In this article, we will take a look at the top 12 medical AI companies.
The healthcare and medical industry is one of the biggest beneficiaries of the AI boom. Over the past few years and months there has been a surge in AI-based decision support systems which are used by medical practitioners and doctors to refine, optimize and improve their decision making while writing prescriptions, doing surgeries or processing patient data. For example, MedAware is an AI-based system that provides an extra layer of security to doctors during prescription writing process. The system automatically generates flags and warnings when it detects the doctor might have prescribed a wrong medication by mistake to the patient. It does so by processing patient history and data within seconds if not minutes, something impossible to do for humans. Another most straightforward but mind-blowing use of AI in the healthcare industry is using AI systems for diagnosis for minor diseases. DXplain, which was developed by the Laboratory of Computer Science at Massachusetts General Hospital, provides probable diagnosis reports based on clinical manifestations. A study showed that DXplain helped family-medicine residents score significantly better on a diagnosis test involving 30 clinical cases. The tool improved their accuracy rate from 74% to 84%.
The Rise of “AI Doctors”
The applications of AI in the healthcare and medical industry are creating opportunities so lucrative that the major tech giants are also jumping in the market. Alphabet’s Google is working on Med-PaLM 2, a large language model specifically designed to process medical data and answer questions related to healthcare and medical conditions. The chatbot is called the first “AI Doctor.” The system is trained by medical professionals or medical data to ensure the quality of its output is strong and safe. Earlier this year, Microsoft partnered with health software company Epic to build tools that can automatically draft messages to patients using the algorithms behind ChatGPT.
The artificial intelligence revolution is expected to bring benefits to almost every domain of the healthcare industry. Take medical imaging market, for instance. A report by Allied Market Research estimates that AI in medical imaging market generated $1.9 billion in 2022. The industry is expected to reach $29.8 billion by 2032, growing at a CAGR of 32.1% from 2023 to 2032.
As applications of AI expand across the healthcare industry, new kinds of challenges emerge. For example, companies have started to use AI to query huge amounts of healthcare data already available. This is helping them make sense of data that was hitherto very difficult and time consuming. But to use data for these purposes, companies use what is called “synthetic data,” which is like a representation of the real healthcare data. Major healthcare companies are reluctant to use data representations. The industry is currently trying to solve the problem of synthetic data and privacy challenges that arise with using huge patient data.
Our Methodology
For this article, we used manual research and deployed stock screeners to identify top healthcare and medical companies using AI. These companies use AI in their drug discovery process, product development, and in several other ways.
Top 12 Medical AI Companies
12. Butterfly Network, Inc. (NYSE:BFLY)
Market Cap: $225.2M
Butterfly Network, Inc. (NYSE:BFLY) makes ultrasound imaging solutions. In April this year, Butterfly Network, Inc. (NYSE:BFLY) said it received 510(k) clearance for an AI-enabled Auto B-line Counter that may simplify how healthcare professionals evaluate adults with suspected diminished lung function and can potentially accelerate their ability to make informed treatment decisions at the point of care.
11. Exscientia plc (NASDAQ:EXAI)
Market Cap: $578.9M
Exscientia plc (NASDAQ:EXAI) offers AI platforms for drug discovery and development. Exscientia plc (NASDAQ:EXAI)’s platform can be used for drug identification, drug candidate design, translational models, and patient selection. Exscientia plc (NASDAQ:EXAI) jumped about 20% in September after Germany-based Merck KGaA (OTCPK:MKGAF) (OTCPK:MKKGY) announced to collaborate with the company for its artificial intelligence (AI)-driven drug discovery platform.
As of the end of the second quarter of 2023, 11 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in Exscientia plc (NASDAQ:EXAI). The biggest stakeholder of Exscientia plc (NASDAQ:EXAI) during this period was Benjamin A. Smith’s Laurion Capital Management which owns a $35 million stake in the company.
10. Relay Therapeutics, Inc. (NASDAQ:RLAY)
Market Cap: $1.0B
Relay Therapeutics, Inc. (NASDAQ:RLAY) ranks 10th in our list of the top medical AI companies. It’s a clinical-stage precision medicines company that offers drug discovery services. Relay Therapeutics, Inc. (NASDAQ:RLAY)’s Dynamo platform extensively uses AI and machine learning for drug discovery.
9. Oscar Health, Inc. (NYSE:OSCR)
Market Cap: $1.1B
Health insurance company Oscar Health, Inc. (NYSE:OSCR) Mark Bertolini in September gave an interview to CNBC during which he talked about how the company is using AI in operations. The executive said that generative AI reduces phone calls, confusions and helps Oscar Health, Inc. (NYSE:OSCR) in customer support. He said that AI increases member satisfaction. Bertolini said that Oscar Health, Inc. (NYSE:OSCR) is in a process to implement 47 large language models it has been developing over the past six months.
