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3 Top Medical Info Systems Stocks to Beat COVID-19 Resurgence Crisis
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The initial phase of COVID-19 proved to be extremely beneficial for the Medical Information industry. With the resurgence of COVID-19 cases, this industry witnessed growing demand for all kind of digital healthcare support including telehealth, cloud computing, artificial intelligence and robotics, analytics, EHR and IoT, which have proved beneficial in controlling the spread of the infection. This created a unique opportunity for heavyweights within the industry like Cerner whose AI-enabled workflow started to get huge industry acceptance.
The frontrunners in the industry are Omnicell, Inc. (OMCL - Free Report) , NextGen Healthcare and NantHealth, Inc. .
However, the pandemic put a brake on the flow of seamless R&D operations within this sector. Also, a gloomy third-quarter performance, along with many of the industry players’ apprehension about a ‘new great depression’ approaching resulted in significant bearishness.
About the Industry
The Zacks Medical Info Systems industry comprises companies, which develop and market healthcare information systems. They offer software and hardware solutions to healthcare providers with secure access to real-time clinical, administrative and financial data in a time-efficient manner. Over the past few years, this digital health sector has evolved greatly to meet the changing needs of healthcare providers.
Focus on patient satisfaction and security of patient data, and increasing administrative costs have increased the need for big data, 3D printing, blockchain and AI. These technologies are currently shaping the MedTech space.
The industry players are raking in billions from the sale of proprietary software and related hardware, professional services and IT outsourcing services. Recurring service contracts for software maintenance and certain transaction processing services also contribute to revenues. A major player in this industry is Cerner, a healthcare information technology (HCIT) solutions provider.
4 Trends Shaping the Future of the Medical Information Industry
Growing Demand for Contactless Services: Amid the pandemic, contactless services became the buzzword. Medical information system companies have witnessed a relatively positive impact on their businesses than the rest. Particularly, the telehealth and remote patient monitoring segments are growing at a faster rate compared to others in themedical information space. Per a Markets and Marketsreport, 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, going by a Dataquest report, 34% of the digital health companies expect the pandemic to have a positive impact on their business and 53% of the industry players believe that this will bring about a significant improvement in patient acceptance of digital solutions. We are keeping an eye on Allscripts Healthcare Solutions, Inc. (MDRX - Free Report) . The company provides simplified telehealth implementation to health systems through its electronic health record (EHR)-agnostic patient engagement platform known as FollowMyHealth.
Lower Product Booking Impacts Performance: The medical information industry players are currently witnessing significantly lower product bookings as well as slowdown in purchasing decisions by hospitals. The pandemic impacted the majority of these players’ third-quarter results. As elective surgeries were postponed to prioritize treatment of COVID-19 patients, these companies witnessed a decline in new bookings. Also, some implementations from backlog were delayed as hospitals were either busy with COVID-19 patients or were preparing for a potential surge in COVID-19 patient hospital admissions. Further, worldwide sales and supply disruption put many smaller players’ businesses at stake. Many of them are currently unable to properly access credit or equity funding. If the situation persists, it can lead to systemic risk, which will gradually cascade through the entire economy.
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 in the U.S. MedTech space. 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. Evolution in telemedicine is another mega trend worth mentioning here. We should also mention blockchain technology, a new method of storing the same amount of digital information in a way that it takes up less space. In fact, leading healthcare companies like Humana, MultiPlan, Quest Diagnostics (DGX - Free Report) and UnitedHealth Group’s Optum and UnitedHealthcare formed an alliance to launch Synaptic Health Alliance pilot project on blockchain technology. Aetna, a CVS Health business, and Ascension have also joined this program.
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. Interpole’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 and cannot afford to be locked out of their systems.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #203, which places it in the bottom 20% 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 Outperforms S&P 500, Sector
The industry has outperformed both the Zacks S&P 500 composite and the sector over the past year.
The industry has gained 33.8% compared with the S&P 500’s 19.8% rise and the Zacks Medical sector’s rise of 8.4%.
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 4.47X compared with the S&P 500’s 4.57X and the sector’s 2.91X.
