1 Healthcare Stock for Long-Term Investors and 2 Facing Challenges

From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. Shareholders who bet on the industry have been rewarded lately as healthcare stocks have returned 27.5% over the past six months, topping the S&P 500 by 16.2 percentage points.

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. With that said, here is one healthcare stock boasting a durable advantage and two that may face trouble.

Two Healthcare Stocks to Sell:

Solventum (SOLV)

Market Cap: $14.95 billion

Founded in 1985, Solventum (NYSE:SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs.

Why Are We Cautious About SOLV?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 18.2 percentage points

At $87.33 per share, Solventum trades at 12.9x forward P/E. If you’re considering SOLV for your portfolio, see our FREE research report to learn more.

Inspire Medical Systems (INSP)

Market Cap: $1.78 billion

Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE:INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.

Why Are We Hesitant About INSP?

1. Smaller revenue base of $898.7 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
2. Forecasted revenue decline of 3.5% for the upcoming 12 months implies demand will fall off a cliff

Inspire Medical Systems is trading at $61.75 per share, or 42.3x forward P/E. To fully understand why you should be careful with INSP, check out our full research report (it’s free).

One Healthcare Stock to Watch:

BrightSpring Health Services (BTSG)

Market Cap: $12.36 billion

Founded in 1974, BrightSpring Health Services (NASDAQ:BTSG) offers home health care, hospice, neuro-rehabilitation, and pharmacy services.

Why Does BTSG Stand Out?

1. Impressive 23.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Economies of scale give it some operating leverage when demand rises
3. Forecasted revenue growth of 14.1% for the next 12 months indicates its momentum over the last two years is sustainable

BrightSpring Health Services’s stock price of $59.15 implies a valuation ratio of 29.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

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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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.