The rapid adoption of technologies and a push to develop therapeutics to serve an aging population have catalyzed the healthcare sector’s growth. According to the Centers for Medicare and Medicaid Services, U.S. national healthcare expenditure is expected to reach $6.2 trillion by 2028. Moreover, the global healthcare and pharma market is expected to reach $1.58 trillion by 2027, registering a 4% CAGR.

Investor’s interest in the healthcare sector is evidenced by the Health Care Select Sector SPDR Fund’s (XLV) 16% gains year-to-date. Furthermore, a growing trend in preventive healthcare because the COVID-19 pandemic has made people more conscious about their health and medical needs should bode well for healthcare providers.

Therefore, we believe small-cap healthcare stocks Semler Scientific, Inc. (SMLR) and IRadimed Corporation (IRMD) could be solid long-term bets because of their solid fundamentals.

Click here to checkout our Healthcare Sector Report for 2021

Semler Scientific, Inc. (SMLR)

SMLR develops, manufactures, and markets products and services for treating chronic diseases. In addition, the San Jose, Calif.-based company provides technology solutions for clinical effectiveness. The company’s product portfolio includes its QuantaFlo System, a four-minute in-office blood flow test to identify flow abnormalities associated with peripheral arterial disease (PAD). It has a $790.22 million market capitalization. SMLR’s revenues increased 124.6% year-over-year to $14.31 million in the second quarter, ended June 30, 2021. The company’s net income rose 522.1% from its year-ago value to $6.69 million. Its EPS grew 538.5% from the prior-year quarter to $0.83. Also, the company’s income from operations increased 573.3% year-over-year to $6.46 million.

Analysts expect SMLR’s revenue to increase 52.8% year-over-year to $59 million in its fiscal year 2021. In addition, the company surpassed consensus EPS estimates in each of the trailing four quarters. SMLR’s EPS is expected to grow 60.3% in the current year. The stock has gained 29.5% in price over the past nine months and 124% over the past year.

SMLR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

SMLR is also rated an A grade for Sentiment and Quality. In addition, , within the Medical – Diagnostics/Research industry, it is ranked #8 of 57 stocks.

To see additional POWR Ratings for Value, Growth, Stability, and Momentum for SMLR, click here.

IRadimed Corporation (IRMD)

With a $414.99 million market capitalization, IRMD is an MRI patient care innovator that offers MRidium MRI-compatible intravenous (IV) infusion pump system with associated disposable IV tubing sets, and an MRI compatible patient vital sign monitoring system. The company also provides mountable non-magnetic vital sign monitors and portable MRI monitors.

During the second quarter, ended June 30, 2021, IRMD’s revenue increased 44.4% year-over-year to $9.81 million. The company’s gross profit grew 48.7% from its year-ago value to $7.33 million. Its net income came in at $1.47 million, compared to a $211 million net loss in the prior-year quarter. Also, the company’s EPS came in at $0.12, compared to a $).17 loss per share in the second quarter of 2020.

IRMD’s revenue is expected to increase 26.6% year-over-year to $40.16 million in its fiscal year 2021. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. IRMD’s EPS is expected to increase 55% in the current year and 142.9% in the current quarter. The stock has climbed  42.7% in price over the past six months and 60.2% over the past year.

IRMD’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. IRMD also has an A grade for Sentiment and Quality. In the Medical – Devices & Equipment industry, it is ranked #6 of 181 stocks.

In addition to the POWR Rating grades I’ve just highlighted, one can see IRMD’s ratings for Momentum, Value, Growth, and Stability here.

Click here to checkout our Healthcare Sector Report for 2021

SMLR shares were trading at $117.00 per share on Friday morning, down $0.00 (0.00%). Year-to-date, SMLR has gained 24.47%, versus a 19.56% rise in the benchmark S&P 500 index during the same period.

About the Author: Priyanka Mandal

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...

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