Top Healthcare Stocks

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• Signify Health: The company offers healthcare payment programs to governments, employers, health systems, health plans, and physicians that cover millions of people. Its major customers include the U.S. government’s Medicare program. In early September, Signify announced that it would be acquired by CVS Health for about $8 billion in cash. The transaction is expected to close in the first half of 2023.
• Cardinal Health Inc.: This company provides healthcare services in surgery centers, laboratories, hospitals, and home settings, among others. It also offers pharmaceutical and medical products. In late December, Cardinal said that Aaron Alt will become chief financial officer (CFO) effective Feb. 10, 2023, succeeding interim CFO Trish English. Alt was most recently executive vice president and CFO for Sysco Corp. (SYY).
• McKesson: See company description above.

Key Trends in the Healthcare Sector

The COVID-19 pandemic and technological advances have accelerated several key trends across the healthcare sector that provide potential opportunities for investors. Two of these are telehealth and healthcare wearables.

Telehealth: Telehealth connects patients with health professionals using technology such as video calls and health apps. These services allow people in less-served regional areas or those who can’t easily travel to access medical advice in their homes or workplaces.

A survey conducted by the Bipartisan Policy Center showed that 63% of respondents had used telehealth as a preventative service, for a prescription refill, or routine visit for a chronic illness. Moreover, eight in 10 surveyed said their primary health issue was resolved and that they would likely use telehealth in the future. Investors can gain exposure to telehealth through stocks including Teladoc Health Inc. (TDOC), Doximity Inc. (DOCS), and American Well Corp. (AMWL).

Healthcare Wearables: Wearable electronic devices allow consumers or patients to wear technology that collects their personal health and fitness data. Healthcare wearables can send a user’s health information in real time to a doctor or other health professional for regular monitoring. 

Some of the more popular healthcare wearable devices are smart health watches, electrocardiogram (ECG) monitors, blood pressure monitors, and biosensors. A survey conducted by Insider Intelligence found U.S. consumers’ use of healthcare wearables increased to 33% from 9% in the past four years and will continue to grow as new health-tracking technologies emerge. Key stocks involved in healthcare wearables include Garmin Ltd. (GRMN), Wearable Health Solutions Inc. (WHSI), and, of course, Apple Inc. (AAPL).

Advantages of Healthcare Stocks

In the wake of the pandemic, the healthcare sector will likely experience further public and private investment, helping to drive innovation and profits. Moreover, an aging baby boomer population continues to underpin the space, creating additional demand for medical products and services. According to the Centers for Medicare and Medicaid Services, U.S. national healthcare expenditure is expected to reach $6.2 trillion by 2028, highlighting the sector’s size.

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