The medical field is a non-negotiable aspect of society. Advanced healthcare is required to combat existing diseases and protect ourselves from new ones. Constant innovation in the medical field is a net positive for the world, increasing life expectancies, improving living conditions and saving countless lives. On a more prosaic but no less important note, investors who want to participate in advancing medicine and healthcare can look into highly rated medical stocks.
In the U.S. alone, national health expenditure is expected to increase annually from 2023 and 2032, according to the Centers for Medicare & Medicaid Services. So, profit is to be had in medicine — but only if you move fast enough.
Today, I’ll examine three highly-rated medical stocks that fall under the Global Industry Classification Standard for the healthcare sector and operate as a medicine maker or healthcare providers. I used the following criteria to get my list:
- A Strong Buy rating from analysts
- Positive revenue and net income growth in its last annual report
- Trades above $10
Then, I arranged the results from highest to lowest annual revenue growth. So, here are the top three.
Vericel (VCEL)
Vericel (NASDAQ:VCEL) specializes in severe burns and sports medicines in the United States. The company has three main products:
- MACI for knee injury repairs
- Epicel for skin replacement on body burns
- NexoBrid for partial burns
The company previously shared positive results of the Phase 3 Trial of NexoBrid, highlighting another growth opportunity for potential investors.
In 2023, Vericel’s revenue was up 20% year-over-year (YOY), reaching $197.5 million, driven by strong sales across its product line. While still operating at a net loss, its bottom line has significantly improved from a 35 cents per share loss to a 7 cents per share loss.
With a notable increase in forecasted revenue for 2024 ($237 million to $241 million) and a gross margin expectation of 70%, the company has a chance of reaching profitability — soon.
Wall Street shares this opinion, rating VCEL stock as a Strong Buy. Vericel is among the best and most highly-rated medical stocks, and investors might want to keep an eye on it.
Tactile Systems Technology (TCMD)
Being in the hospital isn’t an option for everyone. That is why companies like Tactile Systems Technology (NASDAQ:TCMD) offer customers a home alternative. The company specializes in at-home therapies for people suffering from underserved chronic conditions. These include AffloVest, an at-home therapy that promotes airway clearance; the Flexitouch Plus system, a pneumatic compression device; and Entre and Flexitouch Plus for lymphedema and chronic venous insufficiency treatment.
Tactile’s 11% YOY revenue increase headlined its FY’23 report. It also came with other good news, like a 62% increase in adjusted EBITDA and a $30.6 million increase in generated cash flow. However, its most notable metric was a 260% growth in net income.
President and CEO Dan Reuvers said, “2023 proved to be a year of significant progress for Tactile.” He continued, “We remain focused on delivering double-digit revenue growth, expanding operating margins and generating solid free cash flow as we seek to extend our leadership position in the treatment of patients with underserved chronic conditions.”
Based on a consensus of four analysts, TCMD stock is rated a Strong Buy, with a high target price of $25.
Option Care Health (OPCH)
Known for being the largest alternate site infusion and home services provider, Option Care Health (NASDAQ:OPCH) offers clinical management and nursing support for infusion therapy.
The company’s services include a wide range of therapies and services that cater to various medical needs, such as bleeding disorder infusion, anti-infective infusion and more. Option Care Health has a multi-year partnership with tech firm Palantir (NYSE:PLTR). This partnership will help Option Care Health leverage the tech company’s Artificial Intelligence Platform (AIP) to optimize nurse scheduling, onboarding, purchasing and supply chain execution and improve daily workflow.
Option Care Health’s FY’23 net revenue grew 9.1% YOY, continuing its multi-year growth streak. Adjusted EBITDA was also up 24%, while diluted net income increased from 83 cents in FY’22 to $1.48.
“The Option Care Health team delivered strong financial results in the fourth quarter and full year of 2023,” stated CEO John C. Rademacher in the report, “and continued to execute on our commitment to clinical excellence by providing extraordinary patient care through our resilient national platform.”
OPCH stock has been rated as a Strong Buy like the two other highly-rated medical stocks on this list.
On the date of publication, Rick Orford did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
