Medical science has come a long way from the days when plague doctors wore scary, long-beaked masks and prescribed a steady treatment of leeches and stabbing to cure a head cold. These days, leading American healthcare stocks employ state-of-the-art technology to excel at both saving lives and making profits.
According to the World Health Organization, $7.2 trillion was spent in 2015 on healthcare—that’s roughly ten percent of Global GDP. The majority of that was spent by domestic public sources, meaning that corporate or governmental insurance policies carried the brunt of those trillions.
Because people don’t typically pay out of pocket for healthcare products or services, there’s a degree of stability unique to the medical sector. This is one of the reasons why gigantic healthcare stocks like Johnson & Johnson (NYSE:JNJ) can weather storms and scandals that would be disastrous in other sectors.
For example, last week Johnson & Johnson was ordered to pay more than half a billion dollars for fueling an opioid crisis in the state of Oklahoma. Despite this huge settlement and the terrible press, JNJ stock barely took a hit.
For small- and medium-cap healthcare stocks, the way to tap into this stability is to offer a product or service that is proven to save lives and has no precedent in the market. Though this is easier said than done, there are a few companies in the medical sector that are achieving this. Here are some to consider adding to your portfolio.
Medium-Cap Healthcare Stocks
Oncology company Novocure Ltd. (NASDAQ:NVCR) was already highlighted as a healthcare stock particularly well-positioned to grow despite the upcoming recession. In August, the price of NVCR rose nearly 18 percent, and though it has fallen gradually in the last week, it’s been cited as a company with a lot of potential that should last throughout 2019.
In addition to a strong Q2 financial review—which showed the company’s revenue grew to $86.7 million and its net loss narrowed to just $1.3 million—Novocure also made a big leap forward in establishing itself as a stable investment. In May, the FDA approved the company’s Tumor Treating Fields delivery system, making it the first FDA-approved treatment for mesothelioma to hit the market in more than 15 years.
Another of Novocure’s treatments—Optune, for the treatment of glioblastoma—has been approved for local coverage, and is currently being extended to Chinese hospitals. This affords NVCR some of the stability enjoyed by larger healthcare stocks.
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Another company in a similar position is Teledoc Inc. (NYSE:TDOC). Teledoc utilizes telephone and videoconferencing technology to provide on-demand remote medical care. Its solutions are better equipped to help people who can’t reach out to a doctor in-person than any other on the market. On August 29, the company declared that it is “poised for strong growth in the coming years due to the growing acceptance of telehealth services around the globe.”
The success of the company has been bolstered by the fact that its telehealth solutions are now included in most Medicare Advantage plans.
Since the beginning of 2019, TDOC has increased revenue by 40 percent, and its stock price has risen 33 percent. It operates in a sub-sector that didn’t exist just a few years ago and is now expected to be worth $56 billion by 2023.
Small-Cap Healthcare Stocks
With a market cap just under 300 million, Zynex Medical (NASDAQ:ZYXI) is certainly on the small end of the medical space. However, like all the other healthcare stocks on this list, it is carving a niche for itself as a necessary provider of a life-saving product or service.
Zynex operates in the medical equipment and supplies industry. Specifically, it designs, manufactures, and markets medical devices for electrotherapy and pain management. Once thought to be a barbaric treatment, electrotherapy has entered the modern age as a safe, reliable, and effective method for treating chronic and acute pain. Zynex’s solutions can also activate and exercise muscles for rehabilitative purposes through electrical stimulation.
Not only did the company watch its revenue grow 36 percent in Q2, it also saw its customer base expand by 65 percent. As the medical profession reexamines electrotherapeutic treatments, Zynex is becoming a first mover in many of the applicable services.
As healthcare is an ever-important facet of human life, there’s no doubt that medical companies will always be looking for new ways to extend and preserve our time here on earth. Each of these healthcare stocks offers something that comparable companies cannot, and that makes them worth a look.
For anyone looking to make money on the medical sector, search for companies that are pushing the boundaries of a certain treatment or technology.
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