Are Mediclinic International plc, AstraZeneca plc and Smith & Nephew plc the best FTSE 100 healthcare picks?

Mediclinic International (LSE: MDC) was formed earlier this year when Abu Dhabi-based FTSE 250 firm Al Noor Hospitals combined with South African company Mediclinic. The enlarged private healthcare group was promoted to the FTSE 100 and released its first results this morning.

Strong growth drivers

Mediclinic reported increased patient volumes leading to a 7% rise in revenue to £2.1bn from its 73 hospitals and 45 clinics in South Africa, Namibia, Switzerland and the UAE. Underlying earnings per share increased 3% to 36.7p.

The company, which also has a 29.9% stake in UK firm Spire Healthcare, said: “We anticipate continued capacity and footprint expansion at attractive returns across all of our operating platforms. The Group is well positioned to deliver long-term value to our shareholders”.

The results and generally upbeat outlook saw the shares head 2% higher in early trading, although management did note a continuing impact on the business of “on-going regulatory initiatives and increasing competition”.

However, the long-term growth drivers for the industry are strong, and Mediclinic’s earnings should also get a short-term shot in the arm from the immediate synergies and cost efficiencies of its enlarged scale. As such, I would say the company merits its premium trailing price-to-earnings (P/E) ratio of 23.6.

Income appetiser

Shareholders of pharmaceuticals firm AstraZeneca (LSE: AZN) have endured a long period of frustration, as expiring patents have hit the company’s top and bottom lines. With the shares currently trading below 4,000p, some shareholders probably now wish the board had accepted a 5,500p offer from US group Pfizer two years ago.

However, while Astra isn’t quite out of the woods yet, the future looks bright, with chief executive Pascal Soriot having refocused the business and the drugs pipeline now looking very strong. The long period of revenue and earnings declines appears set to bottom out next year, and management’s medium-term outlook suggests we’ll see impressive growth thereafter.

Trading on 15 times next year’s bottom-of-the-trough forecast earnings, Astra looks an appealing investment with a 5% dividend yield as a nice appetiser ahead of the prospect of strong capital and income increases in the medium term.

Consistent performer

Smith & Nephew (LSE: SN) offers exposure to a third area of the broadly attractive healthcare sector. With its sports medicine, knee and hip implants and advanced wound management divisions, the group is well placed to benefit from such trends as healthier lifestyles and ageing populations are keen to enjoy an active retirement.

S&N has delivered consistent earnings and dividend growth over many years and the pattern is set to continue. Current-year forecasts put the company on a P/E of 19.5, falling to 17.5 for 2017 on the back of 12% forecast earnings growth. The stock looks very buyable to me, with the rating appearing more than reasonable for such a consistent performer in an industry with attractive long-term dynamics.

I believe Mediclinic, Astra and S&N have considerable appeal for long-term investors, but have they made it into the select group of companies named by the Motley Fool's top analysts as five elite FTSE 100 shares?

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G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.