Top 10 AI In Healthcare Stocks In 2023

Top 10 AI In Healthcare Stocks In 2023

UPDATED Feb 24, 2024

Artificial intelligence is transforming most industries in one way or another - but perhaps the biggest impact could be on the healthcare industry.

Here are just a few examples of the way AI can be used to improve healthcare:

  • Models can be trained to process images from scans to identify likely signs of cancer or other diseases.
  • Finding patterns by analyzing large amounts of genetic data and using that to improve treatment outcomes for patients.
  • Combining data from multiple sources to provide intelligence.
  • Identifying inefficiencies in the way healthcare providers operate.
  • Automating tasks to free up time for patient care.

The recent COVID-19 pandemic and the subsequent shortage of healthcare workers has shown us how important it is to have adequate health care infrastructure. As the population continues to grow and as it grows older, we’ll be leaning on the healthcare sector more heavily and so AI in healthcare may not be a nice-to-have, it may be a necessity.

The AI led healthcare revolution is already well underway, and most companies are using artificial intelligence in one way or another. This list includes the companies that are really leveraging the power of big data, machine learning, and neural networks, to transform the industry.

It’s worth mentioning that most of the big technology companies are also building AI powered solutions for the healthcare industry. The list includes Microsoft, Nvidia, IBM, Oracle and Alphabet. However, for this collection we have focussed specifically on healthcare companies.

10 companies

Medtronic plc develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide.

Why MDT?

Integrating AI into the treatment of chronic neurological and cardiovascular conditions.

  • Medtronic PLC is a medical technology company that develops and manufactures a wide range of medical devices and therapies.
  • The company uses AI and machine learning to improve patient outcomes and reduce healthcare costs in a number of areas, including cardiac care, diabetes management, and spinal surgery.
  • In 2020, the company announced the launch of an AI-powered glucose management system for people with diabetes. The system uses machine learning algorithms to automatically adjust insulin delivery based on a patient’s glucose levels, helping to reduce the risk of hypoglycemia and hyperglycemia.
  • Medtronic has also developed an AI-powered software platform for spinal surgery planning and navigation. The platform uses machine learning algorithms to analyze patient imaging data and provide surgeons with real-time guidance during complex procedures.
  • Another example is Medtronic’s GI Genius™ intelligent endoscopy module that is used to identify pre-cancerous and cancerous colorectal polyps during a colonoscopy.
  • The company also uses AI to reduce false alerts from cardiac monitors, to detect lung nodules from images, and to manage surgical video libraries.
  • In terms of financial performance, Medtronic reported Q3 FY 2023 revenues of US$7.7B, a flat result on a reported basis but a slight organic increase from the prior year quarter owing to the increase in business for their Neuro, Cardiovascular and Diabetes portfolios outside of the us. These results were partially offset due to unfavourable sales metrics for COVID-19 ventilators. The company has a strong track record of growth and innovation, with a portfolio of over 90,000 patents and a presence in more than 150 countries worldwide.
  • Medtronic has recently invested in several AI healthcare start-ups such as Vicarious Surgical, a robotic surgical technology company, and Nutrino Health, a digital health platform that uses AI to personalize nutrition recommendations.

Rewards

  • Trading at 11.1% below our estimate of its fair value

  • Earnings are forecast to grow 10.41% per year

Risks

No risks detected for MDT from our risks checks.

View all Risks and Rewards

Illumina, Inc. offers sequencing- and array-based solutions for genetic and genomic analysis in the United States, Singapore, the United Kingdom, and internationally.

Why ILMN?

Utilising AI in the diagnosis of cancer.

