In this article, we will be taking a look at the 10 best healthcare stocks for long-term investment.
Rising Healthcare Costs and the Impact of Tariffs on the US Industry
In the US, healthcare expenditures and costs have been increasing. According to the Centers for Medicare & Medicaid Services, US healthcare spending increased 7.5% from 2022 to $4.9 trillion in 2023. In 2023, the healthcare industry made up around 17.6% of the US economy, up 17.4% from 2022. The expansion of Medicare and commercial health insurance are the two main forces behind this growth.
The impact of tariffs on this continuing trend has become a major topic of contention in the healthcare sector, as more and more US corporations are turning to China for deals on the next promising molecule, whether in the obesity or cancer arena. Versant Ventures managing director Carlo Rizzuto spoke on the effects of tariffs on healthcare on CNBC’s “Fast Money” on February 7. Tariffs might affect the sector in two ways, according to Rizzuto. Products developed in China and introduced to the US or other markets would be the first. The sector would need to see how the tariffs are set up in the market to comprehend how they would impact such trade operations.
Second, and more concretely, the US healthcare industry uses China as a huge hub for contract production and research. As a result, anything that raises that expense is probably going to make the market more difficult. An increase in costs will not improve the running of the healthcare sector, which is already facing pressure from investors.
China’s Role in U.S. Healthcare and Long-Term Investment Opportunities
Speaking about China’s enormous influence in the pharmaceutical and healthcare industries, Rizzuto stated that the vast majority of healthcare organizations use a Chinese CRO or manufacturing partner in some capacity during the research and development phase. As a result, it plays a crucial role in the way biotech and pharmaceutical companies function in the nation. From the tiniest businesses to the biggest, this pattern is very common.
Simply said, the United States lacks the infrastructure to handle the transfer, thus healthcare corporations cannot reshore all of their externalized R&D and production to the country. Therefore, it is quite hard to understand how such a large-scale reshoring might occur. With the quantity of tariffs applied, the costs to accomplish this achievement can be computed linearly.
According to McKinsey, healthcare EBITDA is projected to rise from a baseline of $676 billion in 2023 to $987 billion in 2028 at a 7% CAGR. Recovery from post-pandemic lows is anticipated to support the improvement in several segments, while growth is anticipated to be faster in other areas (such as specialist pharmacy and HST). Software platforms are essential to the healthcare ecosystem because they make it possible for payers and providers to operate more effectively in a complicated setting.
By automating processes, fostering data connectivity, and producing actionable insights, technological innovation (such as generative AI and machine learning) keeps opening doors for stakeholders across all segments. McKinsey went on to say that increased utilization and pipeline expansion (as in cancer) are projected to drive substantial growth in specialty pharmacy revenue. Specialty pharmacy profit pools are still growing as a result of the rise in the use of specialty medications.
With this in mind, we will now have a look at the 10 Best Healthcare Stocks For Long-Term Investment.
Our Methodology
For our methodology, we used a Finviz screener and picked stocks with a market cap of over 2 billion, a 5-year annual return of over 10%, and a low PE ratio under 20. We then ranked these stocks based on their total number of hedge fund holders as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Here is our list of the 10 best healthcare stocks for long-term investment.
10. Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX)
Number of Hedge Fund Holders: 35
Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) is a commercial-stage biopharmaceutical company specializing in developing and commercializing treatments for rare neurological and neuromuscular diseases. Its flagship product, Firdapse, is an FDA-approved treatment for Lambert-Eaton Myasthenic Syndrome (LEMS).
In Q4 2024, Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) reported strong financial growth, with total revenue reaching $491.7 million for the year, a 23.5% increase from 2023. Q4 revenue alone was $141.8 million, marking a 28.3% year-over-year rise. The company ended 2024 with $517.6 million in cash and no debt. GAAP net income for the year was $163.9 million ($1.38 per basic share), while non-GAAP net income stood at $276.3 million ($2.33 per basic share). Given its strong financials and growth potential, Catalyst Pharmaceuticals is often considered among the best healthcare stocks for long-term investment.
