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3 MedTech Sectors Benefiting Despite COVID-19 Resurgence

Here we discuss three major subsectors of MedTech and some of their constituent stocks for which COVID-19 has opened up enormous growth prospects.

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This story originally appeared on Zacks

Consumer demand and investment pattern within the MedTech sector has witnessed a sea change over the past one-and-a-half years of the healthcare catastrophe. Many conventionally recognized efficacious spaces of MedTech from the pre-pandemic era failed to attract investors in the COVID phase. On the contrary, several subsectors, which were not in the limelight earlier, are currently in good shape.

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Let us delve deeper.

The Shift in Demand

The medical service sector, particularly specialized medical caregiving, which had expanded manifold in the last few years driven by the rising incidence of chronic disorders, suffered big time as a result of the declining non-COVID hospital admissions in the pandemic period. On the contrary, demand for long-term care (LTC) services and home health care reached an all-time high during this period due to increased health concerns among the elderly and the vulnerable population.

Again, COVID-19 has changed the face of aesthetic treatment. Cosmetic surgery and elective, non-urgent aesthetic dental procedures, which were earlier on a robust growth trajectory, lost momentum all of a sudden. The dental aesthetic industry was recognized by market watchers as one of the booming spaces in the pre-pandemic time. Going by a 2020 report by the American Dental Association, more than three-fourth of the dental practices in the United States saw emergency patients only. The article also projected U.S. dental care spending to decline by up to 32% in 2021.

Even today, despite the mass vaccination drive, this data has changed marginally, thanks to the emergence of new virus variants.  In terms of cosmetic surgery, confusingly, one line of data researcher recognized it as one of the COVID-induced booming sectors.

This view is kind of supported by the data from the National Center for Biotechnology Information (NCBI) provided in October 2020, which stated that non-invasive procedures, facial aesthetic surgery, and medical-grade skincare elicited the greatest interest. The report noted that people saw themselves in the mirror 43.2% more often than before and had 41.8% more desire to look better after the crisis. Further, they spent 40.4% more time on social media. These were the three top reasons for the increased interest.

Investment Strategy

Looking at the current trend of COVID waves worldwide, we expect the abrupt change in consumer behavior pattern to continue at least till the end of 2022. The resultant uncertainty will put overall MedTech stock investment in a tight spot. In view of this, here we discuss three major subsectors of MedTech and some of their constituent stocks for which COVID-19 has opened up enormous growth prospects.

 

Price Performance Through Pandemic

Zacks Investment Research

Image Source: Zacks Investment Research

3 Sectors to Bet on

The first sector on our list is telehealth services driven by its growing prosperity through the pandemic months on demand for contactless services. Consistently robust uptake, consumer preference, and significant strategic investment have been the main contributing factors behind this continued growth. Per a July 2021 Mckinsey & Company report, telehealth use has increased 38 times from the pre-COVID-19 baseline. The report also stated that investment in virtual care and digital health has skyrocketed, fueling further innovation. In 2020, venture capitalist digital health investment was three times more in 2020 than in 2017.

Investors can consider betting on a Zacks Rank #1 (Strong Buy) stock, Omnicell OMCL, a provider of end-to-end automation solutions for the medication-use process, and a Zacks Rank #2 (Buy) stock, Computer Programs and Systems, Inc. CPSI, a healthcare information technology solutions and services player, at this moment for strong gains.

The next sector that we ask investors to focus on is the prospering home health and hospice. Thanks to COVID-19, this industry has become the new generation’s preferred choice of healthcare now. The pandemic has raised the demand for home-based care beds exponentially over the past few months. Apart from this, the need for remote monitoring and assistance has increased the adoption of remote care settings significantly.

Going by a Market Data Forecast report, the global home healthcare market is set to witnessa CAGR of 9.5% by 2026.  Option Care Health OPCH, a home and alternate site infusion services provider, and Encompass Health Corporation EHC, a facility-based and home-based post-acute healthcare services provider, both with a Zacks Rank #1 are our current picks.

Last but not least is the surgical robotics space that is gaining enormous prominence day by day. Among all the orthopedic device sub wings, robotic surgery has been gaining fame faster. A major advantage of robotic surgery is the lesser utilization of hospital resources along with minimal patient contacts and exposure to the virus. This type of surgery not only enhances patient outcomes and minimizes costs but also reduces postoperative recovery time, immediate post-surgical pain, and infection rates as well as lowers complication rates. Investors can consider buying the shares of the manufacturer and marketer of the da Vinci surgical system, Intuitive Surgical ISRG, currently carrying a Zacks Rank #2. You can see the complete list of Zacks #1 Rank stocks here.



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Intuitive Surgical, Inc. (ISRG): Free Stock Analysis Report

 

Omnicell, Inc. (OMCL): Free Stock Analysis Report

 

Computer Programs and Systems, Inc. (CPSI): Free Stock Analysis Report

 

Encompass Health Corporation (EHC): Free Stock Analysis Report

 

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