The last few years saw a surge in healthcare companies entering the market. The pandemic led to many opportunities and many failures. So, where can investors go to invest in what really should be a stable area of investment?
After all, we’re always going to need healthcare. We saw that during the pandemic. But the key will remain with companies that are staying innovated and providing essential services. With that in mind, these are the two I would pick up now and hold for the next decade.
Bausch Health
Bausch Health Companies (TSX: BHC) has gone through some major changes over the last few years. It sliced off another brand, and shares are now even on par with where they were a year before. Yet this could now offer investors an opportunity to get in on this stock while it’s in value territory.
After all, shares are improving. Since October, shares have climbed almost 40%! Meanwhile, it still trades at just 0.38 times sales. A lot of the recent growth comes from strong earnings, including a fourth-quarter and full-year report that was quite strong.
During the report, revenue was up 10% year over year. While the company still traded at a net loss of US$39 million, this was far less than the US$410 million in the fourth quarter of 2022. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also climbed 6% to reach US$869 million.
Meanwhile, the diversified healthcare company is showing a future outlook that looks quite strong. Far stronger than what we’ve seen over the last few years. BHC stock not expects full-year 2024 revenue to hit between US$9.3 billion and US$9.55 billion, with organic growth between 2% and 5%. Further, it should reach adjusted EBITDA of between US$3.2 and US$3.35 billion for 2024 as well.
With a focus on cost-cutting and more innovation in the pipeline, the company looks well-positioned for future growth. This could be thanks to the chief executive officer (CEO) Thomas J. Appio, who has been with the company since 2010 but took over as CEO in 2022. Since then, he has put them on the right financial footing, with a strong focus on innovation, collaboration, and diversity in his leadership approach.
Knights Therapeutics
Another company that investors will certainly want to consider is Knights Therapeutics (TSX: GUD). The company currently has seen shares rise almost 9% in the last year alone. But again, since bottoming out in October, it’s climbed 27% in that time. Yet it still offers value as well, trading at about 1.82 times sales as of writing.
When we look at earnings, the company has also seen significant improvements. This includes revenue, which most recently was up 13% year over year to US$81.5 million. Net income also rose significantly, reaching US$9.59 million compared to just US$1.59 million in the third quarter of 2022. Adjusted EBITDA also rose 72%, reaching US$15.5 million.
As to the future, GUD stock expects to reach full-year 2023 revenue of between US$325 and US$335 million. It also expects to achieve an adjusted EBITDA of about 18% of revenue for the year as well. Clearly, the company is also similar to BHC stock. It is showing signs of improvement, and that looks to be well underway so far. Investors will especially like that it’s putting out more products and innovations to combat across a diverse range, from oncology and hematology to infectious diseases.
Altogether, these two companies look like strong options if you wish to catch them on their path upward in the healthcare sector.
