SaMD Drives All Facets of US Healthcare: 3 Stocks to Watch
Technology and healthcare have been going hand in hand for years. The advent of health wearables, 3D printing, robotic surgery and virtual reality in the form of software has been a game-changer in the global digital healthcare industry. In fact, the past 20 years have seen acceleration in the trend of using software as medical devices, courtesy of the emergence of IoT.
This has given rise to Software as a medical device (SaMD), a software that serves as a medical product.
For investors’ notice, SaMD serves as an accessory to a medical device. The class of software is available on mobile apps, intended to treat, diagnose, cure, mitigate or prevent diseases or other conditions. It is typically used alongside non-medical computing platforms, which may be connected to virtual networks, traditional medical devices or other general-use hardware.
Needless to say, this makes healthcare an increasingly lucrative space for investors.
Let’s see how.
SaMD Changing Digital Health Landscape
It is encouraging to note that SaMD opportunities are driving breakthroughs in digital health solutions. In fact, MarketWatch projects the global medical software market to reach $19.3 billion by 2025, at a CAGR of 5.8%.
Notably, SaMD represents an increasingly critical tool to better treat patients. Moreover, SaMD can help accelerate the discovery, management and treatment of a variety of medical conditions.
That’s not all. The FDA’s updated regulatory framework to include SaMD should serve as a catalyst to spur industry innovation, allowing medical technology manufacturers to incorporate AI and ML.
For instance, the recent surge in the use of EHR (electronic health records) has revolutionized medical connectivity. The HITECH act provided incentives for healthcare providers to adopt EHRs, and we’ve since seen a rapid increase in the number of health systems using EHRs.
Energias Market Research says that the global EHR market is expected to reach a worth of $36.2 billion by 2025, at a CAGR of 5.6%.
3 SaMD-Focused Stocks to Keep an Eye On:
Given the encouraging backdrop, let us take a look at a few stocks which leverage on their focus on medical device connectivity and her. These might prove to be lucrative investment options over the long haul.
Each of these stocks has also outperformed the industry over the past year.
Our first pick is Cerner Corporation CERN. This Zacks Rank #3 (Hold) company has been dominating the headlines, courtesy of its efforts to digitize its EHR systems. Notably, Cerner's HealtheIntent is a big data platform, which provides the company with significant exposure to AI trends in the medical world. HealthIntent can fetch data from any EHR system, pharmacy benefits managers and insurance claims.
The stock has rallied 29.3% in a year’s time, compared with the industry’s 10.3% rise.
Cerner’s earnings are expected to grow 13.2% over the next five years.
Secondly, Veeva Systems VEEV, a major software supplier to the healthcare industry, is also expanding its footprint in the medical devices space. A large number of medical device makers are currently using Veeva Vault, a flagship platform of the Zacks Rank #2 (Buy) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In fact, Veeva Vault now includes new medical device capabilities to streamline processes and drive efficiency.
Shares of Veeva have risen 56% compared with the industry’s 12.6% rally.
Veeva’s earnings are expected to grow 21.9% over the next five years.
Investors may also keep an eye on McKesson Corporation MCK. The Zacks Rank #3 company’s EHR Oncology platform — iKnowMed Generation 2 — enables high-quality cancer care, personalizing the workflow of physicians apart from meeting the FDA’s regulatory challenges. It also provides secure web-based, mobile-optimized access to patient charts and comprehensive point-of-care treatment decisions.
The stock has rallied 14.5% against the industry’s 4.3% decline.
McKesson’s earnings are expected to grow 7% over the next five years.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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