#280: A Healthcare Stock on Emmet’s Watchlist

0:00We saw a lot of stocks suffer in the last 12 months under his tenure. Maybe just like it kind of dampened a lot of investor confidence in the industry as a whole. A lot of pharma has been underperforming. Now, that was MedPace up until about July 2025 when it released its Q2 report, which sent the stock soaring 50 % in one day.

0:30Emmet:Hey, mate, how we getting on? How are you doing this week, Mike? Where are you today? I'm in Beirut still, but I'm in a new background, if anyone keeps track of that kind of thing, moving apartments, so we're in between for a week. Yeah, nice digital nomad. Another new background soon. Yeah, it's nice. Nice. Nice. Try and get the name of that color for me. I love keeping a log of the colors behind you. Could be a nice marl, maybe. Elephant brown. Isn't that one? elephant breath that is actually a color i've heard that discussed here and in in my home by my wife it's a color called elephant breath so there you have it there you go someone made money making that yeah they did um i'm kind of nervous about recording this episode we're recording it early because uh i'm off away on holidays uh when it actually comes out but the last two times we recorded uh we talked about elon musk and then i think the day after um what they did they announce the trillion dollar pay package and then we talked about nebius last week and then the day after they went and raised four billion quid or something like that so i think we've got a bit of a commentator's curse of the second we talk about something in the meantime between talking and recording something happens and there's a two-week gap so i imagine both of our companies are going to get acquired or um i don't know go bankrupt or whatever happens and we'll do all this for now it i know it is you're right it's the curse of trying to discuss something that's current but also has a long runway ahead of it because you just don't know what's going to happen between the moment you speak and the next hour it's just the nature of what we're doing if we're talking about the history of businesses only and the history of the stock market then it's evergreen content but unfortunately the content we have is deciduous like if you listened to an episode of stocked up from a year ago it probably has 10 of the value we hope today's episode has yeah yeah i mean like it depends it depends on the style of episode as well obviously i think something like today is going to be so sorry we should probably talk about what we're going to talk about oh yeah basically we picked our two favorite healthcare stocks is that a fair statement well it is a fair statement but that's the way it landed as you know yesterday so this will date the podcast i i put a twitter or sorry i put a tweet poll out there and i asked people to pick one of the following four businesses for me to discuss in detail on this week's stock club and i deliberately picked four businesses that i had already pitched for horizon so but i have not yet bought their shares i may buy their shares and the four companies that i put out to pull were lumine as i pronounce i think it's pronounced lumen uh oscar health med pace and sound hound so two of those are in the medical space lumine and sound hound clearly are not but um as it happens the winner the one that got most votes was oscar which i'm going to talk about and the other one that got a lot of the votes was med pace which i believe you're going to talk about so just coincidentally we're going to be talking about two medical companies okay before we get into those two do you want to give a little pitch because this is horizon based these are the first two of these stocks are on your horizon watch list uh well absolutely be appropriate to talk a bit about horizon before we get well that's true i mean i think a lot of people who've listened to this podcast since it started 350 episodes ago know the story my genesis of my investing was that in 1999, I got really excited when I noticed that Dell shares had increased 1 ,600 fold in the previous decade.

4:11Emmet:I just couldn't believe that had you put two grand into Dell shares on the 1st of January 1990 and held until the last week of 1999, that that two grand would have turned into 3.2 million dollars so i really did commit my the majority of my professional life and thinking life to finding the next dell and i've had some great winners and chris mayer the author of 100 baggers and where to find them said that uh he doesn't know anyone who owns more 100 baggers than me he wrote the book and had to find them so i've been very lucky um my current shareholding in tesla is up 200 fold or one of my positions um as everyone who listens to this podcast knows i have a position uh in in netflix that's up 650 fold and another one that's up 400 fold and the chipotle that's up about 70 80 fold um shopify is up by 25 fold so i have spent my life chasing businesses that warp augment your personal wealth and the way i'm doing that as our listeners also know is through a product that we have built called horizon and we are going to change the way horizon is delivered to the market specifically um it's going to be a very much a boutique service uh it's not changing massively but what we are planning to do is being very blunt we're going to reprice it to two thousand dollars in 2026 but we're running a promo for 100 people to get it for $499 now.

