The COVID-19 pandemic has accelerated the need for healthcare companies to make sense of all the data at their disposal so they can give better patient care, track resources and supplies, and accurately forecast capacity.

It's complicated stuff -- which is where medical big-data companies come in. The problem isn't a lack of information, but the contrary. The amount of data can be overwhelming, and that calls for better analytics. 

Insurers, hospitals, and medical manufacturers are looking for ways to cut costs. In 2018, the most recent year for which statistics are available, the Centers for Medicare and Medicaid Services estimated that 17.7% of the U.S. gross domestic product (GDP) went toward healthcare. That figure is expected to rise to 19.7% by 2028. While healthcare spending is rising globally, that 17.7% of the GDP that is spent in the United States is well above the worldwide average of 10%, based on 2017 data from the World Health Organization.

Stethoscope on top of an array of 100-dollar bills.


A Triton Market Research report said that healthcare big data generated $22.43 billion in revenue last year and that growth in that sector is expected to have a compound annual growth rate (CAGR) of 23.35% over the next eight years.

Here are three companies that are riding the data wave this year.

Health Catalyst is ramping up business

Health Catalyst (HCAT 2.21%), based in Salt Lake City, listed a 28% rise in revenues in the first quarter, though its bottom line fell by nearly the same amount -- 27% -- over the same quarter in 2019.

Investors don't seem too concerned. The company had its IPO last July and the stock's shares have climbed 34.8% over the past three months. Health Catalyst said revenue rose 38% last year and 54% the year before that. Last year, it actually trimmed net losses by 2.9%.

One of the company's recent projects is contributing to the COVID-19 Evidence Accelerator, a public-private enterprise that is sharing data regarding the disease and treatments.

COVID-19 didn't slow business down; in fact, the company says more healthcare companies sought out its platforms because of it. In his company's first-quarter earnings call, Health Catalyst CEO Dan Burton said that more than half of its staff work remotely anyway and that since its business platform is cloud-based, there were few hiccups.

The company said it expects revenue between $40.8 million and $43.8 million in the second quarter, which would be a 19% gain over the $36.8 million it made in the second quarter of 2019. One concern is that with many elective procedures being put off, hospitals may trim costs, including those connected with Health Catalyst services.

Globus Medical tailors big data to help surgeries

Globus Medical (GMED -0.46%) uses big data to develop better musculoskeletal implants that require less-invasive surgical methods, such as robotic surgery. Based in Audubon, Pa., the company has seen business slow in recent months because of the pandemic as many surgeries have been put off. Still, the long-term outlook for the company is solid.

Even with the slowdown, the company said revenue for the first quarter was $190.6 million, up 4% over the same quarter in 2019. Net income was $25.9 million in the first quarter compared to $33.2 million in the same period in 2019.

Over the past five years, the company has grown revenue by 44% and increased net income by 37%. In the past three months, the stock has risen more than 20%.

Big government contracts buoy Cerner 

Shares in healthcare technology company Cerner (CERN) are up nearly 30% in the last three months. The company cracked the Fortune 500 for the first time last month.

COVID-19 slowed the company's first-quarter sales. Cerner said revenue was $1.41 billion, up 2% year over year. Diluted earnings per share were $0.47, down from $0.51 in the first quarter of 2019.

However, Cerner has had steady growth in the past five years, from $4.43 billion to $5.69 billion last year. Net income was $529.45 million in 2019.

The North Kansas City, Missouri-based company has landed some major government contracts. Last year, it was awarded what is now a $16.1 billion contract to update the electronic health record (EHR) system for the U.S. Department of Veterans Affairs. Cerner still has another five years on its $4.3 billion contract to rebuild the EHR system for the U.S. Department of Defense. 

Investors in medical big data have choices

Of the three healthcare stocks, I believe Health Catalyst has the most growth opportunities. If you're looking for the safest bet, Cerner is an entrenched dominant player in the industry, and it even began offering a dividend last year of $0.18 per quarter. Globus Medical splits the middle, offering plenty of growth with a lower level of risk.