Digital Healthcare Boom: 2 TSX Stocks Transforming Canadian Medicine

Even though telehealth stocks carry the risk factor of the tech sector and other innovative stocks, the profit margin can be strong enough to make the risk/reward ratio palatable.

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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.

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.

Created with Highcharts 11.4.3Well Health Technologies PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

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.

Created with Highcharts 11.4.3Vitalhub PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

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.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vitalhub. The Motley Fool has a disclosure policy.

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