5 Low-Debt Healthcare Stocks Positioned For Growth

by: ZetaKap

Healthcare companies have to be flexible and adaptive to incorporate new research and innovation to remain competitive. Taking on debt to fund those endeavors may be necessary to keep pace. At a certain point, debt can hamper growth. When a company has a low amount of debt, it has more freedom to spend on strategic alliances and product development. With this in mind we searched for healthcare stocks that have the right ingredients to foster growth: little long term debt and EPS growth rates of 25% over the next five years. If healthcare stocks with these traits speak to you, then you will like our list below.

The long-term debt/equity ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.

EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 5-Year Expected EPS growth rate is a long term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.

We first looked for healthcare stocks. From here, we looked for companies that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). We then looked for businesses that are considered high-growth, with 5-year projected EPS growth above 25%. We did not screen out any market caps.

Do you think these stocks are undervalued? Use our list along with your own analysis.

1) PhotoMedex, Inc (NASDAQ:PHMD)

Sector Healthcare
Industry Medical Appliances & Equipment
Market Cap $262.56M
Beta 0.24

PHMD stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
5-Year Projected Earnings Per Share Growth Rate 30.00%
Short Interest 34.20%

PhotoMedex, Inc., together with its subsidiaries, provides integrated disease management and aesthetic solutions to dermatologists, professional aestheticians, and consumers. The company provides no!no! hair removal products; professional products, including capital equipment to physicians and skin care specialists; XTRAC laser products for the treatment of psoriasis and vitiligo; NEOVA formulations for premature skin aging due to UV-induced DNA damage; Omnilux Light-emitting diode (LED) systems to treat wrinkles, acne, minor muscle pain, and pigmented lesions; Lumire light therapy equipment, a non-invasive skin care solution for use in non-medical applications primarily salons and spas; and topical lotions to improve the appearance of fine lines, wrinkles, skin tone, and blemishes.

It also provides home-use devices under the no!no! brand for various indications, including hair removal, acne treatment, and skin rejuvenation; and a professional product line for acne clearance, skin tightening, psoriasis care, and hair removal to physician clinics and spas. In addition, the company engages in the development, manufacture, and sale of surgical products, including proprietary free-beam and Contact Laser Systems for surgery. Further, it sells surgical disposables and accessories to hospitals and surgery centers; and repairs, maintains, and provides replacement parts for the company's products. PhotoMedex, Inc. was founded in 1998 and is headquartered in Montgomeryville, Pennsylvania.

2) GenMark Diagnostics, Inc. (NASDAQ:GNMK)

Sector Healthcare
Industry Medical Appliances & Equipment
Market Cap $229.44M
Beta -

GNMK stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
5-Year Projected Earnings Per Share Growth Rate 30.00%
Short Interest 0.45%

GenMark Diagnostics, Inc., a molecular diagnostics company, focuses on the development and commercialization of molecular diagnostic testing systems based on its proprietary eSensor detection technology in the United States. The company develops XT-8 system, an automated molecular diagnostic system consisting of a compact bench-top workstation and self-contained disposable test cartridges enabling reference laboratories and hospitals to perform a range of molecular diagnostic tests.

It also offers 6 diagnostic tests for use with its XT-8 system that include Cystic Fibrosis Genotyping Test, which detects a panel of mutations associated with cystic fibrosis; Warfarin Sensitivity Test that determines an individual's ability to metabolize the oral anticoagulant warfarin; Thrombophilia Risk Test, which detects an individual's increased risk of blood clots; Respiratory Viral Panel Test that covers approximately 20 viruses, including influenza A, influenza B, respiratory syncytial virus, and various other upper respiratory viruses; 2C19 Genotyping Test, which is used for the detection and genotyping of various alleles of the cytochrome P450 (CYP450) 2C19 gene locus; and Hepatitis C Virus Genotyping Test, a test for the detection and typing/subtyping of HCV.

In addition, the company engages in developing a NexGen system by integrating automated nucleic acid extraction and amplification capabilities with its eSensor detection technology to enable technicians to place a patient sample into test cartridge and obtain results without any additional steps. Genmark Diagnostics, Inc. is headquartered in Carlsbad, California.

