NutriSystem Inc. (NTRI), Novo Nordisk A/S (ADR) (NVO): Longer But Less Healthy Lives Will Benefit This Trio

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However, it’s actually a double play on diabetes because NutriSystem Inc. (NASDAQ:NTRI) also creates meal plans specifically for diabetics. If third-party payments are approved for obesity, the diabetic angle should be a big selling point for the company that helps differentiate it from competitors like Weight Watchers International, Inc. (NYSE:WTW) and Medifast Inc (NYSE:MED).

The company is struggling now, but it has no long-term debt and, at the end of the first quarter, $35 million in cash. With diabetes and obesity rates heading higher, the company’s food programs could see increasing demand. Turnaround investors should like this opportunity.

Mental Health

While diabetes and the related issue of obesity are pretty well known issues, less discussed is failing mental health. MSNBC reported that schizophrenia increased 29% between 2000 and 2010, alcohol abuse 26%, anxiety disorders 21%, drug abuse 85%, and major depressive disorder 43%. Clearly, the mental state of Americans isn’t what it used to be.

Universal Health Services, Inc. (NYSE:UHS) owns hospitals and psychiatric facilities. Revenues are split roughly equally between the two divisions, but psychiatric hospitals accounted for almost three quarters of earnings before interest, taxes, depreciation, and amortization.

The company expects stable pricing in the mental health division and increasing admissions, an outlook that the recent health study backs up. More interesting, the division has “minimal exposure to uncompensated care” so there are fewer write-offs. And mental health facilities are cheaper to build and run than full hospitals.

Although the top-line fell 5% last year, it’s been heading generally higher over the past decade. Despite that drop, earnings improved from about $4 a share to around $4.50 year over year. The company is in a good position today and should see slow and steady organic growth. Acquisitions would be icing on the cake. Growth focused investors should find Universal Health Services, Inc. (NYSE:UHS) of interest.

Benefit From Changing Healthcare Trends

Although the healthcare market is changing quickly, the long-term trends of Americans living longer and dealing with more chronic illnesses, physical and mental, isn’t going to be changed by Obamacare any time soon. The three stocks above are all worth a look by investors seeking healthcare options.

Novo Nordisk A/S (ADR) (NYSE:NVO) sells a vital compound that diabetics can’t live without. Struggling NutriSystem Inc. (NASDAQ:NTRI) should benefit from obesity being turned into a disease and from its diabetic diet plans. Universal Health Services, Inc. (NYSE:UHS), meanwhile, has a unique niche in the mental health space that would be difficult for competitors to replicate.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Longer But Less Healthy Lives Will Benefit This Trio originally appeared on Fool.com is written by Reuben Brewer.

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