Future in Fitness: 3 Stocks Innovating in Digital Health

Stocks to buy

Digital health and telemedicine are booming sectors offering attractive opportunities to investors looking to capitalize on the growing demand for remote healthcare. A couple of years ago, the Covid-19 pandemic accelerated the adoption of digital health solutions such as online consultations, remote monitoring, and digital prescriptions. And today, this transformation is still very much in motion, making digital health stocks appealing to forward-looking investors .

According to a report by Grand View Research, the global digital health market size is expected to reach $809.2 billion by 2030, registering a compound annual growth rate of 18.6% from 2022 to 2023. With more growth ahead, this is a critical time for investors looking to add digital health stocks to their portfolios.

Teladoc Health (TDOC)

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Despite the growing competition in the sector, Teladoc Health (NYSE:TDOC) remains a clear choice for investors. Currently, Teladoc offers a comprehensive suite of virtual care solutions, including general medical, mental health, and chronic care. In recent years, the company has established itself as a leader in telehealth services with more than 80 million individuals in the
United States “having access to one or more of [their] products and services,” according to their 2022 SEC 10K filing.

Teladoc’s shares have struggled over the past 12 months after its misadventure in acquiring Livongo, a digital health platform that helps people manage chronic conditions. As a result, for FY’2022, Teladoc reported a $13.4 billion goodwill impairment charge related to the plummeting value of the acquisition.

Despite these acquisition-related troubles, Teladoc has grown its revenue into the double digits. As we head into a new year, the service provider could continue to benefit from digital transformation efforts in the broader sector. It’s resilience makes it a clear pick for this list of digital health stocks.

Amazon (AMZN)

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The U.S. e-commerce giant Amazon (NASDAQ:AMZN) first entered the healthcare sector in 2018 with the acquisition of PillPack, an online pharmacy that delivers medications to customers’ doors. Since then, Amazon has launched Amazon Clinic, a digital healthcare services provider that connects employees with doctors and nurses via chat or video.

While Amazon’s strides into the healthcare sector are still in their beginning stages, there are already signs of the tech giant’s success. For example, the insurer Blue Shield of California said it would drop CVS Health’s (NYSE:CVS) Caremark, the pharmacy-benefit manager it currently uses, which negotiates drug prices and wraps in other services such as a mail-order pharmacy. Instead, Blue Shield will partner with Amazon’s pharmacy. Moreover, in 2022 Amazon acquired One Medical, which has allowed Amazon to offer virtual primary care to Amazon Prime members for a fixed subscription fee.

While Amazon’s path into the healthcare industry has been criticized as rocky, the company has certainly made strides to increase its weight in the sector. Investors should keep their eyes on how the e-commerce giant develops further in this space. Who knows, it may become a leader among digital health stocks as well.

Doximity (DOCS)

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Doximity (NYSE:DOCS) is the final digital health stock on this list that investors should consider. The company is one of the largest online networks for medical professionals in the United States. To date, it has helped to connect over 2 million doctors, nurses, pharmacists, and other health care workers, enabling them to communicate and share insights. Doximity also offers telehealth tools that improve clinician productivity.

The company’s Q2 earnings print of their fiscal year 2024 reflected positively on Doximity’s current growth prospects. Impressively, Doximity was able to beat Wall Street’s revenue and earnings estimates. In particular, revenue grew by 11% year-over-year to $113.6 million, while net income came in at $30.6 million, representing a margin of 26.9%. This is up 120 bps from the same period last year.

Currently, Doximity trades around 17x forward EBITDA. While it’s not necessarily cheap, it’s also not expensive compared to companies entering the novel healthcare space. Investors looking for solid growth in a transformative sector, and digital health stocks in particular, should consider looking into Doximity.

On the date of publication, Tyrik Torres did not have (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.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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