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3 Medical Info Systems Stocks to Buy as Industry Improves
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The past three years of health crisis have led to exponential growth in the Medical Info Systems industry, thanks to the growing demand for contactless services. The need for remote monitoring and distant treatment has paved the way for digital services. Even in the post-pandemic era, the popularity of remote healthcare and a paperless environment has increased further. In fact, in 2023, this industry witnessed a massive adoption of artificial intelligence (AI) and the Internet of Medical Things in the form of digital healthcare options in hospitals and other healthcare settings. Apart from being used for the analysis of treatment patterns from a large set of data, AI is currently being extensively used in medical imaging.
Per a GlobalData research, the use of AI in the medical device market is expected to witness a CAGR of 29.1% during 2023-2027. The market’s growth will be propelled by the growing demand for healthcare systems to reduce time and costs and improve detection capabilities, particularly when diagnosing a growing number of patients with complex profiles. Subsequently, 80% of health systems claimed to have plans to increase their investment levels in digital health over the next five years (a HIMSS report).
The growing demand for all kinds of digital healthcare support, including telehealth, cloud computing, AI, robotics and analytics, has created a unique opportunity for companies like Inspire Medical Systems (INSP - Free Report) , Talkspace (TALK - Free Report) and Health Catalyst (HCAT - Free Report) . However, this healthcare system’s excessive dependence on IT comes with its share of risks. Any data disruption in the cloud-based service might lead to a massive loss of information, thereby leading to a breakdown of the system.
Industry Description
The Zacks Medical Info Systems industry comprises companies that 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, and recurring service contracts for software maintenance and transaction processing services.
3 Trends Shaping the Future of the Medical Information Industry
Growing Demand for Remote Healthcare: Even though the pandemic is over, the need for contactless services is growing enormously. Within the medical information systems space, the telehealth and remote patient monitoring segments continue to grow at a fast rate. Going by a Forbes article of 2022, telehealth is likely to stay for long, and will supposedly be embedded into the healthcare vernacular. A Startech Up report in 2023 stated that the use of AI in healthcare is helping medical professionals in several ways. For instance, it is accelerating the diagnosis process and automating hospital workflows through robotics, AI-driven chatbots to check symptoms and so on. Going by a recent Custom Market Insights report, the global Smart Healthcare Products market was valued at $145.9 billion in 2023 and is expected to reach $485.71 billion by 2032, at a CAGR of 12.78%.
AI and Health: The medical sector is one of the major adopters of AI, which is currently being used to synthesize new compounds for drugs and create devices for more precise measurement and faster and more accurate diagnosis. One common application of AI has been in diagnostic settings, where it quickly and precisely detects image abnormalities that might be challenging for the human eye to spot. Several medical device makers are also developing surgical robots with AI integration for complex and specialized procedures. Further, electronic health records, electronic medical records, predictive analytics and real-time alerting have been gaining prominence. A recent National Institute of Health report revealed that in the field of clinical decision-making, AI has demonstrated remarkable capabilities for predicting and classifying diagnoses, as well as providing recommendations and insights.
AI systems have been successful in multiple medical imaging use cases, such as detecting mitosis in breast cancer histology images, classifying skin cancer with dermatologist-level accuracy, diagnosing diabetic retinopathy from retinal fundus photographs and predicting cardiovascular risk factors from retinal fundus photographs.
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. Between October and December 2023, Henry Schein became the victim of consecutive cyberattacks.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #94, which places it in the top 37% 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 outperform the bottom 50% by a factor of more than 2 to 1.
We will present a few stocks that have the potential to outdo the market based on a strong earnings outlook. However, 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 lost 13.1% in the past year against the Zacks Medical sector’s growth of 8.1%. The S&P 500 has risen 30.4% 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 1.3X compared with the S&P 500’s 3.9X and the sector’s 2.8X.
Over the last five years, the sector has traded as high as 12.37X, as low as 1.02X, and at the median of 3.82X, 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 Bet On
Inspire Medical is a medical technology company focused on the development and commercialization of innovative, minimally-invasive solutions for patients with obstructive sleep apnea (OSA). Its proprietary Inspire system is the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA. Inspire Medical continues to make significant investments to build its sales and marketing organization. It does soby increasing the number of U.S. and European sales representatives and continuing its direct-to-consumer marketing efforts in existing and new markets throughout the United States and Europe.
The Zacks Consensus Estimate for 2024 earnings indicates a 47.2% improvement from the 2023 level. For the same period, the company is expected to report sales growth of 25%.
Price and Consensus: INSP
Talkspace, a virtual behavioral healthcare company, works to help people lead healthier, happier lives through access to high-quality mental healthcare. The company pioneered the ability to text with a licensed therapist from anywhere and now offers a comprehensive suite of mental health services, from self-guided products to individual and couples therapy, in addition to psychiatric treatment and medication management.
Talkspace currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2024 earnings indicates 75% growth from the 2023 level. For 2024, the company is expected to report sales growth of 28.4%.
Price and Consensus: TALK
Health Catalyst provides data and analytics technology and services to healthcare organizations committed to being the catalyst for massive, measurable and data-informed healthcare improvement. Its customers leverage the cloud-based data platform, powered by data from more than 100 million patient records and encompassing trillions of facts as well as its analytics software and professional services expertise, to make data-informed decisions and realize measurable clinical, financial and operational improvements.
Health Catalyst currently carries a Zacks Rank #2. The Zacks Consensus Estimate for 2024 earnings indicates a 113.3% improvement from the 2023 level. For 2024, the company is expected to report revenue growth of 4.2%.
