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3 Medical Info System Stocks to Gain on Rising Demand for Digital Health
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In the pre-COVID era, the Medical Information Systems industry witnessed a gradual upsurge in demand for telehealth and other health IT applications from MedTech providers for improving the quality of healthcare and streamlining services. The COVID-19 outbreak led to exponential growth in this industry, thanks to the growing demand for contactless services due to the more infectious new virus variants.
While the severity of the pandemic is gradually fading, market watchers still claim that digital health is expected to maintain its strength with healthcare professionals and patients leveraging its benefits. Through the past couple of years, the extensive application of digital health across every sphere of MedTech has made it evident that AI and predictive analysis are driving better healthcare. Per a Grand View Research report, the global healthcare information system market size was valued at $359.8 billion in 2021 and is expected to expand at an impressive CAGR of 13.2% from 2022 to 2030 on account of rising demand for remote treatment options. Growing demand for all kinds of digital healthcare support has created a unique opportunity for companies like Inspire Medical Systems, Inc. (INSP - Free Report) , Axonics (AXNX - Free Report) , and Pulmonx Corporation (LUNG - Free Report) . However, there is a counterargument that with the opening up of the global economy despite COVID waves, this trend might get disrupted gradually.
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.
3 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. Going by a Forbes article of 2022, telehealth is likely to stay for long, beyond the pandemic and will likely be embedded into the healthcare vernacular and become an everyday part of treating patients. 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 2021, 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 lessened despite the emergence of more infectious variants of the virus. Accordingly, despite 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. These have 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.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #66, which places it in the top 26% 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 bright 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 32.4% compared with the Zacks Medical sector’s decline of 23.6%. The S&P 500 has dropped 20.4% 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 2.03X compared with the S&P 500’s 3.26X and the sector’s 2.06X.
Over the last five years, the sector has traded as high as 3.45X, as low as 0.86X, and at the median of 2.29X, 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
Inspire Medical Systems: Inspire is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea. Inspire’s proprietary Inspire therapy is the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for moderate-to-severe obstructive sleep apnea.
Inspire Medical Systems continues to focus on utilization improvements at existing sites and setting utilization targets for newly activated centers. Further, its outreach programs continue to be effective in generating interest in Inspire therapy, primarily through the inspire sleep.com website. The company currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2022 revenues indicates an increase of 55.4% from 2021. Over the past year, the stock has declined 32.2% compared with the industry’s 54.6% plunge.
Price and Consensus: INSP
Axonics: Based in Irvine, CA., Axonics is a global medical technology company that is developing and commercializing novel products for adults with bladder and bowel dysfunction. Axonics’ sacral neuromodulation (SNM) systems provide patients suffering from overactive bladder and/or fecal incontinence with long-lived, easy-to-use, safe, clinically effective therapy.
As a major positive, the company, in 2022, received FDA approval for its newly developed truly recharge-free SNM system, F15. In September 2022, Axonics announced the first patient implants in Canada with the Axonics F15. The company currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2022 revenues indicates a year-over-year increase of 40.6%. In the past year, the stock has gained 9.2%.
Pulmonx: Pulmonx is a player in the field of minimally invasive treatments for severe lung disease. Pulmonx’s Zephyr Endobronchial Valve, Chartis Pulmonary Assessment System and StratX Lung Analysis Platform are designed to assess and treat patients with severe emphysema/COPD. Pulmonx received FDA pre-market approval to commercialize the Zephyr Valve following its designation as a breakthrough device. The Zephyr Valve is commercially available in more than 25 countries.
Pulmonx carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2022 sales indicates year-over-year growth of 19.1%. Over the past year, the stock has lost 63.7%.
Price and Consensus: LUNG
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3 Medical Info System Stocks to Gain on Rising Demand for Digital Health
In the pre-COVID era, the Medical Information Systems industry witnessed a gradual upsurge in demand for telehealth and other health IT applications from MedTech providers for improving the quality of healthcare and streamlining services. The COVID-19 outbreak led to exponential growth in this industry, thanks to the growing demand for contactless services due to the more infectious new virus variants.
While the severity of the pandemic is gradually fading, market watchers still claim that digital health is expected to maintain its strength with healthcare professionals and patients leveraging its benefits. Through the past couple of years, the extensive application of digital health across every sphere of MedTech has made it evident that AI and predictive analysis are driving better healthcare. Per a Grand View Research report, the global healthcare information system market size was valued at $359.8 billion in 2021 and is expected to expand at an impressive CAGR of 13.2% from 2022 to 2030 on account of rising demand for remote treatment options. Growing demand for all kinds of digital healthcare support has created a unique opportunity for companies like Inspire Medical Systems, Inc. (INSP - Free Report) , Axonics (AXNX - Free Report) , and Pulmonx Corporation (LUNG - Free Report) . However, there is a counterargument that with the opening up of the global economy despite COVID waves, this trend might get disrupted gradually.
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.
3 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. Going by a Forbes article of 2022, telehealth is likely to stay for long, beyond the pandemic and will likely be embedded into the healthcare vernacular and become an everyday part of treating patients. 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 2021, 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 lessened despite the emergence of more infectious variants of the virus. Accordingly, despite 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. These have 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.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #66, which places it in the top 26% 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 bright 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 32.4% compared with the Zacks Medical sector’s decline of 23.6%. The S&P 500 has dropped 20.4% 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 2.03X compared with the S&P 500’s 3.26X and the sector’s 2.06X.
Over the last five years, the sector has traded as high as 3.45X, as low as 0.86X, and at the median of 2.29X, 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
Inspire Medical Systems: Inspire is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea. Inspire’s proprietary Inspire therapy is the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for moderate-to-severe obstructive sleep apnea.
Inspire Medical Systems continues to focus on utilization improvements at existing sites and setting utilization targets for newly activated centers. Further, its outreach programs continue to be effective in generating interest in Inspire therapy, primarily through the inspire sleep.com website. The company currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2022 revenues indicates an increase of 55.4% from 2021. Over the past year, the stock has declined 32.2% compared with the industry’s 54.6% plunge.
Price and Consensus: INSP
Axonics: Based in Irvine, CA., Axonics is a global medical technology company that is developing and commercializing novel products for adults with bladder and bowel dysfunction. Axonics’ sacral neuromodulation (SNM) systems provide patients suffering from overactive bladder and/or fecal incontinence with long-lived, easy-to-use, safe, clinically effective therapy.
As a major positive, the company, in 2022, received FDA approval for its newly developed truly recharge-free SNM system, F15. In September 2022, Axonics announced the first patient implants in Canada with the Axonics F15. The company currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2022 revenues indicates a year-over-year increase of 40.6%. In the past year, the stock has gained 9.2%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: AXNX
Pulmonx: Pulmonx is a player in the field of minimally invasive treatments for severe lung disease. Pulmonx’s Zephyr Endobronchial Valve, Chartis Pulmonary Assessment System and StratX Lung Analysis Platform are designed to assess and treat patients with severe emphysema/COPD. Pulmonx received FDA pre-market approval to commercialize the Zephyr Valve following its designation as a breakthrough device. The Zephyr Valve is commercially available in more than 25 countries.
Pulmonx carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2022 sales indicates year-over-year growth of 19.1%. Over the past year, the stock has lost 63.7%.
Price and Consensus: LUNG