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Digital Health Momentum is Here to Stay: 3 MedTech Stocks in Focus

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If there is one space that has benefited immensely from this catastrophic public health crisis, then it is digital health. Although digital health has been around for a long time, it gained prominence amid the pandemic by aiding healthcare providers and patients significantly. With most of the countries, including United States, easing restrictions and vaccinations in full swing, there seems to be light at the end the tunnel in 2021.

However, digital health will sustain its momentum this year as well, as mutations of the virus have led to several variants, which in turn have increased the risk of infections. Even beyond the pandemic, digital health is expected to maintain this strength as healthcare professionals and patients leverage its benefits.

In fact, per a report by Research and Markets, the U.S. digital health market is expected to be worth $191.64 billion in 2025, witnessing a CAGR of 28.4% during the forecast period (2021-2025). Therefore, the digital health boom is here to stay and investors eyeing this space can capitalize on it backed by certain trends that can drive this market’s performance in 2021.

Digital Health in 2021: Key Trends to Watch

Telehealth continues to be one of the biggest factors driving the digital health market as it helped in expansion of healthcare access, reduced contact, maintained continuity of care and provided care for emergency non-COVID-19 conditions. Telehealth market is likely to grow in leaps and bounds in the coming years, thereby supporting the healthcare sector. Notably, NextGen Healthcare (NXGN - Free Report) achieved a significant milestone by enabling more than 1 million patient visits through its telehealth solution in 2020 and the momentum is likely to continue this year.

Let us now shift our focus to one of the fastest growing digital health trends of 2020 — Internet of Things (IoT) — especially Medical IoT, which is a rapidly growing field utilizing wearable devices, monitors and integrated applications for healthcare needs. On the back of artificial intelligence and machine learning technology, medical IoT can provide advanced versions of traditional medical devices. Benefits like reduced costs for patients and hospitals, better convenience and most importantly remote monitoring are worth mentioning.

Virtual reality (VR) and augmented reality (AR) are not restricted to gaming and entertainment anymore. In healthcare, VR aids in surgical training and planning, thereby allowing both surgeons and patients to be more comfortable with procedures. According to multiple reports VR has proven to be helpful with respect to chronic pain management and mental health.

We have seen that Blockchain technology has been successful in transforming the healthcare industry by putting the patient at the centre of the healthcare system and boosting digitization at a greater scale. Moreover, this technology is playing a crucial role in improving the accuracy and safety of electronic health records (EHRs).

Healthcare and pharmaceutical companies are making substantial investments with respect to better organization of their data to reap the key benefits of big data, which can significantly reduce the rate of medication errors through patient record analysis. Hence, big data is likely to make an even bigger impact in days to come.

3 MedTech Stocks Focusing on Digital Health

Allscripts Healthcare Solutions Inc.’s (MDRX - Free Report) Veradigm — a renowned data and technology solutions provider and a business unit of Allscripts — recently entered into collaboration with Lash Group. With the latest partnership, Allscripts aims to gain traction in the global EHR solutions business. Also, Allscripts’ subsidiary, Allscripts Healthcare LLC, collaborated with Revo Health to offer Allscripts Practice Management and Payerpath to all of the latter’s Infinite Health Collaborative (i-Health) clinics. Its long-term expected earnings growth rate is pegged at 9.1%.

The Zacks Rank #3 (Hold) stock has gained 26.6% on a year-to-date basis against the industry’s decline of 16.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Cerner Corporation (CERN - Free Report) has a good track record when it comes to taking significant steps in the digital health space with its AI-enabled workflow, Chart Assist, and focus on behavioral health technology. In February, Cerner topped the rankings by KLAS Research: Best in KLAS for Behavioral Health (for the second consecutive year) and Global Acute Care — Middle East/Africa (for the third consecutive year). This highlights the Zacks Rank #3 company’s commitment toward enabling healthcare organizations in delivering enhanced patient care. Its long-term expected earnings growth rate is pegged at 12.3%.

The stock has lost 0.5% on a year-to-date basis compared with the industry’s decline of 16.7%.

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During the fiscal third quarter of 2021 ResMed Inc. (RMD - Free Report) saw increased demand for its digital health solutions globally with the robust adoption of remote patient engagement and population health management. ResMed is actively progressing in the field of utilizing digital health technology to convert big data into valuable information. Amid the pandemic, the company envisions increasing digital health demand in the form of remote patient monitoring and adoption of data-driven population health management systems. Its long-term expected earnings growth rate is pegged at 13.9%. The company carries a Zacks Rank of 3.

The stock has gained 14.4% on a year-to-date basis compared with the industry’s growth of 3.3%.

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