Starting from healthcare resource management to efficient handling of medical records and patient data, the Medical Info Systems industry is rapidly expanding its boundaries with each passing day. Added to this is the latest GenAI wave, which has significantly accelerated the acceptance and usage of advanced digital healthcare and telemedicine on a global scale.
The year 2025 is expected to witness a significant expansion of the Medical Info Systems space, influenced by several new federal policies and regulatory supports. Particularly, Donald Trump's newly announced $500 billion Stargate project aims to revolutionize AI infrastructure in the United States, with significant implications for the digital healthcare sector.
Per a Business Research Company report, the use of AI in the medical device market is expected to witness a CAGR of 29.9% during 2026-2029. The market’s growth will be propelled by a patient-centric approach, increasing healthcare expenditure, regulatory support, enhanced clinical decision support and AI in disease prediction and prevention.
The growing demand for all kinds of digital healthcare support has created a unique opportunity for companies like Enovis, Omnicell and Phreesia. However, the healthcare system’s excessive dependence on IT comes with its share of risks. Any data disruption in the cloud-based service might result in a massive loss of information, thereby leading to a breakdown of the system.
Industry Description
The Zacks Medical Info Systems industry comprises companies that develop and market healthcare information systems. These companies offer software and hardware solutions to healthcare providers with secure access to real-time clinical, administrative and financial data in a time-efficient manner.
Focus on patient satisfaction, security of patient data and administrative cost control has increased the need for big data, 3D printing, blockchain and AI. Industry players like Omnicell and Allscripts are raking in millions from the sale of software and related hardware, professional services and IT outsourcing services, and recurring service contracts for software maintenance and transaction processing services.
3 Trends Shaping the Future of the Medical Information Industry
AI and Health: The medical sector is one of the major adopters of AI, which is currently being used to synthesize new compounds for drugs and create devices for more precise measurement and faster and more accurate diagnosis. Starting from generative AI to surgical robotics, one common application of these has been in diagnostic settings, where it quickly and precisely detects image abnormalities that might be challenging for the human eye to spot.
Electronic health records, electronic medical records, predictive analytics and real-time alerting have been gaining prominence. Trump 2.0’s new $500-billion Stargate project to fund infrastructure for artificial intelligence is expected to further enhance the medical information systems space by supporting the maintenance and analysis of electronic health records, enabling better data management and interoperability among healthcare providers.
Going by a Pragma Market Research report, by 2025, the global AI in healthcare market is projected to reach $95.65 billion. AI-powered tools are enhancing diagnostics, with solutions like Google's DeepMind Health achieving higher accuracy in detecting conditions such as breast cancer. Wearable devices, such as Medtronic's AI-enabled glucose monitors and Apple's advanced health metric trackers, are empowering continuous patient monitoring and preventive care.
Growing Demand for Remote Healthcare: Within the medical information systems space, remote patient monitoring segments continue to grow at a fast rate, courtesy of the rapid increase in usage of wearable devices and telehealth services. The major driver behind this growth is the increasing awareness about the usefulness of continuous patient monitoring devices. This has proved to be a game-changer in increasing the standard and efficiency of medical care.
Further, health tech products are also accelerating the diagnosis process and automating hospital workflows through robotics, AI-driven chatbots and so on. Going by a Custom Market Insights report, the global smart healthcare products market was valued at $145.9 billion in 2023 and is expected to reach $485.71 billion by 2032, at a CAGR of 12.78%.
Rising Instances of Cyber Attacks: As healthcare becomes more wired and interconnected, cybersecurity is the primary concern of hospitals. In fact, security flaws are being increasingly found in electronic medical device operating systems or other devices like ECG machines, imaging scanners, infusion pumps and telemetry systems.
Indeed, the pandemic has resulted in growing cyber dependency, which has made the space vulnerable to cyber-attacks. Between October and December 2023, Henry Schein became the victim of consecutive cyberattacks. Further, in February 2024, Change Healthcare — a unit of UnitedHealth Group — was impacted by a cybersecurity incident.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medicalsector. It carries a Zacks Industry Rank #51, which places it in the top 20% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
We will present a few stocks with the potential to outperform the market based on a strong earnings outlook. However, it’s worth considering the industry’s shareholder returns and current valuation first.
Industry Underperforms S&P 500 and Sector
The industry has underperformed the Zacks S&P 500 composite as well as the sector over the past year.
The industry has lost 6.6% in the past year compared with the Zacks Medical sector’s decline of 4.4%. The S&P 500 has risen 25.3% in the said time frame.
Industry's Current Valuation
On the basis of forward 12-month price-to-sales (P/S), which is commonly used for valuing medical stocks, the industry is currently trading at 5.63X compared with the S&P 500’s 5.51X and the sector’s 2.86X.
Over the last five years, the industry has traded as high as 14.47X, as low as 3.05X, and at the median of 5.32X.
3 Medical Info Systems Stocks to Bet On
Enovis is a medical technology company that manufactures and distributes medical devices used for reconstructive surgery, rehabilitation, pain management and physical therapy. The company operates through Prevention and Recovery, and Reconstructive segments.
Enovis currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2024 earnings indicates a 16.3% improvement from the 2023 level. For 2025, the company is expected to report earnings growth of 14.3%.
Omnicell develops and markets end-to-end automation solutions for the medication-use process. Omnicell is positioning itself for long-term growth by addressing the healthcare challenges with enhanced medication management solutions. The introduction of the XT Amplify program is advancing the company’s goal of delivering outcome-centric innovations after it gained market traction with its initial offerings. In terms of its financial roadmap, Omnicell is targeting to reach $1.9 billion-$2 billion of revenues by 2025, representing a CAGR of 14%-15% in the 2021-2025 period.
Omnicell currently holds a Zacks Rank #2. The Zacks Consensus Estimate for 2025 earnings indicates 6.1% growth from the 2024 projected level. For 2025, the company is expected to report revenue growth of 2.9%.
Preesia provides an integrated SaaS-based software and payment platform for the healthcare industry in the United States and Canada. Phreesia enabled approximately 150 million patient visits in 2023, more than 1 in 10 visits across the United States. PHR currently carries a Zacks Rank #2.
You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
The Zacks Consensus Estimate for 2024 earnings indicates a stupendous 56.2% improvement from the 2023 level. For the same period, the company is expected to report sales growth of 17.6%.
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