As of the end of the second quarter of 2023, 23 hedge funds out of the 910 hedge funds tracked by Insider Monkey reported having stakes in Oscar Health, Inc. (NYSE:OSCR). The biggest stakeholder of Oscar Health, Inc. (NYSE:OSCR) was Mason Hawkins’ Southeastern Asset Management which owns a $48 million stake in the company.
Longleaf Partners Small-Cap Fund made the following comment about Oscar Health, Inc. (NYSE:OSCR) in its Q2 2023 investor letter:
“Oscar Health, Inc. (NYSE:OSCR) – Health insurance and software platform Oscar Health was again the top performer in the quarter and for the first half. New CEO Mark Bertolini brings significant operational expertise, as well as a strong endorsement value to the business, given his long-term track record as CEO of Aetna. As discussed last quarter, his compensation package aligns his interests with shareholders. He is already executing on improved cost control and operational efficiency that should translate into improved results in the next 6-12 months. In the quarter, the company affirmed near-term results are on track.”
8. Certara, Inc. (NASDAQ:CERT)
Market Cap: $2.3B
Certara, Inc. (NASDAQ:CERT) offers software products for using bio-simulation in drug discovery, preclinical and clinical research. Certara, Inc. (NASDAQ:CERT)’s Certara.AI can be used to access data, review, validate, and fine-tune generated responses. The platform can also be used to apply GPTs across drug development from early discovery to clinical trials to regulatory submission.
In August, Certara, Inc. (NASDAQ:CERT)’s software platform Simcyp was awarded two new grants from the U.S. FDA.
Baron Discovery Fund made the following comment about Certara, Inc. (NASDAQ:CERT) in its Q1 2023 investor letter:
“We established a position in Certara, Inc. (NASDAQ:CERT), a leading bio-simulation company that accelerates the development of new pharmaceuticals by using its proprietary software, technology, and services to model and predict how drugs will behave in individual humans. Certara’s computer-aided mathematical modeling of biological processes and systems is used by drug developers to optimize the lengthy and expensive process of drug development, when the average time and cost to bring a new drug to market is a staggering 10 years and $2 billion, respectively. Certara helps its blue-chip customer base, spanning large biopharmaceutical to small biotechnology companies to make more timely go/no go decisions, inform appropriate clinical trial protocols, optimize dosing, and target statistically relevant patient populations, all of which are critical inputs to timely and cost-effective drug development.
The company, which generated $335 million in revenue in 2022, is a market leader, providing an integrated end-to-end platform used by over 2,300 biopharmaceutical companies and academic institutions across 70 countries. Since 2014, Certara customers have received over 90% of all of the new drug approvals by the FDA. Furthermore, 17 global regulatory authorities, including the FDA, Europe’s EMA, Health Canada, Japan’s PMDA, and China’s NMPA use Certara’s bio-simulation software to independently analyze, verify, and review regulatory submissions…” (Click here to read the full text)
7. Teladoc Health, Inc. (NYSE:TDOC)
Market Cap: $3.2B
Telemedicine and telehealth company Teladoc Health, Inc. (NYSE:TDOC) ranks 7th in our list of the top medical AI companies and stocks. Earlier this year Teladoc Health, Inc. (NYSE:TDOC) entered into a partnership with Microsoft to integrate ambient clinical documentation tech into its Solo virtual care platform. Teladoc Health, Inc. (NYSE:TDOC) plans to integrate Microsoft Azure OpenAI Service, Azure Cognitive Services, and conversational and ambient clinical documentation solution Nuance Dragon Ambient eXperience (DAX) into Teladoc Health Solo.
As of the end of the second quarter of 2023, 28 hedge funds out of the 910 hedge funds tracked by Insider Monkey were long Teladoc Health, Inc. (NYSE:TDOC). The most significant stakeholder of Teladoc Health, Inc. (NYSE:TDOC) was Catherine D. Wood’s ARK Investment Management which owns a $515 million stake in the company.
Teladoc Health, Inc. (NYSE:TDOC) talked about its AI initiatives in Q2 earnings call:
“AI is helping us to grow and become more efficient at the same time. The same is true for BetterHelp. When it comes to mental health, finding the right provider can make all the difference. So, we use AI to optimize member therapists matching based on over a 100 different criteria. On average, we’re matching a patient with a provider every 30 seconds, something no one else in the industry can say. Besides making life better for patients and providers, it’s also helping to drive our strong gross margin performance and competitive advantage. Finally, AI allows us to deliver personalized content and insights to our members, helping them change their behavior in a sustainable way.
