Healthtech gained traction since the onset of the COVID-19 pandemic two years ago, as the demand for telemedicine and digital healthcare rose. With aging populations, increasing lifestyle diseases given the continuing remote lifestyle, and increasing costs, healthcare providers are innovating and adopting technology to improve the quality of their services and lower their operating expenses.
Digital health start-ups raised $21.30 billion in the first nine months of 2021, 46.9% higher than the $14.30 billion raised in its fiscal 2022. Given the increased adoption of artificial intelligence, machine learning, and data analytics, the health tech market is poised to maintain this growth trajectory in the current year. Merck Global Health Innovation Fund's Bill Taranto said, "In 2022, entrepreneurs and investors will expand telemedicine into more chronic care spaces like cardiology…Overall, expect telehealth players to build out their offerings across the chronic care landscape in a meaningful way in 2022."
Given this backdrop, Wall Street analysts expect quality Healthtech stocks Exact Sciences Corporation (EXAS), GoodRx Holdings, Inc. (GDRX), 23andMe Holding Co. (ME) to rally more than 40% in price in the near term.
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Exact Sciences Corporation (EXAS)
EXAS in Madison, Wisc., is a global provider of cancer screening and diagnostic test products. Along with its flagship product Cologuard, it also offers Oncotype DX; Oncotype Test; Oncotype DX AR-V7 Nucleus Detect Test; Oncomap ExTra; and COVID-19 testing services. In addition, it is developing a blood-based biomarker test to provide an alternative to ultrasound and AFP for use in Hepatocellular Carcinoma testing.
In January, EXAS entered a license agreement with OncXerna Therapeutics to introduce OncXerna's Xerna TME Panel lab services in the U.S. According to Matt Franklin, general manager of Precision Oncology for EXAS, "The immunotherapy prediction ability of OncXerna's Xerna TME Panel, coupled with the comprehensive profiling capabilities of Exact Sciences' GEM ExTra test, has the potential to significantly impact patient outcomes."
Also in January, EXAS acquired genetic testing laboratory PreventionGenetics for $190 million. This partnership should leverage EXAS' commercial reach in diagnostics to expand hereditary cancer and genetic testing globally.
In the fourth quarter, ended Dec. 31, 2021, EXAS's total revenue increased 1.6% year-over-year to $473.81 million. Its total revenue, excluding COVID-19 testing, increased 16% from the same period last year. Its screening revenue increased 11% from its year-ago value to $277.70 million, while its Precision Oncology revenue grew 27% from the prior-year quarter to $149 million. Its investment income came in at $1.25 million, up 20.3% from the same period last year.
Analysts expect EXAS's revenue to increase 16.9% year-over-year to $2.35 billion in its fiscal year 2023. In addition, the consensus EPS estimates indicate a 20.2% year-over-year improvement next year.
Over the past five days, the stock gained 11.1% in price to close the last trading session at $63.90.
Among 11 Wall Street analysts that rated EXAS, nine rated it Buy while two rated it Hold. The 12-month median price target of $105.90 indicates a 65.7% potential upside from the last closing price of $63.90. The price targets range from a low of $80.00 to a high of $155.00.
GoodRx Holdings, Inc. (GDRX)
GDRX, through its subsidiaries, provides a price comparison tool for prescriptions. The Santa Monica, Calif.-based concern operates a price comparison platform that provides consumers with curated, geographically relevant prescription pricing and access to negotiated prices through its codes that are used to save money on prescriptions across the U.S. The company offers other healthcare products and services, including subscriptions, pharma manufacturer solutions, and telehealth services.
On March 7, GDRX agreed to acquire vitaCare Prescription Services for $150 million in cash, with an additional $7 million consideration contingent. This deal is expected to close by mid-2022. GDRX's overall revenues are expected to grow by 1% in 2022, assuming the acquisition is completed mid-year.
Earlier in February, GDRX repurchased $250 million worth of its Class A common stock. This share repurchase program reflects its confidence in its growth prospects and increases shareholder returns.
For its fiscal fourth quarter, ended Dec. 31, 2021, GDRX's revenue increased 39% year-over-year to $213.26 million. The company's adjusted net income increased 26% year-over-year to $40.46 million, while its adjusted EBITDA grew 27% year-over-year to $62.25 million. In addition, its adjusted EPS came in at $0.09, representing a 12.5% increase year-over-year.
Analysts expect GDRX's EPS and revenue to increase 88.3% and 23.5%, respectively, year-over-year to $0.25 and $1.13 billion next year.
Over the past five days, the stock has gained 13.4% in price to close the last trading session at $17.04.
The 12-month median price target of $24.69 indicates a 44.9% potential upside from the last closing price of $17.04. The price targets range from a low of $17.00 to a high of $35.00. Among 14 Wall Street analysts that rated GDRX, eight rated it Buy while five rated it Hold.
It has a B grade for Growth in our proprietary POWR Ratings system. It is ranked #77 out of 175 stocks in the Medical – Pharmaceuticals industry. Click here to see the additional ratings of GDRX for Value, Momentum, Stability, Sentiment, and Quality.
23andMe Holding Co. (ME)
ME in Mountain View, Calif., is a leading consumer genetics and research company that provides direct-to-consumer genetic testing and personalized information about genetic health risks, ancestry, and traits. It operates through two segments: Consumer & Research Services and Therapeutics.
On January 18, ME extended its collaboration with GlaxoSmithKline plc (GSK) by an additional year to July 2023. ME is slated to receive a one-time payment of $50 million for this extension.
Later in the same month, ME initiated its Phase I clinical trial for the first wholly-owned immuno-oncology antibody for patients with solid tumors. According to Anne Wojcicki, CEO and Co-Founder of ME, "This is an important milestone for 23andMe in our mission to help people access, understand and benefit from the human genome."
Last November, ME acquired Lemonaid Health Inc., an on-demand platform for accessing medical care and pharmacy services online. Regarding this acquisition, Wojcicki said, “Lemonaid Health’s telemedicine platform and digital pharmacy will enable us to bring better healthcare to individuals in an affordable and accessible way, and ultimately empower people to take better control of their health.”
During its fiscal 2022 third quarter, ended Dec. 31, 2021, ME's revenue increased 2.5% year-over-year to $56.89 million. It expanded its customer database to 12.2 million genotyped customers. The company's cash and cash equivalents balance stood at $586.20 million as of Dec.31, up 107.5% from the same period last year.
The $344.81 million consensus revenue estimate for its fiscal 2023 indicates a 25.1% improvement year-over-year.
Over the past five days, the stock has gained 3.9% in price. ME is expected to hit $6.00 soon, reflecting a 67.6% potential upside from yesterday's closing price of $3.58.
Click here to checkout our Healthcare Sector Report for 2022
EXAS shares were trading at $66.77 per share on Tuesday afternoon, up $2.87 (+4.49%). Year-to-date, EXAS has declined -14.21%, versus a -5.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
3 Healthtech Stocks Wall Street Predicts Will Rally More Than 40% or More: GoodRx, 23andMe, and Exact Sciences StockNews.com
