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3 Medical Info Systems Stocks Braving Industry-wide Headwinds
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The COVID-19 outbreak has led to exponential growth in the Medical Information Systems industry, thanks to the growing demand for contactless services surrounding the more infectious new virus variants. Market watchers claim that even beyond the pandemic, digital health is expected to maintain this strength as healthcare professionals and patients leverage its benefits. Per a report by Market Watch, the global Internet of Medical Things (IoMT) market is anticipated to reach $142.45 billion by 2026, with a CAGR of 28.9%, on account of the increasing prevalence of chronic diseases.
Growing demand for all kind of digital healthcare support, including telehealth, cloud computing, artificial intelligence, robotics and analytics, has created a unique opportunity for companies like Change Healthcare , Allscripts Healthcare Solutions (MDRX - Free Report) and Computer Programs and Systems, Inc. . However, there is a counterargument that with the continued opening up of the global economy despite COVID waves, this trend might get disrupted going forward.
Industry Description
The Zacks Medical Info Systems industry comprises companies, which develop and market healthcare information systems. These companies offer software and hardware solutions to healthcare providers with secure access to real-time clinical, administrative and financial data in a time-efficient manner. Focus on patient satisfaction, security of patient data and administrative cost control has increased the need for big data, 3D printing, blockchain and AI. Industry players like Omnicell and Allscripts are raking in millions from the sale of software and related hardware, professional services and IT outsourcing services, recurring service contracts for software maintenance, and transaction processing services.
4 Trends Shaping the Future of the Medical Information Industry
Growing Demand for Contactless Services: Amid the pandemic, the need for contactless services has grown enormously. Within the Medical information systems space, the telehealth and remote patient monitoring segments are particularly growing at a faster rate. Per a Markets and Markets report, the global remote patient monitoring market is projected to reach $117.1 billion by 2025 from $23.2 billion in 2020, seeing a CAGR of 38.2% between 2020 and 2025. Also, realizing the importance of digitization in healthcare, the FDA earlier this year launched the Artificial Intelligence/Machine Learning (AI/ML)-Based Software as a Medical Device (SaMD) Action Plan.
Subsiding COVID-19 Cases Might Disrupt the Trend: While COVID-19 has introduced an all-new era of virtual healthcare service, it has also brought in associated pitfalls. A Wall Street Journal report says that major insurers have been rolling back the terms of this virtual care coverage, upon which customers are facing out-of-pocket charges on certain virtual visits. Adding to the complication, thanks to the successful vaccination drives globally, the severity of COVID-19 has been despite the emergence of more infectious variants of the virus. Accordingly, even amid a rise in case count over the past few months, social restrictions have been lifted to a significant extent. This has led to a rise in the number of physician office and hospital visits with a significant reduction in demand for virtual physician appointments. Going by a Healthcare Finance report, insurers are currently wondering how virtual care will look and what it will be like when the pandemic is finally in the rearview mirror.
EMR and Blockchain Gain Ground: Among the long-term trends, EHRs, electronic medical records (EMR), predictive analytics and real-time alerting have been gaining prominence. This has led to the emergence of Internet of Medical Things (IoMT), which has enabled the use of a number of wearables, including ECG and EKG monitors, apart from other common medical measurement devices, to determine temperature, glucose level, and blood pressure readings. The evolution of telemedicine and blockchain is another mega trend worth mentioning here. Leading healthcare companies like Humana, MultiPlan, Quest Diagnostics and UnitedHealth Group’s Optum and UnitedHealthcare formed an alliance to launch the Synaptic Health Alliance pilot project on blockchain.
Rising Instances of Cyber Attacks: As healthcare becomes more wired and interconnected, cybersecurity is the primary concern of hospitals. In fact, security flaws are being increasingly found in electronic medical device operating systems or other devices like ECG machines, imaging scanners, infusion pumps and telemetry systems. Indeed, the pandemic has led to growing cyber dependency, which has made the space vulnerable to cyber-attacks. Interpol’s recent report claims that cybercriminals are particularly targeting hospitals, medical centers and public institutions for ransomware attacks as these institutions are already entangled in a healthcare crisis.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #142, which places it in the bottom 43% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates weak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
We will present a few stocks that have the potential to outperform the market based on a strong earnings outlook. But it’s worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms S&P 500 and Sector
The industry has underperformed the Zacks S&P 500 composite as well as the sector over the past year.
The industry has declined 54.2% compared with the Zacks Medical sector’s decline of 20.1%. The S&P 500 has risen 13.6% in the said time frame.
One Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-sales (P/S), which is commonly used for valuing medical stocks, the industry is currently trading at 3.04X compared with the S&P 500’s 4.44X and the sector’s 2.44X.
