The shares for Doximity (DOCS -2.47%), Iqvia Holdings (IQV -2.52%), and TransMedics Group (TMDX 0.45%) are all off to positive starts this year, but what makes them different from other companies is that they are changing healthcare industry standards.
Doximity is becoming a must for physicians thanks to its helpful applications. Iqvia is speeding the process of bringing healthcare therapies to market, saving companies millions. And TransMedics is changing the efficiency of organ transplants.
The revolutionary nature of the three also makes them great long-term investments.
IQV Revenue (Quarterly) data by YCharts
Doximity is adding to its moat
While technology has been a big part of medicine for a long time, the actual connection between doctors and patients is still stuck in the last century, with 80% of all healthcare documents sent by regular mail or fax. Doximity is trying to bring better tech to medical professionals by giving physicians a variety of applications on one platform.
The company's apps concentrate on helping doctors with professional networks, a newsfeed, and perhaps most importantly, productivity, which has apps that focus on telehealth, digital faxes, e-signatures, and secure messaging.
Doctors have responded well, with 80% of them already using Doximity, along with a growing number of nurse practitioners, and physician assistants. Thanks to an expanding subscriber base, Doximity's revenue continues to grow, mostly through the selling of pharmaceutical company advertising aimed at doctors.
Doximity reported $343.5 million in revenue in fiscal 2022, which ended on March 31, 2022, up 66% over 2021. In fiscal 2023, it anticipates $428 million in revenue, a rise of 24.4% over 2022 estimates. The company reported net income of $154.7 million in fiscal 2022, up 208% over the same period last year. Through six months in fiscal 2023, net income totaled $48.7 million, up 10.4% year over year.
The company's rate of revenue and net income increases may decrease as it saturates the market, but its first-to-market edge means it has a huge moat that should allow it to continue raising advertising rates.
Iqvia benefits from rising costs of clinical trials
Iqvia is one of the largest contract research organizations (CROs). The company specializes in running clinical trials for other healthcare companies, while providing laboratory and analytical services. The company's services are especially valuable to smaller biotech start-ups that don't have the staff or expertise yet to run clinical trials. Pharmaceutical companies turn to CROs because they have a greater geographic reach, more expertise, and can help bring new drugs to market more quickly and at less expense.
CROs aren't new, but Iqvia has changed things by its increased use of virtual trials, also known as decentralized trials (DCTs). They trim the time needed for patient recruitment and cut out the burden of needing one site for a trial. The company has 300 decentralized clinical trials in 30 indications across 50 nations, it said. DCTs became a necessity when the COVID-19 pandemic began, but the trend is expected to continue because they provide more flexibility for CROs and for patients. One report, by Market Research Guru, puts the market for DCTs at $8.3 billion in 2022; it is expected to have a compound annual growth rate of 14.8% over the next five years, reaching $18.95 billion by that time.
The company has increased revenue for 12 consecutive years and is on track for its third consecutive year of improved net income. Through nine months in 2022, the company reported $10.7 billion in revenue, up 4.2%, year over year and net income of $864 million, or earnings per share (EPS) of $4.52, up 33% and 36.1%, respectively, over the same period in 2021. Iqvia's full-year guidance shows it expects revenue to be between $14.325 billion and $14.425 billion, up 3.2% to 4% over 2021.
TransMedics improves organ transplant outcomes
TransMedics developed what it calls the Organ Care System (OCS), which extends the life of transplantable organs by mimicking their natural living environment, pumping oxygen and blood to allow them to be viable longer compared to what had been the standard of care of cold storage. The process, called normal temperature perfusion, allows donated hearts to continue beating, livers to continue to produce bile, and lungs to continue to breathe, all inside portable machines.
The company has also made a business of using transplant centers and by transporting donated organs directly to hospitals. The system, according to TransMedics, reduces post-transplant complications for patients.
TransMedics is expected to soon begin clinical trials of what may become its most valuable product yet, the OCS Kidney. Its other products are OCS Heart, OCS Lung, and OCS Liver.
Since the company went public in 2019, it has improved revenue every year and has had four consecutive quarters of increased revenue. In the third quarter, it reported revenue of $25.7 million, up 378% year over year and 25% sequentially. The company, investing heavily on its push for OCS Kidney and increased marketing, reported a loss of $7.4 million, compared to a loss of $13 million in the same period last year and $12 million in the second quarter of 2022.
TransMedics has forecast 2022 revenue between $80 million and $85 million, a rise of 164% to $181 compared to 2021.
