In this article, we will be taking a look at the 10 best mid-cap healthcare stocks to buy now.
Global Healthcare Market: Growth Projections, Challenges, and Tech-Driven Innovations
According to projections by ReportLinker, the market for healthcare services will increase from $7.5 trillion in 2022 to $7.975 trillion in 2023. Through 2027, it is projected to grow at a compound annual growth rate (CAGR) of 6.3%, or $9.8 trillion. Hospitals, digital health, and healthcare services are some of the segments that make up the global healthcare market. Between 2024 and 2029, the hospital market alone is expected to increase by 4.18% annually, reaching a market value of $5.19 trillion.
In December 2023, the World Health Organization reported that global healthcare spending hit a record $9.8 trillion in 2021, or 10.3% of global GDP. However, spending was unevenly distributed, with low-income countries experiencing a decline in government health spending, relying more on external aid. While 11% of the global population lived in countries spending less than $50 per person on health, high-income countries spent around $4,000 per capita. Despite rising public health spending during COVID-19, this growth is unlikely to continue as countries face economic challenges like slow growth, high inflation, and increased debt.
Dr Bruce Aylward, WHO Assistant Director-General, Universal Health Coverage, Life Course, said:
“Sustained public financing on health is urgently needed to progress towards universal health coverage. It is especially critical at this time when the world is confronted by the climate crisis, conflicts, and other complex emergencies. People’s health and well-being need to be protected by resilient health systems that can also withstand these shocks.”
The Centers for Medicare and Medicaid Services (CMS) estimates that national healthcare expenditures would grow at an average rate of 5.6% between 2027 and 2032, with spending on healthcare expected to reach an estimated $4.8 trillion in 2023.
The healthcare market is undergoing a tech-driven, patient-centered revolution. Telehealth, boosted by the pandemic, is now mainstream, with the global market valued at $60.15 billion in 2023 and expected to grow steadily. Precision medicine, driven by genomics, is set to become a $50.2 billion market by 2028, offering personalized treatments based on genetic makeup. AI is also transforming healthcare, with $31.5 billion in equity funding from 2019 to 2022 and potential annual US savings of $360 billion within five years. Remote patient monitoring (RPM) is rising, with the global market at $71.9 billion in 2023 and projected to grow, supported by wearable technology.
With that, let’s now look at the 10 Best Mid-Cap Healthcare Stocks To Buy Now.
A patient viewing their medical diagnosis on a digital healthcare ecosystem.
Our Methodology
In our methodology, we focused on selecting healthcare stocks with market capitalizations between $2 billion and $10 billion that also had a strong/moderate buy rating and high institutional ownership. After identifying these stocks, we ranked them in ascending order based on their number of hedge fund holders as of Q2 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Mid-Cap Healthcare Stocks To Buy Now
10. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS)
Hedge Fund Holders: 38
Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is a biopharmaceutical company specializing in innovative therapies for rare diseases, particularly those involving the complement system which is a key part of the immune response.
A key catalyst for Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is the success of SYFOVRE (pegcetacoplan injection), its treatment for geographic atrophy (GA) secondary to age-related macular degeneration (AMD). SYFOVRE generated $275 million in revenue in 2023, its first year on the market, indicating strong demand and physician acceptance. With a U.S. market of about 1 million GA patients, there is significant growth potential. Apellis reported total revenues of $397 million for 2023, a sharp increase from $75 million in 2022, driven by SYFOVRE’s launch and ongoing sales of EMPAVELI for paroxysmal nocturnal hemoglobinuria (PNH).
As of Q2 2024, around 38 hedge fund holders held stakes in the stock with EcoR1 Capital being the largest stakeholder with 11,607,425 worth $445,260,823. The stock has a rating of Strong Buy based on 16 Wall Street Analysts. The average price target is $69.56, with a high of $96.00 and a low of $41.00, reflecting a 78.82% increase from the last price of $38.90.
9. Encompass Health Corporation (NYSE:EHC)
Hedge Fund Holders: 39
Encompass Health Corporation (NYSE:EHC) is a leading U.S. provider of post-acute healthcare services, operating in two main segments: Inpatient Rehabilitation and Home Health & Hospice. The company offers specialized care for patients recovering from conditions like stroke, neurological disorders, and complex orthopedic issues.
The company experienced a 13.4% increase in revenue during the first quarter of 2024, primarily driven by a 10% rise in total patient discharges. Encompass Health Corporation (NYSE:EHC)’s President and Chief Executive Officer said in the Q2 earnings call transcript:
“We are continuing the expansion of our joint venture partnership with Piedmont the leading health care system in the state of Georgia. In May, we opened a 40-bed IRF unit within Piedmont Atlanta Hospital. In July, we expanded the relationship further with our existing 70-bed hospital in Augusta Georgia. Our joint venture relationship with Piedmont now includes six open hospitals and the previously announced plans to build hospitals in Athens, and Logan Ville, Georgia. With 15 development projects beyond 2024, already announced and underway, our pipeline remains robust and balanced between wholly owned and joint ventures. We also recently decided to undertake a major ERP conversion from predominantly an Oracle People Soft platform to Oracle Fusion.”