Over the last five years, the sector has traded as high as 4.67X, as low as 1.75X, and at the median of 3.03X, as the charts below show.
Price-to-Sales Forward Twelve Months (F12M)
Price-to-Sales Forward Twelve Months (F12M)
3 Medical Info Systems Stocks to Buy
Change Healthcare: Change Healthcare, headquartered in Nashville, TN, is an independent healthcare technology platform offering data and analytics-driven solutions to boost clinical financial and patient engagement outcomes in the United States healthcare system. The company operates through three segments: Software and Analytics, Network Solutions and Technology-Enabled Services.
Change Healthcare has been utilizing AI and ML to detect inefficiencies and eliminate them from administrative processes in the healthcare system, thereby lowering costs. On the fiscal fourth-quarter 2021 earnings call, the company said that it saw increased volumes stemming from new business, sustained growth in its application programming. The company currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2022 earnings indicates a year-over-year increase of 16.4%. Year to date, the stock has declined 6.6% compared with the industry’s 14.3% dip.
Price and Consensus: CHNG
Allscripts Healthcare Solutions: Allscripts provides information technology (IT) solutions and services to healthcare organizations. Allscripts primarily derives revenues from the sale of its proprietary software and related hardware, professional services and IT outsourcing services.
Allscripts currently expects to benefit from investments it has made to make Sunrise EHR platform, which will be delivered in the cloud through its partnership with Microsoft. The company currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2022 earnings indicates a year-over-year increase of 6.2%. In the past year, the stock has gained 26.1% against the industry’s decline of 53.5%.
Computer Programs and Systems, Inc.: Computer Programs and Systems provides healthcare information technology solutions and services in the United States and the Caribbean nation of St. Maarten. Its software systems include patient management software that enables a hospital to identify a patient at various points in the healthcare delivery system, as well as to collect and maintain patient information throughout the process of patient care; and financial accounting software, which enables business office applications to track and coordinate information needed for managerial decision-making.
According to CPSI, 2021 marked the completion of the first year of its journey of transformation to drive long-term sustainability and growth, creating a solid foundation to build upon over the next few years. The company carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2022 sales indicates year-over-year growth of 6%. Year to date, the stock has gained 0.8%.
Price and Consensus: CPSI
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3 Medical Info Systems Stocks Braving Industry-wide Headwinds
The COVID-19 outbreak has led to exponential growth in the Medical Information Systems industry, thanks to the growing demand for contactless services surrounding the more infectious new virus variants. Market watchers claim that even beyond the pandemic, digital health is expected to maintain this strength as healthcare professionals and patients leverage its benefits. Per a report by Market Watch, the global Internet of Medical Things (IoMT) market is anticipated to reach $142.45 billion by 2026, with a CAGR of 28.9%, on account of the increasing prevalence of chronic diseases.
Growing demand for all kind of digital healthcare support, including telehealth, cloud computing, artificial intelligence, robotics and analytics, has created a unique opportunity for companies like Change Healthcare , Allscripts Healthcare Solutions (MDRX - Free Report) and Computer Programs and Systems, Inc. . However, there is a counterargument that with the continued opening up of the global economy despite COVID waves, this trend might get disrupted going forward.
Industry Description
The Zacks Medical Info Systems industry comprises companies, which develop and market healthcare information systems. These companies offer software and hardware solutions to healthcare providers with secure access to real-time clinical, administrative and financial data in a time-efficient manner. Focus on patient satisfaction, security of patient data and administrative cost control has increased the need for big data, 3D printing, blockchain and AI. Industry players like Omnicell and Allscripts are raking in millions from the sale of software and related hardware, professional services and IT outsourcing services, recurring service contracts for software maintenance, and transaction processing services.
4 Trends Shaping the Future of the Medical Information Industry
Growing Demand for Contactless Services: Amid the pandemic, the need for contactless services has grown enormously. Within the Medical information systems space, the telehealth and remote patient monitoring segments are particularly growing at a faster rate. Per a Markets and Markets report, the global remote patient monitoring market is projected to reach $117.1 billion by 2025 from $23.2 billion in 2020, seeing a CAGR of 38.2% between 2020 and 2025. Also, realizing the importance of digitization in healthcare, the FDA earlier this year launched the Artificial Intelligence/Machine Learning (AI/ML)-Based Software as a Medical Device (SaMD) Action Plan.
