Stock Market Crash Warning: Don’t Get Caught Holding These 3 Healthcare Stocks

Stocks to sell

The healthcare industry has experienced unprecedented growth in recent years due to the global pandemic. However, as COVID-19 began to ease, the immense growth of the healthcare industry is expected to slow down. Additionally, because many healthcare companies rely on trials that need FDA approval, predicting their individual healthcare company’s performance is difficult. These companies experience massive declines in share price when their trials fail. Combining relatively slowed growth with risk factors, these are three healthcare stocks to avoid.

Cosmos Health (COSM)

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Cosmos Health (NASDAQ:COSM) is a pharmaceutical company based in Chicago that sells nutraceuticals and naturally sourced nutrition supplements. It owns four different brands, which include Mediterranation, Sky Premium Life, biobebe and C-Sept and sell a variety of supplements from vitamins to minerals.

Cosmos Health has developed R&D partnerships that target major health issues, including diabetes, obesity and cancer. 

Last week, however, Cosmos Health received a notification from Nasdaq that the company did not fill out and complete its Annual Report on the 10-K for the fiscal year ending December 31, 2023. Cosmos Health’s failure to comply with the timely submission of financial reports with Nasdaq leaves the company with 60 60-day grace period to do so. 

Furthermore, Cosmos Health’s stock has been highly volatile and underperforming. Their stock price decreased 52.55% Year-to-Date, and combining this with the company’s failure to submit 10-Ks puts investing in Cosmos Health an immense risk for investors. 

InnovAge (INNV)

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InnovAge (NASDAQ:INNV) is an American healthcare company headquartered in Denver, Colorado, and it provides services for seniors who need care to live independently. The company is most well known for its Program of All-inclusive Care for the Elderly (PACE) service and has operations in 17 centers across five states, with more than 6,300 people in the beneficiary. 

The most concerning aspect of investing lies within its poor financials, specifically in revenue. In the first half of fiscal year 2022, InnovAge Holdings recorded a net loss of around $8 million. However, this figure skyrocketed for the same period in 2023, when the company reported a loss of $43 million. Furthermore, the company holds $123.1 million in liabilities due within a year while only holding $98.8 million in cash. Combining this figure with a 37% decline in InnovAge Holding’s stock price year-to-date, the company does not seem to picture any source of an optimistic future for investors.

Johnson & Johnson (JNJ)

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Johnson & Johnson (NYSE:JNJ) is an American pharmaceutical giant with a long history dating back to the 1800s. However, the American healthcare giant has proved to be a disappointment as it faces considerable challenges. While Johnson & Johnson won a trial over a woman from Florida who sued the company for its powder that supposedly caused “cancer,” controversies and lawsuits like these have already caused damage to the company’s reputation.   

Recently, the company released its first quarter financials, and while they were not horrible, the results did not impress investors much. Even though they had beat earnings per share (EPS) expectation of $2.64 with an actual figure of $2.71, their quarterly revenue came short of the Wall Street expectation. Furthermore, J&J narrowed its full-year guidance for this year, with an adjusted expected sales of $88 billion compared to a pre-billion of $88.6 billion.

On the date of publication, Andy Kim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Andy is a self-taught investor who is interested in ESG and socially responsible investing. He has managed the portfolio of a small investment fund and started his own research firm. Through his freelance writing on InvestorPlace, he hopes to find and share promising investments in companies with the goal of bettering the world.

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