Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. But financial performance has lagged recently as players offloaded surplus COVID inventories in 2023 and 2024, a headwind for overall demand. The result? Over the past six months, the industry’s 1.8% return has trailed the S&P 500 by 3.1 percentage points.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Keeping that in mind, here are two healthcare stocks boasting durable advantages and one we’re swiping left on.
One Healthcare Stock to Sell:
NeoGenomics (NEO)
Market Cap: $1.06 billion
Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics (NASDAQ: NEO) provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.
Why Do We Avoid NEO?
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 3% annually
- Push for growth has led to negative returns on capital, signaling value destruction
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate
NeoGenomics is trading at $7.89 per share, or 47.7x forward P/E. If you’re considering NEO for your portfolio, see our FREE research report to learn more.
Two Healthcare Stocks to Watch:
iRhythm (IRTC)
Market Cap: $3.94 billion
Pioneering the shift from bulky, short-term heart monitors to sleek, wire-free patches, iRhythm Technologies (NASDAQ: IRTC) provides wearable cardiac monitoring devices and AI-powered analysis services that help physicians detect and diagnose heart rhythm disorders.
Why Do We Like IRTC?
- Market share has increased this cycle as its 23.1% annual revenue growth over the last two years was exceptional
- Adjusted operating margin improvement of 25.6 percentage points over the last five years demonstrates its ability to scale efficiently
- Free cash flow profile has moved into positive territory over the last five years, indicating the company has passed a significant test
At $125.00 per share, iRhythm trades at 39.5x forward EV-to-EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
UnitedHealth (UNH)
Market Cap: $321.1 billion
With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE: UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.
Why Are We Positive On UNH?
- 11.3% annual revenue growth over the last five years was better than the sector average, highlighting the value of its products and services
- Massive revenue base of $449.7 billion gives it meaningful leverage when negotiating reimbursement rates
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
UnitedHealth’s stock price of $352.76 implies a valuation ratio of 18.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