As of Q2 2024, around 39 hedge fund holders held stakes in the stock with Citadel Investment Group being the largest stakeholder with 1,536,417 shares worth $131,809,215. The stock holds a Strong Buy rating based on 7 Wall Street analysts. The average price target is $101.43, with a high of $109.00 and a low of $95.00, indicating a 9.01% increase from the current price of $93.05.
8. Perrigo Company plc (NYSE:PRGO)
Hedge Fund Holders: 39
Perrigo Company plc (NYSE:PRGO) is a leading provider of OTC health and wellness products, including treatments for respiratory issues, nutrition, digestive health, pain relief, and oral care. The company sells branded and private-label products through retail chains, pharmacies, and e-commerce platforms, focusing on affordable, high-quality self-care solutions.
Perrigo Company plc (NYSE:PRGO)’s growth is largely driven by its acquisition strategy. In 2022, Perrigo acquired HRA Pharma, enhancing its product range in women’s health and self-care, strengthening its position in European markets, and adding new growth opportunities through the Rx-to-OTC switch pipeline. This acquisition is expected to boost Perrigo’s adjusted EPS and organic growth.
In its Q2 2024 investor letter, O’keefe Stevens Advisory made the following statements about Perrigo Company plc (NYSE:PRGO):
“Perrigo offers over-the-counter (OTC) self-care and wellness solutions in the U.S. and internationally. In the U.S., the company primarily focuses on store brand products, whereas Perrigo markets its brand internationally. The Consumer Self-Care Americas (U.S. business) represents ~2/3 of sales, with most revenue generated through store-branded products at retailers including Target, Walmart, and CVS. Products include pain relief, sleep aids, upper respiratory relief, and digestive health. Consumer Self-Care International (International business) represents ~1/3 of revenue concentrated in Europe. 90% of sales stem from Perrigo’s branded products, pain and sleep aid brands Solpadeine and Nytol, upper respiratory – Aflubin, and Physiomer.”
In Q2 2024, around 39 hedge fund holders held stakes in the company with Philosophy Capital being the largest stakeholder with 2,402,384 shares worth $61,693,221. The stock holds a Moderate Buy rating based on 2 Wall Street Analysts. The average price target is $38.50, with a high of $42.00 and a low of $35.00. This represents a 32.30% increase from the current price of $29.10.
7. Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE)
Hedge Fund Holders: 43
Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) develops and commercializes therapies for rare genetic diseases. It focuses on severe, life-altering conditions with few treatment options. The company earns revenue mainly from sales of its approved drugs, including Crysvita for X-linked hypophosphatemia and Dojolvi for fatty acid oxidation disorders.
A major catalyst for Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) is its robust and diverse pipeline of potential therapies. The company currently has four approved products and multiple candidates in various stages of clinical development. Of particular interest is UX143 (setrusumab), a monoclonal antibody for the treatment of osteogenesis imperfecta, which has shown promising results in clinical trials. The potential approval and commercialization of UX143 could significantly boost Ultragenyx’s revenue and market position.
Howard Horn, the Chief Financial Officer and Executive Vice President of Corporate Strategy at Ultragenyx said in the Q2 earnings call transcript:
“A major catalyst for Ultragenyx is its robust and diverse pipeline of potential therapies. The company currently has four approved products and multiple candidates in various stages of clinical development. Of particular interest is UX143 (setrusumab), a monoclonal antibody for the treatment of osteogenesis imperfecta, which has shown promising results in clinical trials. The potential approval and commercialization of UX143 could significantly boost Ultragenyx’s revenue and market position.”
As of Q2 2024, around 43 hedge fund holders held stakes in the stock with Alkeon Capital Management being the largest stakeholder with 2,241,832 worth $92,139,295. The stock holds a Strong Buy rating based on 19 Wall Street Analysts. The average price target is $89.61, with a high of $135.00 and a low of $46.00, indicating a 57.82% increase from the current price of $56.78.
6. Structure Therapeutics Inc. (NASDAQ:GPCR)
Hedge Fund Holders: 43
Structure Therapeutics Inc. (NASDAQ:GPCR) is a clinical-stage biopharmaceutical company developing oral drugs for chronic diseases. It focuses on small molecules targeting G protein-coupled receptors (GPCRs) for metabolic and pulmonary conditions. Their lead candidate addresses obesity and type 2 diabetes. The company earns revenue through partnerships, licensing, and future drug sales.
