The healthcare market is characterized by continuous evolution, driven by the increasing demand for quality care, patient engagement, and the integration of digital health technologies.
Given this backdrop, it could be wise to consider investing in fundamentally strong healthcare stocks, Teladoc Health, Inc. (TDOC), Zimmer Biomet Holdings, Inc. (ZBH), and Cardinal Health, Inc. (CAH).
The rise of telemedicine in the healthcare sector is revolutionizing patient care, enabling remote monitoring and access to medical services. Economic growth and lifestyle changes are leading to an increase in healthcare spending, particularly on medical devices and consumables. Therefore, the healthcare services market is forecasted to grow at a CAGR of 8.7% by 2028.
Furthermore, artificial intelligence has transformed the healthcare sector by influencing various areas and offering support in surgeries, diagnostics, personalized treatment plans, and more. AI-driven tools and methods enhance radiology, medical imaging, and the discovery and development of drugs.
Given these favorable industry trends, let’s look at the fundamentals of three healthtech stocks.
Teladoc Health, Inc. (TDOC)
TDOC provides virtual healthcare services worldwide. The company operates through Teladoc Health Integrated Care and BetterHelp segments. The Integrated Care segment offers virtual medical services, including general medical, expert medical, specialty medical, chronic condition management, and mental health, as well as enabling technologies and enterprise telehealth solutions for hospitals and health systems.
In terms of the trailing-12-month gross profit margin, TDOC’s 70.82% is 20.8% higher than the 58.63% industry average. Likewise, its 10.12% trailing-12-month levered FCF margin is 256% higher than the 2.84% industry average.
During the third quarter ended September 30, 2024, TDOC’s revenue came in at $640.51 million. The company’s adjusted EBITDA came in at $83.26 billion. The non-GAAP gross margin was 71.9%, and the cash flow from operations improved 4.4% from the year-ago value to $110.20 million.
Analysts expect TDOC’s revenue to be $111.64 billion for the fiscal fourth quarter (ended December 2024). The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past month, the stock has surged 10.8%, closing the last trading session at $11.18.
TDOC’s POWR Ratings reflect its outlook. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
TDOC has a B grade for Value. It is ranked #36 out of 64 stocks in the Medical - Services industry. Click here to see the additional ratings for TDOC (Stability, Quality, Growth Momentum, and Sentiment).
Zimmer Biomet Holdings, Inc. (ZBH)
ZBH operates as a medical technology company worldwide. The company designs, manufactures, and markets orthopedic reconstructive products, such as knee and hip products; S.E.T. products, including sports medicine, biologics, foot and ankle, extremities, and trauma products; craniomaxillofacial and thoracic products comprising face and skull reconstruction products.
In terms of the trailing-12-month levered FCF margin, ZBH’s 14.49% is 410% higher than the 2.84% industry average. The stock’s 20.51% trailing-12-month EBIT margin is 722.8% higher than the 2.49% industry average.
For the fourth quarter of 2024, which ended on December 31, 2024, ZBH’s net sales increased 7.2% year-over-year to $2.02 billion. Its net earnings were reported at $240 million and $1.20 per share, respectively.
Street expects ZBH’s revenue and EPS for the fiscal second quarter (ending June 2025) to increase 2.2% and 1.4% year-over-year to $1.98 billion and $2.04, respectively. Moreover, it beat the revenue and EPS estimates in each of the trailing four quarters, which is promising.
Shares of ZBH have gained 1.6% year-to-date to close the last trading session at $107.35.
ZBH’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
ZBH has a B grade for Growth, Value, and Quality. It is ranked #18 out of 131 stocks in the Medical - Devices & Equipment industry.
In addition to the POWR Ratings we’ve stated above, we also have ZBH ratings for Momentum, Stability, and Sentiment. Get all ZBH ratings here.
Cardinal Health, Inc. (CAH)
CAH operates as a healthcare services and products company in the United States, Canada, Europe, Asia, and internationally. It provides customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home.
On January 14, 2025, CAH announced construction is underway on a new distribution center in Fort Worth, Texas, which will support its at-Home Solutions business, a leading medical supplies provider that serves more than 5 million patients annually in the United States.
In terms of the trailing-12-month asset turnover ratio, CAH’s 4.75x is significantly higher than the 0.41x industry average.
For the second quarter that ended on October 25, 2024, CAH’s revenue stood at $55.30 billion. Its non-GAAP net earnings grew 1% from the year-ago value to $468 million. In addition, the company’s non-GAAP EPS stood at $1.93, up 2% year-over-year.
The consensus revenue estimate of $55.33 billion for the fiscal third quarter (ending March 2025) represents a marginal increase year-over-year. The consensus EPS estimate of $2.15 for the same quarter indicates a 3.4% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has surged 16.8%, closing the last trading session at $127.81.
CAH’s POWR Ratings reflect its bright outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
CAH has a B grade for Sentiment, Growth, and Value. It is ranked #14 out of 64 stocks in the Medical - Services industry. Click here to see the additional ratings for CAH (Stability, Momentum, and Quality).
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CAH shares were trading at $127.48 per share on Thursday afternoon, up $0.30 (+0.24%). Year-to-date, CAH has gained 8.25%, versus a 0.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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