  • Illumina Inc. is a biotechnology company that develops and develops and sells systems used for genetic and genomic analysis. Its customers include companies and institutions involved in medical research and development.
  • Genomic research plays an increasingly important role in medical research, particularly around preventative medicine. The field also involves analysis of massive datasets making AI tools essential.
  • The company uses AI and machine learning to analyze genetic data and provide insights into disease risk, diagnosis, and treatment.
  • In 2019 the company released SpliceAI, an open source system that interprets non-coding mutations in rare and undiagnosed diseases.
  • In 2020, Illumina announced the launch of its AI-powered platform, called the TruSight Software Suite, which uses machine learning algorithms to analyze genetic data and identify disease-causing mutations.
  • The company has also developed a number of AI-powered tools for cancer research, including a platform for analyzing single-cell gene expression data and a software program for predicting the efficacy of cancer treatments.
  • Turning to the full year financials, Illumina reported revenues of US$4.58B in revenue, up marginally from the previous financial year. This was follwoing some unfavourable results in the fourth quarter owing to difficult macroeconomic conditions. Earnings took a nosedive in FY2022, with the company reporting a per share loss of US$(28.00) on a fully diluted basis, this is compared to an earnings per of US$5.04 in fiscal year 2021. But it should be noted that a per share loss of US$(24.93) arose directly from goodwill impairment related to the Grail Segment. Looking forward to 2023, the company expects growth to resume and the company to post an earnings per share between US$0.03 and US$0.28 for the upcoming fiscal year.
  • Illumina has also been involved in several high-profile collaborations and acquisitions in the AI healthcare space, including an acquisition with Grail, a company developing a blood test for early cancer detection, and the acquisition of Enancio, an AI-powered drug discovery company.

Rewards

  • Trading at 47.5% below our estimate of its fair value

  • Earnings are forecast to grow 71.21% per year

Risks

No risks detected for ILMN from our risks checks.

View all Risks and Rewards

Lantheus Holdings, Inc. develops, manufactures, and commercializes diagnostic and therapeutic products that assist clinicians in the diagnosis and treatment of heart, cancer, and other diseases worldwide.

Why LNTH?

Using machine learning to improve treatment decisions in cancer patients.

  • Lantheus Holdings is a medical imaging company that develops and manufactures diagnostic imaging agents and radiopharmaceuticals. Its solutions are used to diagnose and treat cancers, heart and other diseases.
  • The company uses AI and machine learning to improve the accuracy and speed of medical imaging diagnoses and to develop new imaging agents and therapies.
  • In 2020, Lantheus announced a collaboration with AI healthtech company Ibex Medical Analytics to develop an AI-powered system for improving the accuracy of prostate cancer diagnoses. The system uses machine learning algorithms to analyze prostate tissue samples and provide pathologists with real-time insights to guide diagnosis and treatment decisions.
  • Lantheus has also developed an AI-powered cardiac imaging platform called PYLARIFY AI, which uses machine learning algorithms to improve the accuracy of echocardiography diagnoses and reduce the need for invasive diagnostic procedures.
  • The company has also obtained FDA clearance for an automated bone scan index. This process uses AI to automate the detection of hotspots in bone that may indicate metastatic disease.
  • Compared to other companies in this collection, Lantheus is in a period of rapid growth owing to it being still a maturing company. Full year 2022 results saw a 119.9% increase in revenue to US$935.1M, lead largely by the success of PYLARIFY - their PSMA PET imaging agent - and the expansion of their Radiopharmaceutical Oncology pipeline. Investors will be pleased to know that Lantheus posted full year free cash flow of US$263.4M compared to US$41.8M of the prior year, illustrating an ability to reinvest more capital into fast-tracking their growth.
  • Lantheus has also been involved in several recent acquisitions in the AI healthcare space, including the acquisition of Progenics Pharmaceuticals, a company developing AI-powered imaging agents for cancer diagnosis and treatment.

Rewards

  • Price-To-Earnings ratio (13.9x) is below the US market (16.5x)

  • Earnings are forecast to grow 14.56% per year

  • Earnings grew by 1063.9% over the past year

Risks

  • Large one-off items impacting financial results

  • Volatile share price over the past 3 months

View all Risks and Rewards

Stryker Corporation operates as a medical technology company.

Why SYK?

AI-powered surgical navigation platform providing surgeons with real-time feedback.

