Building Wealth Mark Cuban's latest major investment may be the most important of his career...
He's not just trying to make a quick buck. He's trying to change the world.
The celebrity billionaire built his reputation on investing in up-and-coming technologies. He made his fortune in the late 1990s. That's when he invested in Broadcast.com, an early pioneer in streaming videos over the Internet. He eventually sold the company to Yahoo for nearly $6 billion worth of the Internet giant's stock.
That alone made him unimaginably wealthy... But he has gone on to seed many other successful ventures... He of course is the owner of NBA franchise the Dallas Mavericks. He bought the team in 2000 for $285 million. Since then, the team has won an NBA championship and the Mavericks are currently worth $2.7 billion.
He has also thrown money at impressive entrepreneurs on the hit ABC show Shark Tank – making a lot of money on investments in companies like Tower Paddle Boards and Nuts 'N More (a snack-food startup).
Most recently, though, he made a splash in an industry that has not seen real change for decades...
He believes he's on the verge of changing the lives of many people. And it's hard to disagree.
Back in January, Mark Cuban and partner Alexander Oshmyansky launched an online pharmacy called Cost Plus Drug Company. The mission of the company is simple: To give every American the opportunity to access safe, affordable medicine.
If you've been a Health & Wealth Bulletin subscriber for long, you'll know the inefficiencies in the health care system. I've long said that it's a broken model.
It's one of the many reasons I left the industry after grinding my way through medical school and becoming a board-eligible eye surgeon.
Mark Cuban noticed the inefficiencies, too.
Specifically, he saw how much Americans were paying for drugs and medicines. He knew prices should – and more importantly, could – be lowered.
The solution was to cut out the middleman.
Let's briefly dive into the health care chain for a moment... just so you see how complex it is. Put simply, there are a lot of moving parts...
It's comprised of drugmakers, insurance companies, pharmacy benefits managers ("PBMs"), drugstores, and clinics and physician practices.
Each part of the health care chain has an incentive to extract the most profit. The pharmacist needs to earn his margin, so does the drugmaker, the doctor, the hospital, the benefits manager, and the insurance company.
And for every doctor or pharmacist you see, dozens of administrators shuffle papers, set prices, and process claims. All these levels add bloat and complexity, which mean higher costs and confused patients.
We rarely see these businesses putting the customer’s care first or striving to lower costs.
Cuban has scrutinized the PBMs the most… These are middlemen who negotiate lower prices and handle reimbursements between drugmakers and insurance companies. He said they squeeze a little bit of money from everyone and, as a result, prices go up.
Cuban's Cost Plus Drug offers lower prices than most big players in the space. And the company is gaining ground because it's doing something that no one else in the health care space does...
It's being transparent.
If you buy a drug through Cost Plus Drug, you'll know what you're paying for. The company sets its generic drug prices based on the cost of the ingredients and manufacturing, plus a 15% margin, a $3 dispensing fee, and a $5 shipping fee.
It's simple and upfront. And it makes a real difference.
Harvard researchers calculated that buying 77 generic drugs at prices being charged by Cost Plus Drug would have lowered Medicare spending on those drugs from $9.6 billion to $6 billion.
Imagine that.
The point is that health care is ripe for investment. And Cuban's not the only one who knows it...
Just recently, Amazon bought One Medical for $3.9 billion. One Medical, which is the parent company of 1Life Healthcare, owns and operates 188 primary care doctor offices in 25 different markets. As of its most recent quarter, 767,000 people saw a doctor at these locations.
We expect that Amazon will use this acquisition to create a much bigger primary-care platform that expands into other things like surgical centers.
There's a lot of change coming to health care... And it's long overdue.
This is an extremely exciting time to be an investor.
I'm so bullish on the direction of health care that I recently called investing in the sector one of the greatest opportunities of my career. I truly believe that in a few years' time, some of my biggest winners will be from buying into this sector today.
If you want to learn more about investing in health care and the incredible buying opportunity today, you can click here to view (or read) my presentation.
What We're Reading...
- Mark Cuban health care prices could have saved you $3.6 billion.
- Amazon buying One Medical is only its most recent dive into the health care industry.
- Something different: Thousands of U.S. cattle buried, dumped at Kansas landfill.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
July 27, 2022