5:44Emmet:So if you want to get in on Horizon for basically 500 bucks before it goes to 2000, jump on my Wall Street website, sign up now, or email us at pod at mywallstreet.com. So what is it? Why would you bother doing that? Well, I'm pretty sure I have found a future 40, 50 biker in Horizon. I'll never be so bold as to say, and I think it's that one, because I will curse it. But I think anyone who's looked at the pattern of my buys will see I've bought over and over and over and over into a couple of businesses. And I have other ones as well. And right now today in Horizon, I have a portfolio of about 25 stocks and six or seven of them are up over 100%.

6:30Emmet:They're two baggers. Actually, I think ironically, let me just click on it. Netflix is the biggest winner. it's up 440 % as we were and I don't think that's a coincidence I think it's it was such a timely buy by Netflix that basically it's Nadir kind of after 2022 was it right when kind of peak I suppose peak lack of sentiment because you know the stock so well it was so easy to make that buy whereas someone else who isn't that like you know intimate with one business as you are you've owned it for 20 plus years you've seen the ups and downs you can recognize the temporary blip compared to the yeah the noise that's happening around it you're absolutely right i mean two points in that you're right i have owned netflix shares for about 23 years and i have tuned in listened to or just got the summary notes of every single quarterly call so nearly 100 quarters of information i've absorbed and i really feel i comprehensively understand that business not where it is today but it's history so it was kind of lucky that i saw that dip and that did have dip happened and we bought the absolute absolute low point but the other point i want to make is there's no way i think netflix is going to be the share today that augments people's wealth no not even nearly so happens to be top of the leaderboard for the reasons we just discussed but the attributes of a business that's going to grow fivefold tenfold twentyfold fiftyfold one hundredfold one thousandfold are entirely different to the attributes of netflix today because netflix now is a giant business it's a half trillion dollar business it is not going to grow 50 fold it is going that would basically change the laws of thermodynamics so but i do believe we have i think there's about five companies in there that i think at least will grow 50 fold but it's a game of patience and if you subscribe to horizon And for those who already are in there, they know I care deeply.

8:37Emmet:This is a community. This is something I think about day in and day out. And like summoning a genie, if you just go to the discussion board and write Emmett, I will always respond. There isn't a single message I've not responded to within an hour. So it's kind of what I do. So my point is that we are moving my Wall Street forward. We're evolving the business. I've spoken in previous podcasts about profit and it's a magnificent service, but Horizon is going to be a boutique service for a limited number of people. We have a hundred spots aside for a$499 subscription, which I know is a lot of money, but it's not if I achieve what I'm meant to do.

9:18Emmet:And well, that's it. That's the pitch. So please do subscribe to Horizon. Go to mywallstreet.com or email us at pod at mywallstreet.com. okay great um so you mentioned kind of netflix and the scale of it obviously a 50x return on netflix from here is impossible but i think the company you're talking about today in your eyes might have the characteristics of a potential 50 bagger in terms of its potential and its scale and where it is now compared to where it could be and in fact i'm a big fan of the four companies i put to the twitter poll uh for discussion today luma and oscar med pace and sound hound and and uh i was confident that no matter which one one i was able to hop on a mic and have this chat might have put it up to you to actually dive into oh you're the one who said i'll do med pace so i'm looking forward to that story as well but anyway oscars is a company that's under under hot discussion at the moment in the twitterverse the xverse um and it is definitely one of the most closely watched disruptors in the American healthcare system over the last five and 10 years.

10:29Emmet:But I think the amount of intensity and scrutiny and attention and conversation it's now extracting from the investing world is growing. So it's brand awareness from an investor perspective is growing, which is one of the catalysts for growth. If awareness grows and retail investors get attracted to it, it ultimately drives the share price up. Not that that's an important driver for growth, but it is a factual driver for growth. But let me just rewind and tell. The business was founded in 2012. And as you suppose you expect for any newish disruptor, it has positioned itself at the intersection of technology and insurance, which might sound familiar to those who know what have invested in the past with Lemonade, the insurance disruptor.