Looking ahead, Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX) forecasts 2025 revenue between $545 million and $565 million. The company secured a favorable patent resolution with Teva, preventing generic Firdapse competition until 2035. Additionally, the corporation is actively exploring acquisitions and partnerships in the orphan drug space and advancing Agamri’s potential for immunosuppressive use in rare diseases.
As of Q4 2024, 35 hedge funds held stakes in the stock, as tracked by the Insider Monkey database. The largest stakeholder for the quarter was Deerfield Management with stakes worth $65.3 million.
9. Alkermes plc (NASDAQ:ALKS)
Number of Hedge Fund Holders: 36
Alkermes plc (NASDAQ:ALKS) specializes in neuroscience, developing treatments for mental health and neurological disorders like alcohol and opioid dependence, schizophrenia, and bipolar I disorder. The company generates revenue through its proprietary drugs, including Vivitrol, Aristada, and Lybalvi, and it stands ninth among the best healthcare stocks for long-term investment.
With a total revenue of over $1.5 billion in 2024, Alkermes plc (NASDAQ:ALKS) produced impressive financial performance, mostly due to its exclusive medicine portfolio. With $825 million in cash and no debt at the end of the year, the company produced over $450 million in EBITDA. The corporation also strengthened shareholder value by repurchasing 8 million shares.
The company’s key products did well, with Vivitrol sales hitting $457.3 million (up 14%), Aristada gaining 6% to $346.2 million, and Lybalvi rising 46% to $280 million. With Phase 2 trial results anticipated in late 2025, the business is also moving forward with its ALKS 2680 program for narcolepsy, setting up Alkermes plc (NASDAQ:ALKS) for future expansion in neurological medicines.
It is anticipated that the company will generate between $1.34 billion and $1.43 billion in revenue by 2025, with adjusted EBITDA falling between $310 million and $340 million. However, because of the expiration of the INVEGA SUSTENNA royalty, higher R&D costs for ALKS 2680 trials, and increasing competition in the antipsychotic market, the business expects a $215 million drop in manufacturing and royalty revenue, which is why it expanded its psychiatry sales team.
8. Protagonist Therapeutics, Inc. (NASDAQ:PTGX)
Number of Hedge Fund Holders: 37
Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is a biopharmaceutical company specializing in peptide-based therapies for blood disorders and inflammatory diseases, including polycythemia vera and ulcerative colitis. The development of extremely effective and targeted medication options, such as rusfertide, a prospective treatment for polycythemia vera with encouraging clinical trial outcomes, is made possible by the company’s patented peptide platform.
Through strategic partnerships, including a global agreement with Takeda Pharmaceutical, Protagonist Therapeutics, Inc. (NASDAQ:PTGX) has obtained an upfront payment of $300 million and milestone payments of up to $630 million. Additionally, Johnson & Johnson and the company collaborate on JNJ-211, an oral IL-23 receptor antagonist.
As of September 30, 2024, the company’s cash, cash equivalents, and marketable securities totaled $583.3 million, up from $341.6 million at the end of 2023, demonstrating its strong financial condition. In the third quarter of 2024, Protagonist Therapeutics, Inc. (NASDAQ:PTGX) reported a net loss of $33.2 million, which was somewhat better than the quarterly loss of the previous year, and $4.7 million in license and cooperation revenue. But in the first nine months of 2024, a $300 million upfront payment from its partnership with Takeda Pharmaceutical resulted in a net profitability of $143.5 million, marking a sea change.
Strong growth potential is indicated by this collaboration and corporation’s growing pipeline. Phase 2b outcomes in ulcerative colitis by Q1 2025 and top-line results for JNJ-2113 Phase 3 trials in psoriasis by Q4 2024 are important future benchmarks. Early 2025 is also anticipated to see the nomination of a development candidate for an oral IL-17 peptide antagonist and the findings of rusfertide Phase 3 in polycythemia vera.