  • Stryker Corporation is a medical technology company that develops and manufactures a wide range of medical devices and equipment, including orthopedic implants, surgical instruments, and neurotechnology devices. The company primarily operates through two divisions. The first provides implants for hip and knee joints and spinal surgeries. The second develops and produces a vast portfolio of surgical equipment, surgical navigation systems and other medical equipment.
  • The company uses AI and machine learning to improve patient outcomes and efficiency in a number of areas, including surgical planning, medical imaging, and patient monitoring.
  • Stryker’s Blueprint platform combines AI with augmented reality to help surgeons visualize and plan procedures.
  • In 2020, Stryker announced the launch of its AI-powered surgical navigation platform, called the Mako System, which uses machine learning algorithms to provide surgeons with real-time guidance and feedback during joint replacement procedures.
  • Stryker has also developed an AI-powered platform for medical imaging analysis, called the iSuite, which uses machine learning algorithms to automatically analyze and classify medical images, such as X-rays and CT scans.
  • On the financial front, Stryker enjoyed a 7.8% increase in sales to US$18.4B for fiscal year 2022 compared to the previous fiscal year. Company-wide sales were lead largely by an 11.8% organic growth in sales for the MedSurg and Neurotechnology segment of the business. Despite a 15% decrease in net earnings reported in the final quarter, Stryker reported an 18.3% increase in earnings for the full year owning to improved margins.
  • Stryker has also been involved in several recent acquisitions in the AI healthcare space, including the acquisition of Mobius Imaging, a company developing AI-powered imaging and robotics technology for surgical procedures.

Rewards

  • Earnings are forecast to grow 11.97% per year

  • Earnings grew by 34.2% over the past year

Risks

  • Significant insider selling over the past 3 months

  • Has a high level of debt

View all Risks and Rewards

Intuitive Surgical, Inc. develops, manufactures, and markets products that enable physicians and healthcare providers to enhance the quality of and access to minimally invasive care in the United States and internationally.

Why ISRG?

AI-Powered robotic systems are revolutionizing minimally invasive surgery

  • Intuitive Surgical is a medical technology company that develops and manufactures robotic surgical systems, including the da Vinci Surgical System, which is used for minimally invasive surgeries.
  • The company uses AI and machine learning to improve the accuracy and efficiency of surgical procedures, as well as to develop new surgical applications and techniques.
  • In 2020, Intuitive Surgical announced the launch of its new AI-powered imaging and navigation platform, called the Ion Endoluminal System, which uses machine learning algorithms to help surgeons navigate the lungs during minimally invasive procedures such as biopsies.
  • Intuitive Surgical has also developed an AI-powered platform for surgical planning and simulation, called the da Vinci Skills Simulator, which uses machine learning algorithms to help surgeons train and improve their surgical skills.
  • Worldwide da Vinci procedures grew approximately 18% compared with the fourth quarter of 2021. The fourth quarter of 2022 reflected a resurgence in COVID-19 in China, which negatively impacted procedure volumes in the region. Intuitive continued to increase the reach of its technology as it grew its da Vinci Surgical System installed base to 7,544 systems as of December 31, 2022, an increase of 12% compared with 6,730 as of the end of the fourth quarter of 2021. The growth in the da Vinci surgical system has correlated to a 7% increase in quarterly sales compared to the same period last year, although earnings was down slightly in the fourth quarter following macroeconomic difficulties and the resurgence of COVID-19 impacting procedure volumes.
  • Intuitive Surgical has also been involved in several recent partnerships and collaborations in the AI healthcare space, including a collaboration with Microsoft to develop new surgical technologies using AI and cloud computing.
  • In 2020 Intuitive started a US$100M fund to invest in startups that combine AI and surgical robots to deliver minimally invasive care.

Rewards

  • Earnings are forecast to grow 11.81% per year

  • Earnings grew by 36% over the past year

Risks

No risks detected for ISRG from our risks checks.

View all Risks and Rewards

AstraZeneca PLC, a biopharmaceutical company, focuses on the discovery, development, manufacture, and commercialization of prescription medicines.

Why AZN?

Pharmaceutical giant using AI to accelerate drug discovery.