We provide customized next best actions on a massive scale driving better outcomes at lower costs. Because if you want to have a real impact, a one size fits all approach isn’t good enough. So we’re already taking advantage of AI across our business. And now, we’re going even further. Last week, we announced that we’re expanding our partnership with Microsoft to bring Microsoft’s open AI services and Nuance Dax’s capabilities onto the Teladoc platform. Our goal is to automate more of the clinical documentation during virtual exams, making visits more efficient, improving the quality of medical data, and letting providers focus on what they do best, caring for patients. We’re also exploring ways to use generative AI to improve the experience of our members.”
To read the full earnings call transcript click here.
Greenhaven Road Capital made the following comment about Teladoc Health, Inc. (NYSE:TDOC) in its Q3 2022 investor letter:
“At the end of last year and the beginning of this year, I sold two of our highest multiple holdings and invested in Teladoc Health, Inc. (NYSE:TDOC), believing that swapping out of the highest multiple holdings into a lower multiple holding would provide protection in the event of multiple compression. However, the reality is that the multiple compression on currently loss-making (unprofitable) companies has been severe regardless of starting multiple, and TDOC’s lower relative starting point afforded us far less protection than I expected. We are no longer shareholders today but continue to follow the business and may return someday given its market size, product portfolio, and valuation.”
6. Humana Inc. (NYSE:HUM)
Market Cap: $62.0B
Healthcare company Humana Inc. (NYSE:HUM) is using AI in its backend operations and to optimize its performance. Bruce Broussard, Humana Inc. (NYSE:HUM)’s CEO, talked about how the company uses AI in a video last year. He said that one of the use cases of AI at Humana Inc. (NYSE:HUM) is using the technology for proactive care, making sure “no one slips through the cracks” and people who require healthcare are spotted through AI systems before any urgencies.
In 2021, Humana Inc. (NYSE:HUM) and IBM partnered under which Humana would use conversational AI technology developed by IBM to improve Humana’s member experience.
Vltava Fund made the following comment about Humana Inc. (NYSE:HUM) in its Q3 2023 investor letter:
“A new position in the portfolio is the US health insurer Elevance Health. This sector is quite familiar to us. In fact, we also have shares of another health insurer, Humana Inc. (NYSE:HUM), in our portfolio, which we first bought in 2009. The sector has been very attractive over the long term and its structure favours big players, which both Humana and Elevance Health are. Because each of these two companies also has some specific risk, we decided to increase our investment in the sector by acquiring this second position. Both companies are high-growth in terms of profitability and we expect their above-average growth to continue for quite some time.”
5. Medtronic plc (NYSE:MDT)
Market Cap: $101.3B
Medical device company Medtronic plc (NYSE:MDT) ranks 5th in our list of the top 12 medical AI companies. Earlier this year Medtronic plc (NYSE:MDT) partnered with Nvidia. Under the partnership, NVIDIA healthcare and edge AI will be integrated into Medtronic’s GI Genius™ intelligent endoscopy module, developed and manufactured by Cosmo Pharmaceuticals.
Appleseed Fund made the following comment about Medtronic plc (NYSE:MDT) in its Q1 2023 investor letter:
“During the most recent quarter, Appleseed Fund added three new equity holdings: Medtronic plc (NYSE:MDT), Stanley Black & Decker (SWK), and Synovus Financial (SNV). Medtronic is the world’s largest device manufacturer, and it holds the number one or number two market share in most of its product segments. Medtronic’s business is heavily weighted towards complicated in-patient procedures, which are typically quite profitable. Industry dynamics are quite attractive with an aging global population and the growth of improved healthcare in emerging markets; furthermore, most of its segments are highly concentrated with just 2-3 players that split each segment’s market share, affording the key participants with significant economies of scale and pricing power. The Company has been recently addressing several temporary headwinds including a strong dollar, inflation, a delayed recovery in surgical volumes from the coronavirus pandemic, and supply chain issues. Once these issues reach the rearview mirror, the Company’s growth and margin expansion plans should transform into reality.”
4. Stryker Corporation (NYSE:SYK)
Market Cap: $104.2B
Medical device company Stryker Corporation (NYSE:SYK) uses AI and machine learning in its platforms. Stryker Corporation (NYSE:SYK)’s CEO Kevin Lobo in 2022 said in an interview that the company is going all-in on AI. He said Stryker Corporation (NYSE:SYK) was already using AI for procedures like surgery preparation and patient monitoring. The executive talked about the technology developed by Gauss Surgical, which was acquired by Stryker Corporation (NYSE:SYK). He said that Gauss’s AI technology helps doctors see how much blood a patient has lost using AI systems.
ClearBridge Large Cap Growth Strategy made the following comment about Stryker Corporation (NYSE:SYK) in its second quarter 2023 investor letter:
“Supporting our widely-held names in the second quarter were solid contributions in health care, where we benefited from an overweight to medical device stocks Intuitive Surgical and Alcon which moved higher on signs of improving procedure growth. Supply chain headwinds and labor shortage bottlenecks are now easing while ambulatory surgery centers are adding more surgery hours, which should be a boon to these stocks as well as to orthopedic and spine surgery products specialist Stryker Corporation (NYSE:SYK).”
3. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Market Cap: $104.6B
Intuitive Surgical, Inc. (NASDAQ:ISRG) has been using AI and machine learning in the development of its surgical robots for several years. Intuitive Surgical, Inc. (NASDAQ:ISRG)’s da Vinci robotic surgical system uses AI and machine learning technologies.
As of the end of the second quarter of 2023, 68 hedge funds tracked by Insider Monkey had stakes in Intuitive Surgical, Inc. (NASDAQ:ISRG). The biggest hedge fund stakeholder of Intuitive Surgical, Inc. (NASDAQ:ISRG) during this period was Ken Griffin’s Citadel Investment Group which owns a $664 million stake in the company.
Baron Health Care Fund made the following comment about Intuitive Surgical, Inc. (NASDAQ:ISRG) in its second quarter 2023 investor letter:
“Strength in health care equipment was largely due to the outperformance of sleep apnea device company Inspire Medical Systems, Inc. and robotic surgery system pioneer Intuitive Surgical, Inc. (NASDAQ:ISRG). Intuitive Surgical, Inc. manufactures and markets the da Vinci Surgical System, a robotic system used for minimally invasive procedures. Shares increased after Intuitive reported strong first quarter financial results highlighted by a 26% increase in procedures and raised guidance for 2023. These results, which came in well above Street estimates, were driven by strength in general surgery procedures in the U.S. and non-urology procedures outside the U.S. We continue to believe Intuitive has a large opportunity to expand the use of robotic surgery over time.”
2. Pfizer Inc. (NYSE:PFE)
Market Cap: $187.2B
Being a leader and dominant player in the industry gives Pfizer Inc. (NYSE:PFE) an edge in the market when it comes to the AI race. Pfizer Inc. (NYSE:PFE) is pouring resources and money to use AI to optimize its operations, technology and drug pipeline. Pfizer Inc. (NYSE:PFE) is developing an “ML Research Hub” to create predictive models and tools for drug discovery.
Diamond Hill Large Cap Strategy made the following comment about Pfizer Inc. (NYSE:PFE) in its Q2 2023 investor letter:
“Our bottom contributors in Q2 included health insurance company Humana, biopharmaceutical company Pfizer Inc. (NYSE:PFE) and global entertainment company Disney. Pharmaceutical giant Pfizer has been dealing with a decline in sales due to lower COVID vaccination levels. Additionally, in 2023, management is increasing spend as the company invests in new product launches. That said, we remain positive about the long-term company fundamentals.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Market Cap: $485.6B
UnitedHealth Group Incorporated (NYSE:UNH) acquired Optum back in 2011. Optum uses technology and AI for decision making and predictive analysis. In 2020 UnitedHealth Group Incorporated (NYSE:UNH) launched Level2 digital therapy platform for diabetes patients. UnitedHealth Group Incorporated (NYSE:UNH)’s virtual assistance platform uses conversational AI and AI tech to route calls and optimize customer support resources.
Answering a question about the use of AI during an earnings call, the company’s Chief Operating Officer Dirk McMahon said:
“… we’ve really been applying a lot of artificial intelligence, machine learning and natural language processing. Long-term, we think there’s great hope for those. And some of the short-term things that we’re working on in those areas, like using generative AI to help more efficiently write medical appeal letters, things like optimizing our provider search and all of our digital properties with natural language processing and AI, doing a lot of work, improving our payment integrity models, using AI to detect waste, fraud, and abuse. And then a lot in the G&A world to answer basic questions in our call centers, like leveraging our benefit bots to reduce the number of calls and the labor associated with that, for simple questions like is XY or Z disease covered or have I met my deductible.
From a long range perspective, however, I’m really optimistic about our significant data sets. Our ability to take advantage of whatever new technology comes down the pipe to improve health care, I’m really excited about it.”
Read the full earnings call transcript here.
Mairs & Power Growth Fund made the following comment about UnitedHealth Group Incorporated (NYSE:UNH) in its second quarter 2023 investor letter:
“Notable detractors to performance in the first half were US Bank (USB), Charles Schwab (SCHW), and UnitedHealth Group Incorporated (NYSE:UNH), which were down 22.09%, 31.65%, and 8.65%, respectively. Another detractor from relative performance was UnitedHealth Group, which was down 8.65%. However, we have a positive long-term view of the company, headquartered in Minnesota, and especially its potential when it comes to harnessing its vast amounts of patient data via AI. Additionally, its Optum unit, which provides technology and data-driven care delivery, has AI-enabled tools that can help healthcare providers drive more efficient and accurate care to patients.”
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Disclosure: None. Top 12 Medical AI Companies is originally published on Insider Monkey.
