The 12 Best Healthcare Stocks to Buy for 2022
Several of the best healthcare stocks for 2022 have ties to COVID-19, while others are positioned to thrive in most market conditions.
The first two years of the 2020s has been all about COVID-19, and the pandemic has affected healthcare stocks in ways that will likely carry on for years to come.
By mid-November 2021, roughly 254 million coronavirus cases had been identified worldwide causing more than 5.1 million deaths. However, nearly 7.6 billion people around the world had received at least one dose of a COVID-19 vaccine, equating to 52.4% of the global population, according to research firm Our World in Data.
Given how the Delta variant of COVID-19, which is more than twice as contagious as the original virus, wreaked havoc in mid-2021, scientists are now worried that there will be more offshoots of the coronavirus that are even more transmissible.
As a result, new vaccines will continue to be developed to fight these new virus strains – keeping COVID-19 and vaccine news front and center in 2022 and putting some healthcare stocks in the driver's seat when it comes to growth.
Here, we explore 13 of the best healthcare stocks to buy for 2022. Some of these picks are at the forefront of developing COVID-19 products and vaccines, while others have business models that are designed to do well in most market conditions.
Data is as of Nov. 17. Analysts' ratings courtesy of S&P Global Market Intelligence. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.
UnitedHealth Group
- Market value: $422.8 billion
- Dividend yield: 1.3%
- Analysts' ratings: 17 Strong Buy, 5 Buy, 3 Hold, 1 Sell, 0 Strong Sell
In October, UnitedHealth Group (UNH, $448.95) announced that it would launch NavigateNOW, a new health plan focused on virtual healthcare. It is available to select employers in nine U.S. markets, including Pittsburgh, Minneapolis and Houston. It will be 15% cheaper than traditional benefit plans while still providing in-person visits in addition to virtual care.
These efforts at expanded virtual care will likely help boost UnitedHealth's top line, though it's already seeing impressive growth. UNH's most recent quarterly report included an 11% increase in revenues to $72.3 billion. Its UnitedHealthcare (healthcare benefits) and Optum (healthcare services) units both experienced year-over-year double-digit percentage sales growth during the quarter. UnitedHealthcare accounts for 58% of total revenues, with Optum generating the other 42%.
The insurance giant had adjusted earnings per share (EPS) of $4.52 during the third quarter, up 28.8% from the year earlier. It generated $7.6 billion in cash flow from operations, a healthy 180% of net income. UnitedHealth Group's net margin in the quarter was 5.6%, 70 basis points (a basis point is one-one hundredth of a percentage point) higher than a year ago.
The health insurer's medical care ratio (MCR) – the medical expenses paid out divided by total collected premiums – in the third quarter was 83.0%, 110 basis points less than a year ago. The lower the MCR ratio, the better.
UNH also paid out $1.4 billion in dividends to shareholders during the third quarter while buying back $1.1 billion of its stock.
UnitedHealth expects to earn, on an adjusted basis, between $18.65 and $18.90 per share in 2021. This guidance includes an impact from COVID-19 of approximately $1.80 per share.
In terms of technical performance, UNH is one of the best healthcare stocks out there. Its year-to-date (YTD) total return is 29.2%. It has a five-year annualized total return of 25.5%.
Intuitive Surgical
- Market value: $129.1 billion
- Dividend yield: N/A
- Analysts' ratings: 6 Strong Buy, 3 Buy, 8 Hold, 0 Sell, 0 Strong Sell
Intuitive Surgical (ISRG, $361.42) made leadership changes in October to accommodate future growth. It created two new functional units: Strategy and Growth and Global Business Services.
The company promoted the heads of both units from within. Dave Rosa, a 25-year veteran at the company, was put in charge of the Strategy and Growth division, while ISRG's current chief financial officer (CFO), Marshall Mohr, who has been in the role for 15 years, will take over as the head of Global Business Services. Replacing Mohr as CFO is Jamie Samath, who has been with the company since 2013.
The company's third-quarter report exceeded analyst expectations.
On the top line, the company brought in $1.4 billion, 30% higher than the $1.08 billion in sales it reported a year earlier. On the bottom line, ISRG earned $1.19 per share on an adjusted basis, a 29.3% improvement over its year-ago earnings of 92 cents per share.
ISRG also shipped 336 da Vinci surgical systems in the quarter, 72% more than it did in Q3 2020. In addition, the company's installed base increased by 11% to 6,525 systems. Intuitive Surgical finished the quarter with $8.2 billion in cash on its balance sheet and zero debt.
