The healthcare industry has received tremendous investments from public and private sectors to address pandemic-driven challenges over the past two years. Global health innovation funding totaled a record $44 billion in 2021, up 100% year-over-year. Furthermore, global health innovation funding has increased 20 times over the past 10 years.
With a rising elderly population, an increasing prevalence of chronic diseases, and new COVID-19 variants popping up, the demand for quality medical care facilities is expected to rise over the long term. According to the Centers for Medicare and Medicaid Services, the U.S. national healthcare expenditure is estimated to reach $6.2 trillion by 2028.
Given this backdrop, we think fundamentally strong medical care stocks HCA Healthcare, Inc. (HCA), Fresenius SE & Co. KGaA (FSNUY), and Hanger, Inc. (HNGR) could be ideal investments bets now.
Click here to checkout our Healthcare Sector Report for 2022
HCA Healthcare, Inc. (HCA)
Nashville, Tenn.-based HCA is a healthcare services company that owns and operates general and acute care hospitals that offer medical and surgical services, emergency services, and outpatient services. In addition, the company operates in two geographically organized groups: The National; and American Groups.
On March 21, HCA offered residency positions to 1,867 medical school graduates to aid the physician and nursing shortages faced by the nation. With a larger number of doctors and nurses, HCA should be well-positioned to serve a larger number of patients across the country.
In January, HCA announced plans to build five new full-service hospitals in Texas to help meet the state’s growing need for healthcare services. This expansion should boost HCA’s revenues significantly over the long run.
HCA’s revenue increased 5.4% year-over-year to $15.06 billion in the fourth quarter, ended Dec. 31, 2021. Its net income grew 18.4% from its year-ago value to $2 billion, while its income from operations improved 76% year-over-year to $7.72 billion over the period. The company’s EPS has increased 39.2% from the year-ago value to $5.75.
The $4.30 consensus EPS estimate for its fiscal first quarter (ending March 31, 2022) represents a 3.9% improvement year-over-year. The $14.79 billion consensus revenue estimate for the current quarter represents a 5.9% increase from the same period last year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 41.2% in price over the past year to close the last trading session at $260.60.
HCA’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Value, Stability, and Quality. Among the 13 stocks in the Medical - Hospitals industry, it is ranked #1. Click here to see the additional POWR Ratings of HCA for Growth, Momentum, and Sentiment.
Fresenius SE & Co. KGaA (FSNUY)
FSNUY is a Bad Homburg vor der Höhe, Germany-based health care provider of products and services for dialysis, hospitals, and outpatient medical care. The company operates through four segments: Fresenius Medical Care; Fresenius Kabi; Fresenius Helios; and Fresenius Vamed.
On March 21, FSNUY agreed to merge its subsidiary Fresenius Health Partners with InterWell Health and Cricket Health to create an independent value-based kidney care provider in the U.S. This new company is expected to cure more than 270,000 people with kidney disease by 2025.
On March 14, FSNUY received a 510K regulatory clearance from the U.S. Food and Drug Administration (FDA) for its wireless infusion pump system. Analysts expect this clearance to boost the company’s infusion therapy business in the future.
During its fiscal fourth quarter, ended Dec. 31, 2021, FSNUY’s sales increased 7.1% year-over-year to €9.97 billion ($10.97 billion). Its EBIT (after special items) rose 9.7% from its year-ago value to €1.12 billion ($1.24 billion). Its net income grew 24% from the same period last year to €759 million ($835.57 million).
Analysts expect FSNUY’s revenues to increase 2.7% year-over-year to $43.62 billion in its fiscal 2022 (ending March 2022). Its EPS is expected to increase 2.1% to $0.97 in the current year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock gained marginally intraday to close yesterday’s trading session at $8.86.
FSNUY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. FSNUY also has an A grade for Value and Stability. The stock is ranked #2 of 13 stocks in the Medical - Hospitals industry.
In addition to the POWR Ratings I have just highlighted, click here to see the FSNUY ratings for Growth, Momentum, Sentiment, and Quality.
Hanger, Inc. (HNGR)
HNGR is a provider of orthotic and prosthetic (O&P) services in the United States. The Austin, Tex.-based concern operates in two segments: Patient Care: and Products & Services. It also offers therapeutic solutions to patients and businesses in acute, post-acute, and clinic settings.
In the fourth quarter, ended Dec. 31, 2021, HNGR’s net revenue increased 12.6% year-over-year to $312.37 million. Its adjusted EBITDA rose 4.9% from its year-ago value to $37.22 million, while its adjusted net income grew 12.2% to $15.51 million. The company’s adjusted EPS increased 11.1% from its year-ago value to $0.40.
Analysts expect HNGR’s EPS and revenue to increase 37% and 9%, respectively, year-over-year to $0.37 and $305.98 million in its fiscal second quarter, ending June 30, 2022.
Over the past month, the stock has gained 6.1% in price to close its last trading day at $18.38.
HNGR’s POWR Ratings reflect solid prospects. The stock has an overall B rating, which translates to a Buy in our proprietary rating system. It has a B grade for Value and Stability. It is ranked #3 of 13 stocks within the Medical - Hospitals industry.
To see the other ratings of HNGR for Growth, Momentum, Sentiment, and Quality, click here.
Click here to checkout our Healthcare Sector Report for 2022
HCA shares were trading at $257.69 per share on Friday afternoon, down $2.91 (-1.12%). Year-to-date, HCA has gained 0.51%, versus a -4.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
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