Is a digital health boom coming? The answer to this question depends upon whether you are looking at the short-term or long-term prospects of this growing industry. Digital health/virtual health is certainly growing as a discipline and is even enjoying regulatory backing as it has the potential to significantly lower the cost of healthcare.
And if you are looking to get in early on this trend, there are two healthcare/tech stocks that you should look into owning.
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A healthcare services company
WELL Health (TSX: WELL) is an omni-channel healthcare service provider that assists both patients and healthcare providers in several ways.
The omnichannel platform that the company maintains and the ecosystem of applications it has inspired assist healthcare providers with digital booking (appointments) and e-prescribing. This leads to better patient outcomes, significantly reduced healthcare costs, and ease of healthcare delivery for many patients.
The company is expanding its reach. It’s already the biggest outpatient medical clinic owner-operator in the country and has over 3,900 WELL healthcare providers in Canada and the United States. Its platform supports over 37,000 healthcare providers, and the company has collectively achieved over 6.1 million patient interactions.
WELL Health is a mature digital health company in Canada with a sizable physical footprint. As more healthcare service providers and patients become comfortable with digital health, WELL Health will experience a significant influx of new clients, allowing it to grow organically.
The stock has been rising rapidly since November 2024 and has grown over 57% since then. It might be a brilliant idea to start riding that momentum.
A healthcare-oriented software development company
Vitalhub (TSX: VHI) is a software development company created and run by a team of developers. They focus primarily on health and human services software and cater to various healthcare institutions and providers, including acute and integrated care facilities, specialists, rehab facilities, etc.
The Vitalhub stock has experienced massive growth in the last 12 months — about 180%. Its returns are equally impressive if we start from inception (2015), and it has returned over 980% to its investors since then. However, the recent bull market phase has made the stock relatively overvalued, trading at a price-to-earnings ratio of about 172.
This is high even for a tech stock, so it might be a good idea to wait for this to drop down to a reasonable level before buying this stock for the digital health boom.
Foolish takeaway
The two stocks are already bullish but might experience better traction and offer more sustainable growth as virtual health grows as a mature industry. However, even if your goal is to get in early on the action, it might be a good idea to wait and track the performance of these stocks for a better time to buy.
