In this article, we look at the 9 Best Healthcare Penny Stocks to Buy According to Hedge Funds.
Volatility in the equity market has been on another level in the first quarter of the year. While the S&P 500 started the year on a roll, powering to record highs, it pulled back, plunging into correction territory before bouncing back.
The heightened volatility has come amid growing concerns over high valuations, economic growth uncertainty amid the Middle East conflict, and renewed inflationary pressures from a spike in energy prices. Likewise, there has been a rotation away from large-cap tech stocks after years of blockbuster gains.
According to Oppenheimer chief investment strategist John Stoltzfus, what we are seeing in the equity market is a broadening of a playbook.
“What we’re seeing is a rotation, and it’s not necessarily away from technology, as we would think,” he added. “It’s some profit taking to broaden one’s exposure and diversification.”
On the other hand the healthcare sector has been a big disappointment, failing to capitalize on the renewed focus on defensive plays and a rotation away from stocks trading at historical norms. The S&P 500 healthcare sector is already down about 4% for the year, underperforming the broader S&P 500, which is flat.
The sector’s underperformance over the past three years has been shaped by several headwinds, including Covid-19 digestion weighing on earnings growth and policy overhangs compressing valuations. Nevertheless, analysts at JPMorgan believe the sector’s outlook is slowly changing as policy overhang eases.
“Historically over the past 30 years, healthcare has outpaced the broader market in earnings growth. In the last five years, however, the sector has shifted to underperforming the market in terms of earnings growth. The recent stabilization in earnings and guidance from industry leaders suggest the worst may be behind us,” JPMorgan in a research note.
A pickup in merger and acquisition activity is another factor strengthening prospects in the healthcare sector, as companies seek to sustain and grow their revenue pipelines.
While the overall equity market remains under pressure, healthcare penny stocks trading at highly discounted valuations could offer a way out of the current dilemma.
With that in mind, let’s take a look at some of the best healthcare penny stocks to buy according to hedge funds.
Our Methodology
To compile a list of the best healthcare penny stocks to buy according to hedge funds, we used the Finviz screener to scan for healthcare stocks trading for less than $5 a share and with a market cap of more than $500M. We then shortlisted stocks with an upside potential of more than 30% and that are popular among elite hedge funds in Q4 2025. Finally, we ranked the stocks in ascending order by upside potential as of April 12.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Best Healthcare Penny Stocks to Buy According to Hedge Funds
9. Clover Health Investments, Corp. (NASDAQ:CLOV)
Stock Upside Potential: 55.21%
Number of Hedge Fund Holders: 16
Clover Health Investments, Corp. (NASDAQ:CLOV) is one of the best healthcare penny stocks to buy according to hedge funds. On April 7, Clover Health Investments Corp entered into a strategic partnership with HealthEX.
The partnership paves the way for Clover Medicare Advantage members to securely access and share clinical records and claims data. It also enables patients to advance their rights to access and share their own health data, aligning with Federal interoperability efforts. The strategic partnership builds on recent interoperability with Kno2 and extends member access through infrastructure powered by Counterpart Health.
At the Leerink Global Healthcare Conference 2026, Clover Health affirmed its renewed focus on sustainable growth and profitability. Consequently, it unveiled an AI-powered Medicare Advantage plan showcasing its technological edge and financial aspirations.
Clover Health is targeting 50% revenue growth and hopes to turn in GAAP net income profitability. The company’s solid financial results would come at the back of high member retention of 95%, considered the highest in the market.
Clover Health Investments, Corp. is a healthcare technology and insurance company that provides Medicare Advantage plans to seniors in 11 states. It uses a proprietary software platform, the Clover Assistant, to provide data-driven insights to physicians, aiming for improved, lower-cost care.
8. SELLAS Life Sciences Group Inc. (NASDAQ:SLS)
Stock Upside Potential: 106.09%
Number of Hedge Fund Holders: 6
Sellas Life Sciences Group Inc. (NASDAQ: SLS) is one of the best healthcare penny stocks to buy according to hedge funds. On March 19, Chief Executive Officer Angelos Stergiou reiterated that 2026 is poised to be a pivotal year for Sellas Life Sciences Group Inc.. The remarks align with the significant progress the company is making in its key GPS and SLS009 clinical programs.
The company is moving towards the final analysis of the Phase 3 REGAL trial of GPS in AML patients following second-line salvage therapy. Positive REGAL trial results could position it as the first and best-in-class immunotherapeutic option in this AML population.
Sellas Life Sciences is also making significant progress in developing the SLS009 clinical program for AML. Following positive Phase 2 results in high-risk molecular subtypes, the company has started dosing the first patient in the expansion cohort. Preclinical data in T-PLL demonstrated a statistically significant survival benefit for SLS009 as monotherapy and in combination with venetoclax.
In the first quarter, the company received an additional $42.6 million in proceeds from warrant exercises, further bolstering its reported $71.8 million in cash and cash equivalents as of the end of last year. Consequently, the company remains in a strong financial position to advance the clinical trials.
