A labor shortage in the healthcare industry is expected to persist for the foreseeable future. However, rising health consciousness and the resurgence of COVID-19 cases in several states have been driving the demand for healthcare solutions. Furthermore, the sector is expected to witness a consistent increase in demand from an aging population. Investors’ interest in the healthcare industry is evident in the Health Care Select Sector SPDR’s (XLV) 3.7% returns over the past three months.
Advancements in healthcare research and development are also driving the industry's growth amid increased health awareness. The demand for accurate diagnoses and treatment continues to surge with lifestyle changes. In addition, the online home healthcare sector is booming, owing to the sheer convenience its offers. According to Report Linker, the global home healthcare services market is projected to grow at a 10.8% CAGR from 2022 to 2026.
So, we think it could be wise to bet on under-the-radar healthcare stocks NextGen Healthcare, Inc. (NXGN), Allscripts Healthcare Solutions, Inc. (MDRX), and Computer Programs and Systems, Inc. (CPSI). These stocks are currently trading near their 52-week highs but have more room to run because of their fundamental strength.
Click here to checkout our Healthcare Sector Report for 2022
NextGen Healthcare, Inc. (NXGN)
NXGN in Irvine, Calif., provides software and services for ambulatory healthcare services in the United States. The company offers patient engagement solutions, clinical care solutions, and financial management solutions. It also provides population health solutions, connected health solutions, and managed services.
On March 31, 2022, NXGN announced the newest release of its NextGen Behavioral Health Suite. Srinivas (Sri) Velamoor, NXGN’s chief growth and strategy officer, said, “At NextGen Healthcare, we are committed to advancing our solutions to support integrated whole person health and reduce care disparities.”
NXGN’s total revenues increased 5.6% year-over-year to $149.72 million in its fiscal 2022 third quarter, ended Dec. 31, 2021. Its net income came in at $5.19 million, up 1,019.2% year-over-year. And its EPS came in at $0.08, up 700% year-over-year.
Analysts expect NXGN’s revenue to increase 6.6% year-over-year to $593.64 million in 2022. Its EPS is estimated to increase 7% per annum for the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 46.1% in price to close yesterday’s trading session at $20.81. It is currently trading 4.8% below its 52-week high of $21.87, which it hit on April 8, 2022.
NXGN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
NXGN has an A grade for Growth and a B grade for Stability and Quality. It is ranked first among 83 stocks within the Medical - Services industry. Click here to see NXGN’s ratings for Value, Momentum, and Sentiment.
Allscripts Healthcare Solutions, Inc. (MDRX)
Chicago-based MDRX, together with its subsidiaries, provides information technology solutions and services to healthcare organizations in the United States, Canada, and internationally. The company operates through two segments–Hospitals and Large Physician Practices, and Veradigm.
On March 7, 2022, MDRX re-launched its Application Store as Allscripts App Expo. Tina Joros, MDRX’s Vice President and General Manager, said, “The new App Expo is just the latest step toward making it easier for our clients to find solutions that will continue to help them improve their technology ecosystem and accomplish their practice and health system goals.”
For its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, MDRX’s total revenue came in at $391.70 million, compared to $386.40 million in the previous period. Its non-GAAP net income was $98.90 million, up 215% year-over-year. Furthermore, its non-GAAP EPS came in at $0.79, up 295% year-over-year.
MDRX’s revenue is expected to be $1.56 billion for 2023, representing a 1.9% year-over-year rise. Its EPS is estimated to grow 8% per annum over the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 55.5% in price to close yesterday’s session at $22.11. It is currently trading 4.9% below its 52-week high of $23.24, which it hit on April 4, 2022.
It is no surprise that MDRX has an overall B rating, which equals a Buy in our proprietary rating system. In addition, it has an A grade for Growth.
MDRX is ranked #25 in the Medical - Services industry. Click here to see the additional POWR Ratings for MDRX (Value, Momentum, Stability, Sentiment, and Quality).
Computer Programs and Systems, Inc. (CPSI)
CPSI provides healthcare information technology solutions and services in the United States and the Caribbean nation of St. Maarten. Its software systems include patient management software, and financial accounting software. The Mobile, Ala.-based company also provides clinical software.
On March 1, 2022, CPSI announced the complete acquisition of Healthcare Resource Group, Inc. Boyd Douglas, CPSI’s president and CEO, said, “We are pleased to announce the combination of these two leading providers of RCM services. Their Peer Reviewed by HFMA® RCM solutions offer us significant opportunities to leverage our combined scale and extend our market reach.”
CPSI’s total sales revenues increased 10.7% year-over-year to $74 million for the fourth quarter, ended Dec. 31, 2021. Its non-GAAP net income came in at $10.10 million, up 29.7% year-over-year, while its non-GAAP EPS came in at $0.70, up 27.3% year-over-year.
For its fiscal 2022, analysts expect CPSI’s revenue to increase 10.6% year-over-year to $310.46 million. Its EPS is estimated to increase 12.5% per annum for the next five years. It surpassed EPS estimates in three of the four trailing quarters. Over the past three months, the stock has gained 15.8% in price to close yesterday’s session at $33.47. It is currently trading 11% below its 52-week high of $37.62, which it hit on Nov. 5, 2021.
CPSI’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has a B grade for Growth, Value, Stability, and Sentiment.
Click here to see CPSI’s rating for Momentum and Quality as well. Again, CPSI is ranked #3 in the Medical - Services industry.
Click here to checkout our Healthcare Sector Report for 2022
NXGN shares were unchanged in premarket trading Tuesday. Year-to-date, NXGN has gained 16.98%, versus a -7.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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