Typically, hospital beds are a low-tech part of the hospital environment. But now, a large manufacturer of these beds is determined to transform them into medical devices that can provide crucial data on the person lying in them.
Built-in sensors will monitor the patient’s vital signs (that means heart and respiratory rates) 100 times per minute and sound an alarm to the nurse’s station if the patient’s condition becomes critical.
So far, Hill-Rom Holdings (HRC) is the only hospital bed maker that manufactures beds like these. The idea, according to Hill-Rom CEO John Groetelaars, is that the bed will become a platform for monitoring patients since that’s where they spend the most time while in the hospital.
I’ve been watching this mega-trend toward more and more high-tech applications in the medical field for a while now, but it appears to be accelerating.
Healthcare and tech are becoming intimately connected. Proof of that is the huge interest tech giants like Google, Apple, and Amazon show in the field. Hospital beds that do more than just raise or lower the patient’s head seem like a natural extension of the way things are going.
The manufacturer, Hill-Rom Holdings (HRC), is—somewhat ironically—a former subsidiary of Hillenbrand Industries (HB), the leading manufacturer of caskets.
Hill-Rom was founded in 1929 by William Hillenbrand himself. It’s an established company that has weathered many adverse economic and stock market events. In 2004, Hill-Rom made up 65% of Hillenbrand’s revenue.
Hill-Rom has about 10,000 employees worldwide. In the last decade, the company has made great strides toward becoming a worldwide market leader. Between 2011 and 2017, Hill-Rom acquired five companies, including Aspen Surgical Products and Liko France and Switzerland, a provider of patient lift systems.
I didn’t have time to do the full due diligence on the company, but despite some ups and downs in its stock price, it’s showing overall gains of 20% since mid-March of 2018. Definitely nothing to scoff at.
What’s also notable is that in early March, Hill-Rom raised its quarterly dividend by 5%, to $0.21 per share. CEO Groetelaars called the raise “a demonstration of our strong financial position and free cash flow.”
And just last week, the company announced that it has acquired another gem for its collection: Florida-based Voalte, “a pioneer and leader in real-time, mobile healthcare communications.”
That all sounds great.
But going back to the furniture-turned-medical-device hospital beds, one question remains: How many already cash-strapped hospitals will want to pay for such extravagant—and expensive—technology when less costly external monitors can do the same job?
List prices for hospital beds can range from $8,000 to $20,000... with Hill-Rom digital beds on the high end.
So I guess we’ll see how well that big bet works out for Hill-Rom. In any case, I suggest putting the company on your watch list.
If you are looking for a large, stable medical device company with excellent profit potential that you can invest in right now, look no further than my recommendation in the current Healthy Returns issue.
With a market cap of $124 billion and trailing 12-month revenue of $30.4 billion, it is one of the biggest players in its segment... and it has a large, diversified portfolio of devices that diagnose and treat a wide range of chronic diseases.
Just recently, in December 2018, our Healthy Returns pick acquired a company that manufactures surgical robots and is now getting ready to give the leader in this field a run for its money.
- Just to give you an idea how big this could get: The robots of the market leader assisted in 1 million surgeries last year. Those 1 million surgeries are less than 7% of the global market.
Needless to say, there’s a lot of room for growth in this segment. And don’t forget, our portfolio company is already number one in other medical-device segments, like diabetes and heart devices.
- It’s also one of the 57 global “Dividend Aristocrats,” S&P companies that have raised their dividends for at least 25 years in a row. Our pick has managed to raise its dividends for 41 straight years.
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Editor, A Rich Life
Please note that the companies Chris mentions in A Rich Life are just meant to give you some ideas for your own research... not official investment recommendations. There’s no A Rich Life portfolio, and Chris doesn’t keep track of these companies.Chris does provide actual stock picks—thoroughly researched and vetted, with entry and target prices, full company analysis, the whole nine yards—in his investment newsletter, Healthy Returns. Click here to subscribe to Healthy Returns at a low monthly rate.