Even though the COVID-19 pandemic wreaked havoc across several sectors, the telehealth industry significantly benefited from the increasing demand for remote care. As the continued spread of the Delta coronavirus variant is leading to a resurgence of COVID-19 cases, the industry could continue to witness increasing demand in the upcoming months.
According to a Fortune Business Insights report, the global telehealth market grew 135.2% in 2020, and it is expected to reach $636.38 billion by 2028. Moreover, the Biden-Harris Administration invested more than $19 million in August 2021 to expand telehealth nationwide and improve health services in rural areas.
Against this backdrop, it could be wise to bet on quality telehealth stocks NextGen Healthcare, Inc. (NXGN) and Computer Programs and Systems, Inc. (CPSI). They are expected to benefit from the anticipated increase in demand for their services in the upcoming months.
NextGen Healthcare, Inc. (NXGN)
NXGN provides software and services for ambulatory healthcare services in the United States. It also provides consulting services, including physician, professional, technical consulting, and serves managed service organizations and others.
On September 16, NXGN launched the ‘Care Anywhere’ program for Klamath Tribal Health. Srinivas Velamoor, NXGN’s chief growth & strategy officer, said, “Modernizing the patient experience is a key focus for NextGen Healthcare, and Klamath’s grassroots vaccination initiative is evidence that healthcare technology can change the landscape for providers and patients alike.”
NXGN’s net revenue increased 11.6% year-over-year to $146.08 million in the first quarter ended June 30, 2021. Its gross profit came in at $73.34 million, up 13.7% year-over-year. At the same time, its net income came in at $2.85 million, compared to a loss of $824,000 in the previous period. Its EPS came in at $0.04, compared to a loss of $0.01 in the year-ago period.
Analysts expect NXGN’s revenue and EPS to increase 4.6% and 8.7% year-over-year to $608.89 million and $1, respectively, in fiscal 2023. In addition, it has surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 19.3% to close yesterday’s trading session at $14.59.
NXGN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NXGN has a B grade for Value, Growth, Stability, and Quality. Within the Medical – Services industry, it is ranked #3 of 85 stocks. Click here to see the additional POWR Ratings for Momentum and Sentiment for NXGN.
Computer Programs and Systems, Inc. (CPSI)
CPSI provides healthcare information technology solutions and services in community hospitals with skilled nursing and assisted living facilities. Its unique product, Centriq, provides the end-user with a tool to view past and present patient information.
On July 26, CPSI integrated Medicomp’s Quippe Clinical Data Engine across its electronic health record platforms. William J. Hayes, M.D., chief medical officer of CPSI, said, “This technology mirrors how healthcare clinicians think and work in a way that significantly improves the workflow efficiency and clinical decision making in delivering higher quality care to the patient and ultimately improves outcomes.”
CPSI’s total revenues increased 15.1% year-over-year to $68.53 million for the second quarter ended June 30, 2021. Its gross profit increased 12.6% year-over-year to $33.89 million. Also, its operating income increased 181.9% year-over-year to $7.74 million, while its EPS came in at $0.42, representing a 250% year-over-year rise.
For fiscal 2021, CPSI’s revenue and EPS are expected to grow 5.6% and 21.7% year-over-year to $279.41 million and $2.69, respectively. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 35.4% over the past year to close yesterday’s trading session at $35.86.
CPSI’s POWR Ratings reflect solid prospects. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
In addition, it has a B grade for Growth, Stability, Value, and Sentiment. CPSI is ranked #2 in the same industry. Click here to see the additional POWR Ratings for CPSI (Quality and Momentum).
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NXGN shares were trading at $14.36 per share on Tuesday morning, down $0.23 (-1.58%). Year-to-date, NXGN has declined -21.27%, versus a 17.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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