What happened

Investors could be hearing the sound of a bubble popping. Major stock market indexes plunged on Thursday, with the declines continuing into Friday. And the overall market sell-off is pulling down several of 2020's biggest healthcare winners. Shares of DexCom (DXCM -0.24%) were tumbling 5.9% lower as of 11:43 a.m. EDT on Friday. Livongo Health (LVGO) and Teladoc Health (TDOC 0.76%) stocks were both down 5.8%.

So what

What should investors make of the declines today? There's a pretty good argument that the overall market pullback presents great buying opportunities for DexCom, Livongo, and Teladoc.

Doctor holding stethoscope up to a panel of healthcare icons

Image source: Getty Images.

DexCom continues to deliver tremendous sales growth thanks to the success of its G6 continuous glucose monitoring system. The company reported revenue of $451.8 million in the second quarter, up 34% year over year. This momentum doesn't seem likely to slow down. It could even accelerate as the impact of the COVID-19 pandemic on physician visits fades. 

Livongo and Teladoc stocks are already joined at the hip. The two companies announced on Aug. 5 that they plan to merge. Because of how the deal is structured, their stock prices will basically move in lockstep.

Although some investors initially didn't like that Livongo and Teladoc will merge, the combination of the companies will create a powerful player in the healthcare sector. Livongo brings its digital health platform for chronic disease management to the table, while Teladoc reigns as the leader in telehealth. 

The overall stock market drop on Friday shouldn't affect any of these companies' long-term growth prospects. Demand for their products and services should remain strong. And, in the case of Livongo and Teladoc, a worsening of the pandemic could even fuel higher demand for their virtual-care offerings.

Now what

All three of these healthcare stocks could be volatile throughout the rest of 2020 and perhaps even into next year. But investors will be better off focusing on the businesses instead of the stock performances. The main things to look forward to are each company's next quarterly update and the anticipated closing of the Teladoc-Livongo merger in the fourth quarter of this year.