Healthcare technology company Augmedix has caught the attention of investors due to its excellent revenue growth, especially in the intersection of two industries: healthcare and technology. The company’s products use artificial intelligence (AI) to save healthcare professionals time by streamlining administrative tasks such as data entry, patient chart analysis, and note-taking.
Augmedix has a suite of products that work together to improve the healthcare experience for both professionals and patients. During a visit, Augmedix Live records and transcribes the conversation, supporting the process of ordering prescriptions and making referrals to other doctors based on key words. Augmedix Notes takes accurate and detailed notes using natural language processing algorithms and large language models, and Augmedix Prep creates a chart for the healthcare professional using the information gathered from the patient-doctor dialogue.
Augmedix has established partnerships with several major healthcare industry leaders, including healthcare giant McKesson, where its solution is endorsed and sold. Augmedix is currently utilized throughout McKesson’s U.S. Oncology Network, with over 1,400 physicians and more than 500 locations nationwide. Beyond its partnership with McKesson, Augmedix is also utilized by several other major healthcare institutions.
The company’s contracts have contributed to impressive revenue growth, with a 136% YoY net revenue retention rate in Q1 2023. Augmedix’s top-line revenue has grown at a CAGR of 31.29% over three years, with projections of a 7.6% QoQ growth rate through Q2 2023, or an annualized rate of approximately 30%. While the company operates at a loss, its ability to retain existing clients while capturing new ones supports its growth potential.
While the company has high SG&A expenses, the growing gap between this and revenue is a promising sign, as is its growing gross margin of approximately 45%. Additionally, Augmedix’s R&D spending has begun to stabilize, suggesting the company’s investment in its product is working to improve AI without further financial investment.
While investing in negative cash flow assets poses risks, Augmedix’s revenue growth and potential for growth in the large and expanding market for healthcare technology positions it as an investment opportunity. While there are some concerns about its SG&A expenses and COGS, the scalability of the business model remains questionable. However, the company’s impressive revenue growth, along with its contract retention rates, suggests Augmedix is on a solid path towards continued success and growth.
