An increasing demand for healthcare due to rising chronic diseases and the aging population has been supporting the growth of the healthcare industry over the past two years. The COVID-19 pandemic has brought significant changes to the healthcare sector. It has led to a digital transformation in healthcare systems, including the evolution of telehealth, innovations in personalized medicine, and other technologies. The increased availability of digital options for healthcare services has further accelerated the consumption of these services.
According to a Centers for Medicare & Medicaid Services (CMS) report, U.S. health spending is projected to reach $6.80 trillion by 2030. Furthermore, the healthcare industry is expected to account for 19.6% of GDP by 2030. And because the stock market is expected to remain highly volatile in the near term, healthcare stocks are considered attractive investments due to their ability to hedge against market fluctuations, given the inelastic demand for healthcare products and services. Investors’ bullish sentiment surrounding the industry is evident in the Health Care Select Sector SPDR's (XLV) 7.6% gains over the past year.
Against this backdrop, we think fundamentally sound yet cheap healthcare stocks Sensus Healthcare, Inc. (SRTS), Radius Health, Inc. (RDUS), and Viemed Healthcare, Inc. (VMD) could be great additions to one’s portfolio.
Click here to checkout our Healthcare Sector Report for 2022
Sensus Healthcare, Inc. (SRTS)
SRTS is a Boca Raton, Fla.-based medical device company that manufactures and sells radiation therapy devices to healthcare providers worldwide. The company uses superficial radiation therapy (SRT) in its portfolio of treatment devices. It offers SRT-100, SRT-100 Vision, and SRT-100 Plus. In addition, it offers disposable lead shielding replacements and disposable radiation safety items.
Last month, SRTS announced a share repurchase program to include up to $3 million of shares of its common stock. "Acquiring our own shares is one of the ways we plan to use our resources to continue to build shareholder value. Our financial performance, disciplined and thoughtful approach to capital allocation and expenses, and overall strength of our balance sheet give us both the confidence and the flexibility to execute this share repurchase program," said Joe Sardano, Chairman and CEO of SRTS.
In its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, SRTS' revenues increased 155.7% year-over-year to $13.03 million, while its gross profit grew 174.3% year-over-year to $8.86 million. Its adjusted income from operations improved 1,969.6% from the year-ago value to $5.32 million. The company's adjusted EBITDA rose 321.7% year-over-year to $5.55 million. And its net income and net income per share came in at $5.32 million and $0.32, respectively, registering an increase of 422.4% and 433.3% from the prior-year period.
The $34.39 billion consensus revenue estimate for its fiscal year 2022 represents 27.2% growth from its year-ago value. The $0.69 consensus EPS estimate for the current year indicates a 177% year-over-year rise.
The stock’s price has improved 79.6% over the past six months and 77.4% over the past year. It closed yesterday's trading session at $7.11.
SRTS' POWR Ratings reflect this promising outlook. It has an overall B grade, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
SRTS has an A grade for Sentiment and a B for Growth, Value, and Quality. Within the Medical - Devices & Equipment industry, it is ranked #21 of 157 stocks. To see additional POWR Ratings (Stability and Momentum) for SRTS, click here.
Radius Health, Inc. (RDUS)
RDUS is a Waltham, Mass.-based biopharmaceutical company that focuses on addressing medical needs in bone health, orphan diseases, and oncology. The company's commercial product is TYMLOS, an abaloparatide injection used to treat postmenopausal women with osteoporosis. In addition, it is developing abaloparatide-SC to treat osteoporosis in men, Elacestrant (RAD1901) to treat breast cancer, RAD011 to treat hyperphagia related to Prader-Willi syndrome.
This March, RDUS provided a business update on bone health. The company announced an exclusive extension of research discovery collaboration with Massachusetts General Hospital (MGH) to evaluate novel oral salt-inducible kinase (SIK) inhibitors for musculoskeletal diseases. In addition, the United States Patent and Trademark Office (USPTO) has granted patent 11,255,842, extending protection for TYMLOS to Jan. 10, 2040. These recent developments might boost RDUS's growth and profitability.
RDUS' total revenue increased 3.7% year-over-year to $65.11 million in its fiscal year 2021 fourth quarter, ended Dec. 31, 2021. Its other income grew 616.2% year-over-year to $351,000. For its fiscal year 2021, ended December 31, its cash and cash equivalents rose 22% year-over-year to $111.53 million.
The $247.48 million consensus revenue estimate for its fiscal year 2022 represents 7.6% growth from the last year. The $1.11 consensus EPS estimate for its fiscal year 2023 indicates a 190.8% year-over-year rise. The company has an impressive earnings surprise history; it has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock declined 26.2% in price over the past month. It closed yesterday's trading session at $6.80.
RDUS' POWR Ratings reflect a strong outlook. The stock has an overall B rating, which translates to Buy in our POWR Ratings system.
RDUS has a B grade for Growth, Quality, and Value. It is ranked #31 of 168 stocks in the Medical - Pharmaceuticals industry. Click here to see RDUS ratings for Stability, Sentiment, and Momentum.
Viemed Healthcare, Inc. (VMD)
VMD offers in-home durable medical equipment (DME) and post-acute respiratory healthcare services to patients in the United States. The Lafayette, La.-based company offers respiratory management solutions, invasive and non-invasive ventilators, positive airway pressure machines (PAP), oxygen concentrator units, and other respiratory equipment. In addition, VMD provides neuromuscular care and oxygen therapy services, and home sleep apnea testing services.
On March 8, VMD announced that its board of directors authorized a share repurchase program on Nasdaq. Under the program, the company may repurchase up to 1,984,014 common shares from time to time under applicable securities laws. It is expected to increase its shareholder value and maintain resources to fund its operations and growth.
For its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, VMD's revenue and gross profit amounted to $31.96 million and 19.66 million, respectively, registering a marginal increase from the prior-year period. The company's adjusted EBITDA was valued at $9.55 million for the fourth quarter.
Analysts expect VMD's revenue for its fiscal year 2022 first quarter ended March 2022 to come in at $31.13 million, representing a 9.6% rise year-over-year. The Street expects the company's EPS for the to-be-reported quarter to come in at $0.06, representing a 41.7% increase year-over-year.
Shares of VMD have decreased 12.2% in price over the past six months and closed yesterday's trading session at $5.02.
VMD's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A grade, which equates to a Strong Buy in our proprietary rating system.
VMD has an A grade for Quality and B for Sentiment, Value, and Stability. It is ranked #1 of 83 stocks within the Medical - Services industry. To see additional POWR Ratings (Growth and Momentum) for VMD, click here.
Click here to checkout our Healthcare Sector Report for 2022
What To Do Next?
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SRTS shares were trading at $6.97 per share on Thursday afternoon, down $0.14 (-1.97%). Year-to-date, SRTS has declined -3.46%, versus a -10.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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