Cathie Wood is known for her investments in disruptive technologies that are changing or have the potential to change the way things are done. She's built a solid reputation as a stock picker, aiming to beat the market over the long term by buying innovative companies with a vision and the technology to reach their goals. In many cases, the chief executive officer of Ark Invest even buys shares of a company when they're wallowing in the doldrums because she's confident about that company's long-term prospects.
That's the case with two healthcare stocks at the moment, and Wood scooped up shares of both, adding to existing positions this week. I'm talking about telemedicine leader Teladoc Health (TDOC +0.19%) and gene editing company Intellia Therapeutics (NTLA 0.74%).
Both of these stocks have dropped in the double digits over the past year, but Wood still sees a bright future for these players. They are among the top 20 holdings in her flagship fund Ark Innovation and her healthcare fund Ark Genomic Revolution.
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Teladoc Health
Teladoc shares have dropped 42% over the past year and are down more than 90% from their high back in 2021. The telemedicine company has a huge market position, with an installed base of 90 million members, but it's failed to turn revenue growth into profit.
NYSE: TDOC
Key Data Points
Last year, though, the company started making progress toward its goal, reporting a 33% increase in full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to more than $328 million. This represents the company's most profitable year ever. Teladoc also has shown that its chronic-care business is driving growth. This is key because about half of Americans suffer from at least one chronic condition.
In the most recent quarter, chronic-care members increased 14% year over year, and the company expects to deliver mid- to high-single-digit chronic-care revenue growth in the coming years. Still, Teladoc's lukewarm forecast for overall three-year annual sales growth -- in the low- to mid-single digits -- disappointed investors who had gotten used to Teladoc's soaring growth in the earlier pandemic days.
But a new turning point may be ahead. Last week, Teladoc announced the departure of Chief Executive Officer Jason Gorevic, who will be temporarily replaced by Chief Financial Officer Mala Murthy. If Murthy or eventually a new permanent CEO helps the company progress toward profitability goals, the shares, today trading at their lowest ever in relation to sales, could take off.
TDOC PS Ratio data by YCharts.
Intellia Therapeutics
Intellia is developing candidates in the exciting field of CRISPR gene editing. This involves cutting DNA at a particular location for a repair process to occur, therefore fixing faulty genes responsible for a disease.
The company doesn't yet have products on the market but is getting close to that goal. Its two lead programs, gene editing candidates for transthyretin amyloidosis with cardiomyopathy (ATTR) and hereditary angioedema (HAE), are involved in pivotal studies. Intellia's goals include completing enrollment in these studies over the coming three years and applying for regulatory approval of the HAE candidate in 2026.
NASDAQ: NTLA
Key Data Points
If Intellia's candidates make it to the finish line, they could attract both doctors and patients since these two diseases have limited treatment options today. ATTR is caused by accumulation of a misfolded protein and affects various organs, while HAE causes unpredictable and extreme swelling.
Over the coming three years, Intellia also aims to launch a new wave of programs and deploy new editing and delivery technologies. Many catalysts lie ahead for this innovative company.
Today is a great moment to be approaching the finish line in the area of gene editing. Regulators recently approved the world's first CRISPR-based product -- CRISPR Therapeutics' blood disorders treatment Casgevy -- showing they're ready to give the nod to the technology if data supports safety and efficacy. That's a great sign for Intellia -- and its investors -- as it advances its late-stage candidates and moves closer to commercialization and potential revenue.