7. Lantheus Holdings, Inc. (NASDAQ:LNTH)
Number of Hedge Fund Holders: 39
Lantheus Holdings, Inc. (NASDAQ:LNTH) is a radiopharmaceutical company specializing in diagnostic and therapeutic products for cardiology, oncology, and neurology. It develops advanced imaging agents and AI solutions to aid disease diagnosis and treatment. The company’s key products include PYLARIFY, a PET imaging agent for prostate cancer, and DEFINITY, an ultrasound contrast agent for cardiac imaging.
Lantheus Holdings, Inc. (NASDAQ:LNTH) is a top healthcare stock for long-term investment, backed by its strong market position in radiopharmaceuticals and impressive financial performance. In 2024, the company achieved significant revenue growth, reinforcing its market leadership.
For Q4 2024, Lantheus Holdings, Inc. (NASDAQ:LNTH) reported $391.1 million in revenue, a 10.5% year-over-year increase, while full-year revenue reached $1.53 billion, up 18.3%. PYLARIFY, its flagship PET imaging agent, surpassed $1 billion in net sales, growing 24.3% annually. DEFINITY, another key product, generated $317.8 million in revenue for the year, reflecting a 13.6% increase. Lantheus is among the best healthcare stocks with consistent growth.
The company maintained a strong 68% gross profit margin and generated $493.1 million in free cash flow in 2024. Looking ahead, Lantheus Holdings, Inc. (NASDAQ:LNTH) is expanding its portfolio with strategic acquisitions of Life Molecular Imaging and Evergreen Theragnostics, expected to close in H2 2025. These acquisitions aim to enhance its radiopharmaceutical capabilities, positioning the corporation for sustained double-digit revenue growth from 2026 onward.
6. United Therapeutics Corporation (NASDAQ:UTHR)
Number of Hedge Fund Holders: 42
United Therapeutics Corporation (NASDAQ:UTHR) is a biotechnology company specializing in treatments for rare and life-threatening diseases, primarily pulmonary arterial hypertension (PAH) and cardiovascular disorders. Its key medications—Remodulin, Tyvaso, and Orenitram—are sold to patients, hospitals, and specialty pharmacies.
United Therapeutics Corporation (NASDAQ:UTHR) ended 2024 with record revenue and strong earnings, surpassing expectations. The company reported earnings per share (EPS) of $6.19, beating estimates of $6.10. Double-digit growth in key products, including Tyvaso, Remodulin, Orenitram, and Unituxin, contributed to the financial success.
United Therapeutics Corporation (NASDAQ:UTHR)’s Tyvaso revenue grew 19% year-over-year to $4 million in Q4, while Orenitram saw a 28% increase to $108 million. Remodulin generated $135 million in worldwide revenue, up 17%, and Unituxin achieved record revenue of $68 million, reflecting 25% growth. These gains highlight the corporation’s strong market position in treating pulmonary arterial hypertension (PAH) and other rare diseases.
In addition to financial growth, United Therapeutics Corporation (NASDAQ:UTHR) advanced its clinical pipeline. The company received IND clearance for the uKidney clinical trial, marking the first FDA-cleared xenotransplantation trial for organ replacement. Capital allocation remains balanced between strategic investments, acquisitions, and shareholder returns through repurchase programs, reinforcing confidence in sustained growth and innovation.
5. DaVita Inc. (NYSE:DVA)
Number of Hedge Fund Holders: 46
DaVita Inc. (NYSE:DVA) is a leading kidney care provider specializing in dialysis treatments for chronic kidney disease and end-stage renal disease and stands fifth on our list of the best healthcare stocks for long-term investment. The company provides both in-center and at-home dialysis alternatives through its extensive network of dialysis facilities in the United States and abroad. The corporation offers ancillary services like laboratory tests, pharmaceutical solutions, and illness management programs in addition to billing insurance companies like Medicare, Medicaid, and private insurers.
