Bear markets come and go, but great businesses remain and continue to drive investor returns with the passage of time. If you're looking for great businesses with tons of room left to run over the next five years, 10 years, or more, the intermittent movements of the market on a short-term basis shouldn't drive or detract from your investing decisions.
The healthcare industry is one of many areas that can prove a wise choice for your investment capital as you diversify across a range of stocks and sectors. Here are two stocks to consider adding to your buy basket to start 2024 off on a high note.
1. Intuitive Surgical
Intuitive Surgical (ISRG 1.62%) is the global leader in surgical robotics, with a family of surgical suites that are used in procedures ranging from gynecological to thoracic to cardiac specialties. Last year was an excellent one for growth of the business.
The company has recently contended with fluctuating procedure volumes following the height of the pandemic as ongoing difficulties in certain markets delayed surgeries. However, solid growth rates in its installed base of surgical suites and a healthy recovery in procedure growth are driving the business forward.
Intuitive Surgical ended 2023 with 8,606 da Vinci surgical systems installed globally. That installed base of systems was up 14% from the end of 2022. This follows 2022 and 2021, both years in which Intuitive Surgical grew its installed base of systems 12% from the prior fiscal year.
NASDAQ: ISRG
Key Data Points
While most of Intuitive Surgical's growth is attributable to its flagship da Vinci surgical systems, its Ion system is also making headway. The Ion is used for minimally invasive lung biopsies. Procedures using the Ion system grew 129% in 2023 compared to 2022. Moreover, the company placed 213 Ion systems in 2023, compared to 192 in 2022. That's a year-over-year growth rate of about 11%.
In 2023, Intuitive Surgical brought in profits of $1.8 billion on revenue of $7.1 billion. And the company has grown its annual revenue and net income by respective amounts of 234% and 329% over the trailing 10 years.
This healthcare stock boasts a wide moat in a vast and growing addressable market, profitability is strong, and its recovery from the pandemic's heights has been steady. The future looks bright for this business, and long-term investors can benefit from that trajectory by holding onto the stock in the years ahead.
2. Teladoc Health
Teladoc Health (TDOC +5.57%) is slowly but surely righting the ship after a series of less-than-stellar financial reports. Investors who have stayed with the stock through this period have felt the turbulence that has ensued following the company's astronomical growth in the early days of the pandemic.
The company still has work to do to get back to sustained profitability, that's for certain. However, most of the net losses it has reported in recent years have been non-cash in nature. While not pretty to look at, non-cash losses are infinitely better than true operational ones.
In the third quarter of 2023, Teladoc generated revenue of $660 million, up 8% from one year ago. Adjusted earnings for the three-month period totaled $89 million, an improvement of 73% on a year-over-year basis. Over the trailing 12 months, Teladoc has generated operating cash flow of $286 million, and levered free cash flow of $257 million.
NYSE: TDOC
Key Data Points
Teladoc ended the quarter with 90.2 million members across its integrated care segment, up 10% from one year ago. It also reported 459,000 paying users in its BetterHelp teletherapy business, and 1.1 million enrollees in its chronic care segment. Those figures were up 5% and 13% year over year.
While Teladoc's growth has slowed since the pandemic's heights, this was to be expected at some point. And the demand for quality telehealth services hasn't gone anywhere. In fact, the combination of an aging population, a still very real shortage of healthcare workers, and the need for on-demand healthcare services across a range of specialities is driving the growth of this industry forward.
As one of the premier providers of telehealth services globally, with a thriving primary care program and growing chronic care business, Teladoc is well-positioned to address this growing need. Teladoc is entering a more mature stage of its growth story, but the growth is there. Investors may find this presents an opportunity to buy the healthcare stock on the dip for its long-term potential.