One of the major concerns facing the surgical robotics firm is the competitive threats from medtech stocks such as Medtronic (MDT) and Johnson & Johnson (JNJ). CEO Gary Guthart addressed the competitive landscape during the company's third-quarter earnings call.
"So far, there are a fair number of claims about what these new systems will do and I think the reality is time will tell the genuine systems," he said on the call. "I think evidence has to be generated to back up those claims. And so far, we don't see anything yet that looks like evidence."
Guthart added that ISRG will keep serving its customers and continuing to innovate.
ISRG has a YTD total return of 32.5%, and it's up nearly 45% over the past year. However, when it comes to the healthcare stocks featured here, this one is not cheap at the moment. Intuitive Surgical trades at 24 times sales, well above its five-year average of 16.7 times.
Danaher
- Market value: $221.3 billion
- Dividend yield: 0.3%
- Analysts' ratings: 14 Strong Buy, 3 Buy, 2 Hold, 0 Sell, 0 Strong Sell
Danaher (DHR, $309.67) has an interesting motto.
"One of the Core Values we live by at Danaher is We Compete for Shareholders, and we believe we are uniquely positioned to deliver meaningful, long-term shareholder value for many years to come," CEO Rainer M. Blair states on the company's Investor Relations page.
DHR has certainly followed through on this statement, with the stock up 39.7% for the year-to-date and 31.4% on an annualized basis over the past five years.
On Aug. 30, Danaher completed its $9.6-billion all-cash acquisition of privately held Aldevron, a North Dakota-based biotech that manufactures plasmid DNA, mRNA and proteins. One of Aldevron's customers is Moderna (MRNA). Aldevron supplies Moderna with the plasmid DNA used to make its COVID-19 vaccine. The acquisition should give Danaher a nice boost to its life sciences segment.
In the three months ended Oct. 1, DHR's revenues increased 23% year-over-year to $7.2 billion. On an adjusted basis, Danaher grew net earnings by 39% to $2.39 per share from $1.72 per share a year earlier. In addition, its free cash flow in the first nine months of the year jumped by 47% to $5.2 billion from $3.52 billion a year earlier.
This growth is expected to continue in the fourth quarter as well, with analysts projecting a 15.6% increase in revenue and 19.2% rise in EPS. For all of 2021, the pros are guiding for revenues of $29.02 billion, up 30.2% from 2020, and earnings of $9.83 per share, +55.8% year-over-year (YoY).
Idexx Laboratories
- Market value: $53.3 billion
- Dividend yield: N/A
- Analysts' ratings: 3 Strong Buy, 2 Buy, 3 Hold, 0 Sell, 0 Strong Sell
Idexx Laboratories (IDXX, $627.99) has been one of the best healthcare stocks in 2021. The provider of diagnostic and software products for veterinarians is up 25.6% YTD and 37.8% over the past year.
Despite a raucous time on the charts, it's been pretty quiet on the acquisition front, although IDXX did acquire ezyVet in June. The company provides a cloud-based practice information management system (PIMS). As part of the acquisition, Idexx gets ezyVet's Vet Radar – an innovative workflow management solution system that's seeing strong growth across the U.S., U.K. and Asia. The terms of the deal weren't released.
In IDXX's third quarter ended Sept. 30, its revenue was $810.4 million, 12.3% higher than the $721.8 million in revenue it reported a year earlier. The company's Companion Animal Group (CAG), which accounts for more than 90% of its sales, had a very healthy quarter with double-digit sales increases.
On an adjusted basis, Idexx's earnings in the quarter were $1.96 a share, 12% higher than a year earlier. It finished the quarter with net debt of $715.7 million, or just 1.3% of its current market cap. Through the first nine months of fiscal 2021, it had free cash flow of $457.8 million, or 79% of its net income.
In August 2020, the company unveiled the ProCyte One Hematology Analyzer, which allows vets to get in-clinic hematology results, resulting in better customer service and happier pet owners. It began shipping units of the product in the first quarter of 2021.
In its third-quarter earnings call, CEO Jonathan Mazelsky said it had delivered more than 1,000 units worldwide since its launch. The company believes itis on track to sell 4,000 annually worldwide.