11:17Emmet:So Oscar feels like a cousin of Lemonade when I read through all the reports and watch the quarterly shareholder presentations. And what they're doing is they're aiming to simplify and personalize the health care experience. So as of now, let's say mid 2025, it's serving about 2 million members across 18 states in the United States. And it continues to expand its presence in the Affordable Care Act marketplace. while also offering a white label technology solution through its platform, which I think they've called Plus Oscar. Now, like when we chatted about Lululemon and Chip Wilson, every company starts with a founder's story.

12:00Emmet:So I always like to kind of start with that individual who had the spark and who saw the opportunity or happened across a fast-growing opportunity. And Oscar is no different. And it was co-founded by three men, Mario Schlosser, Kevin Nazimi, and Joshua Kushner in New York in 2012. And Kushner's name probably rings a bell for most listeners because he's known for founding a VC, a venture capital firm called Thrive Capital. but he's unquestionably I think better known for being the younger brother of Jared Kushner who is according to his LinkedIn profile a senior advisor to President Trump and is also married to his daughter Ivanka so he basically his brother's father-in-law is the president of America so I think that's a bigger casual flex than I founded a VC firm but either way 33 yeah I think I think the initials Jay Kushner are going to ring true with a couple of people when they see that written down somewhere.

13:04Emmet:Yeah, so true. There's no doubt. I mean, it is a name, certainly in Ireland, it's a very unusual name, Kushner. I don't know in America, but certainly you'd have to question, and sure enough, the question would be right. He is through marriage, through brother, related to the president, which can't hurt you, got to imagine. So he brought the VC, look at my family credibility although in fairness he founded oscar before his yeah but still you know his his brother was married to the trump family but either way he brought this vc credibility and he brought an entrepreneurial network and a powerful one you'd have to guess but either way oscar quickly gained attention for being the first health insurer that was built on a full stack technology platform which i think is just a tech speak for every part of the process is underpinned by a piece of technology.

13:56Emmet:So we've all worked in businesses where there's little bits that are manual. If you worked in an office in the 90s, it was, I'll walk this piece of paper over to that desk and put it there. Well, if you think of the modern equivalent, that doesn't exist anymore. So it's a full stack tech platform. And they really went for this user-friendly design and digital first healthcare management system. And I think we all appreciate good design these days. we just want our things to do what they need to do and don't make me think and I've often cited Uber as a good example because you open the Uber app and effectively there's a lot of stuff in there but there's only one big fat button which is call a cap well if you take that logic and push it forward through every product out there that's what you're trying to go for so over its first decade from 2012 to say 2022 oscar grew by focusing on the aca the affordable care act marketplace um which for our non-us listeners just to talk about aca for a minute it's a u.s health care law designed to expand access to affordable health insurance it's designed to protect patients with pre-existing conditions and it's there to reduce overall health care costs which I think from the outside looking in as a non-American I have a feeling that it's all very complicated and a bit of an expensive mess that would be it's a it's Obamacare yeah you're right I mean it's a very um it's Obamacare for sure yeah that's that's the that's how it's known on the street but the but the truth of the matter is that health care in america for a non-american is a very complicated thing i speak to my uncle who lives in arizona he's talking about blue cross blue shield and medic the one you pay for is medicaid medicare like it's all a bit of um uh there's a lot of jingo and i guess you have to live it to know it and i'm sure once you live it you get it so by 2021 2022 oscar was serving about a half million members and it became publicly listed on the New York Stock Exchange.

16:09Emmet:Now, despite early losses and a whole lot of skepticism about the viability of a tech-driven insurer, specifically in this space, it really made steady process in reducing its operating costs, improving its medical loss ratio, or MLR, which is just the medical loss ratio is the share of an insurance premium, uh insurers premium that's spent on their health care um so for example if you pay your insurer a dollar if they spend 86 cent on your care 14 cent is there is there is what they get to run the business with so in 2023 two years ago a guy called mark bertoloni who is the former CEO of Aetna.

