Looking back on outpatient & specialty care stocks’ Q4 earnings, we examine this quarter’s best and worst performers, including U.S. Physical Therapy (NYSE: USPH) and its peers.
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 mixed Q4. As a group, revenues beat analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was 0.7% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.2% since the latest earnings results.
U.S. Physical Therapy (NYSE: USPH)
Founded in 1990 with just six clinics, U.S. Physical Therapy (NYSE: USPH) operates outpatient physical therapy clinics across the country, offering rehabilitation services for orthopedic injuries, post-surgical recovery, and chronic pain management.
U.S. Physical Therapy reported revenues of $180.4 million, up 16.6% year on year. This print exceeded analysts’ expectations by 2.4%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ sales volume estimates but a significant miss of analysts’ EPS estimates.
Chris Reading, Chief Executive Officer, said, “The past few years have been particularly challenging for our industry due in large part to the intersection and impact of Medicare reimbursement reductions done in sequence, and the rising cost of people and goods, impacted by inflation and exacerbated by a tight labor market.”
The stock is down 11.1% since reporting and currently trades at $77.99.
Is now the time to buy U.S. Physical Therapy? Access our full analysis of the earnings results here, it’s free.
Best Q4: LifeStance Health Group (NASDAQ: LFST)
Founded in 2017, LifeStance Health (NASDAQ: LFST) provides outpatient mental health services, including therapy, psychiatry, and digital health solutions.
LifeStance Health Group reported revenues of $325.5 million, up 16% year on year, outperforming analysts’ expectations by 3.6%. The business had an exceptional quarter with EBITDA guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EPS estimates.
LifeStance Health Group scored the highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 10.5% since reporting. It currently trades at $6.71.
Is now the time to buy LifeStance Health Group? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: agilon health (NYSE: AGL)
Founded in 2016, Agilon Health (NYSE: AGL) is a healthcare services company that partners with primary care physicians to enhance patient care and improve health outcomes with a focus on seniors and older individuals.
agilon health reported revenues of $1.52 billion, up 44.2% year on year, in line with analysts’ expectations. It was a softer quarter as it posted full-year EBITDA guidance missing analysts’ expectations.
agilon health delivered the fastest revenue growth but had the weakest full-year guidance update in the group. The company added 2,000 customers to reach a total of 527,000. Interestingly, the stock is up 9.7% since the results and currently trades at $3.97.
Read our full analysis of agilon health’s results here.
DaVita (NYSE: DVA)
Founded in 1994, DaVita Inc. (NYSE: DVA) provides dialysis services to patients with chronic kidney failure and end-stage renal disease, offering both in-center and at-home treatment options.
DaVita reported revenues of $3.29 billion, up 4.7% year on year. This number topped analysts’ expectations by 0.9%. However, it was a slower quarter as it recorded a significant miss of analysts’ full-year EPS guidance estimates and sales volume in line with analysts’ estimates.
DaVita had the slowest revenue growth among its peers. The stock is down 19% since reporting and currently trades at $143.38.
Read our full, actionable report on DaVita here, it’s free.
Encompass Health (NYSE: EHC)
Founded in 1984, Encompass Health (NYSE: EHC) specializes in inpatient rehabilitation hospitals and home health care services.
Encompass Health reported revenues of $1.41 billion, up 12.7% year on year. This print beat analysts’ expectations by 1.8%. It was a strong quarter as it also produced a solid beat of analysts’ EPS estimates and a narrow beat of analysts’ same-store sales estimates.
The stock is down 3% since reporting and currently trades at $95.50.
Read our full, actionable report on Encompass Health here, it’s free.
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