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Healthcare Will Catalyze Apple's Growth

Mar. 11, 2018 9:51 AM ETApple Inc. (AAPL)97 Comments
Roman Luzgin profile picture
Roman Luzgin


  • Apple is launching its own clinics with technology-enabled healthcare for employees.
  • The move is Apple's answer to the team of Amazon, Berkshire Hathaway, and JPMorgan.
  • It is likely the clinics will be used to test Apple's own healthcare-related technologies.
  • The venture is one of the points why Apple's future remains to be bright, despite slowing growth in smartphones.

Apple pushes into the healthcare industry with a network of clinics for its employees

Apple (NASDAQ:AAPL) has been somehow associated with the health products since the launch of its HealthKit on WWDC 2014, and at that time, the scope of the corporation's efforts in the filed was limited to having an API for health-related software developers. Since then, the iPhone maker has created and used several data platforms to "connect its users’ health information across third-party apps and into clinical research projects." In other words, Apple has been researching different ways to use data and technology for better health treatment.

Recently, the corporation has made another significant step in the direction of the medical industry. At the end of February, it was reported Apple is creating its own healthcare service, so-called "wellness" program, for the employees. This is believed to be a network of in-house medical clinics for "compassionate, effective healthcare to the Apple employee population." It is revealed by The Guardian the first two clinics will be opened in the spring near Apple Park and Infinite Loop headquarters.

The website for AC Wellness, which is likely to be the name of the initiative, was also published by the company. It is revealed by Financial Times:

According to records from the Internet Archive, the domain name acwellness.com was bought, presumably by Apple, sometime in the second half of last year.

(Source: AC Wellness website)

The page also provides some more details about the clinics and includes a career page, listing such jobs as primary care physician, exercise coach, health partner, nurse coordinator and other. The major emphasis is made on such points as "unique concierge-like healthcare experience," continuous learning, and accessible relationships with patients, enabled by technology. In other words, this means a smartphone or tablet will serve as the primary communication channel between doctors and patients. I also find it clear

This article was written by

Roman Luzgin profile picture
I write about growth opportunities in different sectors related to technology, providing analyses of fundamentals that are driven by current and future trends. Senior Data Analyst by day, I am building and managing my own portfolio of tech-related securities, which to date has consistently beaten the market.

Analyst’s Disclosure: I am/we are long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (97)

BobInAustin profile picture
sorry about the bad editing job on my comment.

Apple long.
BobInAustin profile picture

American Association for advancement of Science reports, "FY 2018 request would allocate only $26.9 billion for the agency, representing a 21.5 percent reduction below omnibus levels. [The bulk of "omnibus funding" targets Alzheimer]

Most individual institutes would receive reductions on the order of 22-23 percent. NIH is made up of 27 Institutes and Centers, each with a specific research agenda, often focusing on particular diseases or body systems.

The National Institute on Aging would receive a 36.4 percent reduction below 2017 levels".

Given theduced spending on Healthcare at the national level and this is creating a "research vacuum." The Apple R & D budget of $10 billion or so, and growing free cash flow of about $50 billion per year, this is a timely move by Apple. Beats buying Netflix. We would all be better off if big Pharma would also respond with an increase in R&D spending as they are overly dependent on NIH research funding.

At the very least, Apple can introduce "error trapping" to medical software on the data capture end, and gain new insights by analyzing (over) prescription data.
Stevlg profile picture
Good ideas and thanks.
Now following with good reason-
Forward thinking both by you
and APPL.
Roman Luzgin profile picture
Thank you for taking time to read and for following me!
FredHSTein profile picture
Great article, Thanks Roman, Adding:
Kaiser started out as healthcare for it's employees. Nice precedent.
Apple has the long view. I hope they will be disruptive.
1) Apple is are about healthcare vs. the medical industry which is about sick care.
2) The incumbent healthcare system is still back in the mainframe era in terms of workflow, stovepiped systems, bottlenecks, and countless inefficiencies.
3) While we need strict regulation, and I support it, regulation slows innovation and has reduced venture investing.
4) Apple's security and privacy approaches are perfect for healthcare. No other vendor can match this.
5) Apple will not displace or replace. They will cherry pick areas that they can improve. For example, excellent hearing aids cost thousands. Surely Apple could build comparable devices that sell for far less.
6) Globally this is a $16 USD business.
7) For perspective, smartphones bring banking to those who had no access to banking before the smartphone. The same will happen in healthcare, in some fashion.
Roman Luzgin profile picture
Thank you, @FredHSTein. The point number seven is especially true and relevant, from my point of view (working in a fintech).
ErikWilson profile picture
As you point out, Apple will not keep the doctor away. Just the opposite. They will get their good share of the pie, even adding to it.
Damn good comment, especially #1,3,4,5.

