The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how outpatient & specialty care stocks fared in Q2, starting with DaVita (NYSE: DVA).

The outpatient and specialty care industry delivers targeted medical services in non-hospital settings that are often cost-effective compared to inpatient alternatives. This means that they are more desired as rising healthcare costs and ways to combat them become more and more top-of-mind. Outpatient and specialty care providers boast revenue streams that are stable due to the recurring nature of treatment for chronic conditions and long-term patient relationships. However, their reliance on government reimbursement programs like Medicare means stroke-of-the-pen risk. Additionally, scaling a network of facilities can be capital-intensive with uneven return profiles amid competition from integrated healthcare systems. Looking ahead, the industry is positioned to grow as demand for outpatient services expands, driven by aging populations, a rising prevalence of chronic diseases, and a shift toward value-based care models. Tailwinds include advancements in medical technology that support more complex procedures in outpatient settings and the increasing focus on preventive care, which can be aided by data and AI. However, headwinds such as reimbursement rate cuts, labor shortages, and the financial strain of digitization may temper growth.

The 7 outpatient & specialty care stocks we track reported a satisfactory Q2. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.

In light of this news, share prices of the companies have held steady as they are up 3.1% on average since the latest earnings results.

DaVita (NYSE: DVA)

With over 2,600 dialysis centers across the United States and a presence in 13 countries, DaVita (NYSE: DVA) operates a network of dialysis centers providing treatment and care for patients with chronic kidney disease and end-stage kidney disease.

DaVita reported revenues of $3.38 billion, up 6.1% year on year. This print exceeded analysts’ expectations by 0.7%. Overall, it was a satisfactory quarter for the company with a beat of analysts’ EPS estimates.

"We're reporting another solid quarter, fueled by our unwavering focus on patient care," said Javier Rodriguez, CEO of DaVita Inc.

Unsurprisingly, the stock is down 8.8% since reporting and currently trades at $128.62.

Is now the time to buy DaVita? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q2: U.S. Physical Therapy (NYSE: USPH)

With a nationwide footprint spanning 671 clinics across 42 states, U.S. Physical Therapy (NYSE: USPH) operates a network of outpatient physical therapy clinics and provides industrial injury prevention services to employers across the United States.

U.S. Physical Therapy reported revenues of $197.3 million, up 18% year on year, outperforming analysts’ expectations by 2.1%. The business had an exceptional quarter with a solid beat of analysts’ revenue and EPS estimates.

U.S. Physical Therapy scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 23.6% since reporting. It currently trades at $90.38.

Is now the time to buy U.S. Physical Therapy? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q2: agilon health (NYSE: AGL)

Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE: AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements.

agilon health reported revenues of $1.39 billion, down 5.9% year on year, falling short of analysts’ expectations by 4.8%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and EPS estimates.

agilon health delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The company added 7,000 customers to reach a total of 498,000. As expected, the stock is down 39.9% since the results and currently trades at $1.09.

Read our full analysis of agilon health’s results here.

Select Medical (NYSE: SEM)

With a nationwide network spanning 46 states and over 2,700 healthcare facilities, Select Medical (NYSE: SEM) operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers across the United States.

Select Medical reported revenues of $1.34 billion, up 4.5% year on year. This result met analysts’ expectations. Aside from that, it was a satisfactory quarter as it also logged a solid beat of analysts’ full-year EPS guidance estimates but full-year revenue guidance meeting analysts’ expectations.

The stock is down 5.5% since reporting and currently trades at $14.

Read our full, actionable report on Select Medical here, it’s free for active Edge members.

Surgery Partners (NASDAQ: SGRY)

With more than 180 locations across 33 states serving as alternatives to traditional hospital settings, Surgery Partners (NASDAQ: SGRY) operates a national network of outpatient surgical facilities including ambulatory surgery centers and short-stay surgical hospitals.

Surgery Partners reported revenues of $826.2 million, up 8.4% year on year. This print beat analysts’ expectations by 1.2%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ sales volume estimates and a beat of analysts’ EPS estimates.

Surgery Partners achieved the highest full-year guidance raise among its peers. The stock is down 8.4% since reporting and currently trades at $20.35.

Read our full, actionable report on Surgery Partners here, it’s free for active Edge members.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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