16:58Emmet:He had huge experience in this space and he became their new CEO and he brought a new sense of direction and his lived experience to the business and basically Oscar outlined the path to profitability by 2024 and set long-term goals of 20 % revenue compounded annual growth and 5 % operating margins by 2027 which is only two years away less one and a half years away so let me try to explain the u.s health care system in a little tiny bit more detail because i always have to restudy it as it were before i open my mouth and it is in essence a patchwork private yeah it's gonna say good luck yes you know i mean it's funny because every time i get a hold i read a book about about eight years ago i'd say called i think it was called healing america and it spoke about all the different layers and players in a healthcare situation and in the entire system of america and it is inordinately complex it is such a multi-layered multi-faceted expensive thing to deliver an end product to a customer to a patient you just can't believe it even functions but it does and it functions well i mean if you're on the right side of the line but so here's how i kind of go about explaining it it is a patchwork of private and public payers with employer-sponsored insurance covering nearly half of americans and public programs like medicare and medicaid covering about one third so you have half of people who have an employer program that's great one third um i have medicare medicaid and then the remainder are buying insurance individually or uh they're remaining uninsured, which is danger zone.

18:52So here in Ireland, like just for American listeners,

18:56Emmet:small country with a small population by comparison, you either have private insurance generally with Leia Healthcare or VHI, which makes things happen faster and in nicer surrounds. But with the public service, they'll get you fixed up if you're stuck. At least that's the plan. So you either go with a private insurer or you just drive yourself to hospital and they'll look after you do their best and obviously not everything is perfect but that's the way it works in Ireland so you can see why when you come from here when we look at America it's all very complicated so Obamacare as you say our ACA the Affordable Care Act signed into law in 2010 and it reshaped the individual insurance market by creating marketplaces which are also commonly known as exchanges where individuals can purchase subsidized coverage are you with me so far Mike i mean like yes but also no yeah i know you just gotta roll with it so these exchanges opened up opportunities for new insurers like oscar to serve individuals and freelancers and gig economy workers outside those traditional employer-based systems so if you and i were in america as colleagues and my wall street hq was on wall street and you were living in dakota and we as a small business said look we don't even understand the health care system up there you could go to oscar as a effectively gig economy worker i know you're not a gay economy but you could go and you could find your own health provider on an exchange on a platform and this aca market is has become really important for a couple of reasons the first is uh medicaid redeterminations which are pushing millions into the aca plans now i'm not even going to try to explain that one mike but their medicaid have redetermined a whole bunch of customers many millions of people being pushed into aca then the gig economy is continuing continuing to expand the world over so it's especially in america and that's creating demand for individual uh coverage i was going to say bespoke coverage but individual workers who just want to be covered.

21:07Emmet:And a third kind of catalyst is that individual coverage health reimbursement arrangements, or ICHRAs, are allowing employers to fund employees' individual insurance, expanding the ACA's reach to millions more potential lives. I told you it was complex. Like this is there's an awful lot on the roadmap of healthcare in America. So it's not one bit complicated. It is just, it's layered. So Oscar has leaned into these tailwinds, in particular, the ICHRA, the Individual Coverage Health Reimbursement Arrangements, which it views as a key growth driver over the years ahead. So, Emmett, I hear you cry, Mike.

21:52Emmet:What differentiates Oscar? um why are we talking about it because i'm really worried even as i describe this business how it's cripplingly boring so let me try and bring it up a notch or two so it has three things that it's differentiating with it has technology as i said it has a consumer first design like the big fat button in uber and the third is its strategic marketing or strategic market positioning i mean to say so um it basically has these three elements that it's obsessing on and we could dive into those like the full stack platform um so like what does that actually mean 98 they're saying at the moment 98 percent of claims are currently auto-adjusted which means they've reduced administrative costs they have a ton of ai tools that streamlining provider documentation everyone is doing ai that's table stakes now um but what what all of this has lots of other kind of bells and whistles on the tech but what it actually means is that it's constantly having better outcomes that's what matters you know you go you sign up you sit down you're the guy living in delaware you sign up for a mascar healthcare healthcare package and what you want is that your outcomes are better and it's consistently posting really high net promoter scores 66 overall in 2024 75 for patients using oscar's virtual primary care services and members with chronic conditions interact with the care teams at high levels and and retention rates have gone way over 80 90 percent so they have happy customers so that's that's a success factor number one throw that in the book it then it also has this kind of dual strategy which it's an insurance and a tech platform so it operates as i said both as an insurer in the ACA market but it also has other help plans through this plus oscar platform and then it has a whole bunch of personalization and inclusivity bells and whistles as well like for example they have hola oscar which is a spanish first solution for hispanic and latino communities and condition specific plans uh for people with multi-condition conditions like chronic illnesses all of that is to say they figured out the right product at the right time so let me just tell you about its recent performance um it has rich it reached uh EBITDA profitability in 2023 and total profitability in 2024.