Over the last five years, the sector has traded as high as 4.47X, as low as 1.62X, and at the median of 2.19X, as the charts below show.
Price-to-Earnings Forward Twelve Months (F12M)
Price-to-Earnings Forward Twelve Months (F12M)
3 Medical Info Systems Stocks Likely to Keep Moving Higher
Omnicell: This medication-use end-to-end automation solutions provider is progressing well with strategy that covers market expansion through delivery of differentiated, innovative solutions; expansion into new markets and expansion through strategic partnerships and acquisition of new technologies. Omnicell’s ongoing improvement in Service and other revenues despite the pandemic-led business challenges is impressive. The company is optimistic about the gradual resumption of elective surgeries and some on-site sales activities in regions less impacted by the pandemic.
The company currently holds a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2021 earnings indicates year-over-year increase of 34.5%. Over the past six months, the stock has gained 73.5%, comparing favorably with the industry’s 40.3% rise.
NextGen Healthcare: This healthcare information systems provider offers software that helps in automating and streamlining administrative functions required for operating a medical, dental or hospital practice. The company plans to further capitalize on the success of its integrated solution by shifting its client base to its Spring '21 release, which leverages on its new patient experience platform. The launch of the next generation of EHR-based behavioral health suite during the fiscal second quarter was encouraging too.
The company currently holds a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2021 earnings indicates year-over-year increase of 15.7%. The company delivered average earnings surprise of 50.9% in the trailing four quarters. Over the past six months, the stock has gained 82.8%.
Price and Consensus: NXGN
NantHealth: This healthcare IT solutions and services provider primarily derives revenues from molecular profiling solutions, software-as-a-service platforms, and connected care medical device interoperability solutions to enable value-based care and evidence-based clinical practice. The company is positive about its recent strategic acquisition of OpenNMS, which provides a number of cross marketing opportunities by leveraging NantHealth data science and AI competencies and OpenNMS’ network monitoring solutions for critical data flows.
The company carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for 2021 sales indicates year-over-year growth of 7.4%. Over the past year, the stock has gained 122.4%.
Price and Consensus: NH
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Shutterstock
3 Top Medical Info Systems Stocks to Beat COVID-19 Resurgence Crisis
The initial phase of COVID-19 proved to be extremely beneficial for the Medical Information industry. With the resurgence of COVID-19 cases, this industry witnessed growing demand for all kind of digital healthcare support including telehealth, cloud computing, artificial intelligence and robotics, analytics, EHR and IoT, which have proved beneficial in controlling the spread of the infection. This created a unique opportunity for heavyweights within the industry like Cerner whose AI-enabled workflow started to get huge industry acceptance.
The frontrunners in the industry are Omnicell, Inc. (OMCL - Free Report) , NextGen Healthcare and NantHealth, Inc. .
However, the pandemic put a brake on the flow of seamless R&D operations within this sector. Also, a gloomy third-quarter performance, along with many of the industry players’ apprehension about a ‘new great depression’ approaching resulted in significant bearishness.
About the Industry
The Zacks Medical Info Systems industry comprises companies, which develop and market healthcare information systems. They offer software and hardware solutions to healthcare providers with secure access to real-time clinical, administrative and financial data in a time-efficient manner. Over the past few years, this digital health sector has evolved greatly to meet the changing needs of healthcare providers.
Focus on patient satisfaction and security of patient data, and increasing administrative costs have increased the need for big data, 3D printing, blockchain and AI. These technologies are currently shaping the MedTech space.
The industry players are raking in billions from the sale of proprietary software and related hardware, professional services and IT outsourcing services. Recurring service contracts for software maintenance and certain transaction processing services also contribute to revenues. A major player in this industry is Cerner, a healthcare information technology (HCIT) solutions provider.
4 Trends Shaping the Future of the Medical Information Industry
Growing Demand for Contactless Services: Amid the pandemic, contactless services became the buzzword. Medical information system companies have witnessed a relatively positive impact on their businesses than the rest. Particularly, the telehealth and remote patient monitoring segments are growing at a faster rate compared to others in themedical information space. 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, going by a Dataquest report, 34% of the digital health companies expect the pandemic to have a positive impact on their business and 53% of the industry players believe that this will bring about a significant improvement in patient acceptance of digital solutions. We are keeping an eye on Allscripts Healthcare Solutions, Inc. (MDRX - Free Report) . The company provides simplified telehealth implementation to health systems through its electronic health record (EHR)-agnostic patient engagement platform known as FollowMyHealth.
