Outpatient & Specialty Care Stocks Q4 Teardown: Select Medical (NYSE:SEM) Vs The Rest

April 17, 2025 at 05:02 AM EDT

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As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q4. Today, we are looking at outpatient & specialty care stocks, starting with Select Medical (NYSE: SEM).

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.

While some outpatient & specialty care stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2% since the latest earnings results.

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 $1.31 billion, up 7.8% year on year. This print fell short of analysts’ expectations by 8.9%. Overall, it was a slower quarter for the company with a significant miss of analysts’ EPS and sales volume estimates.

Select Medical delivered the weakest performance against analyst estimates of the whole group. The stock is down 12.8% since reporting and currently trades at $16.61.

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

Best Q4: LifeStance Health Group (NASDAQ: LFST)

With over 6,600 licensed mental health professionals treating more than 880,000 patients annually, LifeStance Health (NASDAQ: LFST) provides outpatient mental health services through a network of clinicians offering psychiatric evaluations, psychological testing, and therapy across 33 states.

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 6.8% since reporting. It currently trades at $6.99.

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)

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 $1.52 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 and a significant miss of analysts’ EPS estimates.

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 51.1% since the results and currently trades at $5.47.

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

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 $864.4 million, up 17.5% year on year. This number surpassed analysts’ expectations by 4.3%. It was a strong quarter as it also put up an impressive beat of analysts’ EPS estimates and a narrow beat of analysts’ sales volume estimates.

Surgery Partners scored the biggest analyst estimates beat among its peers. The stock is down 10.1% since reporting and currently trades at $21.65.

Read our full, actionable report on Surgery Partners here, it’s free.

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 $1.41 billion, up 12.7% year on year. This print topped analysts’ expectations by 1.8%. Overall, it was a strong quarter as it also logged a solid beat of analysts’ EPS estimates and a narrow beat of analysts’ same-store sales estimates.

The stock is up 4.6% since reporting and currently trades at $103.

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

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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

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