SELLAS Life Sciences Group Inc. is a late-stage clinical biopharmaceutical company developing novel immunotherapies and targeted therapies for a broad range of cancers. Its core focus is treating hematological malignancies and solid tumors, with lead candidates targeting WT1 antigen overexpression and CDK9 inhibition to improve survival and reduce relapse.
7. OPKO Health, Inc. (NASDAQ:OPK)
Stock Upside Potential: 121.45%
Number of Hedge Fund Holders: 16
OPKO Health, Inc. (NASDAQ:OPK) is one of the best healthcare penny stocks to buy according to hedge funds. On April 9, H.C. Wainwright reiterated its Buy rating on Opko Health and $3 price target, impressed by the company’s Phase 1 trial of a Covid-19 prevention treatment.
The company is currently working on MDX2301, a tetravalent bispecific antibody that shows tremendous potential for neutralizing all known variants of SARS-CoV-2. Opko Health has already conducted a Phase 1 trial of the candidate drug and dosed the first participants. It evaluated the safety and tolerability in healthy adults and adults at higher risk of severe COVID-19.
Opko Health is funding the COVID-19 program in its entirety with federal funds from the US Department of Health and Human Services Administration. H.C. Wainwright is confident that the company will deliver positive pharmacokinetic and immunogenicity data from the study before year-end. In addition, the research firm remains optimistic about MDX2301’s prospects for neutralizing all known variants and delivering broader, more durable protection against COVID-19.
OPKO Health, Inc. is a multinational biopharmaceutical and diagnostics company that discovers, develops, and commercializes pharmaceutical products and operates clinical laboratories. It focuses on treating serious diseases through products such as RAYALDEE and NGENLA, while also providing diagnostic services.
6. Precigen Inc. (NASDAQ:PGEN)
Stock Upside Potential: 130.58%
Number of Hedge Fund Holders: 36
Precigen Inc. (NASDAQ:PGEN) is one of the best healthcare penny stocks to buy according to hedge funds. On April 7, Precigen Inc. reiterated its expectation that sales of its lead respiratory treatment, PAPZIMEOS, will exceed $18 million in the first quarter. It would be a significant increase, considering total sales for the candidate drug totaled $3.4 million in the fourth quarter of 2025.
The significant sales increase would be driven by higher uptake, with patient hub enrollment having surpassed 300 patients in the fourth quarter. The US launch of the candidate drug continues to build strong momentum with a significant increase in the first quarter.
In addition, Precigen has received a significant boost from the Centers for Medicare & Medicaid Services, which assigned a permanent J-code J3404, to PAPZIMEOS. The designation is poised to streamline the claims process and facilitate broader patient access. In addition, the company has already filed a Marketing Authorization Application for the use of the treatment on adults with RRP with the European Medicines Agency.
Precigen Inc. is a commercial-stage biopharmaceutical company focused on developing and commercializing next-generation gene and cell therapies, specifically in immuno-oncology, autoimmune disorders, and infectious diseases.
5. Nuvation Bio Inc. (NYSE:NUVB)
Stock Upside Potential: 163.36%
Number of Hedge Fund Holders: 40
Nuvation Bio Inc. (NYSE:NUVB) is one of the best healthcare penny stocks to buy according to hedge funds. On April 8, analysts at Truist Securities reiterated a Buy rating on Nuvation Bio Inc with a $12 price target. The positive stance follows a meeting with the company’s management.
The meetings centered on the launch of Ibtrozi, the company’s FDA-approved once-daily inhibitor for treating adults with advanced or metastatic non-small cell lung cancer. Management confirmed the launch of the candidate drug, with prospects of it adding about 200 points per quarter in the near term.
The company is already capitalizing on patient mix shifting towards the use of Ibtrozi as a first line of defense, with the potential to expand as testing increases. Last year, Nuvation Bio generated $15.7 million in net product value from the launch of Ibtrozi, with 216 new patients starting treatment in the fourth quarter. In addition, Truist Securities touted the company’s Safu treatment prospects in Glioma.
Nuvation Bio Inc. is a commercial-stage biopharmaceutical company focused on developing and commercializing novel, targeted oncology medicines for difficult-to-treat cancers. The company targets drug resistance and aims to improve patient quality of life through a deep pipeline of small molecule inhibitors and drug-drug conjugates.
4. MannKind Corporation (NASDAQ:MNKD)
Stock Upside Potential: 171.26%
Number of Hedge Fund Holders: 39
MannKind Corporation (NASDAQ:MNKD) is one of the best healthcare penny stocks to buy according to hedge funds. On March 30, Truist Securities reiterated that MannKind is a Buy with a $7 price target in response to positive trial results from its strategic partner, United Therapeutics.
MannKind has partnered with United Therapeutics to develop Tyvaso products. United Therapeutics delivered positive top-line data in the TETON-1 study investigating inhaled treprostinil (Tyvaso) for Idiopathic Pulmonary Fibrosis (IPF). The 598-patient multicenter randomized, double-blind Phase III study of nebulized Tyvaso showed superiority over placebo for the change in absolute forced vital capacity.
