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3 Medical Info System Stocks to Bank on Despite Decline in COVID-19 Cases

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The COVID-19 pandemic has in a way increased the pace of progress of Medical Information Systems industry. Thanks to the one-and-a-half-year long pandemic-led healthcare emergencies, automated and computer-assisted medical procedures have gained great importance. This industry is currently witnessing 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 companies like Computer Programs and Systems, Inc. (CPSI - Free Report) and Centogene N.V. (CNTG - Free Report) . We should also keep a close eye on Cerner whose AI-enabled workflow started to get huge industry acceptance. However, there is a counter argument that with a gradual decline in COVID-19 cases, this trend might get disrupted any time in 2021.

Industry Description

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. Focus on patient satisfaction, security of patient data and increasing administrative costs have increased the need for big data, 3D printing, blockchain and AI. The industry players are raking in billions from the sale of software and related hardware, professional services and IT outsourcing services, recurring service contracts for software maintenance and certain transaction processing services. 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, the need for contactless services has grown enormously. Within Medical information systems space,  the telehealth and remote patient monitoring segments are particularly growing at a faster rate compared to others. 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 in January 2021 launched Artificial Intelligence/Machine Learning (AI/ML)-Based Software as a Medical Device (SaMD) Action Plan. This is considered as an important step in furthering the agency’s efforts toward advancing digital health technology, including mobile health devices, SaMD, wearables when used as a medical device, and technologies used to study medical products. 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.

Subsiding COVID-19 Cases Might Disrupt 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, 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, with COVID-19 cases gradually dropping in 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 visible reduction in demand for virtual physician appointments. Going by a Healthcare Finance report, insurers are currentlywondering 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 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

The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #212, which places it in the bottom 15% 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, Outperforms Sector

The industry has underperformed the Zacks S&P 500 composite but outperformed the sector over the past year.

The industry has gained 2.3% compared with the S&P 500’s 34.1% rise and the Zacks Medical sector’s rise of 0.2%.

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 4.32X compared with the S&P 500’s 4.70X and the sector’s 2.62X.

Over the last five years, the sector has traded as high as 4.63X, as low as 1.48X, and at the median of 1.98X, 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 Keep an Eye On

Computer Programs and Systems, Inc.: Thishealthcare information technology solutions and services provider is executing well with regard to its core growth, margin optimization, and tangible upside growth strategies through digital innovation. In terms of automation, the company has been investing in development of resources dedicated to equipping its revenue cycle workforce with modern tools and processes to reduce labor intensive work. In terms of the company’s partnership with key outsource labor partners, it is making good progress in applying outsourced resources related to medical coding and accounts receivable management services for the emergency department.

The company currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2021 earnings indicates year-over-year increase of 13.1%. Over the past year, the stock has gained 34.6%, comparing favorably with the industry’s 2.4% rise.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: CPSI


Centogene N.V.: This healthcare information systems player focuses on rare diseases that transform real-world clinical and genetic, or other data into actionable information for patients, physicians, and pharmaceutical companies worldwide. The company’s continued investments into rare disease core business embarks on its next phase of growth.In 2020, the company’s revenues more than doubled from 2019 driven by COVID-19 testing.

The company currently holds a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2022 earnings indicates year-over-year increase of 1.8%. Year to date, the stock has lost 10.4%, comparing favorably with the industry’s loss of 21.1%.

Price and Consensus: CNTG


Cerner: This healthcare IT solutions and services provider continues to benefit from electronic health record (EHR), electronic patient record (EPR) or electronic medical record (EMR) platforms that provide patient care in acute inpatient and outpatient settings. Gains in Licensed software, Subscriptions and Managed Services units buoy optimism.

The company carries a Zacks Rank of 3 (Hold), at present. The Zacks Consensus Estimate for 2021 sales indicates year-over-year growth of 12.7%. Over the past year, the stock has gained 9.9%.

Price and Consensus: CERN

5 Stocks Set to Double

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

In-Depth Zacks Research for the Tickers Above

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Quest Diagnostics Incorporated (DGX) - free report >>

Computer Programs and Systems, Inc. (CPSI) - free report >>

Centogene N.V. (CNTG) - free report >>