Walgreens Boots Alliance
- Market value: $41.4 billion
- Dividend yield: 4.0%
- Analysts' ratings: 2 Strong Buy, 0 Buy, 19 Hold, 1 Sell, 0 Strong Sell
Walgreens Boots Alliance (WBA, $47.81) got a star CEO in early 2021 when it hired Rosalind Brewer, then-chief operating officer at Starbucks (SBUX), to head its company. Prior to Starbucks, Brewer ran Walmart's (WMT) Sam's Club warehouse business.
In August, Brewer started to put together a management team with several key hires, including Tracey Brown, the company's president of Retail and chief customer officer. She previously served as the CEO of the American Diabetes Association – a possible sign Brewer is looking to transform Walgreens into a healthcare company.
More recently, the company announced its long-term plan to grow the business. The consumer-centric healthcare strategy includes the launch of Walgreens Health, a new operating segment made possible by its $5.2 billion investment in VillageMD, a value-based primary healthcare leader. The move more than doubled WBA's stake from 30% to 63%.
VillageMD currently has more than 230 practices in 15 markets. It plans to open more than 600 Village Medical locations at Walgreens' primary care practices by 2025. VillageMD could go public as early as 2022.
"The best healthcare is deeply rooted in local communities, and Walgreens is committed to expanding convenient access to high-quality and affordable healthcare services to our patients and customers in our neighborhood locations," Brewer stated in an Oct. 14 press release announcing WBA's investment in VillageMD.
According to the company, 75% of Americans live within five miles of a Walgreens location.
WBA stock has benefited under Brewer's leadership. YTD, it is up 24.6%. Compare this to its three-year annualized total return of -13.5%.
Pfizer
- Market value: $285.5 billion
- Dividend yield: 3.1%
- Analysts' ratings: 5 Strong Buy, 0 Buy, 15 Hold, 1 Sell, 0 Strong Sell
It's hard these days to have a list of the best healthcare stocks and not include Pfizer (PFE, $50.87). COVID-19 has greatly influenced the company's business in 2021 – and will likely continue to do so in 2022.
On Nov. 2, PFE reported third-quarter results that included a 130% year-over-year increase in revenues to $24.1 billion, with adjusted earnings per share of $1.34, 129% higher than a year earlier. If you exclude Comirnaty, the brand name of its COVID-19 vaccine co-developed with BioNTech (BNTX), its revenues rose by 7% in the quarter over last year.
In its quarterly report, Pfizer reported that 75% of its COVID-19 revenue has come from countries outside the U.S. It expects to deliver at least 2 billion doses of Comirnaty to low- and middle-income countries by the end of next year.
In Q3, the company's vaccine revenue was $14.6 billion compared to $1.7 billion a year earlier. For the first nine months of 2021, it generated $28.7 billion in revenue from vaccines, up from $4.6 billion in the same period a year earlier.
For all four quarters of 2021, Pfizer expects revenues of $36 billion from its COVID vaccine, followed by $29 billion in 2022.
As a result of its strong showing, the company estimates its adjusted earnings per share in 2021 will be between $4.13 and $4.18 a share, representing 89% year-over-year growth at the midpoint of its guidance. Excluding Comirnaty, it still expects earnings per share of at least $2.60.
On Nov. 5, Pfizer announced that Paxlovid, its COVID-19 oral antiviral treatment, was found to reduce the risk of hospitalization or death by 89%. It submitted its data to the Food and Drug Administration (FDA) in mid-November for emergency use authorization it has found to the FDA as part of its ongoing submissions to get emergency use authorization from the regulator and subsequently signed a $5.3 billion deal with the U.S. government for 10 million courses of the oral treatment.
Pfizer has invested $1 billion in the development of Paxlovid in the belief that COVID will be around for years to come.
Novavax
- Market value: $13.9 billion
- Dividend yield: N/A
- Analysts' ratings: 3 Strong Buy, 1 Buy, 2 Hold, 0 Sell, 0 Strong Sell
Novavax (NVAX, $183.99), one of the leading COVID-19 vaccine candidates that's yet to be approved by the FDA, is having a volatile year in 2021. Its shares are up 65% YTD and 98.1% over the past year, with its share price trading as high as $331.68 and as low as $109.01.
While approval in the U.S. is not on the company's immediate radar, approvals from other countries are ramping up.
In November, Novavax and its manufacturing and marketing partner, the Serum Institute of India, received emergency use authorization for their COVID-19 vaccine in both Indonesia and the Philippines. Additionally, the company, along with its South Korean development partner SK Bioscience, submitted an application to the South Korean Ministry of Food and Drug Safety (MFDS). They have a contract to supply the South Korean government with 40 million doses.
