Shares of Nano-X Imaging (NNOX -3.02%) are up more than 135% to start the year after the company got approval in April from the Food and Drug Administration (FDA) for its Nanox.ARC system. It may be too late to benefit from the stock's rise, but GE HealthCare Technologies (GEHC -0.90%) and Lantheus Holdings (LNTH -2.55%) are also involved with medical imaging and are less risky plays.

Nano-X was founded in 2011 and went public in 2021. The stock concerns me because of the oversized run-up in its price and because Nano-X only has $91 million in cash. The company showed improved revenue in the first quarter, but it is still losing money. Nano-X reported $2.4 million in revenue, up 25% year over year, and a net loss of $11.8 million, compared to a loss of $21.7 million in the same period last year. It will need to spend additional money to bring the Nanox.ARC system to market.

There's plenty of opportunity in medical imaging thanks to the growth in chronic diseases and the aging of our population. A report by GlobalData says the global diagnostic imaging market will reach $31.9 billion this year and, with a compound annual growth rate of 4.8%, will reach a $45.8 billion market by 2030. 

However, Lantheus and GE HealthCare are in a better position to take advantage of that growth. They are profitable and have a longer track record of success. Lantheus was founded as New England Nuclear in 1956, while GE Healthcare was spun off in January from General Electric, which began as Edison Electric Light Company in 1878.

Lantheus Holdings' agents aren't a secret

Lantheus Holdings is the parent company of Lantheus Medical Imaging, Progenics Pharmaceuticals, and EXINI Diagnostics. The company makes dyes and solutions, and uses artificial intelligence (AI) to improve the performance of medical imaging. The healthcare company more than doubled its annual revenue last year and has increased revenue for eight consecutive quarters.

In the first quarter, Lantheus' revenue totaled $300.8 million, up 44% year over year, led by increasing sales for the company's prostate-specific membrane antigen (PSMA) positron emission tomography (PET) with Pylarify and its Definity ultrasound agent. 

There are solid reasons for the growth of both products. The former, approved in 2021 by the Food and Drug Administration, is already the top-selling PSMA radioactive tracer for PET scans. It is designed to locate the protein that is overexpressed in prostate cancer, the No. 2 leading form of cancer for men, according to the American Cancer Society. One in eight men will develop prostate cancer and 60% of those who do are 65 or over, a demographic group that is growing.

The latter product, Definity, is the top-selling ultrasound enhancing agent, used primarily in echocardiograms. Heart disease, according to Centers for Disease Control and Prevention, is the No. 1 cause of death in the U.S., and echocardiograms are the second-most commonly used cardiac diagnostic behind electrocardiograms (EKGs). 

Lantheus has 11 programs in clinical trials, including several in late-stage trials, including improved agents for detecting neuro-endocrine tumors, prostate cancer, and one used in myocardial perfusion, a type of nuclear stress test to see how well the heart is pumping blood.

While the company had an earnings-per-share (EPS) loss of $0.04, compared to EPS of $0.61 in the same period a year ago, its adjusted EPS was $1.47 in the first quarter, an improvement of 51% year over year. 

Lantheus also released improved guidance to show it expects full-year revenue between $1.23 billion and $1.27 billion, compared to earlier estimates of $1.14 billion to $1.16 billion. It also upgraded 2023 adjusted EPS estimates to between $5.45 and $5.70, compared to earlier guidance of $4.95 to $5.10.

The strength of the company's financials, as well as its improved guidance, has pushed the stock up 72% to start the year.

GE HealthCare at the forefront of AI machines

GE HealthCare makes medical imaging agents as well as equipment and tech devices, and its use of AI is not just as a buzzword, but as part of its software systems to better run its machines. The company has four segments: imaging, ultrasound, pharmaceutical diagnostics, and patient care solutions. 

The stock is up more than 33% so far this year, helped in part by positive results. The company reported revenue of $4.7 billion in the quarter, up 8% year over year. That was led by imaging, with $2.5 billion in sales, up 8% year over year, in turn led by magnetic resonance imaging, molecular imaging, and computed tomography (CT).

Ultrasound was the next highest-performing segment with $895 million in revenue, up 5% over the same period last year. The company's EPS fell to $0.41 versus $0.86 in the same quarter in the prior year, but that didn't stop it from offering its first quarterly dividend. At $0.03 per share, that equals a yield of 0.15%. That's well below average, but with a dividend payout ratio of 7%, there's plenty of room for continued dividend growth.

On May 30, the company got FDA clearance for its Precision DL, exactly the type of medical device that uses the company's main strengths. It uses deep learning-based image processing software to improve image quality in the company's Omni Legend, which performs PET and CT scans.

The company's guidance is looking for annual EPS to grow 7% to 11% this year to $3.60-$3.75 a share.