Rengenxbio (RGNX -3.06%), Corcept Therapeutics (CORT -9.04%), and Pacira BioSciences (PCRX -1.23%) are all small-cap healthcare stocks with market caps below $3.5 billion. While the share prices of many companies in this sector have plummeted recently, these three have risen in the past three months.

That said, they aren't necessarily overpriced. While not well-known, they offer the potential for incredible growth. So far, they seem to be headed in the right direction -- they each increased their earnings last year.

At the same time, small-caps often don't have much product diversification or as much cash to handle downturns, so there can be more risk than in mid-cap or large-cap stocks. Investors need to make sure that their growth is sustainable. Let's take a closer look.

A lab technician examples a blood sample.

Image Source: Getty Images

Regenxbio

Regenxbio shares are up by more than 17% over the past three months.

This biotech company specializes in gene therapies using a specialized virus delivery system. Last year, the company reported revenue of $470.3 million, up from $154.6 million in 2020. Net income totaled $127.8 million, or $2.91 per share, vs. a net loss of $111.3 million or $2.98 per share in 2020.

The company has only one approved therapy: Zolgesma, which is used to treat children aged two and under with spinal muscular dystrophy, but it is already making money from its pipeline.

Most of Regenxbio's 2021 revenue came from a $370 million upfront payment from AbbVie as part of the company's collaboration agreement in developing RGX-314, a one-time gene therapy intended to treat wet, age-related macular degeneration (wet AMD), diabetic retinopathy (DR), and other chronic retinal diseases.

The deal with AbbVie could be worth as much as $1.38 billion for Regenxbio from reaching certain development, regulatory, and commercial milestones -- and that doesn't even count Regenxbio's share of potential future U.S. sales of the therapy. (AbbVie will market the drug outside the U.S. and pay Regenbio tiered royalties based on its international sales.)

Regenexbio also receives royalty revenue from Novartis for Zolgesma. In the fourth quarter, Novartis said its Zolgesma sales were up 35% year over year. Thanks to royalty payments, Regenxbio said it had $849.3 million in cash as of Dec. 31 -- enough, management says, to fund its operations through 2025 as it develops its five treatment candidates, including RGX-314.

Corcept Therapeutics

Corcept Therapeutics' shares are up more than 32% over the past three months.

Corcept focuses on therapies that modulate the stress hormone cortisol to help treat cancer and metabolic and psychiatric disorders. It has one marketed drug, Korlym, which is approved to treat high blood sugar in patients with Cushing's syndrome or hypercortisolism, a condition that occurs when a tumor increases the body's level of cortisol to the point that it can lead to high blood pressure, bone loss, and type-2 diabetes.

Last year, the company's revenue grew by 3.4% to $366 million and net income rose 6% to $112.5 million. The company said it expects to bring in between $400 million and $430 million in revenue this year. The company also spent $207.5 million to repurchase 10 million shares in the fourth quarter.

Perhaps most exciting is that the company has several therapies in late-stage studies, including Relacorilant, which is in two phase 3 trials: one as a treatment for endogenous Cushing's syndrome and another as a treatment for Cushing's syndrome caused by adrenal adenomas. Relacorilant is also in a phase 2 trial in combination with Abraxane as a treatment for ovarian cancer. Another key Corcept pipeline drug is Miricorilant, which is in two phase 2 trials as a potential treatment for antipsychotic-induced weight gain.

The one thing hanging over Corcept is an investigation by the United States Attorney's Office for the District of New Jersey into whether Corcept violated any laws in its sale and promotion of Korlym. In November, the company said it received a subpoena for records regarding the matter, but as of early February, when Corcept issued its 2021 annual report, the U.S. Attorney's Office said it did not consider it a defendant in the matter, but rather an entity within the scope of the investigation.

While nothing further has been said about the investigation by Corcept or the U.S. Attorney's Office, it is something that stockholders are watching carefully and will probably continue to slow interest in the stock until the matter is resolved.

Pacira BioSciences

Shares of Pacira BioSciences are up more than 14% over the past three months. Pacira specializes in non-opioid pain management and health solutions in hospitals and ambulatory surgery centers, using its multivesicular liposome (pMVL) drug delivery technology.

The company has three products: analgesic Exparel (bupivacaine liposome injectable suspension), used as a post-surgery pain reliever; Zilretta (triamcinolone acetonide extended-release injectable suspension), used to treat osteoarthritis knee pain; and the Iovera hand-held cryotherapy system for relief of osteoarthritis pain, both before and after surgery.

Exparel, first approved in 2011, remains Pacira's key product. For the first quarter of 2022, the drug brought in record sales of $129.2 million, up 12%, year over year. It was also responsible for some 80% of the company's total revenue, preliminarily reported as $157.4 million to $158.4 million. Moreover, the company noted last year that it is pursuing several label expansions for Exparel.

Last year, Pacira's annual revenue grew 26.3% to $538.9 million. Management also said Pacira is on track for its eighth consecutive year of positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

Pacira's sales should continue to rise as the medical community works through the backlog of elective surgical procedures that were delayed due to the pandemic. The company sees a lot of untapped potential for Exparel sales, along with natural growth in sales for Zilretta and Iovera.

CORT PE Ratio (Forward) Chart

CORT PE Ratio (Forward) data by YCharts

Big gains in little packages

Small-cap stocks can be hidden gems with great potential for growth, sporting relatively low valuations because they aren't well-known yet. The downside of each of these healthcare companies is that they have little diversity when it comes to revenue sources: Regenxbio and Corcept have only one approved therapy each, and Pacira is heavily reliant on its lead therapy.

However, Corcept has a growing pipeline of therapies in late-stage trials, and while it has had the slowest revenue growth of the three, I think that's about to change, though again, the pending investigation into Korlym sales should be watched. I also see plenty of potential for Pacira -- its business will likely pick up as elective procedures increase. Based on their forward price-to-earnings ratios of 18.39 and 18.25, respectively, they appear to be well-priced for interested investors.