Personal health and wellness is one of the many secular tailwinds for healthcare companies. But financial performance has lagged recently as players offloaded surplus COVID inventories in 2023 and 2024, a headwind for overall demand. The result? Over the past six months, the industry’s 11.6% return has trailed the S&P 500 by 4.7 percentage points.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Taking that into account, here is one healthcare stock boasting a durable advantage and two we’re steering clear of.
Two Healthcare Stocks to Sell:
AdaptHealth (AHCO)
Market Cap: $1.24 billion
With a network of approximately 680 locations serving patients across all 50 states, AdaptHealth (NASDAQ:AHCO) provides home medical equipment, supplies, and related services to patients with chronic conditions like sleep apnea, diabetes, and respiratory disorders.
Why Are We Cautious About AHCO?
- Annual revenue growth of 2.1% over the last two years was below our standards for the healthcare sector
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 1.3% annually
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam
At $9.46 per share, AdaptHealth trades at 10.8x forward P/E. Read our free research report to see why you should think twice about including AHCO in your portfolio.
Fortrea (FTRE)
Market Cap: $944.3 million
Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ:FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.
Why Should You Dump FTRE?
- Sales tumbled by 2.6% annually over the last four years, showing market trends are working against its favor during this cycle
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Fortrea is trading at $10.19 per share, or 17.5x forward P/E. To fully understand why you should be careful with FTRE, check out our full research report (it’s free for active Edge members).
One Healthcare Stock to Watch:
Hims & Hers Health (HIMS)
Market Cap: $8.21 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 Watch HIMS?
- Average customer growth of 38.9% over the past two years demonstrates success in acquiring new clients that could increase their spending in the future
- Free cash flow margin grew by 21.3 percentage points over the last five years, giving the company more chips to play with
- Improving returns on capital suggest its past investments are beginning to deliver value
Hims & Hers Health’s stock price of $35.99 implies a valuation ratio of 32.3x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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