"It's big dollars going into health-care IT… I think it's going to be a long bull run," says Steve Kraus of Bessemer Venture Partners.
With an entire generation of people ecstatic about the latest Internet of Things (IoT) platform and the transition into cloud computing, keeping healthcare, the most protuberant part of our daily routine aside will be utter foolishness.
In an era of digital revolution, all devices are going the ‘smart’ way. Health benefits too are merely a click away. The latest health apps and technological devices connect patients seamlessly with their care givers so as to provide the latter with instant access to patient information.
Technological evolution facilitates increased and smooth access of healthcare services for both patients and doctors across the care continuum. Companies in the Healthcare-IT space are thus leaving no stone unturned to capitalize on the opportunities in this era of data explosion. Greater accessibility of medical services at reduced overall cost, made possible by the digital platform, is the call of the hour.
Hence, it’s time investors wake up to the reality of IoT and cash in on this ongoing revolution within healthcare IT. This highly lucrative Healthcare-IT industry, also known as Medical Info Systems, currently sports a decent Zacks Industry Rank of #77 out of 265 (as a guideline, the outlook for industries with Zacks Industry Rank #88 and lower is Positive; learn more about Zacks Industry Rank). Impressively, this industry belongs to the top 29% of the Zacks Rank Industries.
With time, healthcare has proved itself as one of the most progressive industries, transforming itself consistently vis-à-vis the shifting trends of the global order. With Internet and smart devices playing an indispensable role in our daily lives, healthcare could not be left behind. No wonder, companies in this space are fast jumping on the digital bandwagon.
With population on the rise and lives becoming busier, the availability of convenient, personalized healthcare facilities, via the virtual platform, is essentially the need of the hour. Thanks to rapid advances witnessed in cloud computing and mobile apps, healthcare organizations are now keen to remodel themselves as data-intensive care providers. According to a recently released report by Accenture, 41% of health executives suggest that the data volume their organizations manage has grown over 50% in the last year.
Thus, in the wake of the vast market potential that the Healthcare IT industry has to offer to its players, we recommend investors to take a look at the top-performing stocks in this industry.
Stocks to Pick
From among the wide gamut of stocks in the Medical Info Systems space, we hereby select three top-performing stocks for you, that carry a healthy Zacks Rank #1 (Strong Buy) or 2 (Buy).
OmniComm Systems Inc. : OmniComm is a leading provider of strategic software solutions to pharmaceutical, biotechnology, research and medical device organizations that conduct life changing clinical trial research. So far, OmniComm has supported over 4,000 trials in all phases of clinical development in over 30 therapeutic areas across 55 countries. We believe, an innovative product line, designed to facilitate convenient and smooth clinical trial operations, will allow the company to further expand its customer network.
On Sep 22, 2015, OmniComm entered into a five-year agreement with a leading contract research organization (CRO), worth multi-million dollars. This deal will allow the CRO to use OmniComm’s unique TrialMaster electronic data capture technology (EDC). With one of the top 5 CROs now on its client list, OmniComm is closely focused on increasing its revenue growth. Management expects the revenue increment to be reflected in the remainder of fiscal 2015 results.
Add this desirable stock to your portfolio as it boasts a Zacks Rank #2 and witnessed a solid rise of 12.5% in the last two years. The expected earnings growth of 150% for the current year compares favorably with the industry average of a mere 27.8%.
Streamline Health Solutions, Inc. (STRM - Free Report) : Streamline Health is a leader in transformational data-driven solutions in healthcare. The company’s unique Looking Glass platform facilitates capturing, aggregating and translating enterprise data into knowledge – actionable insights that reduce exposure to risk, enhance operational performance and improve patient care. On Aug 25, 2015, Streamline Health announced that for the second year in a row, its Looking Glass Enterprise Content Management solution has been ranked one in the category of financial management/content management solutions under a Black Book Rankings survey.
The company’s recent quarterly performance has also exceeded expectations. On Sep 3, 2015, Streamline Health posted second-quarter 2015 loss of 5 cents per share, narrower than the Zacks Consensus Estimate by 58.3%. Revenues of $9 million also beat the mark by 20.6%. Investors appear to be reasonably upbeat about Streamline Health, as evident from the 10.5% rise in its share price that followed its earnings release.
A Zacks Rank #1 makes this stock a great choice for your portfolio. Further the expected earnings growth of 45.1% for the current year compares favorably with the industry average of 27.8%.
Merge Healthcare Inc. : Merge Healthcare, a developer of healthcare information software solutions, offers enterprise imaging solutions for radiology, cardiology, orthopedics and eye care; a range of products for clinical trials; and financial and pre-surgical management software and applications. According to Frost and Sullivan and Merge’s research report, the global market for imaging software and services, healthcare IT interoperability solutions and electronic health records (EHR) solutions for radiology, cardiology, ophthalmology and orthopedics is worth $7.5 billion annually.
On Aug 6, 2015, renowned IT giant IBM Corp. (IBM - Free Report) announced its plan to take over Merge for $1 billion. Although no definitive approval has yet been disclosed at Merge’s end, if this acquisition takes place, the combined company will likely bring in a revolutionary transformation in the healthcare-IT industry by expanding the realm of cognitive computing, population health, and cloud-based healthcare intelligence. Investors also seem inquisitive about this deal, as is evident from the 31% surge in Merge’s share price that immediately followed the news release.
Merge has raised an impressive 158.9% in the last two years and its Zacks Rank #2 implies that the stock still has huge upside potential. The projected sales growth of 18.6% for the current year compares favorably with the industry average of 12.6%.
The Bottom Line
The global Healthcare-IT market is expected to reach a value of $228.8 billion by 2020, growing at a CAGR of 13.4%. So, why not take advantage of this potentially big money-making opportunity? We suggest you to add the aforementioned stocks in your portfolio to make the most of it.
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