DaVita Inc. (NYSE:DVA) ended 2024 on a strong note, showing resilience and growth. The company reported Q4 adjusted operating income of $491 million, bringing the full-year total to $1.98 billion. Adjusted EPS for Q4 was $2.24, contributing to a full-year EPS of $9.68. Free cash flow reached $281 million for the quarter and $1.16 billion for the year. U.S. treatment volume grew slightly, while revenue per treatment increased by $1 sequentially.
For 2025, DaVita Inc. (NYSE:DVA) expects adjusted operating income between $2.01 billion and $2.16 billion, reflecting a 5.2% growth at the midpoint. Treatment volume is projected to remain steady, while revenue per treatment is expected to grow by 4.5% to 5.5%. Adjusted EPS is forecasted between $10.20 and $11.30 which represents 11% growth at the midpoint.
Key developments include the transition of oral medications to the dialysis bundle starting in 2025, which is expected to benefit patients. The business also continues its share repurchase program, reinforcing its commitment to shareholder value. Additionally, the company expanded internationally, closing three out of four planned Latin American acquisitions in 2024.
As of Q4 2024, 46 hedge funds held stakes in the stock, as tracked by the Insider Monkey database. The largest stakeholder was Berkshire Hathaway with stakes worth $5.3 billion.
4. Molina Healthcare, Inc. (NYSE:MOH)
Number of Hedge Fund Holders: 48
Molina Healthcare, Inc. (NYSE:MOH) is a managed care organization providing health insurance primarily for low-income individuals through Medicaid and Medicare. Instead of manufacturing products, it delivers healthcare coverage via government contracts, premiums, and value-based care. The company also generates revenue from pharmacy services and supplemental products like dental and vision coverage.
Molina Healthcare, Inc. (NYSE:MOH) reported strong Q4 2024 and full-year results, with total revenue reaching $40.65 billion, a 19% increase from 2023. Premium revenue grew to $38.6 billion, which was driven by contract wins, acquisitions, and service area expansions, though partially offset by Medicaid redeterminations.
The company’s profitability remained solid, with GAAP net income per diluted share rising 9% to $20.42 and adjusted EPS increasing 8% to $22.65. Molina Healthcare, Inc. (NYSE:MOH) is considered one of the best healthcare stocks, with a consolidated Medical Care Ratio (MCR) standing at 89.1%, and Medicaid MCR slightly above expectations due to redetermination-related shifts. The Medicare MCR was 89.1%, while the Marketplace MCR performed well at 75.4%.
Operating efficiency remained strong, with a well-managed General and Administrative (G&A) expense ratio of 6.7%. However, operating cash flow declined to $644 million from $1.66 billion in 2023 due to timing differences in government receivables and payables. The company repurchased 1.7 million shares for $500 million in Q4, reflecting confidence in its value.
Molina Healthcare, Inc. (NYSE:MOH) continues to expand its presence in Medicaid and Medicare Duals markets, leveraging new contract wins to strengthen its competitive position and achieve long-term financial targets.
3. Tenet Healthcare Corporation (NYSE:THC)
Number of Hedge Fund Holders: 65
Tenet Healthcare Corporation (NYSE:THC) is a leading U.S. healthcare provider, operating hospitals, outpatient centers, and specialty care facilities. It generates revenue through patient services, insurance reimbursements, physician services, outpatient care, and ancillary services like pharmacy operations and medical equipment rentals.
Tenet Healthcare Corporation (NYSE:THC) delivered strong financial results for Q4 and the full year 2024, highlighting its operational efficiency and strategic growth. Net operating revenue reached $20.7 billion, supported by same-facility revenue growth despite hospital divestitures. Net income surged to $3.2 billion, significantly up from $611 million in 2023, driven by a $2.916 billion pre-tax gain from hospital sales. Adjusted EBITDA grew 13% year-over-year to $4 billion, with a margin improvement of over 200 basis points to 19.3%.
In its key segments, USPI (Ambulatory Care) saw a 17% rise in adjusted EBITDA to $1.81 billion, with a Q4 margin of 42.1% and strong growth in high-acuity cases. The hospital segment’s adjusted EBITDA increased by 9% to $2.185 billion, supported by a 4.7% rise in same-store admissions. Free cash flow for the year was $1.1 billion, excluding divestiture-related taxes. Additionally, the corporation repurchased 5.6 million shares worth $672 million, signaling confidence in its valuation.