24:29Emmet:Membership has grown 40 % compounded from 2021 to 2024. However, here in 2025, just kind of some headwinds. So in July, just two months ago, it revised its guidance, projecting between 12 and 12.2 billion in revenue, but also an operating loss of around 200 to 300 million dollars as a result of higher than expected ACA marketplace risk scores etc etc but what I find really interesting and let me just open this up here because it's an important I don't want to get it wrong yeah so in 2020 Oscar's revenue was 455 million now they're talking about an order of magnitude of 12 billion so we're not talking about a business that has headwinds that means it's totally done for not even nearly so well so that's the kind of the past and a little bit of the present but where are they headed well they're targeting revenue growth of 20 compounded all the way through as i said till 2027 um they expand they plan to expand into 150 more metropolitan areas by 2027 in other words expanding its They see a footprint and they plan to grow this plus Oscar tech platform to capture some of the$25 billion health plan and provider IT market, this dual prong strategy.

25:55Emmet:So. As some of our listeners know, I pitched Oscar and Horizon. I've not yet bought it, but in plain speak, I love that it's one of the, I suppose, boldest attempts to reimagine and rebuild and redeliver U.S. health insurance through technology and i'm still a little concerned about the power and possible connivingness and maneuvers from legacy players that would be a little bit of a concern but right now the business has actually but even that that metric we discussed now and again ev enterprise value divided by ebitda it's down down down the business by its own internal metric is looking cheaper than ever before and i think it's a i think it's a great long-term investment yeah i was just peeking at the numbers as well while you were talking then like members have doubled in the space of two years obviously you're saying revenue is up about 20 fold in the space of five years yeah i just feel like there's so many implications like even with the political climate in the u.s right now that the term obamacare seems like it has a target and it's backed, you know what I mean?

27:04So for a company serving this market, I imagine the political implications, even though there is the connection to the president there with the brothers.

27:13Emmet:I agree with what you're saying. Yeah. So, yeah, I think in terms of especially this kind of market, I would be a bit concerned, but you can't argue with just the scale that has happened so fast in such a short space of time. Yeah. But then again, with insurance, scale means a lot less than, say, a tech company. Do you know what I mean? You can scale up to 10 million users, but if your loss ratios are useless, you know, it's a much more intricate kind of equation than just, say, adding users on a social media platform or whatever else is the kind of scale we're used to seeing. So it is confusing.

27:58And I think like the complexities and intricacies you've outlined for me would be a bit prohibitive in the sense of I don't understand this industry. it's so complex like the healthcare insurance it's so politically motivated as well um yeah that there's so many outside factors that i wouldn't be able to foresee that would put me off it but i agree in the sense of like you know revenue is up 20 fold in five years and stock is cut in half in that time which is just that's crazy like and like the scale that's happening right now the new member editions and all the rest and then you're obviously saying the customer love there as well so there's a lot to like um but personally i wouldn't i'd put it on the no fly list just because it's too difficult i think we were talking with peter a couple of weeks ago and he has the three he has like interested not interested in too hard um as his kind of stock categories when you go through screeners and stuff and like i think i would push oscar in the too hard category for me just for those reasons yeah because it is easy to get entranced

29:09Emmet:with the numbers and how fast it is moving you know totally and that's what's held me back from buying with horizon it's the i don't know what i don't know and it is i will probably never interact with its products not that that matters a whole lot because as i've often said anecdote doesn't make data but i do like to see if something is consumer facing i'd love to interact with it so you can feel its magic but you're right i would regard it as interested but too complex for now yeah yeah okay i'm gonna jump into med pace this is a business uh i've admired for a while it's actually if there's any nexus uh users listening it's on nexus 2 um and for a lot of reasons so as in obviously if it's a nexus 2 stock uh it's going to have certain characteristics is going to have things we like, things that, you know, we're talking about Chris Mayer already in the episode.