An analysis of TETON-1 and TETON-2 delivered positive topline results versus placebo, with a change in absolute FVC of 111.8 mL. According to Truist Securities, the top-line clinical data underscores the tremendous prospects of the Tyvaso franchise. In addition, the results bode well for Tyvaso’s future in IPF.
Earlier at the Barclays 28th Annual Global Healthcare Conference, MannKind reiterated its plans to expand revenue streams and achieve $1 billion in sales in five years. The acquisition of scPharmaceuticals is poised to strengthen the company’s revenue streams and expand its cardiometabolic portfolio.
MannKind Corporation is a biopharmaceutical company focused on developing and commercializing inhaled therapeutics and drug-delivery technologies for endocrine and orphan lung diseases. They specialize in dry-powder formulations using their proprietary Technosphere® technology, delivering drugs deep into the lungs.
3. Taysha Gene Therapies, Inc. (NASDAQ:TSHA)
Stock Upside Potential: 173.42%
Number of Hedge Fund Holders: 32
Taysha Gene Therapies Inc. (NASDAQ:TSHA) is one of the best healthcare penny stocks to buy according to hedge funds. On April 6, Canaccord reiterated its Buy rating on Taysha Gene Therapies Inc. and raised its price target to $17 from $14. The price target hike comes on the heels of the stock’s impressive 258% return over the past year.
Canaccord remains confident about the company’s long-term prospects in the aftermath of the company confirming dosing completion in both the REVEAL and ASPIRE trials in the second quarter. The company is currently advancing TSHA-102, an AAV9-based gene therapy for Rett syndrome. The FDA has already cleared initiation of the ASPIRE trial, in which three patients between 2 and 4 years old are to receive a scaled-down 1E15 dose.
Taysha Gene Therapies plans to provide updated Part A data for the trials in the second quarter, once all 12 patients have received at least 12 months of follow-up. On the other hand, interim six-month pivotal data should be available before year-end.
According to Canaccord, the significant milestone gains and clean safety profile in the pivotal trials underscore why Taysha Gene Therapies is a buy.
Taysha Gene Therapies, Inc. is a clinical-stage biotechnology company developing adeno-associated virus (AAV)-based gene therapies for severe, rare genetic disorders of the central nervous system. Their primary focus is TSHA-102, a promising one-time gene therapy for Rett syndrome.
2. Sana Biotechnology Inc. (NASDAQ:SANA)
Stock Upside Potential: 195.95%
Number of Hedge Fund Holders: 21
Sana Biotechnology Inc. (NASDAQ:SANA) is one of the best healthcare penny stocks to buy according to hedge funds. On March 16, H.C. Wainwright reiterated Sana Biotechnology as a Buy with a $7 price target.
The research firm remains bullish on the company following the topline clinical trial data presented at the Advanced Technologies & Treatments for Diabetes conference. The trial results showed sustained survival and function of pancreatic beta cells.
The company delivered topline results from a 14-month follow-up Phase 1 UP421 IST evaluating allogeneic hypo-immune modified pancreatic islet cells in patients with Type 1 diabetes. The trial results showed a rebound in C-peptide levels comparable to those observed during the initial 6 months of the study, reversing the previous decline.
The positive data have opened the door for the company to file an Initial New Drug Application and initiate Phase 1 for SC451 as early as this year. The company exited the fourth quarter with $138 million in cash reserves, expected to last until the end of the year as it develops its current pipeline.
Sana Biotechnology Inc. is a clinical-stage company developing engineered cell therapies to treat serious diseases by repairing or replacing malfunctioning cells. It focuses on creating “off-the-shelf” (allogeneic) cell therapies that can evade immune detection, primarily targeting Type 1 diabetes, B-cell cancers, and autoimmune disorders, using hypoimmune (HIP) and in vivo gene-delivery technology.
1. CytomX Therapeutics, Inc. (NASDAQ:CTMX)
Stock Upside Potential: 221.78%
Number of Hedge Fund Holders: 33
CytomX Therapeutics (NASDAQ:CTMX) is one of the best healthcare penny stocks to buy according to hedge funds. On March 24, analysts at Jefferies reiterated their Buy rating on CytomX Therapeutics and set a $16 price target. The research firm remains bullish on the company following topline results from its candidate drug, Varseta-M.
Varseta-M is a first-in-class antibody-drug conjugate targeting the epithelial cell adhesion molecule in colorectal cancer. Trials’ results for the candidate drug showed no EpCAM-class toxicities in an expanded dataset of approximately 80 patients. Nevertheless, management confirmed they are working to address the diarrhea adverse event migration and dose fine-tuning.
CytomX Therapeutics has already conducted a $250 million public offering as it seeks to secure the much-needed capital to accelerate the development of its candidate drugs. On the other hand, Jefferies has identified incremental efficacy and durability updates for the candidate drug to bolster the stock’s market sentiment.
CytomX Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing “masked” antibody therapeutics, known as PROBODY platforms, designed to activate specifically within tumor microenvironments. This approach targets cancer while minimizing damage to healthy tissue, focusing on antibody-drug conjugates (ADCs) and T-cell engagers to treat advanced cancers.
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