NVAX has also made regulatory filings with the U.K., Australia, New Zealand, Canada and the European Union, and it expects to submit its entire completed package to the FDA by the end of the year.
2022 could be the year the floodgates open for the biotech development company.
In its third-quarter earnings report, Novavax said it expects to have a monthly manufacturing capacity for 150 million doses per month by the end of the year and approximately 2 billion for all of 2022.
NVAX also reported $178.8 million in revenue in the third quarter, 14% higher than a year earlier. However, on the bottom line, due to increased research and development expenses, it recorded a $322.4 million loss during the quarter, 63% more than in the same period a year ago.
Veeva Systems
- Market value: $49.1 billion
- Dividend yield: N/A
- Analysts' ratings: 9 Strong Buy, 6 Buy, 6 Hold, 1 Sell, 0 Strong Sell
Veeva Systems (VEEV, $315.15) provides cloud-based software solutions to the global life sciences industry. The estimated size of the life sciences industry is $2.2 trillion annually and growing by 6% a year, according to market data firm MarketLine.
VEEV is a public benefit corporation (PBC), which means it considers all its stakeholders and not just shareholders. Despite its broader focus, it is one of the best healthcare stocks for shareholder returns. Over the past five years, it generated an annualized total return of 49.7%.
In 2015, Veeva had a goal to hit $1 billion in annual revenue by the end of 2020. It reached its target in 2019. So that year, it upped its revenue goal and is now looking to hit $3 billion by the end of 2025. It's ahead of that plan as well.
In its most recently reported quarter, Veeva's revenues were $455.6 million, 29% higher than a year ago. Its adjusted net income was $152.7 million, a 31% year-over-year improvement. For all of this fiscal year, Veeva estimates that it will have revenues of at least $1.83 billion, 24% more than its fiscal 2021 revenues of $1.47 billion. VEEV also expects adjusted earnings per share of $3.57, 21% more than the $2.94 per share from a year ago.
The company's two major products are Veeva Commercial Cloud and Veeva Vault. Through the first six months of 2022, Veeva Vault accounted for $476.5 million (54%) of its $889.2 million in sales, while Veeva Commercial Cloud accounted for the rest.
Wall Street pros are certainly upbeat toward this healthcare stock. The consensus outlook among the 22 analysts covering the stock tracked by S&P Global Market Intelligence is Buy and the average price target is $341.48.
HCA Healthcare
- Market value: $75.8 billion
- Dividend yield: 0.8%
- Analysts' ratings: 9 Strong Buy, 6 Buy, 6 Hold, 1 Sell, 0 Strong Sell
HCA Healthcare (HCA, $243.86) is the owner and operator of 183 hospitals, surgery centers, urgent care centers, physician clinics and freestanding emergency rooms in 20 states and the U.K.
The hospital group announced on Nov. 9 that all of its employees must have at least one vaccine dose by Dec. 5 and be fully vaccinated by Jan. 4, 2022. It its press release, HCA added that a majority of employees had already been fully vaccinated and it is working with those that haven't in order to meet its Jan. 4 deadline.
HCA reported its third-quarter results in late October. Revenues rose 15% to $15.3 billion from $13.3 billion a year earlier. The company's same facility admissions increased by 6.8% year-over-year and 2.7% over 2019. Its third-quarter net income was $2.3 billion, or $7.00 a share, compared to $668 million, or $1.95 a share, in Q3 2020.
The company expects to generate full-year 2021 revenues of at least $58.7 billion with earnings per share of $17.50 at the midpoint of its guidance.
When looking at HCA's technicals, it's easy to see why it is featured on a list of the best healthcare stocks to buy. For the year-to-date, HCA is up 49.2% and has gained 60.3% over the past year.
Iqvia Holdings
- Market value: $50.5 billion
- Dividend yield: N/A
- Analysts' ratings: 14 Strong Buy, 3 Buy, 2 Hold, 0 Sell, 0 Strong Sell
Iqvia (IQV, $264.45) is a provider of contract research for late-stage clinical trials. In addition, it provides healthcare data analytics to companies. IQV came together through its transformational October 2016 merger of equals between product development specialist Quintiles Transnational Holdings and IT firm IMS Health.
