2 Healthcare Stocks That Could Outperform the Market Over the Next Decade

The article is bullish on TransMedics Group and Dexcom, highlighting strong fundamentals and sizable long-term market opportunities in healthcare technology. TransMedics reported 2025 revenue of $605.5 million, up 37%, and EPS of $4.87 versus $1.01 a year earlier, while Dexcom posted $4.7 billion in revenue, up 16%, and EPS of $2.09 versus $1.42. The piece argues both companies have room for continued growth through market expansion, product launches, and broader adoption.

Analysis

TMDX is the cleaner duration trade, but the market is likely underestimating how much of the upside is operational leverage rather than pure market growth. As the company internalizes more of the transport workflow, it reduces third-party friction and creates a higher switching-cost ecosystem; that can expand margins faster than revenue if utilization rises, especially if kidneys become a third modality. The key second-order effect is competitive: a successful kidney launch would move TMDX from a niche device vendor toward a logistics platform, forcing transplant centers to adopt an end-to-end standard that rivals would struggle to displace.

DXCM looks less like a saturated leader and more like a category founder still in the early innings of penetration. The over-the-counter and non-diabetes use cases are important because they broaden the sales motion beyond reimbursement-heavy endocrinology channels, which should smooth adoption and reduce dependence on payer cycles over the next 12-24 months. The GLP-1 concern is likely overstated near term; the bigger risk is not substitution, but that payers and physicians become more selective about who gets CGM, slowing incremental attach rates if outcomes data does not keep expanding.

The main tail risk for both names is execution, not demand: TMDX must prove that higher utilization does not create service failures or regulatory scrutiny, while DXCM must defend accuracy, supply reliability, and pricing as it pushes into a wider consumer base. At current sentiment, both names look directionally right but not obviously cheap; the more attractive setup is on pullbacks or against weaker healthcare growth names. The market is pricing in continued adoption, but not necessarily the persistence of above-market earnings growth once the easy expansion phase matures.

Key Decisions for Investors

• Long TMDX on a 6-12 month horizon on pullbacks; thesis is operating leverage plus platform expansion. Risk/reward is attractive if kidney launch progresses, but trim if service metrics or regulatory headlines deteriorate.
• Long DXCM as a 12-24 month secular compounder; favor entry on weakness from GLP-1 headline noise. Upside comes from international penetration and OTC expansion, while downside is mainly reimbursement or pricing pressure.
• Pair trade: long DXCM / short a slower-growth medtech or diabetes-adjacent name with limited optionality. This isolates penetration growth and reduces market beta if healthcare multiples compress.
• For higher-conviction traders, use call spreads rather than outright equity in TMDX to capture modality-expansion upside while capping event risk around execution and approvals.
• Set a catalyst watch on TMDX kidney-development milestones and DXCM payer/launch updates over the next 2-4 quarters; if either thesis stalls, reduce exposure quickly because both names are priced for sustained premium growth.