Subsiding COVID-19 Cases Might Disrupt the Trend: While COVID-19 has introduced an all-new era of virtual healthcare service, it has also brought in associated pitfalls. A Wall Street Journal report says that major insurers have been rolling back the terms of this virtual care coverage, upon which customers are facing out-of-pocket charges on certain virtual visits. Adding to the complication, thanks to the successful vaccination drives globally, the severity of COVID-19 has been despite the emergence of more infectious variants of the virus. Accordingly, even amid a rise in case count over the past few months, social restrictions have been lifted to a significant extent. This has led to a rise in the number of physician office and hospital visits with a significant reduction in demand for virtual physician appointments. Going by a Healthcare Finance report, insurers are currently wondering how virtual care will look and what it will be like when the pandemic is finally in the rearview mirror.
EMR and Blockchain Gain Ground: Among the long-term trends, EHRs, electronic medical records (EMR), predictive analytics and real-time alerting have been gaining prominence. This has led to the emergence of Internet of Medical Things (IoMT), which has enabled the use of a number of wearables, including ECG and EKG monitors, apart from other common medical measurement devices, to determine temperature, glucose level, and blood pressure readings. The evolution of telemedicine and blockchain is another mega trend worth mentioning here. Leading healthcare companies like Humana, MultiPlan, Quest Diagnostics and UnitedHealth Group’s Optum and UnitedHealthcare formed an alliance to launch the Synaptic Health Alliance pilot project on blockchain.
Rising Instances of Cyber Attacks: As healthcare becomes more wired and interconnected, cybersecurity is the primary concern of hospitals. In fact, security flaws are being increasingly found in electronic medical device operating systems or other devices like ECG machines, imaging scanners, infusion pumps and telemetry systems. Indeed, the pandemic has led to growing cyber dependency, which has made the space vulnerable to cyber-attacks. Interpol’s recent report claims that cybercriminals are particularly targeting hospitals, medical centers and public institutions for ransomware attacks as these institutions are already entangled in a healthcare crisis.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #142, which places it in the bottom 43% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates weak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
We will present a few stocks that have the potential to outperform the market based on a strong earnings outlook. But it’s worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms S&P 500 and Sector
The industry has underperformed the Zacks S&P 500 composite as well as the sector over the past year.
The industry has declined 54.2% compared with the Zacks Medical sector’s decline of 20.1%. The S&P 500 has risen 13.6% in the said time frame.
One Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-sales (P/S), which is commonly used for valuing medical stocks, the industry is currently trading at 3.04X compared with the S&P 500’s 4.44X and the sector’s 2.44X.
Over the last five years, the sector has traded as high as 4.67X, as low as 1.75X, and at the median of 3.03X, as the charts below show.
Price-to-Sales Forward Twelve Months (F12M)
Price-to-Sales Forward Twelve Months (F12M)
3 Medical Info Systems Stocks to Buy
Change Healthcare: Change Healthcare, headquartered in Nashville, TN, is an independent healthcare technology platform offering data and analytics-driven solutions to boost clinical financial and patient engagement outcomes in the United States healthcare system. The company operates through three segments: Software and Analytics, Network Solutions and Technology-Enabled Services.
Change Healthcare has been utilizing AI and ML to detect inefficiencies and eliminate them from administrative processes in the healthcare system, thereby lowering costs. On the fiscal fourth-quarter 2021 earnings call, the company said that it saw increased volumes stemming from new business, sustained growth in its application programming. The company currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2022 earnings indicates a year-over-year increase of 16.4%. Year to date, the stock has declined 6.6% compared with the industry’s 14.3% dip.
Price and Consensus: CHNG
Allscripts Healthcare Solutions: Allscripts provides information technology (IT) solutions and services to healthcare organizations. Allscripts primarily derives revenues from the sale of its proprietary software and related hardware, professional services and IT outsourcing services.
Allscripts currently expects to benefit from investments it has made to make Sunrise EHR platform, which will be delivered in the cloud through its partnership with Microsoft. The company currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2022 earnings indicates a year-over-year increase of 6.2%. In the past year, the stock has gained 26.1% against the industry’s decline of 53.5%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: MDRX
Computer Programs and Systems, Inc.: Computer Programs and Systems provides healthcare information technology solutions and services in the United States and the Caribbean nation of St. Maarten. Its software systems include patient management software that enables a hospital to identify a patient at various points in the healthcare delivery system, as well as to collect and maintain patient information throughout the process of patient care; and financial accounting software, which enables business office applications to track and coordinate information needed for managerial decision-making.
According to CPSI, 2021 marked the completion of the first year of its journey of transformation to drive long-term sustainability and growth, creating a solid foundation to build upon over the next few years. The company carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2022 sales indicates year-over-year growth of 6%. Year to date, the stock has gained 0.8%.
Price and Consensus: CPSI