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3 healthcare companies whose social impact is the key to financial performance

Today’s investment landscape is increasingly focused on sustainable healthcare investing, in which companies’ financial goals align with societal welfare.

There are three companies that stand out: Abbott Laboratories ABT , which emphasizes patient-focused healthcare; Johnson & Johnson JNJ , which is dedicated to achieving net zero carbon emissions and prioritizing environmental health equity; and UnitedHealth Group UNH , which focuses on “zero distance” from patients.

The niche of sustainable healthcare investing is defined by companies that merge innovative medical technology with a commitment to corporate social responsibility writ large. These companies stand at the forefront of a new era in investing, representing a paradigm shift in the industry, and demonstrating that profitability and ethical stewardship can coexist.

This approach resonates with the burgeoning trend of ESG (environmental, social and governance).

Central to these companies’ ethos is the focus on patient-centric healthcare. They lead the way in creating healthcare solutions that prioritize patient needs and experiences, marking a significant shift from profit-driven approaches to ones that are empathetic and effective. This patient-first approach is often complemented by green healthcare technology, ensuring that advancements in health solutions also consider environmental sustainability, thus marrying technological progression with ecological responsibility.

All three companies’ stock performance this year makes them value targets: Only UnitedHealth’s stock has risen this year, and by just 6%, underperforming the S&P 500 Index. Healthcare companies are on the back side of the COVID boom, and analysts have adjusted their numbers. But it’s likely the bottom is in.

Abbott Laboratories

In the realm of sustainable healthcare investment, Abbott Laboratories emerges as an innovator and responsible corporate entity. Abbott exemplifies the fusion of innovative medical technology with patient-focused healthcare solutions.

Abbott’s stride in technology is a testament to its role in directing healthcare industry trends. The introduction of Freestyle Libre 3, a pioneering diabetes management system, places Abbott at the forefront of eco-friendly healthcare technology. This product, with its significant revenue potential, showcases Abbott’s commitment to impactful patient care.

The Aveir VR Leadless Pacemaker, honored with a CES 2023 Innovation Award, is a milestone in ethical healthcare. Its unique features redefine standards in the health sector, aligning with principles of impact investing in healthcare.

Likewise, the Proclaim Plus SCS System underscores Abbott’s stature in ESG healthcare stocks. This advanced neuro-stimulation therapy for chronic pain underscores the company’s dedication to alleviating patient suffering with innovative solutions.

Abbott’s quick response to global health crises, as seen in the development of the Alinity m Monkeypox PCR Test and the forthcoming Lingo product, highlights its commitment to socially responsible healthcare.

Cardiac care innovations, like the AVEIR DR Dual Chamber Leadless Pacemaker and advancements in biowearable technologies, further reinforce Abbott’s position in the healthcare sector.

Beyond product innovation, Abbott’s comprehensive sustainability plan is central to its strategy. By 2030, Abbott aspires to impact over three billion lives annually, emphasizing accessibility and affordability in healthcare.

The company posted solid third-quarter results, driven by strength in the device business and a recovery in nutrition, offsetting the unwinding of COVID-19-related sales.

Johnson & Johnson

In the dynamic landscape of healthcare investment, Johnson & Johnson stands as a beacon of innovation and corporate social responsibility. Its recent endeavors epitomize the emerging trends in ethical healthcare. The company’s focus is clear: Patient-centric healthcare innovations and green technology are at the forefront of its strategy.

This has been a pivotal year for Johnson & Johnson, marked by groundbreaking medical advancements. The introduction of Talvey for multiple myeloma, a bispecific antibody, has transformed treatment options for patients. This innovation is a testament to Johnson & Johnson’s commitment to sustainable healthcare investing. Similarly, Akeega’s FDA approval for prostate cancer underscores the company’s dedication to innovative medical technology. These developments are not just milestones in healthcare; they represent a new era of hope for patients worldwide.

Johnson & Johnson’s initiatives go beyond mere medical solutions. The company’s approach to corporate social responsibility in healthcare is holistic. It recognizes the interconnection between environmental health and human well-being. By striving for net zero carbon emissions, Johnson & Johnson is not just contributing to climate action; it’s redefining green healthcare technology. This initiative aligns with the broader goal of environmental sustainability, showcasing the company’s commitment to a healthier planet and healthier lives.

In the realm of financial performance, Johnson & Johnson’s third-quarter results for 2023 cheered investors, as the company raised full-year guidance. Sales rose 6.8% to $21.4 billion in the third quarter, accelerating for the third quarter in a row.

UnitedHealth Group

UnitedHealth is known for innovation in health insurance as no other company is. The company’s showcase is its robust approach to healthcare transformation. At the forefront is the concept of “zero distance” from patients. This philosophy, championed by Chief Digital and Technology Officer Sandeep Dadlani, emphasizes a deep understanding of individual health needs. It aligns UnitedHealth with industries known for rapid innovation, such as retail and consumer products.

Under Dadlani’s guidance, Optum Technology, a UnitedHealth division, is redefining technology’s role in healthcare. The division concentrates on delivering digital solutions to both Optum and UnitedHealthcare customers. Its focus on efficiently leveraging technology, like AI, signals a new era in healthcare digitalization. Furthermore, UnitedHealth’s recent introduction of Price Edge, under Optum, epitomizes its dedication to making healthcare more affordable and accessible. This tool assists pharmacy benefit management members in finding the lowest prices for generic drugs.

Strategic partnerships are also a cornerstone of UnitedHealth’s strategy. Collaborations with industry giants like Walmart WMT , Red Ventures and Microsoft MSFT enhance the company’s ability to innovate. These alliances expand their capabilities across various healthcare needs. Additionally, the UnitedHealthcare Accelerator program underscores a commitment to diversity and innovation. This mentorship-driven initiative has supported 50 companies to date, with the 2023 cohort spotlighting startups focusing on AI-powered care management and health inequities.

The company is also deeply invested in digital health advancements. Its initiatives in workplace wellness programs, as evidenced by the Optum Wellness in the Workplace study, are transforming employee health engagement. Furthermore, the company’s exploration of blockchain technology in partnership with Optum and Synaptic Health Alliance is a significant leap forward in data management in healthcare.

UnitedHealth’s sustainability initiatives are equally noteworthy. Efforts like closing gaps in care and preventive services have significantly improved health outcomes. The company’s Diversity in Health Care Scholarship Program, with a $100 million investment over 10 years, demonstrates a profound commitment to diversifying the healthcare workforce. Additionally, its focus on environmental sustainability and health equity, with notable actions like reducing paper use and offering $0 copays for lifesaving drugs, showcases its dedication to a sustainable health system.

Financially, UnitedHealth has demonstrated exceptional performance in 2023. The third quarter alone saw revenues of $92.4 billion, a year-over-year increase of 14%. This growth is driven by both Optum and UnitedHealthcare, with their revenues growing substantially. The company’s full-year outlook remains optimistic, reflecting its broad-based growth strategy and commitment to improving healthcare services.