Market volatility tends to affect every industry in unique ways. While there are always exceptions, healthcare has continually proven to be one of the most resilient sectors in a wide variety of market environments. If you have cash to add to stocks right now, here are two healthcare names to buy without hesitation before the month is out.
1. DexCom
DexCom (DXCM -1.95%) has long been known as a leader in diabetes care, with its industry-dominating portfolio of continuous glucose monitoring (CGM) devices, led by its flagship G series of products. Its latest CGM device, the G7, was just approved in the U.S. at the end of 2022, and launches are underway across the nation, as well as in international markets spanning Europe to the U.K. to Asia.
Early feedback about the G7 from users has already been promising. CEO Kevin Sayer noted in the fourth-quarter 2022 earnings call:
We are hearing consistent praise for the new features, such as the 60% smaller form factor, shorter warm-up period, and more engaging and consumer-friendly app. Perhaps the most encouraging is that 97% of initial users surveyed have found G7 easy to use.
Despite the fact that CGMs can be valuable and even lifesaving tools for both type 1 and type 2 diabetics (and there are indications that there could potentially be valuable use cases for pre-diabetics), there are still millions of people with diabetes all over the world that do not utilize one.
This fact, combined with the growing prevalence of diabetes worldwide, creates a vast and growing addressable market opportunity for DexCom, an opportunity that it is well-positioned to seize upon, given its broad footprint in this space. The enhancement of both private and public coverage options are also factors driving CGM adoption by the consumer populace. DexCom has not only been at the forefront of advocating for change on the government level and working alongside private insurers to effect this end, but its products are currently the most covered on the market.
The company saw its user base skyrocket by an incredible 450,000 lives in 2022, with DexCom ending the year with about 1.7 million users around the world. Bear in mind that it's estimated that there are about half a billion people with diabetes globally. DexCom raked in profits of $341 million and operating income of $391 million in 2022 alone.
If you're looking for a profitable business with a firm foothold on a fast-growing and highly non-cyclical industry, DexCom meets the mark on all counts.
2. Intuitive Surgical
Intuitive Surgical (ISRG -1.16%) has built a thriving, multibillion-dollar business around its long-standing leadership in the surgical robotics industry. The company has been a trailblazer in this space and boasts the distinction of having first-mover market advantage, since its flagship product, the da Vinci Surgical System, was approved more than two decades ago.
While the da Vinci Surgical System was initially approved for use in general laparoscopic surgery, it has since garnered approval for a range of other use cases, including prostate, gynecological, bladder, and kidney surgeries, to name a few.
In recent quarters, Intuitive Surgical has exhibited somewhat of a growth deceleration, but this isn't because the company is losing its edge or due to underlying issues with the business. It goes back to a wave of COVID-19 resurgences throughout 2022 across markets that provide key sources of revenue and profits for Intuitive Surgical in Europe and Asia, which inevitably caused a delay in procedures and impacted procedure volume.
However, even several quarters of fluctuating procedure volumes shouldn't deter investors looking at a multi-year, buy-and-hold position in this stock. Notably, the procedures that Intuitive Surgical's systems support are not usually elective in nature, which lends an overall resilience to the business.
Even as year-over-year growth comparisons have been somewhat more moderate, Intuitive Surgical is continuing to witness stable revenue acceleration, remains profitable, and its installed base of systems continues to grow. The company ended the year with an installed base of 7,544 systems globally, up 12% from 2021 and 35% from 2019.
Intuitive Surgical doesn't just generate revenue from how many systems it sells and installs for medical providers. It makes even more revenue -- and recurring revenue at that -- from the range of services, software, tools, and instruments that go along with these systems. This is a company with a strong history of profitability.
Just looking back over the past few years, Intuitive Surgical generated profits of $1.3 billion in 2022, $1.7 billion in 2021, and $1.1 billion in 2020. The company controls a roughly 80% share of the surgical robotics industry, a space that represents a vast and expanding addressable market as use cases for and adoption of surgical robotics systems grows. For healthcare investors, that can create a golden opportunity in any market environment.
