Review & Outlook

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Will Apple’s Next Big Move Be in Healthcare?

What will Apple do next? This is the big question. The company has had a long string of successes, but if it hopes to continue its impressive growth it will need to come up with something new beyond just updating its existing devices. For the last year or so a lot of speculation has fixated on a smartwatch or some new kind of TV. While both of those are still possible, another big move has that has emerged is Apple’s healthcare initiative, which is known as HealthKit.

(Source: Apple.com)

Though the details are still somewhat sketchy, Reuters has reported that Apple is working together with a number of leading healthcare providers and medical software companies to create an app, HealthKit, that will collect and consolidate health data. Currently there are hundreds of health and fitness apps and numerous electronic medical record systems. Apple will collect all of this data in one easy-to-use app. The app will also provide a platform for developers to add their own additional developments and accessories. The HealthKit app will likely be a feature of the new iPhone 6 that Apple is expected to unveil sometime in September.

Healthcare technology is a hot area of the market. Small cap could-based medical software company Medidata Solutions (MDSO), for example, currently trades at 265 times earnings, and medical records giant Cerner (CERN) trades at a more modest but still lofty P/E of 48.5. Some of Apple’s big competitors such as IBM (IBM) and Google (GOOG) already are active in healthcare.

HealthKit combines several major trends including wearable, self-tracking technology, “Big Data” and the movement to streamline medical services and lower costs. Whether HealthKit will be a major disruptive technology in healthcare is hard to say. But it shows that Apple is working on a lot more than just the next high-tech gadgetry or entertainment device. The company hopes to combat some of our society’s biggest problems such as soaring medical costs.

The app faces legal and regulatory hurdles, of course, and raises a lot of questions about privacy. But if HealthKit it successful it could be an important strategic move in Apple’s battle against Samsung and Google’s Android operating system. HealthKit will likely be closely tied to Apple iOS 8 operating system, making it difficult to move the health data to another system. This could be a major competitive advantage for the iPhone and iPad if HealthKit is widley adopted in the healthcare industry.

The announcement in September could provide much-anticipated hints about what Apple’s next big move will be, and this could further boost the stock’s impressive run recently.  Apple’s stock reached a split-adjusted price of $100 per share today, flirting with its all-time high.

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