I really like the healthcare industry, indeed it's my favourite sector. I like it because it offers defensive earnings compared to finance businesses or some technology businesses. I also like that most healthcare businesses should benefit from the ageing population tailwind, there should be more demand for healthcare services as time goes on.
With that in mind, here are three shares I own in my portfolio:
Japara Healthcare Ltd (ASX: JHC)
Japara is one of Australia's largest aged care operators. At the end of the half-year to 31 December 2017 it had almost 4,000 operational places for residents and it was generating $276.90 of revenue per occupied bed day. At 31 December 2017 it had an additional 1,100 places that are planned to be finished by the end of FY20.
The company also recently announced that it had acquired Riviera Health, which included four aged care facilities. This came with another 507 bed licenses, 265 of which are currently operational.
Ramsay Health Care Limited (ASX: RHC)
Ramsay is Australia's largest private hospital operator. It has over 200 facilities spread across several countries, which are mainly in Australia, the UK and France.
The ageing populations of those countries should mean that more people end up needing to go to a hospital because right now the people who visit the hospital the most are from the elderly cohort, and there will be more elderly people in the future.
Ramsay is continually re-investing back into its business with new hospitals and expansions. It also just announced a joint venture global supply chain business and it's looking to expand its hospital business into another country like China or into a region like North America.
Paragon is a small cap that is quickly growing through acquisitions. It is acquiring other healthcare supplier businesses, like the recent surgical equipment acquisition, to expand its range of products & equipment and grow its customer base.
More patients in the future should lead to more products demanded from Paragon, which will hopefully lead to higher revenue, higher profit margins due to economies of scale and bigger profits.
Foolish takeaway
I like all three of three businesses, that's why they're in my portfolio. I think Japara makes compelling value today because how much bigger it will be by FY21, Paragon could be a good buy because it's trading with such a low price/earnings ratio. Investors in Ramsay will need to be patient for the long-term thesis to play out.