Lower Product Booking Impacts Performance: The medical information industry players are currently witnessing significantly lower product bookings as well as slowdown in purchasing decisions by hospitals. The pandemic impacted the majority of these players’ third-quarter results. As elective surgeries were postponed to prioritize treatment of COVID-19 patients, these companies witnessed a decline in new bookings. Also, some implementations from backlog were delayed as hospitals were either busy with COVID-19 patients or were preparing for a potential surge in COVID-19 patient hospital admissions. Further, worldwide sales and supply disruption put many smaller players’ businesses at stake. Many of them are currently unable to properly access credit or equity funding. If the situation persists, it can lead to systemic risk, which will gradually cascade through the entire economy.
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 in the U.S. MedTech space. 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. Evolution in telemedicine is another mega trend worth mentioning here. We should also mention blockchain technology, a new method of storing the same amount of digital information in a way that it takes up less space. In fact, leading healthcare companies like Humana, MultiPlan, Quest Diagnostics (DGX - Free Report) and UnitedHealth Group’s Optum and UnitedHealthcare formed an alliance to launch Synaptic Health Alliance pilot project on blockchain technology. Aetna, a CVS Health business, and Ascension have also joined this program.
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. Interpole’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 and cannot afford to be locked out of their systems.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #203, which places it in the bottom 20% 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 Outperforms S&P 500, Sector
The industry has outperformed both the Zacks S&P 500 composite and the sector over the past year.
The industry has gained 33.8% compared with the S&P 500’s 19.8% rise and the Zacks Medical sector’s rise of 8.4%.
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 4.47X compared with the S&P 500’s 4.57X and the sector’s 2.91X.
Over the last five years, the sector has traded as high as 4.47X, as low as 1.62X, and at the median of 2.19X, as the charts below show.
Price-to-Earnings Forward Twelve Months (F12M)
Price-to-Earnings Forward Twelve Months (F12M)
3 Medical Info Systems Stocks Likely to Keep Moving Higher
Omnicell: This medication-use end-to-end automation solutions provider is progressing well with strategy that covers market expansion through delivery of differentiated, innovative solutions; expansion into new markets and expansion through strategic partnerships and acquisition of new technologies. Omnicell’s ongoing improvement in Service and other revenues despite the pandemic-led business challenges is impressive. The company is optimistic about the gradual resumption of elective surgeries and some on-site sales activities in regions less impacted by the pandemic.
The company currently holds a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2021 earnings indicates year-over-year increase of 34.5%. Over the past six months, the stock has gained 73.5%, comparing favorably with the industry’s 40.3% rise.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: OMCL
NextGen Healthcare: This healthcare information systems provider offers software that helps in automating and streamlining administrative functions required for operating a medical, dental or hospital practice. The company plans to further capitalize on the success of its integrated solution by shifting its client base to its Spring '21 release, which leverages on its new patient experience platform. The launch of the next generation of EHR-based behavioral health suite during the fiscal second quarter was encouraging too.
The company currently holds a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2021 earnings indicates year-over-year increase of 15.7%. The company delivered average earnings surprise of 50.9% in the trailing four quarters. Over the past six months, the stock has gained 82.8%.
Price and Consensus: NXGN
NantHealth: This healthcare IT solutions and services provider primarily derives revenues from molecular profiling solutions, software-as-a-service platforms, and connected care medical device interoperability solutions to enable value-based care and evidence-based clinical practice. The company is positive about its recent strategic acquisition of OpenNMS, which provides a number of cross marketing opportunities by leveraging NantHealth data science and AI competencies and OpenNMS’ network monitoring solutions for critical data flows.
The company carries a Zacks Rank of 2, at present. The Zacks Consensus Estimate for 2021 sales indicates year-over-year growth of 7.4%. Over the past year, the stock has gained 122.4%.
Price and Consensus: NH
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>