3) Abiomed Inc. (NASDAQ:ABMD)

Sector Healthcare
Industry Medical Appliances & Equipment
Market Cap $844.36M
Beta 1.25

ABMD stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
5-Year Projected Earnings Per Share Growth Rate 35.20%
Short Interest 19.38%

ABIOMED, Inc. provides medical devices in circulatory support and continuum of care in heart recovery to acute heart failure patients. The company's products are designed to enable the heart to rest, heal, and recover by enhancing blood flow and/or performing the pumping function of the heart. Its products consist of Impella 2.5 catheter, a percutaneous micro heart pump with an integrated motor and sensors for use in interventional cardiology; and Impella 5.0 catheter and Impella LD, which are percutaneous micro heart pumps with integrated motors and sensors for use primarily in the heart surgery suite.

The company also manufactures and sells the AB5000 Circulatory Support System and the BVS 5000 Biventricular Support System for the temporary support of acute heart failure patients in profound shock, including patients suffering from cardiogenic shock after a heart attack, post-cardiotomy cardiogenic shock, or myocarditis. Its products are used in the cardiac catheterization lab by interventional cardiologists and/or in the heart surgery suite by heart surgeons for patients who are in need of hemodynamic support prophylactically or emergently before, during, or after angioplasty or heart surgery procedures. The company sells its products through direct sales and clinical support personnel in the United States, Canada, Germany, France, the United Kingdom, and internationally. ABIOMED, Inc. was founded in 1981 and is based in Danvers, Massachusetts.

4) BioMimetic Therapeutics Inc. (NASDAQ:BMTI)

Sector Healthcare
Industry Medical Instruments & Supplies
Market Cap $101.87M
Beta 0.90

BMTI stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
5-Year Projected Earnings Per Share Growth Rate 35.00%
Short Interest 1.65%

BioMimetic Therapeutics, Inc., a biotechnology company, engages in the development and commercialization of regenerative protein therapeutic products primarily used for bone and tissue regeneration, repair and healing of musculoskeletal injuries, and conditions affecting bones, tendons, ligaments, and cartilage. The company's orthopedic products include Augment Bone Graft for open fracture and fusion treatment; and Augment Injectable Bone Graft for open or closed fracture treatment and minimally invasive fracture/fusion treatment.

Its products also comprise Augment Rotator Cuff Graft for rotator cuff tendon to bone repair; Augment OCD for cartilage and bone repair; TBD for the treatment of injuries due to tendon overuse; and Augment Bone Graft for spine fusion. The company was formerly known as BioMimetic Pharmaceuticals, Inc. and changed its name to BioMimetic Therapeutics, Inc. in July 2005. BioMimetic Therapeutics, Inc. was founded in 1999 and is headquartered in Franklin, Tennessee.

5) Auxilium Pharmaceuticals Inc. (NASDAQ:AUXL)

Sector Healthcare
Industry Drug Related Products
Market Cap $1.15B
Beta 0.77

AUXL stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
5-Year Projected Earnings Per Share Growth Rate 30.00%
Short Interest 7.71%

Auxilium Pharmaceuticals, Inc., a specialty biopharmaceutical company, together with its subsidiaries, engages in developing and marketing pharmaceutical products primarily in the United States. It markets Testim, a testosterone gel for the treatment of hypogonadism; and XIAFLEX (collagenase clostridium histolyticum), an injectable collagenase enzyme for the treatment of Dupuytren's contracture in adult patients with a palpable cord.

The company is also developing XIAFLEX, which is in Phase III clinical trial for the treatment of Peyronie's disease, in Phase IIa clinical trial for the treatment of Adhesive Capsulitis (frozen shoulder syndrome), and in Phase Ib clinical trial for the treatment of edematous fibrosclerotic panniculopathy indications. In addition, it has rights to pursue various other indications for XIAFLEX. The company sells its products to wholesale drug distributors, specialty pharmacies, specialty distributors, and chain drug stores. Auxilium Pharmaceuticals, Inc. was founded in 1999 and is headquartered in Malvern, Pennsylvania.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on August 23, 2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.

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