3 High-Growth, Low-Debt Healthcare MicroCaps

Includes: INMD, RTIX, WINT
by: ZetaKap

Healthcare companies have to be flexible and adaptive to incorporate new research and innovation if they want to remain competitive. To find healthcare stocks that are on the cutting edge, we looked today specifically for those with impressive EPS growth projections. Our short list of healthcare stocks includes those that are slated for rapid growth in the next year. In addition, we wanted to make sure that the companies we looked at today will grow without taking on lots of debt, which could cut into their future profit margins. We these ideas together, we came up with a rather intriguing list of healthcare companies to consider.

The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.

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 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.

We first looked for healthcare stocks. We then looked for businesses that have maintained a sound capital structure (D/E Ratio<.1). We then screened for businesses that operate with little to no long term debt (Long Term D/E Ratio<.1). We next screened for businesses with estimated high-growth, with 1-year projected EPS growth above 25%. We did not screen out any market caps.

Do you think these stocks have what it takes to grow? Please use our list to assist with your own analysis.

1) Discovery Laboratories Inc. (DSCO)

Sector Healthcare
Industry Biotechnology
Market Cap $110.77M
Beta 0.99

DSCO stock chart

Key Metrics

Debt/Equity Ratio 0.03
Long Term Debt/Equity Ratio 0.02
1-Year Projected Earnings Per Share Growth Rate 56.40%
Short Interest 6.41%

Discovery Laboratories, Inc., a biotechnology company, focuses on developing products for the treatment of respiratory disease. The company's product pipeline includes Surfaxin, a synthetic, peptide-containing surfactant that has completed Phase-III pivotal trial for the prevention of respiratory distress syndrome (RDS) in premature infants; Surfaxin LS, a lyophilized dosage form of Surfaxin in Phase-III clinical trials, which enhances ease of use for healthcare practitioners; and AEROSURF, a drug-device combination product that has completed first pilot Phase II clinical study of aerosolized KL4 surfactant for the prevention of RDS in premature infants. It has license agreements with Philip Morris USA Inc.; Philip Morris Products S.A.; Johnson & Johnson; and Ortho Pharmaceutical Corporation for its capillary aerosolization and KL4 surfactant technologies. The company also has a strategic alliance with Laboratorios del Dr. Esteve, S.A. for the development, marketing, and sale of a portfolio of potential KL4 surfactant products in Andorra, Greece, Italy, Portugal, and Spain. Discovery Laboratories, Inc. was founded in 1992 and is headquartered in Warrington, Pennsylvania.

2) RTI Biologics, Inc. (NASDAQ:RTIX)

Sector Healthcare
Industry Medical Appliances & Equipment
Market Cap $213.50M
Beta 1.49

RTIX stock chart

Key Metrics

Debt/Equity Ratio 0.01
Long Term Debt/Equity Ratio 0.01
1-Year Projected Earnings Per Share Growth Rate 46.67%
Short Interest 3.91%

RTI Biologics, Inc., together with its subsidiaries, produces orthopedic and other surgical implants that repair and promote the natural healing of human bone and other human tissues. The company processes donated human musculoskeletal and other tissues, including bone, cartilage, tendon, ligament, fascia lata, pericardium, sclera, and dermal tissues, as well as bovine animal tissues to produce allograft and xenograft implants by utilizing its proprietary BIOCLEANSE and TUTOPLAST sterilization processes. It processes and distributes human and bovine animal tissues for use in the fields of sports medicine, spine, dental, surgical specialties, bone graft substitutes, and general orthopedic. RTI Biologics, Inc. markets its products through its direct distribution force, as well as through a network of independent distributors to hospitals and surgeons in the United States and 30 countries internationally. The company was formerly known as Regeneration Technologies, Inc. and changed its name to RTI Biologics, Inc. as a result of its merger with Tutogen Medical, Inc. in February 2008. RTI Biologics, Inc. was founded in 1997 and is headquartered in Alachua, Florida.

3) Integramed America Inc. (NASDAQ:INMD)

Sector Healthcare
Industry Medical Practitioners
Market Cap $167.62M
Beta 0.81

INMD stock chart

Key Metrics

Debt/Equity Ratio 0.10
Long Term Debt/Equity Ratio 0.00
1-Year Projected Earnings Per Share Growth Rate 37.74%
Short Interest 3.62%

IntegraMed America, Inc., a specialty healthcare services company, provides products and services to patients and providers in the fertility and vein care segments of healthcare industry in the United States. It offers business and management services to fertility centers and vein clinics in the areas of finance, accounting, human resources, risk management, and legal and purchasing support; marketing and sales support; internet marketing and website support; access to integrated information systems; non-physician personnel; and access to capital for financing clinic operations and expansion, as well as physician recruiting and training, regional management, revenue cycle management, and new practice development services to the vein clinics. The company provides its business and management services to a network of 15 contracted fertility centers in its partner program; and a network of 45 vein clinics located in 14 states, which offers specialized treatment for patients suffering from vein diseases and other vein disorders. IntegraMed America, Inc. also offers its Attain IVF products to its 15 contracted fertility centers and 24 affiliate fertility centers in 34 states and the District of Columbia, which are designed for fertility patients to attain their goal of starting a family. The company was founded in 1985 and is headquartered in Purchase, New York.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/23/2012.

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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