition you may be subject to additional fees called “loads” which can be taken at time of purchase or time of sale.

The True Cost of High Fees

1.58% may not seem like a big deal in the grand scheme of things. But the true cost comes over a long time horizon. Assume you invested $100,000 over 20 years and earned 7% per year over that time period. The chart below illustrates in that situation what your investment would be worth and how much you will have paid in fees. The results are staggering!

Investing in the lower cost funds makes you roughly $100,000 richer. You save roughly $50,000 in fees. In addition the money you saved stays invested into the fund. The power of the extra money compounding over the life of the investment is powerful.

Conclusion

Despite how similar the products may appear on the surface not all index funds are created equal. Even if they track the same index. It is critical as an investor that you perform due diligence and know what you are buying.

Berkshire Hathaway’s Equity Portfolio as of 11-14-2018

Berkshire Hathaway filed it’s 13-F a little while ago. When Todd Combs and Ted Weschler joined Berkshire I was excited if for no othe reason than the 13-Fs would get more interesting. But I think it is fair to say that Warren has been the big surprise in recent history with his Apple spending spree. The ballpark value of Berkshire’s APPL position is 10% of its market cap. Below is pie chart of BRK’s public equity positions with a value of 1 billion or greater.

CSV  

Premier Diversified Holdings Investment in Zed Therapeutics – Is PDH in the Marijuana Biz Now?

What is going on with Premier Diversified and Zed Therapeutics?

Back in September it was announced that PDH ( Premier Diversified Holdings ) picked up some shares in Zed Therapeutics. Specifically 5,144,000 shares for a consideration of $25,720.00. This values the shares around $0.005 CAD. The stake is almost 37% of Zed’s common stock. As a result we get a back of the envelope estimate of $70K total marketcap for Zed Therapeutics. Zed Therapeutics also added Premier’s CEO Sanjeev Parsad to the board of directors.

What is Zed Therapeutics?

At the time of this writing the Zed Therapeutics website appears to be down. A cached google result shows an under construction site:

Zed Therapeutics Home Page
The Zed Therapeutics website appears to be down but a cached version showed an under maintenance site.

Zed is based in Alberta, Canada. The companies self reported focus is “Medicinal Hemp” (vs “Medicinal Marijuana”). This appears to mean that their products will be focused on CBD with low or almost no THC. CBD aka Cannabidiol is found in marijuana and often associated with its healing and pain relieving characteristics. CBD reportedly does not cause a high. The high normally comes from the THC in Marijuana. Hence if you produce a product with CBD but no or little THC then you have something of interest to people who want the relief benefits of Marijuana but don’t want to get “stoned”. According to the press release Medicinal Hemp products have around 0.3% THC or less.

There is not a lot of information about Zed Therapeutics online.

Did Premier Buy the Shares?

Sanjeev provided a little more detail via a discussion on the Corner of Berkshire & Fairfax message board.

The shares were issued to us and 3 other insiders of MyCare who supported the company in the early days.  We (PDH) personally are not going into the medicinal hemp business…MyCare is.  The $0.005 per share is the minimum that has to be charged for the issued shares.  That is not the price of what any other shares will be issued at for ZED Therapeutics.  Cheers!
MyCare (aka GoEvisit ) is a PDH investment. It sounds like MyCare and it’s investors helped Zed earlier and this is equity in exchange for that help. What is not clear what kind of help they provided. Given the stake is close to 37% of the company I would assume the help was via cash. I also expect that this position will probably see pretty heavy dilution in the not so distant future. Parsad alluded to more stock being sold in his message board post albeit at higher prices. Higher prices would obviously increase the mark to market value of PDH’s position but also dilute at the same time.

What does this mean for Premier?

It is hard to say what to make of this investment. Without knowing any deeper details the Zed Therapeutics investment seems to be a speculative position that company acquired in exchange for helping out a startup. This is a very hot space for speculators and traders but it is not clear that anyone in the business has any durable long term competitive advantages.