Outpatient & Specialty Care Stocks Q4 Teardown: Encompass Health (NYSE:EHC) Vs The Rest

April 18, 2025 at 05:07 AM EDT

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Earnings results often indicate what direction a company will take in the months ahead. With Q4 behind us, let’s have a look at Encompass Health (NYSE: EHC) 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 9.3% since the latest earnings results.

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 exceeded analysts’ expectations by 1.8%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EPS estimates and a narrow beat of analysts’ same-store sales estimates.

"The fourth quarter was a very strong finish to 2024," said President and Chief Executive Officer of Encompass Health Mark Tarr.

The stock is up 4.9% since reporting and currently trades at $103.35.

Is now the time to buy Encompass Health? Access our full analysis of the earnings results 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 a solid beat of analysts’ EPS estimates.

LifeStance Health Group delivered the highest full-year guidance raise among its peers. The stock is down 10.7% since reporting. It currently trades at $6.70.

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.

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 10.5% since the results and currently trades at $4.

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 result beat analysts’ expectations by 4.3%. Overall, it was a strong quarter as it also produced a solid beat of analysts’ EPS estimates and a narrow beat of analysts’ sales volume estimates.

Surgery Partners pulled off the biggest analyst estimates beat among its peers. The stock is down 11.9% since reporting and currently trades at $21.22.

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

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 $180.4 million, up 16.6% year on year. This print surpassed analysts’ expectations by 2.4%. Aside from that, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ sales volume estimates.

The stock is down 23.1% since reporting and currently trades at $67.45.

Read our full, actionable report on U.S. Physical Therapy here, it’s free.

Market Update

Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

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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