  • AstraZeneca is a multinational pharmaceutical company that develops and manufactures a wide range of prescription drugs, including treatments for cancer, respiratory diseases, and cardiovascular diseases.
  • The company uses AI and machine learning to accelerate drug discovery and development, as well as to improve the accuracy and efficacy of clinical trials.
  • In 2020, AstraZeneca announced a collaboration with BenevolentAI, an AI drug discovery company, to develop new treatments for chronic kidney disease using AI algorithms to analyze biological data and identify potential drug targets.
  • AI is particularly important to its genomic research. To this end it has developed JARVIS, a deep learning model that scans the genome’s noncoding regions for potentially troubling variations.
  • AstraZeneca has also developed an AI-powered platform for personalized cancer treatment, called the Oncology Artificial Intelligence (AI) platform, which uses machine learning algorithms to analyze patient data and develop personalized treatment plans.
  • AstraZeneca saw saw strong company-wide sales growth which culminated in a 25% increase in revenues to US$44.35B. Statutory EPS also increased handidily by 33% to US$6.66, however as the demand for COVID-19 related medicines declines into the near future, continued growth at these levels may not be easily accomplished. If AstraZeneca’s foray into AI drug discovery proves fruitful, we should expect to see rapid growth in their drug trial pipeline and lower research costs which will be beneficial for the company’s bottom line.
  • AstraZeneca has also been involved in several recent partnerships and collaborations in the AI healthcare space, including collaborations with companies such as Owkin, GNS Healthcare, and Berg Health to develop new AI-powered drug discovery and development tools.
  • With an R&D budget of nearly US$10B, the company has the potential to deliver many new innovations.

Rewards

  • Trading at 31.9% below our estimate of its fair value

  • Earnings are forecast to grow 16.65% per year

  • Earnings grew by 81.1% over the past year

Risks

  • Large one-off items impacting financial results

  • Has a high level of debt

View all Risks and Rewards

UiPath Inc. provides an end-to-end automation platform that offers a range of robotic process automation (RPA) solutions primarily in the United States, Romania, and Japan.

Why PATH?

AI company automating administrative processes in the healthcare sector.

  • UiPath is a software company that develops and provides a platform for robotic process automation (RPA), which uses AI and machine learning to automate routine business processes, such as data entry and customer service.
  • The company has expanded its platform to include AI-powered tools for healthcare, such as automating insurance claims processing and patient record management.
  • In 2021, UiPath announced the launch of its new healthcare-focused platform, which uses AI and RPA to streamline administrative tasks and improve patient care, including automating appointment scheduling and processing insurance claims.
  • UiPath has also developed an AI-powered platform for data extraction and processing, called the UiPath Document Understanding platform, which uses machine learning algorithms to extract and classify data from unstructured documents, such as medical records and insurance forms.
  • Its solutions are also used to find inefficiencies in the way healthcare providers store and process information. This is an often overlooked aspect of the healthcare industry and an opportunity for cost saving.
  • The company headlined its fourth quarter earnings report stating that it achieved 30% year-on-year growth in annual recurring revenue (ARR). UIPath also detailed its high net dollar retention rate of 123%, illustrating a sticky customer-base, which is key to solid fundamental growth into the future.
  • UiPath has also been involved in several recent partnerships and collaborations in the AI healthcare space, including partnerships with companies such as Olive and Molina Healthcare to develop new AI-powered solutions for healthcare automation and management.

Rewards

  • Revenue is forecast to grow 15.08% per year

  • Earnings have grown 15.6% per year over the past 5 years

Risks

  • Shareholders have been diluted in the past year

  • Volatile share price over the past 3 months

  • Currently unprofitable and not forecast to become profitable over the next 3 years

View all Risks and Rewards

CRISPR Therapeutics AG, a gene editing company, focuses on developing gene-based medicines for serious diseases using its Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)/CRISPR-associated protein 9 (Cas9) platform.

Why CRSP?

Leaning on AI to assist with identifying and editing specific sequences in the human genome.

  • CRISPR Therapeutics is a biotechnology company that specializes in gene editing technologies, particularly the CRISPR-Cas9 system, which uses AI and machine learning to identify and edit specific genes within the human genome.
  • The company is developing gene therapies for a wide range of genetic diseases, including sickle cell anemia and beta thalassemia, using its CRISPR-Cas9 technology.
  • In 2020, CRISPR Therapeutics announced the launch of its new AI-powered drug discovery platform, called the CRISPR AI Discovery Platform, which uses machine learning algorithms to identify new drug targets and develop more effective gene therapies.
  • CRISPR Therapeutics has also developed an AI-powered platform for gene editing, called the CRISPR Genome Editing Platform, which uses machine learning algorithms to optimize the CRISPR-Cas9 system for specific gene editing applications.
  • CRISPR Therapeutics has also been involved in several recent partnerships and collaborations in the AI healthcare space, including collaborations with companies such as Vertex Pharmaceuticals and ViaCyte to develop new gene therapies for genetic diseases using AI and machine learning.

