As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the outpatient & specialty care industry, including Select Medical (NYSE: SEM) 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 Q1. As a group, revenues beat analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 0.8% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 8.7% since the latest earnings results.

Weakest Q1: 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 $1.35 billion, up 2.4% year on year. This print fell short of analysts’ expectations by 2.6%. Overall, it was a softer quarter for the company with a significant miss of analysts’ EPS estimates and full-year revenue guidance missing analysts’ expectations.

Select Medical delivered the weakest performance against analyst estimates and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 16.4% since reporting and currently trades at $15.24.

Read our full report on Select Medical here, it’s free.

Best Q1: 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 $183.8 million, up 18.1% year on year, outperforming analysts’ expectations by 4.4%. The business had an exceptional quarter with an impressive beat of analysts’ sales volume estimates and a decent beat of analysts’ EPS estimates.

U.S. Physical Therapy delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 8.6% since reporting. It currently trades at $77.

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

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 $3.22 billion, up 5% year on year, exceeding analysts’ expectations by 0.5%. Still, it was a slower quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates.

As expected, the stock is down 5.5% since the results and currently trades at $136.12.

Read our full analysis of DaVita’s results here.

Encompass Health (NYSE: EHC)

With a network of 161 specialized facilities across 37 states and Puerto Rico, Encompass Health (NYSE: EHC) operates inpatient rehabilitation hospitals that help patients recover from strokes, hip fractures, and other debilitating conditions.

Encompass Health reported revenues of $1.46 billion, up 10.6% year on year. This number beat analysts’ expectations by 1.7%. It was a strong quarter as it also put up a solid beat of analysts’ full-year EPS guidance estimates.

Encompass Health delivered the highest full-year guidance raise among its peers. The stock is up 20.3% since reporting and currently trades at $122.

Read our full, actionable report on Encompass Health here, it’s free.

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 $1.53 billion, down 4.5% year on year. This print topped analysts’ expectations by 1.8%. Taking a step back, it was a decent quarter as revenue and EBITDA exceeded expectations.

agilon health had the slowest revenue growth among its peers. The company lost 36,000 customers and ended up with a total of 491,000. The stock is down 51.2% since reporting and currently trades at $2.19.

Read our full, actionable report on agilon health here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

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