Price and Consensus: HCAT
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3 Medical Info Systems Stocks to Buy as Industry Improves
The past three years of health crisis have led to exponential growth in the Medical Info Systems industry, thanks to the growing demand for contactless services. The need for remote monitoring and distant treatment has paved the way for digital services. Even in the post-pandemic era, the popularity of remote healthcare and a paperless environment has increased further. In fact, in 2023, this industry witnessed a massive adoption of artificial intelligence (AI) and the Internet of Medical Things in the form of digital healthcare options in hospitals and other healthcare settings. Apart from being used for the analysis of treatment patterns from a large set of data, AI is currently being extensively used in medical imaging.
Per a GlobalData research, the use of AI in the medical device market is expected to witness a CAGR of 29.1% during 2023-2027. The market’s growth will be propelled by the growing demand for healthcare systems to reduce time and costs and improve detection capabilities, particularly when diagnosing a growing number of patients with complex profiles. Subsequently, 80% of health systems claimed to have plans to increase their investment levels in digital health over the next five years (a HIMSS report).
The growing demand for all kinds of digital healthcare support, including telehealth, cloud computing, AI, robotics and analytics, has created a unique opportunity for companies like Inspire Medical Systems (INSP - Free Report) , Talkspace (TALK - Free Report) and Health Catalyst (HCAT - Free Report) . However, this healthcare system’s excessive dependence on IT comes with its share of risks. Any data disruption in the cloud-based service might lead to a massive loss of information, thereby leading to a breakdown of the system.
Industry Description
The Zacks Medical Info Systems industry comprises companies that 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, and recurring service contracts for software maintenance and transaction processing services.
3 Trends Shaping the Future of the Medical Information Industry
Growing Demand for Remote Healthcare: Even though the pandemic is over, the need for contactless services is growing enormously. Within the medical information systems space, the telehealth and remote patient monitoring segments continue to grow at a fast rate. Going by a Forbes article of 2022, telehealth is likely to stay for long, and will supposedly be embedded into the healthcare vernacular. A Startech Up report in 2023 stated that the use of AI in healthcare is helping medical professionals in several ways. For instance, it is accelerating the diagnosis process and automating hospital workflows through robotics, AI-driven chatbots to check symptoms and so on. Going by a recent Custom Market Insights report, the global Smart Healthcare Products market was valued at $145.9 billion in 2023 and is expected to reach $485.71 billion by 2032, at a CAGR of 12.78%.
AI and Health: The medical sector is one of the major adopters of AI, which is currently being used to synthesize new compounds for drugs and create devices for more precise measurement and faster and more accurate diagnosis. One common application of AI has been in diagnostic settings, where it quickly and precisely detects image abnormalities that might be challenging for the human eye to spot. Several medical device makers are also developing surgical robots with AI integration for complex and specialized procedures. Further, electronic health records, electronic medical records, predictive analytics and real-time alerting have been gaining prominence. A recent National Institute of Health report revealed that in the field of clinical decision-making, AI has demonstrated remarkable capabilities for predicting and classifying diagnoses, as well as providing recommendations and insights.
AI systems have been successful in multiple medical imaging use cases, such as detecting mitosis in breast cancer histology images, classifying skin cancer with dermatologist-level accuracy, diagnosing diabetic retinopathy from retinal fundus photographs and predicting cardiovascular risk factors from retinal fundus photographs.
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. Between October and December 2023, Henry Schein became the victim of consecutive cyberattacks.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #94, which places it in the top 37% 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 outperform the bottom 50% by a factor of more than 2 to 1.
We will present a few stocks that have the potential to outdo the market based on a strong earnings outlook. However, 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 lost 13.1% in the past year against the Zacks Medical sector’s growth of 8.1%. The S&P 500 has risen 30.4% 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 1.3X compared with the S&P 500’s 3.9X and the sector’s 2.8X.
Over the last five years, the sector has traded as high as 12.37X, as low as 1.02X, and at the median of 3.82X, 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 Bet On
Inspire Medical is a medical technology company focused on the development and commercialization of innovative, minimally-invasive solutions for patients with obstructive sleep apnea (OSA). Its proprietary Inspire system is the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA. Inspire Medical continues to make significant investments to build its sales and marketing organization. It does soby increasing the number of U.S. and European sales representatives and continuing its direct-to-consumer marketing efforts in existing and new markets throughout the United States and Europe.
Inspire Medical currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for 2024 earnings indicates a 47.2% improvement from the 2023 level. For the same period, the company is expected to report sales growth of 25%.
Price and Consensus: INSP
Talkspace, a virtual behavioral healthcare company, works to help people lead healthier, happier lives through access to high-quality mental healthcare. The company pioneered the ability to text with a licensed therapist from anywhere and now offers a comprehensive suite of mental health services, from self-guided products to individual and couples therapy, in addition to psychiatric treatment and medication management.
Talkspace currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2024 earnings indicates 75% growth from the 2023 level. For 2024, the company is expected to report sales growth of 28.4%.
Price and Consensus: TALK
Health Catalyst provides data and analytics technology and services to healthcare organizations committed to being the catalyst for massive, measurable and data-informed healthcare improvement. Its customers leverage the cloud-based data platform, powered by data from more than 100 million patient records and encompassing trillions of facts as well as its analytics software and professional services expertise, to make data-informed decisions and realize measurable clinical, financial and operational improvements.
Health Catalyst currently carries a Zacks Rank #2. The Zacks Consensus Estimate for 2024 earnings indicates a 113.3% improvement from the 2023 level. For 2024, the company is expected to report revenue growth of 4.2%.
Price and Consensus: HCAT