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Buy These 3 Medical Info Systems Stocks to Capitalize on GenAI Boom
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The Medical Info Systems industry is rapidly transforming, banking on quick-moving technological advancements and exponentially growing worldwide demand for new-generation products. Originally, the need for a distant treatment option and a paperless environment led to a tremendous upsurge in digital healthcare options. Added to this is the latest GenAI wave, which has significantly sped up the acceptance and usage of advanced digital healthcare and telemedicine on a global scale.
Per a Market Research report, the use of artificial intelligence (AI) in the medical device market is expected to witness a CAGR of 44.4% during 2024-2028. 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. As much as 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, artificial intelligence, robotics and analytics, chatbots and virtual assistants and 3D printing, has created a unique opportunity for companies like Inspire Medical Systems (INSP - Free Report) , Clover Health Investments (CLOV - Free Report) and CareCloud (CCLD - Free Report) . However, the 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: Within the medical information systems space, remote patient monitoring segments continue to grow at a fast rate, courtesy of the rapid increase in usage of wearable devices and telehealth services. The major driver behind this growth is the increasing awareness about the usefulness of continuous patient monitoring devices. This has proved to be a game-changer in increasing the standard and efficiency of medical care. Further, health tech products are also accelerating the diagnosis process and automating hospital workflows through robotics, AI-driven chatbots and so on. Going by a 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. Starting from generative AI to surgical robotics, one common application of these has been in diagnostic settings, where it quickly and precisely detects image abnormalities that might be challenging for the human eye to spot. Further, electronic health records, electronic medical records, predictive analytics and real-time alerting have been gaining prominence. Going by a Tedisel Medical report, 2024 is seeing advances in machine and deep learning techniques, as well as real-time monitoring of health conditions and proactive interventions directing to a future full of smart hospitals. Wearable devices, too, are fast gaining market supporting the rise of telemedicine as remote patient care. Further, 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 resulted in 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. Further, in February 2024, Change Healthcare — a unit of UnitedHealth Group — was impacted by a cybersecurity incident.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #68, which places it in the top 27% 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 6.4% in the past year against the Zacks Medical sector’s growth of 12.6% and the S&P 500’s rise of 25.3%.
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 1.47X compared with the S&P 500’s 5.16X and the sector’s 2.79X.
Over the last five years, the sector has traded as high as 11.80X, as low as 1.04X, and at the median of 2.78X, 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
MN-based InspireMedical is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea. The company continues to make significant investments to build its sales and marketing organization by 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 in Europe. INSP currently carries a Zacks Rank #1 (Strong Buy).
The Zacks Consensus Estimate for 2024 earnings indicates a stupendous 204.1% improvement from the 2023 level. For the same period, the company is expected to report sales growth of 27.4%.
Price and Consensus: INSP
Clover Health is a physician enablement technology company with a health equity-based focus on seniors who have historically lacked access to affordable, high-quality healthcare. The company’s strategy is powered by its software platform, Clover Assistant, designed to aggregate patient data from across the healthcare ecosystem to support clinical decision-making and improve health outcomes through the early identification and management of chronic disease.
Clover Health currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2024 earnings indicates a 68.3% improvement from the 2023 level. For 2025, the company is expected to report earnings growth of 7.7%.
Price and Consensus: CLOV
CareCloud is a healthcare information technology company providing a suite of cloud-based solutions and related business services to healthcare providers and hospitals, primarily in the United States. The company is actively expanding the use of generative AI, which further drives operating efficiencies as it simultaneously strengthens the foundation of CareCloud’s platform.
CareCloud currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2024 earnings indicates 115.8% growth from the 2023 level. For 2025, the company is expected to report earnings growth of 40%.
Price and Consensus: CCLD
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Buy These 3 Medical Info Systems Stocks to Capitalize on GenAI Boom
The Medical Info Systems industry is rapidly transforming, banking on quick-moving technological advancements and exponentially growing worldwide demand for new-generation products. Originally, the need for a distant treatment option and a paperless environment led to a tremendous upsurge in digital healthcare options. Added to this is the latest GenAI wave, which has significantly sped up the acceptance and usage of advanced digital healthcare and telemedicine on a global scale.
Per a Market Research report, the use of artificial intelligence (AI) in the medical device market is expected to witness a CAGR of 44.4% during 2024-2028. 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. As much as 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, artificial intelligence, robotics and analytics, chatbots and virtual assistants and 3D printing, has created a unique opportunity for companies like Inspire Medical Systems (INSP - Free Report) , Clover Health Investments (CLOV - Free Report) and CareCloud (CCLD - Free Report) . However, the 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: Within the medical information systems space, remote patient monitoring segments continue to grow at a fast rate, courtesy of the rapid increase in usage of wearable devices and telehealth services. The major driver behind this growth is the increasing awareness about the usefulness of continuous patient monitoring devices. This has proved to be a game-changer in increasing the standard and efficiency of medical care. Further, health tech products are also accelerating the diagnosis process and automating hospital workflows through robotics, AI-driven chatbots and so on. Going by a 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. Starting from generative AI to surgical robotics, one common application of these has been in diagnostic settings, where it quickly and precisely detects image abnormalities that might be challenging for the human eye to spot. Further, electronic health records, electronic medical records, predictive analytics and real-time alerting have been gaining prominence. Going by a Tedisel Medical report, 2024 is seeing advances in machine and deep learning techniques, as well as real-time monitoring of health conditions and proactive interventions directing to a future full of smart hospitals. Wearable devices, too, are fast gaining market supporting the rise of telemedicine as remote patient care. Further, 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 resulted in 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. Further, in February 2024, Change Healthcare — a unit of UnitedHealth Group — was impacted by a cybersecurity incident.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #68, which places it in the top 27% 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 6.4% in the past year against the Zacks Medical sector’s growth of 12.6% and the S&P 500’s rise of 25.3%.
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 1.47X compared with the S&P 500’s 5.16X and the sector’s 2.79X.
Over the last five years, the sector has traded as high as 11.80X, as low as 1.04X, and at the median of 2.78X, 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
MN-based Inspire Medical is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea. The company continues to make significant investments to build its sales and marketing organization by 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 in Europe. INSP currently carries a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for 2024 earnings indicates a stupendous 204.1% improvement from the 2023 level. For the same period, the company is expected to report sales growth of 27.4%.
Price and Consensus: INSP
Clover Health is a physician enablement technology company with a health equity-based focus on seniors who have historically lacked access to affordable, high-quality healthcare. The company’s strategy is powered by its software platform, Clover Assistant, designed to aggregate patient data from across the healthcare ecosystem to support clinical decision-making and improve health outcomes through the early identification and management of chronic disease.
Clover Health currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2024 earnings indicates a 68.3% improvement from the 2023 level. For 2025, the company is expected to report earnings growth of 7.7%.
Price and Consensus: CLOV
CareCloud is a healthcare information technology company providing a suite of cloud-based solutions and related business services to healthcare providers and hospitals, primarily in the United States. The company is actively expanding the use of generative AI, which further drives operating efficiencies as it simultaneously strengthens the foundation of CareCloud’s platform.
CareCloud currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2024 earnings indicates 115.8% growth from the 2023 level. For 2025, the company is expected to report earnings growth of 40%.
Price and Consensus: CCLD