Philips & Pegasystems Team Up To Enhance Patient Care

Koninklijke Philips N.V. (NYSE:PHG) recently collaborated with premium strategic business applications provider Pegasystems Inc. (NASDAQ:PEGA) to help health organizations utilize connected devices and sensitive customer data to offer personalized patient care.

A Boon for Healthcare

This collaboration is in the interest of managed care service providers and “accountable care organizations” that strive to improve health outcomes by relying on modern technology. The integration of Philips’ HealthSuite Cloud platform with Pegasystems’ Pega Care Management Application will help health care personnel identify potential health hazards and take preventive actions in a timely manner. Developed by Pegasystems, these latest connected health solutions are likely to be commercially available toward the end of the second half of this year.

Philips Cloud Platform

The Philips Cloud platform is well known for its state-of-the art predictive analytical expertise, linking millions of connected health devices and offering secured cloud storage and sharing of longitudinal patient data. The Philips and Pegasystems collaboration will allow patients to monitor their conditions on wearable devices and convey the same information to professional healthcare teams on a real-time basis, allowing time for quick response to critical patient needs.

The recent surge in the use of connected medical devices owing to changes in consumer lifestyle is acting as a primary catalyst for Philips’ Cloud platform. The increasing use of consumer wearables and sensors by consumers are encouraging major healthcare companies to harness the power of “Internet of Things” to boost healthcare quality, reduce readmissions and slash operational costs. This offers Philips ample opportunities to capitalize on its HealthSuite Cloud platform to maximize growth.

Our Take

Philips’ Healthcare segment emerged as one of the company’s primary growth drivers and the company is making concerted efforts to strengthen this segment further. Senior citizens make up for the chunk of the Healthcare segment’s customer base. Hence, we believe that an aging population and increasing healthcare expenditure in the years ahead will better Philips’ prospects.

Despite a strong foothold in the healthcare market, challenging market conditions, and mixed outlook in China, Russia and Latin America have dimmed the company’s prospects. Also, a sluggish macroeconomic outlook has marred the potential of the healthcare business which is expected to grow in low-single digits in 2016. This apart, escalating taxes and restructuring charges associated with the Lighting business are proving to be major headwinds over the near term,, dealing heavy blow to its bottom line. Going forward, the company forecasts discontinued operations and separation costs in the range of €200–€300 million and restructuring costs of €50 million. These challenges are expected to impact this Zacks Rank #4 (Sell) company’s 2016 EBITA by €80–€100 million.

Some better-ranked stocks in the same space include Jason Industries, Inc. (NASDAQ:JASN) and Kopin Corporation (NASDAQ:KOPN) , both holding a Zacks Rank #2 (Buy).