Investing in the stock market is never without risk, but great businesses with clear paths forward to growth can come out on top despite near-term mayhem. If you're looking for profitable, growth-oriented businesses that have a track record of expansion in a wide range of economic cycles, you don't have to look far.
Today, we're going to take a look at two fast-growing healthcare stocks that are not only leading the way in their respective markets, but also still have abundant growth runways ahead of them that long-term investors can capitalize on.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.46%) has amassed a profitable and high-revenue growth business around a relatively small portfolio of drugs. However, these drugs all have one thing in common -- they are the only products currently on the market that work to correct the underlying cause of the genetic disease cystic fibrosis.
Together, these four products brought in total revenue of $9 billion in 2022, an increase of 18% over 2021. Net income totaled $3.3 billion for the 12-month period, jumping 42% from the prior one. This follows the trailing three-year period, in which the company's annual revenue and net income have grown by respective amounts of 44% and 23%.
While the addressable market for Vertex's existing portfolio of cystic fibrosis drugs is massive -- management estimates that as many as 20,000 people globally could benefit from the company's products but are not yet taking them -- and additional indications for these drugs are expanding its patient population, the company is looking to new sources of growth. It currently has an impressive pipeline of products spanning disease areas ranging from rare blood disorders to type 1 diabetes to acute pain.
In the company's 2022 earnings call, CEO and President Reshma Kewalramani said that each of its mid- to late-stage clinical pipeline candidates "holds the potential to be best-in-class and transform the disease, and each represents a multibillion-dollar market opportunity. Furthermore, we see the opportunity to launch new products into five of these disease areas within the next five years or our five-in-five goal."
For investors seeking a high-growth, profitable healthcare business that is only in the early days of its overall expansion strategy, Vertex Pharmaceuticals is a prime candidate to consider for a long-term position in both bull and bear markets.
2. DexCom
DexCom (DXCM 0.18%) is riding on its most recent victory, the approval of its latest continuous glucose monitor (CGM) device in the U.S., and a remarkable year of growth and profitability for the company. The latest version of its flagship CGM, the G7, is currently being launched in the U.S., with launches already underway in key markets outside of the country.
The G7 is 60% lighter than its predecessor, the G6 CGM, and has already received overwhelmingly positive reviews from wearers. In fact, 97% of initial wearers have reported how easy to use the G7 is. Meanwhile, DexCom just announced that the G7 will be covered for eligible Medicare beneficiaries, ensuring that it is the most-covered CGM device currently on the market.
2022 was a successful year for DexCom on a multitude of fronts. The company grew its user base by 450,000 individuals, closing out the 12-month period with a total of about 1.7 million CGM users globally. Revenue and net income for the 12-month period hit $3 billion and $341 million, respectively, representing increases of 19% and 57% from the prior year.
The market for CGMs is continuing to expand as the prevalence of diabetes rises globally. And while most CGM wearers are type 1 diabetics, not only is this market still underpenetrated (there are more than 8 million people globally with type 1 diabetes), but there is an expanding market opportunity for DexCom to reach those with type 2 diabetes, the most common form of the disease, and potentially even prediabetes.
Despite the fact that DexCom remains a CGM market leader globally, there is tremendous room for the healthcare company to expand in the years ahead, and boost shareholder returns in the process.