Strategically, Tenet Healthcare Corporation (NYSE:THC) has reshaped its portfolio by selling 14 hospitals, generating $5 billion in proceeds to strengthen its balance sheet. As one of the best healthcare stocks, it expanded its Ambulatory Surgery Center (ASC) network by adding over 70 new centers, capitalizing on the industry’s shift toward outpatient care. Investments in AI-driven technologies further enhance clinical efficiency and patient experiences. With a strong payer mix and pricing power, the business is well-positioned for continued growth.
2. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 66
Abbott Laboratories (NYSE:ABT) stands second among the best healthcare stocks for long-term investment. It discovers, develops, manufactures, and sells healthcare products. Medical devices, established pharmaceutical products, diagnostic products, and nutritional products are some of the company’s business segments. A complex range of branded generic pharmaceutical items are sold internationally by its Established Pharmaceutical items sector. The Medical Devices division oversees the worldwide sales of goods related to electrophysiology, neuromodulation, structural heart, heart failure, rhythm management, and diabetes care.
Several growth potentials are highlighted by Abbott Laboratories (NYSE:ABT)’s primary business. One of the company’s biggest growth engines has been its FreeStyle Libre franchise in the diabetes care segment, which includes a variety of continuous glucose monitoring (CGM) devices and has the potential to increase its market share. As the world’s population ages, the corporation’s cardiovascular devices—including its structural heart portfolio—should also contribute to long-term growth.
The business generated $8.5 billion in operating cash flow in fiscal Q4 2024, which it utilized to fund capacity expansions, pay down debt, and give $5 billion back to shareholders in dividends and share repurchases. With an organic sales growth expectation of 7.5% to 8.5%, Abbott Laboratories (NYSE:ABT) is well-positioned to produce robust growth in fiscal 2025. It has a competitive advantage in the market because of its creative skills, varied business, and industry knowledge.
1. HCA Healthcare, Inc. (NYSE:HCA)
Number of Hedge Fund Holders: 81
HCA Healthcare, Inc. (NYSE:HCA) owns and operates a network of hospitals and healthcare facilities across the US and tops the list for being one of the best healthcare stocks. This network offers specialist treatments in fields like behavioral health, acute care, and outpatient operations. Serving a range of patient requirements is the goal of each of them.
In 2024, HCA Healthcare, Inc. (NYSE:HCA)’s hospital network experienced a 2.4% increase in emergency room visits, a 2.8% increase in inpatient procedures, and a 3% increase in inpatient admissions. Net revenue per equivalent admission increased by 2.9%, while overall revenue increased by 6%. With $5 to $5.2 billion set up for capital expenditures in 2025, the corporation is making investments in network development. Its main goals are shareholder profits and staff development. It just approved a new share repurchase program for $10 billion. Additionally, the business said that the 2024 hurricanes had a $250 million effect on the 2024 fiscal year.
HCA Healthcare Inc. (NYSE:HCA) anticipates $72.8 to $75.8 billion in sales and $24.05 to $25.85 in earnings per share in 2025. The company anticipates a 3-4% increase in equivalent admissions and a 2-3% increase in revenue per equivalent admission.
Delaware Ivy Core Equity Fund stated the following regarding HCA Healthcare Inc. (NYSE:HCA) in its Q3 2024 investor letter:
“HCA Healthcare, Inc. (NYSE:HCA) – While long-term growth trends favor the healthcare sector, HCA is also benefiting from a short-term surge in healthcare utilization, likely the consequence of consumers catching up on care that was deferred during the pandemic. Growth in the insured population through healthcare exchanges also appears to be a more secular driver of increased demand.”
Overall, HCA Healthcare, Inc. (NYSE:HCA) ranks first among the 10 best healthcare stocks for long-term investment. While we acknowledge the potential of healthcare companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HCA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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