I enjoy your commentary on PED's site as well.

Best of luck.
Apple health clinics are no revenue churners. They are simply point of work convenient primary care facilities. Most Apple employees I know dismiss its impact as zero.
@knarayana - They are not intended to be revenue producers. Their primary objective is to improve the wellness of Apple employees, with the potential added benefit of reducing Apple's health insurance costs.

That said, these clinics will also serve as "labs" for identifying new wellness and healthcare applications that could be deployed by other companies and/or insurers. In that regard, they would support sales of Apple products.
Roman Luzgin profile picture
I agree with @Ernie here. Generating revenue through providing care to the employees is absolutely not the intention of Apple. However, if they gain enough data/experience/and technology, they can try to expand the tech-enabled services to the public, thus opening for AAPL a huge source of revenue.
Exactly. I guess people have to look 3 steps ahead. This approach fits perfectly into the Apple eco system because they have to capabilities to make this happen. Will they upend the out of control health care market? I have no idea. I do know that monitoring alone will be a big business. We will see how things go from there. I would much rather have them spend time on this than on Apple studios.
neals58 profile picture
IPhone is and will be more of an indispensable device along with the watch where going forward people may buy the same number of watches as they buy phones. THAT is where Apple is going with this tech. Healthcare is such a natural area for APPLE to get into and make themselves a bigger part of our lives at the same time perhaps LOWERING Healthcare costs in the bargain.
Good News. With extra money in hand, you can get many advises. Long AAPL.
All these companies are bragging about their new ventures when the overwhelming cost will drag their earnings in the mud. Others will capitalize in their longing to make headlines. Why don’t they also try to make a car that flies.
Ocean Energy Engineer profile picture
I am a long time (since 1981) Apple user, sometime (and current) Apple investor. I tend to be an early adopter in computer (first Mac bought in Q1 1984), but bide my time, elsewhere. My first iPhone was a 5, just upgraded to an X in December; first Apple Watch is a Series 3. I get the devices for my wife, too, so she had first iPhone 4S (didn't want to wait for 5, we got at same time), second iPhone 7+ (product RED, wish Apple would do more product RED devices).

I plan on upgrading my iPad (4th gen) soon, to the larger iPad Pro, after a few good years of use. (I bought it refurbished, which is how I've also been buying my Macs for the past few years...always from the Apple Store online).

I never bought an iPod, I thought a phone would be forthcoming...and it was and I am pleased with my purchases, on my schedule. I waited on the Apple Watch for several things: the heart rate monitoring, waterproofing, cellular capability, fitness monitoring. I am happy with the watch, and happy I waited. The only wait I was unhappy with was, when I wanted to get my wife the Apple Watch 3, she balked. It took a month of her balking before I decided to get her watch...for me. She had knee replacement surgery in January, and is just now starting to get around reasonably well. I go back to work in two weeks, after being on vacation since the end of November (that's how my job is: 4 months work followed by 4 months vacation is fairly typical). With the Apple Watch, she has immediate access to 911, easy access to her phone (she doesn't have to get up to answer it if it is not within reach), monitoring and notification if her heart rate jumps inexplicably, activity monitoring which gently nags her to keep active and do some deep breathing.

We are in our 60s, she's disabled, with this knee issue, and unlikely to go back to work, and I am still working for at least a couple more years. I'm looking forward to Apple's involvement in the HomeTech and HealthTech areas developing over the next few years...
Budavar profile picture
Another sad blog completely ignoring AAPL's exploding Other Business, including Retail. ApplePay. As I predicted some 2 years ago, that segment will become AAPL's #1 cash-cow by 2022, if not sooner.
Actionable Conclusion profile picture
Apple has so many cash cows... it's hard to place a bet on the futures #1.
Shocker34 - I concur. It is hard to change an industry so well-stocked with lobbyists urging the status quo.
Actionable Conclusion profile picture
The day the last health insurance Co finally tumbles... that is the day that the US enters a new consumer friendly chapter in healthcare.
It may be the day that socialized medicine has been legislated. I wouldn't hold my breathe for that though--the health insurance industry owns too many politicians.
Güner Soysal profile picture
ACWellness = Apple Care Welness (Division)?