30:02We've kind of tried to quantify and turn those characteristics into some form of filter for stocks all across the world. And then they spit out incredibly high quality businesses and Medpace was one. And I'm going to just say, if you're listening and you can hear that droning in the background, excuse this. It feels like it's inside my brain. And if not, Amory's done a great job of editing it out in post. But to give more insight, MedPace is what's called a contract research organization. So essentially what it does, companies can outsource their clinical trial process. So new pharmaceutical or biotech companies, it manages the phases of clinical trials for drug or even medical device companies as well, but mostly drug companies.

30:49So services are designed to help these companies kind of navigate a really complex area of bringing a new drug to market. So it's essentially a pick and shovel play for the entire biotech sector. This might come as a shock to image, but bringing a new pharma product to market is quite difficult. So on average, it's estimated that going from, say, drug discovery to FDA approval costs around$1.3 billion and can take up to 15 years. and then almost half of that 15-year period is spent in the clinical trial phase. So when we add on the fact that new drugs typically enjoy a 20-year patent from discovery before generics come in and kind of erode the competitive advantage there, it showcases how important a process like this is when it's done fast.

31:33Literally, time is money here. Do you know what I mean? So the more patent-protected years you can enjoy on the market, the more profitable the drug is going to be and the more worth, say, that$1.3 billion you've invested into this clinical trial is going to pay off essentially. But for smaller players and startups and all the rest, they don't have the money or resources to conduct these clinical trials in-house. So outsourcing to a company like Medpace is so important. They have an experienced proven vendor. Medpace has been around for over 30 years. So it's got all the clinical and regulatory know-how there already.

32:08That's a huge benefit because that reduces the risk and like vastly improves the chance of success for these clinical trials if you're a new company you're emmet savage pharma and you have this new wonder drug but you have never brought a drug or anything through clinical trials before outsourcing that is such a no-brainer decision do you know what i mean and on top of that it's also faster we talked about time being money i think i know what you're saying i think you're

32:34Emmet:suggesting we we try and think figure out a drug and then it's also to med pace well if me and you We did figure out a drug. That's where we'd be going. Anyways, that's for sure. But there was a study done that proved that trials done through a CRO are completed up to 30 % faster than in-house, which is huge. If you think about that in terms of dollar amount, it's absolutely huge. So the investment thesis is there in a nutshell, where if you are a smaller player, you can't afford in-house CRO optionality, essentially. You go to a company like this, they'll do it all for you and they take away a lot of the risks involved.

33:14They reduce the time factor. And essentially, like as in pay, the ROI on this is huge if you don't have the capabilities to do it yourself. So at the minute, MedPay's control is about 5 % of the small and medium biopharma CRO market. So that's about a$28 billion market. So there's lots of potential upper movement there. and then if it wants to really expand its time, which has kind of dipped its toe in so far, beyond its bread and butter with the smaller players, the total CRO market is estimated to be worth about$65 billion. Now, obviously, a lot of that market's not going to be attainable. There's going to be in-house players, there's going to be specialists, but it shows that there's a lot of room left to run, even though MedPace has been around since 1992.

34:03um it's been around since 1992 but it's been a public company since 2006 2016 and up until the middle of last year it was basically one big party the stock was up about 1500 percent in that time uh and in fairness a lot of that time was a great time to be in the biotech industry there was a lot of vc money flowing around that dried up in about 2022 um now medpace's demand was delayed from that we'll say but uh so like sorry med pace party didn't start in 2022 it stopped about 2024 uh so in july of 2024 it hit a previous all-time high and then in the 12 months after that it fell about 30 so there's a lot of factors at play there i think a lot of med paces demand comes you know it trickles down from say vc markets you know if vc markets are putting a lot of money into new biotech startups.

