StockStory flags three healthcare names to avoid

StockStory identifies three healthcare stocks that investors should avoid due to regulatory risks and fundamental weaknesses, despite the sector outperforming the S&P 500 by 21.7 percentage points over the past six months. The healthcare industry has posted a 31.4% gain during this period, but the outlet cautions that heavy regulation can influence earnings potential for many businesses in the space.

Integra LifeSciences, a regenerative medicine pioneer founded in 1989, has a market capitalization of $1.05 billion. The company develops medical technologies for neurosurgery, wound care, and surgical reconstruction. StockStory flags concerns regarding Integra's organic revenue growth, which has fallen short of benchmarks over the past two years, suggesting a need to improve products, pricing, or go-to-market strategy. Over the last five years, incremental sales have been less profitable, with earnings per share declining by 4.6% annually. The company also carries a high net-debt-to-EBITDA ratio, which could force unfavorable capital raises if market conditions deteriorate. Integra LifeSciences trades at $13.53 per share, representing a forward P/E of 5.3x.

AMN Healthcare provides healthcare workforce solutions, including temporary staffing and technology platforms, with a market cap of $1.55 billion. The outlet notes that declining travelers on assignment over the past two years indicate soft demand, potentially requiring a strategic revision. Earnings per share have dipped by 7.6% annually over the past five years, a trend StockStory cites as concerning because stock prices typically follow EPS in the long term. Additionally, diminishing returns on capital suggest that earlier profit pools are drying up. AMN Healthcare Services trades at $38.72 per share, or 44.4x forward P/E.

Jazz Pharmaceuticals, headquartered in Ireland since a 2012 tax inversion merger, develops medicines for sleep disorders, epilepsy, and cancer. With a market cap of $13.92 billion, the company faces an estimated sales growth of 4.9% for the next 12 months, implying a slowdown from its two-year trend. Costs have risen faster than revenue over the last five years, causing adjusted operating margins to decline by 2.6 percentage points. Below-average returns on capital suggest management has had difficulty locating attractive investment targets. Jazz Pharmaceuticals is valued at $214.48 per share, equating to a forward P/E of 9.6x.