Rewards

  • Trading at 55.4% below our estimate of its fair value

  • Revenue is forecast to grow 37.92% per year

Risks

  • Shareholders have been diluted in the past year

  • Currently unprofitable and not forecast to become profitable over the next 3 years

View all Risks and Rewards

Veeva Systems Inc. provides cloud-based software for the life sciences industry.

Why VEEV?

Automating the clinical trial process with machine learning.

  • Veeva Systems is a software company that specializes in cloud-based software solutions for the life sciences industry, including pharmaceutical, biotechnology, and medical device companies. Its solutions are used throughout the industry from relationship management to data storage, research and operations.
  • The company has developed a range of AI-powered software solutions for clinical trial management, including its Vault CTMS and Vault eTMF platforms, which use machine learning algorithms to automate and streamline clinical trial processes, such as site monitoring and data management.
  • Veeva Systems has also developed an AI-powered platform for pharma-covigilance, called the Veeva Vault Safety platform, which uses machine learning algorithms to identify and analyze adverse events in clinical trial data.
  • In 2021, Veeva Systems announced the launch of its new AI-powered platform for medical affairs, called the Veeva Medical AI, which uses natural language processing and machine learning algorithms to automate medical information requests and improve engagement with healthcare providers.
  • Veeva Systems has reported strong financial performance, with revenues of US$2.16B in fiscal year 2023, a 16% increase compared to the previous year. The company has a strong presence in the life sciences software market, with a customer base of over 1,000 companies worldwide.
  • Veeva Systems has also been involved in several recent partnerships and collaborations in the AI healthcare space, including collaborations with companies such as Accenture and Medidata to develop new AI-powered solutions for clinical trial management and data analytics.

Rewards

  • Trading at 10.5% below our estimate of its fair value

  • Earnings are forecast to grow 11.52% per year

  • Earnings grew by 43% over the past year

Risks

  • Shareholders have been diluted in the past year

View all Risks and Rewards

Butterfly Network, Inc. develops, manufactures, and commercializes ultrasound imaging solutions in the United States and internationally.

Why BFLY?

Using AI to conduct medical image analysis.

  • Butterfly Network is a medical technology company that specializes in developing handheld ultrasound devices and AI-powered software solutions for healthcare professionals.
  • The company has developed a range of portable ultrasound devices, including its flagship product, the Butterfly iQ, which uses AI and machine learning algorithms to provide high-quality imaging of internal organs and tissues.
  • Butterfly Network has also developed an AI-powered platform for medical imaging analysis, called the Butterfly Cloud, which uses deep learning algorithms to analyze ultrasound images and provide diagnostic insights to healthcare professionals.
  • The company has partnered with Caption Health to provide AI guided interpretation of ultrasound images. This allows healthcare professionals without sonography expertise to capture and interpret ultrasound images.
  • In 2021, Butterfly Network announced the launch of its new AI-powered platform for lung health, called the Butterfly Lung AI, which uses machine learning algorithms to analyze ultrasound images of the lungs and diagnose respiratory conditions such as COVID-19.
  • Butterfly Network has reported strong financial performance, with revenues of US$73.4M in fiscal year 2022, a significant increase compared to the previous year, helped due to to the commercial sales of its Butterfly iQ+ device and the introduction of its "Cloud 2.0" software which is intended to assist in workflow efficiency for its customers.
  • Butterfly Network has also been involved in several recent partnerships and collaborations in the AI healthcare space, including collaborations with companies such as Massachusetts General Hospital and TMCx to develop new AI-powered solutions for medical imaging and diagnosis.

Rewards

  • Revenue is forecast to grow 9.86% per year

Risks

  • Shareholders have been diluted in the past year

  • Significant insider selling over the past 3 months

  • Volatile share price over the past 3 months

  • Currently unprofitable and not forecast to become profitable over the next 3 years

View all Risks and Rewards

Simply Wall St analyst Richard Bowman and Simply Wall St have no position in any of the companies mentioned.

Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.