35:03New biotech startups have the money to spend a lot on clinical trial services like MedPay. So it kind of comes down the way. So the funding market was hit at about 2022. And then in 2024, it kind of all came to a head of it. So it was a very tough 12 months. And what didn't help things either is RFK's appointment as the health secretary. Oh, yeah. Why? Well, he's skeptical, shall we say, on the pharma industry as a whole. And that cast a pretty wide shadow. We saw a lot of stocks suffer in the last 12 months under his tenure. Maybe just like it kind of dampened a lot of investor confidence in the industry as a whole.

35:53You're looking at high quality business. I mean, Danaher is still down heavily. Yeah. A lot of pharma has been underperforming. And whether that's a lack of demand or a lack of investor confidence, I think it's kind of a combo of both. But we are seeing that industry suffer. Now, that was MedPace up until about July 2025 when it released its Q2 report, which sent the stock soaring 50 % in one day. So earnings and revenue blew past expectations. It's book to bill ratio. Essentially, is it taking in more bookings, more future revenue contracts than the actual revenue it is posting on that day was up above one again.

36:36So it's a great test of demand. If the book to bill ratio is above one, it means that demand is high, essentially. uh so it raised eps earnings share guidance from 1226 to 1304 uh was the site it raised its earnings per share guidance from its low point was 1226 and its high point was 1304 originally that went up from a low point of 13.76 to 14.553 on the high end sorry that's a bit of a word salad But basically, absolutely blew past expectations and shot up its growth forecast for the second half of the year. We're way ahead of the first six months. And it was one of those kind of very much seminal earnings reports.

37:23Like as a company of this scale, I think it's worth 20, 30 billion, going up 50 % in the space of one day. It's just kind of nuts. But it did a lot of things. So like we're talking about investor confidence and then perceived lack of demand. And this report kind of blew both out of the way in the space of, you know, a half an hour in July. So it really goes to show that the perception played a lot in this. I think in terms of biotech funding, in terms of investor confidence, in terms of, say, the administration's maybe lack of enthusiasm around the industry, it all kind of came to a head. And then MedPace kind of showed, actually, wait, maybe that's not really playing out the way it did.

38:17So loads of good stuff coming out from that two months ago in July. and then on top of that as well throughout that period throughout that downturn medpace was buying repurchasing shares hand over fist which is looking pretty good right now um so a lot of good things coming and an awful lot comes from the top so i want to talk about the ceo yes august trundle uh founder and ceo yeah he's 60 he's 68 but if you see him he looks about 20 years younger and this is such a nonsense tangent but it made me think is there like a requirement of healthcare ceos to look good and young and fit and healthy do you know what i mean would you think less of novo nordisk or ila lily if their ceo was some owl fellow with big bags under his eyes and he smokes 50 a day and he has a big alcoholic's nose like it's so stupid but i actually think i would like as in i think a pharma ceo a healthcare ceo has to be healthy is that a weird thing to say

39:17Emmet:no i think it's it's probably one of those unspoken biases that exist it's it's not shocking that that the ceo of a health care company is is a picture of good health no more than it should be shocking that the ceo of a cosmetics company wears cosmetics you know and you know you kind of got to exhibit what it is you're living or live what you're exhibiting rather yeah i was thinking that when i saw like a picture because you see the the age 68 as ceo and he owns just under 20 of the outside outstanding shares at the minute which is obviously a big huge big huge plus we love seeing insider ownership we love seeing leadership aligned with shareholders um like i think the is it is it about three percent founder-led businesses outperforming the market by yeah um like it's a proven stat like as we look for it it's a big factor in our calculations for adding a stock to Nexus.

