Did you know that Americans spent $4.3 trillion on healthcare in 2021?

Healthcare expenses in the U.S. are already too large to comprehend, and they're going to get a lot bigger. The national health expenditure is projected to rise by 5.1% annually through 2030.

Investor looking at stock charts.

Image source: Getty Images.

These two healthcare stocks soared last week, and ever-increasing spending in this sector of the economy gives them a good chance to continue their climb. That said, there are some things you should know before risking your own hard-earned money.

Veeva Systems

Veeva Systems (VEEV 0.80%) is a cloud-based software provider to pharmaceutical companies and other members of the highly regulated life-science industry. The stock jumped about 20% last week in response to a first-quarter report that was much better than expected.

Generally, biotechnology start-ups use Veeva Vault applications to keep track of data collected from laboratory research and clinical trials. Companies with approved drugs to sell tend to bundle Vault with Veeva's customer relationship management (CRM) products. 

Veeva Systems began around 16 years ago with a flagship CRM service adapted from Salesforce.com's platform, and it still pays for that access. Veeva's cost of subscription services, which includes fees to Salesforce, and Amazon Web Services, reached $258 million, or 12% of total revenue last year.

Late last year, Veeva announced it would migrate clients from Veeva CRM, which incurs fees from Salesforce to its new, wholly owned platform, Vault CRM. This could help the company's shrinking gross profit margin recover.

VEEV Gross Profit Margin (Quarterly) Chart

VEEV Gross Profit Margin (Quarterly) data by YCharts

In addition to a new CRM, Veeva is entering the lucrative space for biopharmaceutical sales data and analytics with Veeva Compass. Early next year, Veeva will launch services that allow its customers to replace their subscriptions with today's top analytics provider, Iqvia.

Shares of Veeva are trading at around 43 times forward-looking earnings expectations, even though it reported adjusted operating income that fell 21% year over year during the fiscal first quarter that ended on April 30. Veeva stock could soar further if its bottom line starts moving in a positive direction again before the end of the year. This is a risk not every investor should be willing to take.

If Veeva fails to meet the market's lofty expectations, its stock price could fall a long way from the high perch it's sitting on now. Risk-averse investors might want to wait for a more attractive entry point. 

Doximity

Shares of Doximity (DOCS 5.15%) are up about 8% since the end of May. Investors are encouraged by impressive performance metrics during a difficult time for the social media company's peers.

Doximity's social media platform is exclusive to practicing healthcare professionals in the U.S., and this is its strength. Pharmaceutical companies eager to get their messages in front of the physicians who can prescribe their drugs drove sales 18% higher year over year during the company's fiscal fourth quarter, ended March 31.

Doximity entices busy physicians to use its application with free access to valuable productivity tools. For example, 380,000 unique providers used Doximity Dialer in the fiscal fourth quarter. Dialer is a telehealth application that lets doctors use their personal devices to contact patients in a professional setting that complies with strict privacy laws.

With tools that keep physicians engaged, like Dialer, Doximity could soon be the pharmaceutical industry's favorite advertising partner, if it isn't already. Unfortunately, I'm not the first to notice Doximity's potential and expectations are already high. The stock is trading at around 40 times forward earnings expectations. 

Investors should know that adjusted earnings in fiscal 2023 shrank almost 11% year over year. The stock could soar further than it has already, but it's probably best to wait until the company's bottom line starts moving in the right direction again before putting it on your buy list.