Cathie Wood is known for her investments in breakthrough technologies that are changing, or have the potential to change, the way things are done. She has developed a strong reputation as a stock picker whose goal is to beat the market over the long term by purchasing innovative companies that have the vision and the technology to achieve their goals. In many cases, the CEO of Ark Invest will even buy shares in a company when it is in the doldrums because she is confident in that company’s long-term prospects.
That’s currently the case with two healthcare stocks, and Wood bought shares in both stocks this week, adding to existing positions. I’m talking about the telemedicine guide Teladoc Health (NYSE:TDOC) and gene editing companies Intellia Therapeutics (NASDAQ:EXTERNAL).
Both stocks have fallen by double digits over the past year, but Wood still sees a bright future for these players. They are among the top 20 holdings of their flagship fund Ark Innovation and their health insurance Ark Genomic Revolution.
Teladoc Health
Teladoc shares have fallen 42% over the past year and are down more than 90% since their peak in 2021. The telemedicine company has a huge market position with an installed base of 90 million members, but has failed to capitalize on revenue growth.
Last year, however, the company began making progress toward its goal, reporting a 33% increase in full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to more than $328 million. This represents the company’s most profitable year ever. Teladoc has also shown that its chronic disease business is driving growth. This is critical because about half of Americans suffer from at least one chronic condition.
Last quarter, chronic care membership increased 14% year-over-year, and the company expects to deliver mid- to high-single-digit chronic care revenue growth in the coming years. Still, Teladoc’s tepid forecast for three years of total annual revenue growth in the low to mid-single digits disappointed investors who had become accustomed to Teladoc’s rapid growth in the earlier days of the pandemic.
But a new turning point may be at hand. Last week, Teladoc announced the departure of Chief Executive Officer Jason Gorevic, who will be replaced on an interim basis by Chief Financial Officer Mala Murthy. If Murthy, or eventually a new permanent CEO, helps the company reach its profitability goals, the shares, now trading at their lowest ever as a percentage of sales, could soar.
Intellia Therapeutics
Intellia is developing candidates in the exciting field of CRISPR gene editing. This involves cutting DNA at a specific location to carry out a repair process to fix faulty genes that are responsible for a disease.
The company doesn’t have any products on the market yet, but it’s getting close to that goal. Its two main programs, gene editing candidates for transthyretin amyloidosis with cardiomyopathy (ATTR) and hereditary angioedema (HAE), are involved in pivotal studies. Intellia’s goals include completing recruitment for these studies over the next three years and seeking regulatory approval of the HAE candidate in 2026.
If Intellia’s candidates make it to the finish line, they could attract both doctors and patients, as there are limited treatment options for both of these diseases today. ATTR is caused by the buildup of a misfolded protein and affects various organs, while HAE causes unpredictable and extreme swelling.
Over the next three years, Intellia also plans to launch a new wave of programming and deploy new editing and delivery technologies. There are still many catalysts ahead for this innovative company.
Today is a great time to move toward the finish line in gene editing. Regulators recently approved the world’s first CRISPR-based product – CRISPR therapeutics“Blood disease treatment Casgevy – shows they are willing to embrace the technology if data shows safety and effectiveness. This is a great sign for Intellia – and its investors – as the company advances its late-stage candidates and moves closer to commercialization and potential revenue.
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends CRISPR Therapeutics, Intellia Therapeutics, and Teladoc Health. The Motley Fool has a disclosure policy.
Cathie Wood goes bargain hunting. 2 stocks she bought this week. was originally published by The Motley Fool