A significant catalyst for Structure Therapeutics Inc. (NASDAQ:GPCR) is its development of oral obesity drugs, particularly GSBR-1290. This compound has shown potential to challenge established players like Novo Nordisk and Eli Lilly in the rapidly growing obesity treatment market.
Structure Therapeutics Inc. (NASDAQ:GPCR) has four approved products, including Crysvita for X-linked hypophosphatemia and tumor-induced osteomalacia, Mepsevii for mucopolysaccharidosis VII, Dojolvi for long-chain fatty acid oxidation disorders, and Evkeeza for homozygous familial hypercholesterolemia.
As of Q2 2024, around 43 hedge fund holders held stakes in the stock with a Strong Buy rating based on 7 Wall Street Analysts. The average price target is $85.57, with a high of $100.00 and a low of $65.00, reflecting a 124.42% increase from the current price of $38.13.
5. Vera Therapeutics, Inc. (NASDAQ:VERA)
Hedge Fund Holders: 43
Vera Therapeutics, Inc (NASDAQ:VERA) is a clinical-stage biotech company developing treatments for serious immunological diseases, including IgAN and lupus nephritis. Atacicept, currently in Phase III trials for immunoglobulin A nephropathy (IgAN) and Phase II trials for lupus nephritis, is a major growth catalyst for Vera. The drug recently received FDA Breakthrough Therapy Designation, which could expedite its market entry. Recent 72-week data from the Phase 2b ORIGIN clinical trial showed consistent and sustained reductions in Gd-IgA1 and hematuria, indicating potential efficacy in treating IgAN
Vera Therapeutics, Inc (NASDAQ:VERA) has significant institutional backing, with 364 institutional owners holding 99.56% of the outstanding shares. As of Q2 2024, 43 hedge fund holders held stakes in the stock with VenBio Select Advisor being the largest stakeholder with 4,309,590 worth $155,920,966. The stock also holds a Strong Buy rating based on 3 Wall Street Analysts. The average price target is $63.00, with a range between $56.00 and $68.00. This target implies a 66.58% increase from the current price of $37.82.
Vera Therapeutics, Inc (NASDAQ:VERA) recently appointed David Johnson as Chief Operating Officer, further strengthening its executive team. This move aligns with the company’s strategy to build a robust leadership structure capable of advancing its pipeline and potential commercialization efforts.
4. Jazz Pharmaceuticals plc (NASDAQ:JAZZ)
Hedge Fund Holders: 44
Jazz Pharmaceuticals plc (NASDAQ:JAZZ) is a biopharmaceutical company specializing in neuroscience and oncology. It develops and markets treatments for sleep disorders, epilepsy, and cancer, selling its products to healthcare providers, hospitals, and pharmacies.
Jazz’s growth is primarily driven by its key products, including Xywav, Epidiolex, and Rylaze. These three products combined saw a 15% year-over-year revenue increase in Q2 2024. The acquisition of GW Pharmaceuticals in 2021 for $7.2 billion has allowed Jazz Pharmaceuticals plc (NASDAQ:JAZZ) to enter the cannabis-based medication market. Epidiolex, a CBD-derived drug for treating seizures, has become a significant revenue contributor.
In the second quarter of 2024, Jazz Pharmaceuticals plc (NASDAQ:JAZZ) achieved a significant milestone by surpassing $1 billion in quarterly revenues. This achievement was driven by effective execution and increased demand for key growth products like Xywav, Epidiolex, and Rylaze. The company also reported a return to profitability with net income of $168.6 million, or $2.49 per share.
As of Q2 2024, around 44 hedge fund holders held stakes in the stock with Vestal Point Capital being the largest stakeholder with 1,500,000 worth $160,095,000. The stock holds a Strong Buy rating based on 18 Wall Street Analysts. The average price target is $173.76, ranging from $113.00 to $230.00, indicating a 49.82% increase from the current price of $115.98.
3. Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX)
Hedge Fund Holders: 44
Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) a mid-cap biotech company, develops small-molecule drugs for rare endocrine disorders and endocrine-related tumors. Crinetics’ primary catalyst is the progression of its drug candidates through clinical trials. The company’s lead product, paltusotine, is being developed for the treatment of acromegaly and neuroendocrine tumors. Positive trial results could significantly boost investor confidence and stock value. Crinetics recently announced positive initial findings from two ongoing, open-label studies for atumelnant in the treatment of Congenital Adrenal Hyperplasia (CAH) and ACTH-Dependent Cushing’s Syndrome (ADCS). The company reported that 100% of participants with CAH maintained normal or near-normal hormone levels.
