Nanosonics and 1 more ASX healthcare share to buy and hold beyond 2025

Of all the industry sectors represented on the ASX, the ASX healthcare sector is definitely one of my favourites. Our ageing population is driving an ever-increasing demand for healthcare services. Also, continual technology advances in this market segment is driving demand higher.

In this article we examine 2 of my top ASX healthcare shares right now: ResMed Inc (ASX: RMD) and Nanosonics Ltd. (ASX: NAN). I am attracted to both of them because of their high level of technological innovation, entrenched market positions, and growing international exposure.

I believe both have strong long-term growth potential, which is likely to translate to above average shareholder returns over the next 5 years.

Nanosonics

ASX healthcare company Nanosonics manufactures and distributes disinfection system for ultrasound probes. Nanosonic’s core product, the trophon EPR disinfection system, has achieved an industry reputation as the leader in its market niche.

Nanosonics has seen strong revenue growth over the past 5 years. In particular, the company has continued to see solid revenue growth in its largest market, the US. It also has been experiencing strong growth across Asia, Europe and the Middle East. Nanosonics achieved total revenue of $48.5 million for the first half of FY20. This was an increase of 19% on the prior corresponding period (pcp).

In its most recent market update, the company revealed that sales momentum has continued during the early phase of the coronavirus pandemic. Unaudited sales for the third quarter of FY20 were significantly higher than the prior corresponding period. However, lower than anticipated overall growth of its installed base is predicted for Q4, due to difficulty accessing some hospitals.

Despite any short-term challenges, I believe that Nanosonics is well placed to grow strongly over the next 5 years, on the back of the growing global trend towards stricter disinfection control in hospitals.

ResMed

Another ASX healthcare share that I would consider adding to your share portfolio is ResMed. The company designs and manufactures healthcare devices and cloud-based software solutions for sleep apnea and other respiratory conditions.

Revenue growth over the past few years has been assisted by new product launches and successful targeted acquisitions. ResMed’s global scale and entrenched market position provide it with a strong competitive advantage. ResMed recorded a super strong 47% increase in net income during the third quarter of FY20.

I believe that the demand for ResMed’s products will continue over the next decade. Research from ResMed estimates that around 1 billion people globally are impacted by sleep apnoea worldwide. In addition, more than 80% of cases are estimated to be undiagnosed globally.

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Phil Harpur owns shares of Nanosonics Limited and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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