From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. Those leading the charge have not only realized strong financial performance but also propelled the broader industry’s returns as healthcare stocks have gained 32% over the past six months while the S&P 500 was up 14.3%.
Although these businesses have produced results, only a handful will thrive over the long term as the influx of venture capital has ushered in a new wave of competition. Keeping that in mind, here is one resilient healthcare stock at the top of our wish list and two we’re passing on.
Two Healthcare Stocks to Sell:
Supernus Pharmaceuticals (SUPN)
Market Cap: $2.45 billion
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ: SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Why Are We Bearish on SUPN?
- 6.5% annual revenue growth over the last five years was slower than its healthcare peers
- Subscale operations are evident in its revenue base of $822.8 million, meaning it has fewer distribution channels than its larger rivals
- Free cash flow margin shrank by 16.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Supernus Pharmaceuticals’s stock price of $41.80 implies a valuation ratio of 2.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SUPN.
Elanco (ELAN)
Market Cap: $11.26 billion
Originally established as a division of pharmaceutical giant Eli Lilly before becoming independent in 2018, Elanco Animal Health (NYSE: ELAN) develops and sells medications, vaccines, and other health products for pets and farm animals across more than 90 countries.
Why Are We Wary of ELAN?
- Annual revenue growth of 2% over the last five years was below our standards for the healthcare sector
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 3.5 percentage points
- Negative returns on capital show that some of its growth strategies have backfired
Elanco is trading at $22.52 per share, or 18.6x forward P/E. Check out our free in-depth research report to learn more about why ELAN doesn’t pass our bar.
One Healthcare Stock to Watch:
Hims & Hers Health (HIMS)
Market Cap: $6.55 billion
Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE: HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.
Why Do We Like HIMS?
- Customer trends over the past two years show it’s maintaining a steady flow of new contracts that can potentially increase in value over time
- Free cash flow margin expanded by 15.9 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Improving returns on capital suggest its past investments are beginning to deliver value
At $28.09 per share, Hims & Hers Health trades at 23.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
