The healthcare industry is full of opportunities for long-term investors to become part-owner in compelling businesses that are changing the future for patients across countless disease areas. You don't have to be rich to invest in the stock market.
Whether you're new to investing or simply don't have a ton of extra cash on hand to put toward investing, you can still steadily build your portfolio through methods like dollar-cost averaging. If you have even $100 to invest in stocks right now, here are two top healthcare companies that the market has beaten down recently that you can scoop up with that amount.
1. Pfizer
Pfizer (PFE +0.52%) has certainly gone through a lot of shifts the last few years, following the height of its pandemic successes and the slowdown in growth that has followed. Shares are trading for a mere $28 apiece right now, down 24% from one year ago. On the one hand, changes in Pfizer's growth trajectory were inevitable at some point given that that the billions of dollars in revenue and profits provided by its COVID-19 products would hit a cliff.
On the other hand, Pfizer has put that money to impeccable use, fueling a series of strategic acquisitions along with aggressive research and development efforts. Last year, Pfizer had more products approved by the U.S. Food and Drug Administration than any other healthcare company. Out of the 55 drugs approved by the regulatory body last year, seven of those were attributable to Pfizer, almost all of which analysts have hailed as likely blockbusters.
Analysts are also closely watching the ongoing clinical trials of danuglipron, one of several obesity drugs that Pfizer is developing. This is Pfizer's obesity drug candidate that flopped in phase 2 testing as a twice-daily drug because discontinuation rates among participants surpassed 50%, but is still being tested as a once-daily treatment.
Even if Pfizer doesn't break into the lucrative world of weight loss drugs anytime soon, from oncology to vaccines, its portfolio covers a broad range of specialties and conditions where patient demand is consistent and high. The company is on the tail end of an 18-month window where it has planned to launch 19 new products or indications.
NYSE: PFE
Key Data Points
Management previously targeted adding $20 billion in annual revenue to the business by 2030 thanks to these launches alone, which will also help stave the impact of patent exclusivity losses on several core moneymakers. Most of these launches have already happened at the time of this writing.
Chairman and CEO Albert Bourla said in the first-quarter earnings call that the company remains on track to double the number of patients using its cancer medicines and increase its blockbuster drug count from five to eight or more by the year 2030. Ongoing cost-cutting initiatives are also expected to reduce operating expenses by up to $4 billion in 2024.
Excluding Pfizer's COVID-19 products, revenue increased by 11% in the first quarter of 2024. Total revenue came to $15 billion for the three-month period. That figure was down 19% year over year if you factor in its COVID-19 products. Net income was also down from one year ago, but totaled $3.1 billion.
The impact of new products from internal and acquisitive efforts will take time to manifest in Pfizer's financial results. But this is hardly a business on the brink of defeat. Cyclicality affects even the biggest healthcare companies, and after a streak like Pfizer had during the pandemic, that's even more so.
Bear in mind, the business brought in operating cash flow of about $9 billion over the trailing 12 months alone. And as downtrodden as the stock has been, its dividend yield is up to a hefty 6%. Forward-thinking investors seeking passive income and a robust business to add to their portfolio might want to consider this beaten-down stock.
2. Teladoc
Teladoc Health (TDOC 2.75%) is trading down about 50% from its share price one year ago. You can buy one share of Teladoc right now for approximately $13.
Clearly, stock price alone should never lead you to buy or sell a stock. And just because a stock is trading up or down doesn't mean it's time to go all in. You always need to consider the underlying business, the reasons behind those share price shifts, and how that business aligns with the overall goals you've set for your personal portfolio.
Teladoc's journey has certainly not been a linear one. The company was a leader in the telehealth space long before the pandemic, but the rise of virtual care services and demand for it by both patients and providers rapidly accelerated its growth story.
The company used that growth to fuel a series of acquisitions and expand into new segments of telehealth as part of its vision to provide whole-person care. As the world reopened, that growth decelerated and it became apparent that it had grossly overpaid for pandemic-era acquisitions.
NYSE: TDOC
Key Data Points
These were not deficiencies exclusive to Teladoc by any means, but investors began to sell off the stock in droves as it reported a series of multibillion-dollar impairment charges to write down the value of those past purchases. Those impairment charges were not actual cash losses, but consistent unprofitability, a slowdown in growth, and most recently, the surprise departure of longtime CEO Jason Gorevic has tested the limits of patient shareholders (myself among them).
CFO Mala Murthy is serving as acting CEO right now. She outlined the multiple ways Teladoc is looking toward future growth in the recent first-quarter earnings call. These include delivering $43 million in cost savings this year and $85 million next year, better yield on advertising spend, and the integration of generative artificial intelligence to optimize everything from provider matching to patient signups.
In the first quarter of 2024, total revenue grew 3% year over year to $646 million. Broken down by segment, integrated care revenue jumped 8% from one year ago, which offset the year-over-year decrease in BetterHelp revenue to the tune of 4%.
However, chronic care enrollment was up 9% year over year. And even though the company is still unprofitable according to generally accepted accounting principles (GAAP), adjusted earnings rose 20% in the recent quarter to $63 million. Teladoc also brought in positive levered free cash flow of $307 million over the last 12 months.
I continue to believe in the potential of this business, which remains one of a diverse group of positions I maintain in various companies. I could be proven wrong, but for now, I'm holding on to the stock to see how Teladoc manages upcoming quarters with a new CEO at the helm and as it gets further away from the shadow of pandemic successes. Risk-resilient investors might want to do the same.
