The COVID-19 pandemic slowed business for many healthcare companies because the number of elective surgeries fell. On top of that, labor shortages for hospital staff, tightened hospital spending, and supply chain issues slowed sales of medical equipment.
However, as elective procedures gradually return to where they were before the pandemic, medical equipment makers are seeing a surge in sales. Edwards Lifesciences (EW -1.22%), Abbott Laboratories (ABT 1.35%), and DexCom (DXCM -2.83%) all stand out for their solid growth over time.
Let's see why investors should consider them now.
Edwards has its pulse on growth
Edwards Lifesciences focuses on devices for critical care monitoring and to treat structural heart disease.
About 10 years ago, the company pioneered transcatheter heart valves (TAVR) that don't require open-heart surgery. It's looking forward to a boost this year thanks to the launch late last year of its next-generation TAVR, the Sapien 3 Ultra Resilia. The valve is made from cow heart tissue and has anti-calcification technology.
The company's other big seller has been its HemoSphere system to monitor patients' heart functions and fluid status. Edwards should benefit as the population ages. Heart disease is the No. 1 cause of death in the U.S., according to the Centers for Disease Control and Prevention.
The need for heart valves and heart monitoring is expected to grow, with Edwards saying in its latest quarterly report that it expects low double-digit growth in business between now and 2028.
The company reported fourth-quarter and full-year earnings on Jan. 31. Fourth-quarter sales were up 1% year over year to $1.35 billion while yearly revenue grew 3% to $5.38 billion. Earnings also grew. In the fourth quarter, Edwards reported earnings per share (EPS) of $0.65, up 22.6% over the fourth quarter of 2021. Yearly EPS was up 2.5% to $2.44.
Edwards said it expects 2023 sales of $5.6 billion to $6 billion, up 9% to 12%, and adjusted EPS between $2.45 and $2.60, compared to $2.48 in 2022.
ABT EPS Diluted (Annual) data by YCharts
Abbott is keeping the FDA busy
Abbott Laboratories has had several Food and Drug Administration (FDA) clearances for its devices this year that should help to drive future sales. On Jan. 6, the FDA cleared Abbott's Navitor, its latest transcatheter aortic valve implantation (TAVI) system, to treat people with severe aortic stenosis (when a heart valve doesn't open properly) who are at high risk for open-heart surgery.
Then on Jan. 26, it received FDA approval for another indication for its Proclaim XR SCS (spinal-cord stimulation) system as a non-medication pain therapy for diabetic peripheral neuropathy.
Finally, on March 30, Abbott received FDA approval of its Epic Max stented tissue valve to treat patients with aortic regurgitation (when a heart valve doesn't close properly) or stenosis. Epic Max is designed for patients who can't take blood thinners but need heart valve replacements.
On the financial front, Abbott reported revenue of $43.6 billion last year, up 1.3%, though EPS was down to $3.91 compared to $3.94 a year earlier. Abbott's diabetes care sales spiked by 34.8% in the U.S. last year and 9.9% overall to $4.8 billion, thanks to the introduction of the Freestyle Libre 3, the world's smallest and thinnest continuous glucose monitoring (CGM) device.
One advantage Abbott has over the other two stocks here is its dividend, which it has increased for 51 consecutive years. The current quarterly dividend pays $0.51 per share, equal to an above-average yield of about 2%. The payout ratio is a conservative 42%, meaning it is well-covered by the company's cash flows.
G7 launch will drive DexCom sales this year
DexCom focuses on CGM systems for diabetic care -- a need that is increasing due to an aging population and increasing obesity. According to the International Diabetes Foundation, there were 537 million adults with diabetes in 2021, and that number is expected to grow to 783 million by 2045. The number could be even higher, the foundation said, because nearly one in two adults who have diabetes are undiagnosed.
The company launched its latest -- and smallest -- CGM device, the G7, in February and is looking forward to another year of growth.
DexCom reported fourth-quarter and full-year 2022 numbers on Feb. 9. Fourth-quarter revenue was up 17% year over year to $815 million while full-year revenue was up 19% to $2.9 billion.
Net income for the year was $341 million, up about 45%, with 2023 EPS coming in at $0.82, up almost 55%. Fourth-quarter net income was $91.8 million, compared to a loss of $5.3 million in the same quarter a year ago, while EPS this quarter was $0.22 compared to an EPS loss of $0.01 in the same period a year ago.
This year, thanks to the launch of the G7, the company's guidance points to revenue of between $3.35 billion and $3.49 billion, growth of 15% to 20%.