Marc Wilson, the Cheif Financial Officer of Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) said in Q2 earnings call transcript:
“Crinetics continues to be in a strong financial position, having ended the second quarter with approximately $863 million in cash and investments. Our solid financial foundation is projected to fund our current operating plan into 2028. This includes plans to commercialize paltusitine for acromegaly, the initiation of multiple later-stage clinical trials in additional indications with paltusitine and Atumelnant, as well as continued investment in our pipeline. Concerning the second quarter financial results, research and development expenses were $58.3 million for the quarter end of June 30th, 2024, compared to $40.6 million for the same period in 2023. The increase was primarily attributable to higher personnel costs and manufacturing and development activities, both of which were driven by the advancement of our clinical programs and the expansion of our preclinical portfolio. For the quarter ended June 30th, 2024, General and Administrative expenses were $24.8 million compared to $13.3 million for the same period in 2023. The change was primarily due to an increase in personnel costs and an increase in outside services as we continue to build the infrastructure to support our growing pipeline.”
As of Q2 2024, around 44 hedge fund holders held stakes in the stock with Driehaus Capital being the largest stakeholder in the stock with 6,112,173 shares worth $273,764,229. The stock holds a Strong Buy rating based on 11 Wall Street Analysts. The average price target is $70.09, ranging from $54.00 to $97.00, indicating a 32.10% increase from the current price of $53.06.
2. Xenon Pharmaceuticals Inc. (NASDAQ:XENE)
Hedge Fund Holders: 51
Xenon Pharmaceuticals (NASDAQ:XENE) has emerged as one of the most promising mid-cap stocks in the biopharmaceutical sector, particularly in the field of neuroscience. The company specializes in developing innovative therapeutics for neurological disorders, with a focus on epilepsy and other central nervous system (CNS) conditions.
Xenon’s lead candidate, XEN1101, is currently in Phase 3 trials for focal onset seizures. In its Q2 2024 financial results, Xenon reported continued progress in its Phase 3 epilepsy program. The company also highlighted the successful completion of patient enrollment in X-TOLE2, a key milestone in advancing its lead candidate XEN1101.
Beyond epilepsy, Xenon Pharmaceuticals (NASDAQ:XENE) is exploring XEN1101’s potential in other neurological disorders, including major depressive disorder (MDD). This expansion into new therapeutic areas could substantially increase the drug’s market potential and drive future revenue growth.
Christopher Kenny, the Pharmaceutical/Biotech industry executive and board-certified neurologist at Xenon Pharmaceuticals (NASDAQ:XENE) mentioned in the Q2 earnings call transcript:
“Beginning with our Phase 3 epilepsy program, which includes X-TOLE2 and X-TOLE3 in focal onset seizures and X-ACKT in primary generalized tonic-clonic seizures, our Phase 3 FOS studies continue to advance with the first top-line data readout of X-TOLE2 anticipated in the second half of 2025. Our plan remains to submit results from X-TOLE2, along with the existing data package from our Phase 2b X-TOLE clinical trial and additional safety data from other clinical trials to meet regulatory requirements in the U.S. for approval.”
As of Q2 2024, around 51 hedge fund holders held stakes in the stock with VenBio Select Advisor being the largest stakeholder with 5,666,666 shares worth $220,943,307.
1. Intra-Cellular Therapies, Inc. (NASDAQ:ITCI)
Hedge Fund Holders: 52
Intra-Cellular Therapies, Inc. (NASDAQ: ITCI) develops drugs for neuropsychiatric and neurological disorders, focusing on schizophrenia, bipolar disorder, and major depressive disorder. The primary catalyst for ITCI’s growth is the continued success and expansion of CAPLYTA. Initially approved for schizophrenia, CAPLYTA received additional FDA approval for bipolar depression in late 2021. This expanded indication has significantly increased the drug’s potential market size and revenue opportunities.
Sharon Mates, the Chairman of the board of directors at Intra-Cellular Therapies, Inc. (NASDAQ: ITCI) said in the Q2 earnings call transcript:
“We are pleased to report our strong progress in Q2 in addition to CAPLYTA’s impressive growth trajectory. During the quarter, we announced robust positive results from our two Phase III clinical trials in major depressive disorder or MDD. These results form the basis for an expanded label for CAPLYTA and we are on track to submit a supplemental NDA for CAPLYTA for the adjunctive treatment of MDD later this year. In addition, we continue to advance our broad development pipeline which I will discuss later. We are very pleased with the company’s progress. Our vision has been to establish CAPLYTA as a first choice treatment across multiple depressive disorders and we are well on our way to achieving this goal.”
As of Q2 2024, around 52 hedge fund holders held stakes in the stock with VenBio Select Advisor being the largest stakeholder with 3,000,000 shares worth $205,470,000. The stock holds a Strong Buy rating based on 14 Wall Street Analysts. The average price target is $96.77, ranging from $74.00 to $130.00, indicating a 32.06% increase from the current price of $73.28.
Overall, Intra-Cellular Therapies ranks first among the 10 best mid-cap stocks to buy now. While we acknowledge the potential of mid-cap stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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