Although equities started the year on a strong note, investors haven't forgotten that we experienced a bear market last year. And even after the recent run, the S&P 500 remains down by nearly double-digits over the trailing-12-month period.
Even so, some companies have done just fine amid the downturn. Among them are HCA Healthcare (HCA -1.85%) and Regeneron (REGN -1.44%). These healthcare giants aren't just one-hit wonders. There are excellent reasons to invest in both. Let's consider some of them.
1. HCA Healthcare
With recession fears alive and well, HCA Healthcare might be an excellent stock to turn to now. The company is a leading hospital chain operator in the U.S., a business that is sure to remain somewhat in high demand even if a recession hits. People don't get to choose when they need medical care; nor are they inclined to cut down on these costs in a downturn if they can help it.
That puts HCA Healthcare in a position to keep occupancy and procedure levels reasonably high in its facilities regardless of economic conditions. It partly explains why HCA Healthcare has outperformed the stock market in the past year, even as it has had to deal with higher costs brought about by inflation, supply chain issues, and higher labor costs. In 2022, HCA Healthcare's revenue increased by 2.5% year over year to $60.2 billion.
Note that comparisons to 2021 are difficult for the company since it experienced higher business than usual that year due to the pandemic. With cases of COVID-19 dropping in 2022 compared to 2021, it's not surprising to see HCA Healthcare record unimpressive revenue growth. Combining that with the higher expenses it faced, the company's adjusted earnings per share for the year dropped to $16.89, down from $17.50.
However, these are short-term issues that should do little to impede the company's long-term growth. HCA Healthcare does not control inflation and supply chain problems. The former has started to ease, and the company's labor costs should drop as the pandemic continues to subside. That's because HCA Healthcare relied heavily on contract labor during the outbreak.
Management is making it a priority to deal with these labor-related challenges this year. Higher revenue and lower costs should lead to higher profits for HCA Healthcare. So expect even better financial results from the company once coronavirus-related dynamics and economic problems are well behind us, and with that, HCA Healthcare can continue beating the market.
2. Regeneron
At first glance, biotech giant Regeneron looks to be in trouble. The company's revenue in 2022 dropped by 24% year over year to $12.2 billion. Also, one of Regeneron's biggest growth drivers, the medicine Eylea to treat wet age-related macular degeneration, will see its composition of matter patent expire in the U.S. this year. Regeneron shares Eylea's rights with Bayer.
Eylea's sales could drop as biosimilars enter the market. These are real issues Regeneron faces, but looking closer reveals a very different picture. Regeneron's declining revenue last year was entirely due to its COVID-19 antibody cocktail, REGEN-COV, whose sales dropped in 2022. Regeneron's top line excluding this product increased by 17% year over year.
REGEN-COV helped Regeneron generate some revenue it otherwise wouldn't have during the worst of the pandemic, but it is doubtful whether it was ever going to be a key component of the company's long-term plans. And while Eylea's patent cliff is a problem, Regeneron has found a way to deal with that problem.
In September, the company reported results from a phase 3 clinical trial for a high-dose formulation (8 mg) of Eylea. The data showed "non-inferiority" of the high dose version in 12- and 16-week dosing regimens compared to Eylea's usual 8-week dosing schedule. Many patients will want to switch to the 8 mg version given that it requires fewer doses per year and showed a similar safety and efficacy profile.
This new product will also help Regeneron fend off Roche's Vabysmo, a competing medicine on a 16-week dosing schedule that was approved last year. Elsewhere, Regeneron's other major growth driver, eczema treatment Dupixent -- the rights of which it shares with Sanofi -- continues to grow its sales rapidly.
Dupixent's worldwide total sales soared by 40% year over year to $8.68 billion last year. Beyond Dupixent and Eylea, Regeneron has a rich pipeline with more than three dozen ongoing clinical trials. So the company is well-positioned to expand its lineup in the coming years. That's why the biotech stock is still worth buying today.
