3 healthcare companies with revenue growth of 100% or more
Do you like stocks with triple-digit earnings growth? Here are three companies you might want to explore.
The first is Medical start (NASDAQ:OM), a healthcare company that doubled its sales last year. The next is Aurinia Pharmaceuticals (NASDAQ: AUPH); analysts estimate that its revenue will triple in 2022. Then there is medical shock wave (NASDAQ: SWAV), whose sales jumped 270% in its most recent quarter. Here’s why three Fool.com contributors are bullish on these names.
Several tailwinds will make this one fly
Patrick Bafuma (Outset Medical): When you hear about a company’s triple-digit revenue growth, it’s natural to wonder about its sustainability. Fortunately, dialysis innovator Outset Medical has huge tailwinds that should keep sales going for years to come. After posting a 105.5% year-over-year increase in fiscal 2021 revenue to $102.6 million, the company is looking to continue expanding its footprint with its innovative dialysis system , Table.
This healthcare company operates in two markets: hospital dialysis and home dialysis. These are addressable markets of $2.5 billion and $8.9 billion, respectively. There are good reasons to believe that Outset should be able to gain traction in both markets in the coming years. First, it has already signed agreements with seven of the eight largest health systems and a third of the 100 largest regional health systems to supply its system. And by demonstrating 55% cost savings for a hospital system as well as treatment success rates over 95%, it’s easy to envision Tablo continuing to grow its presence in the hospital.
Second, in the broader home dialysis market, this healthcare newcomer believes Tablo’s ease of use will convert more patients to home dialysis. And, with only 2% of dialysis patients receiving home therapy, there are plenty of ways to grow in the $8.9 billion addressable home market. Compared to traditional home systems, Tablo users require less training, fewer treatments per week, and have to spend less time preparing for treatment. It’s no wonder the Centers for Medicare and Medicaid Services (CMS) has called the Outset Medical System a substantial clinical improvement over current home hemodialysis machines. Not to mention that CMS offers a small financial incentive for health care providers to start treatments at home. The company is just getting started, hoping to have 100 units in homes by the end of 2022, but there were just over 59,000 home dialysis patients in 2019. With plenty of room for growth, Cost savings for hospitals, financial boosts from Uncle Sam, and a better patient experience all add up to continued exhilarating growth for years to come.
A waiting game
George Budwell (Aurinia Pharmaceuticals): Aurinia Pharmaceuticals has fallen on hard times in 2022. The autoimmune disease specialist’s shares have lost 55% of their value so far this year and are currently trading at a whopping 99% discount from their all-time highs.
But there is a stark counterpoint to Aurinia’s terrible stock market performance. Namely, the company’s oral lupus nephritis (LN) drug Lupkynis (voclosporin) is on track to post some pretty respectable sales numbers this year and beyond.
Aurinia management expects the drug to earn between $115 and $135 million in 2022. On the low side of these revenue forecasts, biotechnology sales are expected to increase by at least 155% from the previous year. ‘last year. Longer term, Wall Street expects Lupkynis to hit $2 billion in annual revenue by the end of the decade. That’s a huge revenue projection for a company with a current enterprise value of around $1 billion.
So why is Aurinia’s action heading in the wrong direction? Two issues are at stake here. First, Aurinia was expected to be a hot takeover target after Lupkynis was approved in 2021. So far, this particular investment thesis has yet to pan out. Investors hoping for a quick gain, in turn, apparently lost patience and moved on to greener pastures.
Second, the drug’s first-year sales were hampered by pandemic-related logistical issues. Wall Street expected the drug to gobble up market share in its second full year on the market. Unfortunately, Aurinia’s initial sales forecast for 2022 was more than a little disappointing, prompting some growth investors to throw in the towel.
Is Aurinia a valid buy on this weakness? Aurinia’s stock should eventually rebound. Lupkynis fills a clear need in an important market. However, investors should not expect a quick turnaround. Like most early-stage commercial biotechs, Aurinia is currently battling a wave of negative sentiment. As such, this stock is arguably best suited for investors looking to buy and hold for the long term.
Shockwave fly high
Taylor Carmichael (Shockwave Medical): Shockwave is experiencing massive growth right now. The medical technology pioneer has a minimally invasive platform for the treatment of calcified plaques in the arteries. Using intravascular lithotripsy (IVL), Shockwave’s devices produce sonic pressure waves that destroy calcium deposits without damaging soft tissue.
The cool thing about Shockwave is that investors can expect a lot of recurring revenue as the company’s platform becomes the standard treatment for calcified arteries. At present, the company is still placing its devices in hospitals around the world. Shockwave had $237 million in revenue last year, up 250% from 2020. Revenue grew again in the fourth quarter, up 271% from a year ago .
This is remarkable considering the disruption caused by COVID-19 last year. The company is steering cautiously for 2022, forecasting revenue growth of 71% to 79% for the year. I think it’s conservative. One fact that jumped out at me on the earnings call was that Medicare changed its payment for Shockwave devices in 2022, essentially doubling payment to hospitals using the device. This is a validation of the company’s platform and ultimately a financial boon for Shockwave as more hospitals will switch to IVL to treat calcified deposits. in the arteries.
The stock has become cheaper over the past year, with the price-to-sales ratio falling from 76 in June to 22 now. The market is still pricing this stock for fantastic growth in the future. With a market cap of $5 billion, Shockwave has plenty of room to run much higher.
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George Budwell has no position in the stocks mentioned. Patrick Bafuma has no position in the stocks mentioned. Taylor Carmichael has no position in the stocks mentioned. The Motley Fool holds positions and recommends Aurinia Pharmaceuticals, Outset Medical, Inc. and ShockWave Medical. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.