While much ado has rightfully been made of the COVID-19 public health disaster, we haven't seen a lot of long-term forward-looking analysis -- few prognosticators seem focused on skating to where the puck is going. Throughout COVID-19, I read a whole lot about the possibilities of investing in the vaccine (Moderna, Pfizer, Johnson & Johnson), ventilators (Resmed), and treatments (Gilead) -- but I didn't hear many cogent arguments focused around what are sure to be the longer-term public health implications of COVID-19.

A July 2020 study done in Frankfurt, Germany, of patients who had recovered from COVID-19 showed that 60% had ongoing heart problems after recovery, independent of their pre-existing conditions. This is startling data that has implications for the medical establishment -- and investors -- going forward.

A woman in scrubs puts on a surgical mask.

Image source: Getty Images.

Do we even know the true extent of COVID-19?

While we know that more than 500,000 people in the U.S. have died of COVID-19 to date, and The New York Times estimates 30 million have been infected, an MIT article posits that the actual number of infected is much higher than reported. The theory is that a large number of cases -- many on college campuses -- went unreported because of mild symptoms, but nonetheless contributed to community spread. This, too, has ongoing implications for public health.

As it progresses, COVID-19 often infects the lungs; this keeps oxygen from being pumped through the body effectively and can seriously affect the patient's blood flow, which in turn strains the heart. This may be especially worrisome in the U.S., a country stricken by high levels of diabetes.

According to the CDC, 34 million Americans (roughly 10%) have diabetes, and 88 million (over 25%) have prediabetes. The CDC also says that people with type 2 diabetes are at higher risk of severe symptoms of COVID-19. One study found that patients with type 2 diabetes were three to four times more likely to be hospitalized and experience extreme COVID-19 symptoms.

When we look at these statistics -- the unknown number of actual infections, probably much higher than reported; the number of Americans with diabetes and the extended hospitalization many who get COVID-19 require; and the German data on ongoing symptoms -- we can conclude that America's hospitals may well be seeing more heart surgeries. 

Abiomed to the rescue

Medical device maker Abiomed (ABMD) has long been doing the most innovative work in this space. The company's Impella device, introduced in 2020, has groundbreaking implications for the treatment of heart failure. A Japanese study done in 2020 looked at 800 patients across 109 hospitals and found that those patients who received treatment with an Impella device saw a 77% survival rate 30 days post-surgery -- far higher than the historical average 50% survival rate for cardiogenic shock. 

I fully expect that as Abiomed's research team continues to create even more innovative products that contribute to ever-higher survival rates, its financials will benefit, too. Better proven efficacy should mean increased reimbursement rates from Medicare, and there's also plenty of room to run in international markets, where the company has much less penetration so far compared with the U.S.

And it's nowhere near done innovating. The coolest part about the newest Impella 5.5 product, for example, is that it comes with an AI-assisted technology whose algorithms have "learned" from Abiomed patient data about how the Impella should help a heart recover.

After the Impella is implanted for temporary healing purposes, this adaptive technology knows how to make the heart pump in order to give the patient the best chance for survival. That's American ingenuity at its best, and it's a great example of why I think this company has so much potential.

Don't hold your breath for a lower price

I'll start by saying that I'm not a fan of looking at stocks on a strictly price-to-earnings (P/E) basis. Abiomed is a totally different company from, say, Chevron, and comparing their P/E ratios would be like comparing the maximum speed of a Ferrari to that of a Matchbox car. Context matters! That's why whenever I'm comparing stocks with different growth rates, I use the PEG ratio -- price-to-earnings-growth. This takes a company's growth into account as well as its earnings. 

While this seems intuitive, I've encountered many "portfolio managers" who totally ignore this nuance and would say that given the S&P 500's current average P/E of less than 40, Abiomed is pricey with a P/E of 68.

But when we factor in growth, the picture changes: Abiomed's PEG ratio is currently 1.32, which is lower than Amazon's (1.7), Medtronic's (14.3), and Apple's (14.4). The company is even cheap according to its own historical multiples: Its P/E averaged between 100 and 120 between 2016 and 2018. 

Given the number of likely new heart patients that COVID-19 infections seem likely to cause in the U.S., not to mention the supercharged international opportunity (international revenue is currently only 17% of the total) and the efficacy of its products, Abiomed stock looks to be worth much more than it's selling for. Interested healthcare investors may find this the right time to buy in.