While some goods and services sometimes go out of style due to technological innovations or other factors, it is highly unlikely that medical services will be available any time soon unless we develop an all-purpose drug that can cure all diseases.
Until that day, companies in the healthcare sector that can be ahead of the curve will continue to thrive. Such companies can offer excellent returns to their shareholders in this way.
Let’s take a look at these three strong candidates: Viva systems (VEEV 1.36%), exact science (EXAS 2.04%) and Novo Nordisk (NVO 2.12%). That’s why these three stocks can be excellent winners over the long term.
1. Viva systems
Viva Systems offers cloud-based software solutions for companies. Although this market is competitive, the company has made a name for itself by targeting the life sciences industry. It distinguishes itself as a leader in this small corner of the cloud space by building differentiated offerings for its customers. In other words, Viva Systems is a specialist, not a generalist.
One of the great things about Viva’s business is that it benefits from a competitive advantage. Its customers rely on its cloud-based solutions to store data, improve productivity and efficiency, and ensure regulatory compliance in a highly regulated industry. Switching to a competitor comes with risks – business disruption, data loss and more – and results in high switching costs for Viva Systems’ platform.
The company typically has retention rates in excess of 100%. This strongly suggests that Viva Systems can continue to grow, especially as it makes strides in a total addressable market (TAM) valued at over $13 billion. In the second quarter of its fiscal 2023 (ended July 31), the company reported revenue of $534.2 million, up 17% from the prior-year period.
Viva’s revenue growth rate has fallen recently, a key reason the company’s shares have underperformed over the past year.
Despite this, the company reported trailing-12-month sales of $2 billion, a fraction of its TAM. Viva Systems reported adjusted net income of $166.2 million for the second quarter of 2023, up 9% year over year. Viva’s capabilities will grow as the life sciences industry, currently valued at $2 trillion, expands.
Because of this, combined with its competitive advantage, Viva Systems remains in a solid position to provide shareholders with strong returns for years to come.
2. Exact science
Exact Sciences markets products that help detect cancer as early as possible and improve patient survival. The company’s best-known product is Colonard, which tests for early-stage colorectal cancer in patients ages 45 and older who are at average risk for the disease — that is, those who don’t have a family history or other factors. Which increases the chances of its development.
Exact Sciences aggressively markets Cologuard. This is partly because screening for colorectal cancer falls far short of what it should be. Colorectal cancer is one of the leading causes of cancer deaths worldwide. It has a 5-year survival rate of 65% – but that’s an average. When diagnosed at an early stage of the disease, the survival rate is 91%. However, if it has spread to nearby organs, this drops to 72%.
This is reduced to 15% if the disease has spread to distant parts of the body. Unfortunately, only 37% of cases are diagnosed in the early stages, meaning many deserving patients go unchecked. Exact Sciences orders peaked in 2019 and declined during the pandemic. He has yet to fully recover.
In addition, Exact Sciences is developing other products, including an improved version of the Colonard and other tests for detecting many early-stage cancers. The company sees a TAM of $58 billion across all target markets.
Exact Sciences reported third-quarter revenue of $523.1 million, up 15% from the prior-year period. The healthcare company remained unprofitable and reported a net loss of $148.8 million for the period, slightly better than the net loss of $166.9 million reported in the year-ago quarter. The red ink on the bottom line partially explains why investors recently sold the stock.
But with fiscal 2022 revenue guidance of nearly $2 billion, Exact Sciences has plenty of room to grow its top line and bottom line. Patient investors will benefit as exact science advances in the fight against cancer.
3. Novo Nordisk
Novo Nordisk is an established pharmaceutical company based in Denmark. The drugmaker has a habit of developing innovative medicines that help patients with diabetes, which is one of the main reasons it has long been a leader in this therapeutic area. Novo Nordisk had a 31.6% share of the diabetes drug market in August, up almost 2 percentage points year over year.
The company remains committed to making meaningful advances in the treatment of diabetes and is currently developing a potential once-weekly insulin alternative called Icodec. The company has announced excellent results from clinical trials for this product and plans to file for regulatory approval over the next year. People with diabetes who inject insulin usually have to do so every day. Because of this, an option once a week can be very successful.
Novo Nordisk has a rich pipeline with many other programs. The company also aims to diversify its product line with candidates targeting therapeutic areas such as oncology, rare diseases and neurological conditions such as Alzheimer’s disease. Seven of Novo Nordisk’s 12 programs in Phase 3 trials do not target diabetes or obesity.
Over the next few years, the company should win important approvals in its core therapeutic area and elsewhere. Meanwhile, Novo Nordisk continues to report solid sales, earnings and free cash flow. In the first nine months of the year, the company reported 128.9 billion Danish kroner (DKK) — or $17.9 billion — up 26% year over year.
Novo Nordisk’s net income of 41.9 billion DKK ($5.8 billion) rose 14% from the same period last year, while free cash flow rose 19% year-on-year to 62.5 billion DKK ($8.7 billion). dollars) rose. Novo Nordisk’s proven ability to create innovative medicines and its consistent top-line and earnings growth make it an excellent healthcare stock to buy and hold for a while.