The first half of 2018 has been a pretty good one across the board for most, but not all, U.S. healthcare stocks. The sector-tracking iShares U.S. Healthcare ETF (NYSEMKT:IYH) is up 7.1% in 2018, without any help from a couple of troubled drugmakers and a dental equipment specialist that you're probably more familiar with than you think.

While there were plenty of smaller biotechs that imploded this year, most of those start-ups, at their peak, were worth less than a Lebron James contract. However, owners of the biotech stocks on this list have lost a combined $31.2 billion in 2018, making them the worst healthcare stocks of the year so far:

Company (Symbol) Year-to-Date Performance Year-to-Date Market Cap Loss
Celgene Corporation (NASDAQ:CELG) (17.8%) $21.7 billion
Incyte Corporation (NASDAQ:INCY) (26.3%) $5.2 billion
Dentsply Sirona Inc. (NASDAQ:XRAY) (30.9%)

$4.8 billion

Data source: Yahoo! Finance.

Here's a look at what went wrong.

1. Celgene Corporation: A crisis of confidence

Success with a blood cancer drug, now nearing the end of its patent-protected life cycle, has helped this biotech turn long-term investors into millionaires. But recent events have left them a bit shaken up. A massive $21.7 billion chunk of this company's market cap evaporated in 2018, because investors just aren't sure management can replace revenue from Revlimid, which is expected to top $9.5 billion this year.

The trouble started last year when a candidate treatment for Crohn's disease crashed and burned during a long-running pivotal trial. The blowup was especially troubling because Celgene had spent $710 million up front to develop and commercialize the candidate, called mongersen, just a few years earlier.

While the mongersen failure highlighted the general risks of drug development, the company's next blunder has investors deeply concerned. In 2015 Celgene acquired Receptos for $7.2 billion to get its hands on ozanimod, a potential new multiple sclerosis (MS) drug that had just succeeded in a midstage trial. Given the fierce competition for MS treatments hitting the market now, every day ozanimod stays off the market makes its potential launch even more challenging. With this in mind, it was troubling to learn that Celgene didn't double-check every portion of the application package started by Receptos, so it received a refuse-to-file letter that will delay an approval decision by at least a year.

Three people doing facepalms

Image source: Getty Images.

Also in 2018, Celgene completed a $9 billion acquisition of Juno Therapeutics for a chance to develop some cutting-edge gene therapies. While Juno's lead candidate has produced some exciting data, a lousy track record with acquired assets isn't doing wonders for investor confidence. Celgene has sunk a ton of money into a huge pipeline full of acquired and partnered drug candidates, but it needs to launch a few winners before investors go back to assuming management can squeeze out big returns.

2. Incyte Corporation: Double whammy

This company's investors have suffered a double dose of bad news this year. First, Incyte announced that adding the company's experimental IDO inhibitor, epacadostat, to Keytruda from Merck & Co. failed to produce a significant survival benefit for melanoma patients in a pivotal study. That's a huge problem because Incyte bet heavily on epacadostat's success, and started a slate of phase 3 clinical trials that don't appear to be going anywhere.

Merck wasn't the only one of Incyte's big pharma partners that could be found moping around in the first half of the year. The Food and Drug Administration recently handed down an unfavorable decision regarding a rheumatoid arthritis drug partnered with Eli Lilly. Olumiant is already selling well in the EU, but the dosage the FDA refused to approve this time around is widely considered necessary to compete for patients who have several new treatment options.

3. Dentsply Sirona: Not smiling now

If you've been to a dentist in the U.S. you've probably sat in one of this company's chairs, spit in one of its sinks, and been bombarded with subatomic particles from the imaging device in its ticker symbol ("XRAY"). Demand for dentistry should be increasing, but you wouldn't know that looking at Dentsply Sirona's performance following a botched merger a couple of years ago.

Terrified dental patient

Image source: Getty Images.

Dentsply's $5.5 billion, all-stock acquisition of Sirona at the beginning of 2016 hasn't exactly paid off for investors in any way they can measure. Buying a competitor was supposed to boost profitability by eliminating shared costs, but trailing operating income is just 15% higher now than it was at the end of 2015.

A poorly executed merger isn't the only problem weighing on investors' minds. Dentsply Sirona's first-quarter U.S. sales shrank 6.9% compared to the same period last year. International markets are still growing, but total first-quarter sales fell 1.1% year over year when you ignore the benefits of a weakened dollar.

Keep those fingers crossed

While it's been a lousy year for these three healthcare stocks so far, there are reasons to expect better days ahead. Dentsply is still a profitable leader in the dental market, and its breadth makes it a business most dentists can't live without.

Celgene sacked its operations officer following the ozanimod debacle, and I think it's safe to expect closer attention to mission-critical details in the future. Incyte's lead drug Jakafi has a strong position as a treatment for two bone-marrow disorders, and it could keep the bottom line climbing for years to come.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.