As a result of the merger, IMS Health shareholders received 0.3840 shares of Quintiles stock for every IMS share held. The company was renamed Iqvia Holdings in 2017.
As one example of how Iqvia generates revenue: The company worked with the NFL to perform contact tracing for athletes who have been around those who tested positive for COVID-19. It identified those people and let them know that additional monitoring and testing was required as part of the league's pandemic protocols.
In Iqvia's third quarter, sales increased 21.7% from the year prior to $3.4 billion. Of IQV's major operating segments, Research & Development Solutions had the most robust quarter, with sales up 32.4% year-over-year. Still, its Technology & Analytics Solutions and Contract Sales & Medical Solutions (CSMS) businesses experienced double-digit percentage growth over last year.
The company's research and development (R&D) backlog grew 12.7% in the third quarter to $24.4 billion. Iqvia expects $6.9 billion of this backlog to convert to revenue in the 12 months ended Sept. 30, 2022. IQV's adjusted net income in the third quarter was $423 million, 33% higher than a year ago.
For all of 2021, Iqvia expects to grow revenue by at least 21.3% to $13.8 billion and adjusted EPS by 37.9% to $8.85.
Avantor
- Market value: $23.9 billion
- Dividend yield: N/A
- Analysts' ratings: 11 Strong Buy, 5 Buy, 0 Hold, 0 Sell, 0 Strong Sell
Avantor (AVTR, $39.19) got its start in 1904 as the J.T. Baker Chemical Company. It specialized in producing the purest of chemicals for manufacturers. In 1985, it was sold to Procter & Gamble (PG). Ten years later, Mallinckrodt (MNKKQ) acquired the chemical company. In 2010, Avantor was acquired by affiliates of New Mountain Capital.
Several acquisitions later, it provides approximately 6 million products and services to its customers in three major segments: Materials & Consumables (70% of sales), Equipment and Instrumentation (15%), and Services & Specialty Procurement (15%). Approximately 85% of its revenues are recurring in nature.
At the end of October, Avantor reported its third-quarter results.
During the three-month period, AVTR reported revenues of $1.83 billion, 14.3% higher than a year earlier. Organic sales accounted for 10.2% of the growth, with acquisitions making up the difference. Sales were higher across all three geographic regions, including a 24.1% increase from Asia, the Middle East and Africa.
The company also reported adjusted net income of $226.4 million in its third quarter, compared to a loss of $42.2 million in the year-ago period. Free cash flow through the nine months ended Sep. 30 was $606.1 million, up from $582.4 million in the same period a year earlier.
Avantor expects to generate 15% revenue growth at the midpoint of its guidance for all of 2021, with 55% growth in its adjusted earnings per share. Its free cash flow estimate for 2021 is $850 million.
On Nov. 1, Avantor completed its latest acquisition, paying $2.7 billion for Masterflex, an Illinois-based manufacturer of peristaltic pumps and aseptic single-use fluid transfer technology. The purchase strengthens the company’s position in the biopharma industry – and could make it one of the best healthcare stocks in 2022 and beyond.
Maravai Life Sciences Holdings
- Market value: $4.9 billion
- Dividend yield: N/A
- Analysts' ratings: 7 Strong Buy, 2 Buy, 0 Hold, 0 Sell, 0 Strong Sell
Maravai Life Sciences Holdings (MRVI, $37.57) a life sciences company that provides genetic products and testing services for drug development and research. The San Diego-based company went public in November 2020 at $27 a share. Its stock is up more than 39% since its IPO.
The company has over 5,000 customers, including Pfizer and BioNTech, which use its CleanCap technology to stabilize their mRNA COVID-19 vaccine. The technology has more than 100 users. According to its prospectus, a total of five mRNA COVID-19 vaccine trials have used CleanCap.
Maravai reported its third-quarter results in mid-November. On the top line, it reported a 133% year-over-year rise to $204.8 million. The company's nucleic acid production segment, which includes its CleanCap technology, experienced a 170% increase in revenue during the quarter. It accounts for 89% of its overall sales. Biologics Safety Testing and Protein Detection accounted for the rest.
MRVI's bottom line rose 39% from the year prior to $54.3 million, or 45 cents per share.
The company included preliminary revenue guidance for 2022. It expects revenue to grow by 12.5% at the midpoint to $860 million. MRVI also sees demand for its CleanCap technology increasing by 5%-10% in 2022. This estimate includes the divestment of its Protein Detection business to Thompson Street Capital Partners for $124 million.