Maybe Apple will have more subsidies/divisions regarding Health.
Roman Luzgin profile picture
It is possible, so we'll see!
I liked it better when Apple's solution for slowing handset sales was to get into electric cars.

Next thing you know their new growth market will be personal companion robots. You know, capable of simulating emotion and relating to their owners in way that no other machine could.. This would be fantastic for APPL's stock price because the companion robots could be delivered with a built-in bias in favor of Apple which could be harnessed to stimulate sales of APPL shares (and more handsets). They could even subtly convince their owners to NEVER sell AAPL shares. The possibilities are literally endless!
Actionable Conclusion profile picture
Bartender, I'll have what user is drinking.

The maniacal musings of a short?
@Roman Luzgin - Thanks for the informative article on an area that, I believe, holds great promise for Apple and society in general. The pursuit of improved wellness and healthcare is also consistent with the message Tim Cook gives to potential employees:

"Apple has always been different. A different kind of company with a different view of the world. It's a special place where we have the opportunity to create the best products on earth - products that change lives and help shape the future. It's a privilege we hold dear."

AC Wellness is a natural extension of Apple's interest and engagement in the healthcare space. Several years ago, it established partnerships with the Mayo Clinic, Cleveland Clinic, Duke Medical Center and other top medical research institutions to research, identify and develop high value-added applications in the healthcare field. Its recent partnership with Stanford Medicine to study and gather irregular heart rhythm data is the most recent example of Apple's commitment to this area.
Dilo investor profile picture
Thanks Roman. Apple will disrupt the cottage, multi-trillion medical industry just as Amazon is doing to several other industries. Rewriting rules and new thinking are what is needed. Long on Apple, and Amazon.
Good job, Roman. This area offers great prospects.
Roman Luzgin profile picture
Thank you, exactly right. The size of the market is huge while the competition is low. Looks promising now.
rgulson profile picture
Consider this: most ALS (advanced life support) response units in my county, paramedic ambulances and paramedic staffed fire engines, have mobile data devices, in most cases Apple iPads. This enables GPS tracking of the exact location and disposition by the centralized control. In a perfectly integrated ecosystem a medical condition (heart attack for instance) detected by a wearable device could dispatch the nearest available ALS unit without human intervention. This would emulate IBM’s computer hardware maintenance protocol that dispatches computer repair technicians (with the required part) without customer request. We are very close to this as a practical possibility. Most of the hardware and software is already deployed, we just need more capable wearables. And as to the market size? The biggest growing segment of our county demographic is affluent, retired seniors who already are married to their iPhones.
Schöwel Tölz profile picture
Great article. But please don't forget the ramnifications the FDA will bring into the game as soon as some serious health claims are being formulated.
Hudson Investments profile picture
This will bring Apple deices into every day mainstream usage.
lky profile picture
Long time Apple user here (30+years). Apple use to be innovator or 1st to integrate technology into new form, fit and function. These days Apple just copies. iPhone X is a copy of Samsung. Wearable/Smart is FitBit. Digital Health is another copy of FitBit. Apple is confused. They should focus on their core while they still have one. Branding power can wane quickly if not taken care of. Sony is a classic example of sheer dominance and now not so much. Coco-cola is still relevant. Nike is losing to Addidas. Apple to who?
Meanwhile all the new android devices are copying iPhone X shamelessly. Apple can’t bring brand new tech to market first because they have to consider the logistics of rolling out tech to tens of millions, or hundreds of millions of devices at a time. Small android brands meanwhile ship maybe hundreds of thousands or a couple of million, making it much easier to be first to market on lots of new tech.

OLED is a great example, Samsung had this for years, but if Apple put this on the iPhone a couple of years ago, it would have severely restricted their unit shipments for any OLED devices developed. It would have been viewed as a disaster by investors if they were only able to meet have the demand due to supply constraints for an extended period of time.
Apple to who? To nobody. Google does not want to compete. Vendors sabotage Project Treble - Google not only does not enforce it but removes direct updates from Android One. Microsoft gets small but fanatic following and ditches not only mobile but also kills Windows S. This makes the U-turn necessary to keep Windows relevant virtually impossible.
Dingwell88 profile picture
Apple is almost never first. Which product were they the first with? They just do it better.
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