40:14Do you know what I mean? So MedPace was always an example of that. And Trindle, he found huge success on the stock market because of his long-term vision and because his ownership means he isn't looking quarter to quarter, he's looking decade to decade. That's what we want as shareholders. It's why we love insider ownership so much. But at 68, this kind of brings in question marks. like having an iconic CEO has a shelf life and I imagine however healthy he looks he'll want to sail off into the sunset at some point so there's no official succession plan in place it looks that's interesting I didn't know that yeah it looks like it'll be president Jesse Geiger Geiger he joined Medpace in 2007 he moved from CFO to COO and now he's president and Medpace strategy has always been to hire internally likes to hire people out of college promote from within and then avoid external senior hires um just to kind of instill that company culture and all the rest and then i suppose train people in the way they see the world or they see that industry so it does look like gager is kind of being propped up as potentially the replacement but we don't know there's no official uh there's no official communique on that yet um but having you know it'll probably be 20 years plus under trendle's guidance by that time that comes which should hopefully um should hopefully kind of be able to continue on his legacy but again it would be one of the big risks i would see with med paces a key person risk we talk about it a lot but if you have a conic ceo elon musk is for tesla is always a big example you see how much tesla's board are doing to try to keep them there because he's so attached to the success of the business and the and the stock i think trundle obviously he doesn't have the name of elon musk but he would be as well and i think if you're talking about an investment thesis it's so important that he's there so being wary of uh of his kind of his eventual transition away from the top spot um would be top of mind other risks i think they have a lot of customer concentration so the top five customers account for 23 percent of revenue and like while none of them represent over 10 it's a big reliance on a few names especially in a competitive industry where they could be poached I'd be very worried about that too and then lastly look I mentioned it already but just the way the funding of market is going for biotechs maybe my pace has booked the trend a bit there with the earnings and projections from Q2 but it's a variable that's out of the company's control which I don't like which adds a level of volatility to the share price and just it doesn't matter how well managed the businesses or what they can do themselves if there's no money coming from that kind of top funnel it won't get to trickle down to them that's what i would be concerned about in fairness but they have about a three billion just under three billion dollar backlog and i was telling you already the book to bill ratio is above one so they're getting in more orders than actually um you know recognizing revenue in a quarter which is huge and like shows the demand

43:39Emmet:it's there but with that backlog for ages when i i pitched it in march uh of last year so i pitched it in horizon about a year and a half ago and um as these things go when you when you have something on your watch list that you don't own when its price goes up you feel it way more than a stock you own that goes up when when a stock i own goes up 20 40 50 percent or double or 100 whatever i'm like yeah whatever yeah grand i just leave it there when the stock i was watching goes up i'm like no i knew that was gonna happen when in fact i didn't actually know it was gonna happen i just uh felt that kind of homo or or i nearly did it remorse i don't know what what name we can give that but i was watching the day after the stock jumped 50 went up from like 300 bucks to 450 And I was looking for a pullback, which barely happened at all, which showed in some respects that the fundamental announcement that drove that 50 % increase in value was real, very tangible.

44:44Emmet:And what you just said came back to me, they still have an order backlog. They can't sell the stuff they do fast enough, which is quite a quality position to be in. well absolutely and we're talking about clinical trials could take you know 10 years for a certain company so obviously that backlog is always going to be there and it's important thing to track but i keep bringing up this book to bill ratio but if they are bringing in those new orders faster than revenue is being recognized that means there's always going to be that backlog there yeah and so important for a business like this and it's one of the key metrics to track um certain other industries as well is very important like semiconductors this book to build ratio is very important metric uh but yeah i think med pace it's a really really high quality business always has been um yeah if we were if we were very astute but i suppose our nexus 2 users got in at a a reasonably good time they had a bit of pain before they had a bit of pain before uh july this year but they're up uh up pretty handsomely now and yeah it's one of those businesses i've always liked um but again it's complex there's there's a lot going on that's out of its control it's not dissimilar to ask your health in that case where external factors could really weigh heavily on it but at the minute now i think it's trading at or around all-time highs pretty pricey stock if you are interested i think i'd recommend kind of building a position over the course of a year maybe doing some dollar cost averaging every month or something because i think it's about 37 38 times earnings which is fairly pricey even in this current very pricey market but yeah med pace kind of the comeback kid of the year i would say um especially well it's open door but let's just hold that for another camera open doors is completely different animal okay mike i have a question for you if you ten thousand dollars and just those two businesses we discussed today med Medpace and Oscar Healthcare, and you could split that 10 grand across those to only those two businesses, how would you invest?