SPECIAL REPORT The Top 7 Stocks for 2024

Ticking Time Bombs: 3 Healthcare Stocks to Dump Before the Damage Is Done


  • These healthcare companies are a strong sell
  • Centene Corp(CNC): The company is experiencing layoffs and having a difficult time competing in the competitive healthcare industry
  • iBio Inc(IBIO): The company is far from getting drug approval and is struggling financially
  • Cosmos Health Inc(COSM): The company shows weak growth prospects and is unprofitable
healthcare stocks - Ticking Time Bombs: 3 Healthcare Stocks to Dump Before the Damage Is Done

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The healthcare industry has historically provided significant returns to investors. And, it is currently boasting a compounding annual growth rate prediction of 10.4% until 2027. Despite having many extremely profitable companies that see a surge in stock price, there are also many healthcare stocks that plummet. This is because many healthcare companies rely on trials which need to be approved by the U.S. Food and Drug Administration, making their performance difficult to predict.

Many healthcare stocks see massive declines when their trials fail or their treatments do not get approved. It takes great care to invest in the industry, be sure to avoid these healthcare stocks to sell.

Centene Corp (CNC)

Image of a hospital with workers walking in the halls
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Centene (NYSE:CNC) is the largest American Medicaid managed care organization. It serves as an intermediary between private and government-sponsored healthcare insurance programs. On September 26th, Centene announced the company will lay off 2,000 employees in order to cut down on its costs. A large chunk of the layoffs are anticipated to occur in the next few weeks.

Just last month, Centene signed a major deal with PureHealth, a large healthcare network in the Middle East. The deal has Centene selling Circle Health Group, one of the largest British hospital operators, for $1.2 billion. 

While the company’s recent move to withdraw from the European market can be seen as an effort to focus on the domestic market and provide more health benefits through government programs, the company is facing increased competition in the industry. Furthermore, there is also a potential loss of insured lives if Medicaid eligibility gets redetermined. 

iBio Inc (IBIO)

Scientists in a lab
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iBio (NYSEA:IBIO) is an American pharmaceutical company which specializes in biotherapeutic drugs. Its’ lead drug candidates include a vaccine that treats swine fever and an immuno-oncology drug which treats cancer. However, iBio is extremely far from a fully approved product that will generate consistent profit. None of iBio’s nine current drug candidates are currently in clinical trials, with most in the early discovery stage, which bodes poorly for the future of the company.

In the past six months, iBio’s stock has fallen from over $2 a share to 30 cents. In some cases that would be the signal of a good opportunity to buy. However, it is unlikely to rise in the future given its poor financials, with $50.3 million lost in net profit in fiscal year 2022, and its lackluster remaining asset reserves of $39.5 million. Coupled with the fact that it lacks an innovative drug which will enter the market in the next couple of years, iBio’s stock won’t be a good bet to perform well in the short or long-term. The company is likely heading towards bankruptcy.

Cosmos Health Inc (COSM)

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Cosmos Health (NASDAQ:COSM) is a healthcare corporation primarily focused on the sale of nutraceuticals, naturally sourced nutrition supplements. They currently own two different brands, Sky Premium Life and Mediterranation, which sell vitamin and mineral supplements. Cosmos Health has recently generated headlines for expanding its operations by planning to launch a publicly listed biotech company. However, Cosmos Health’s stock and intrinsic company value both show red flags which should prevent investors from buying into COSM, and selling already owned stocks.

For one, revenue and earnings are unlikely to grow in the near future, as Cosmos Health has shown a consistent trend of less than favorable financial statements. Over the past five years, Cosmos Health has been consistently unprofitable. Investors may look at Cosmos Health favorably due to its exceptional price to sales ratio of 0.4, an anomaly in the healthcare industry. However, given the company’s fundamental flaws, and its tendency to be extremely volatile in the stock market, it should be considered as one of the health care stocks to be avoided and shares currently held should be sold.

On the date of publication, Tomas Levani did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Article printed from InvestorPlace Media, https://investorplace.com/2023/09/ticking-time-bombs-3-healthcare-stocks-to-dump-before-the-damage-is-done/.

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