Looking back on outpatient & specialty care stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including agilon health (NYSE: AGL) 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 Q3. As a group, revenues beat analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 10.7% since the latest earnings results.

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 $1.44 billion, down 1.1% year on year. This print exceeded analysts’ expectations by 1%. Despite the top-line beat, it was still a slower quarter for the company with full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ EPS estimates.

agilon health delivered the slowest revenue growth of the whole group. The company added 5,000 customers to reach a total of 503,000. Unsurprisingly, the stock is down 27% since reporting and currently trades at $0.53.

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

Best Q3: 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 $1.36 billion, up 7.2% year on year, outperforming analysts’ expectations by 2.7%. The business had a strong quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ revenue estimates.

Select Medical delivered the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 10.3% since reporting. It currently trades at $12.74.

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

Weakest Q3: 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 $3.42 billion, up 4.8% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a significant miss of analysts’ EPS estimates and revenue in line with analysts’ estimates.

DaVita delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 7.3% since the results and currently trades at $117.30.

Read our full analysis of DaVita’s results here.

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 $197.1 million, up 17.3% year on year. This result beat analysts’ expectations by 1%. It was a satisfactory quarter as it also put up a narrow beat of analysts’ revenue estimates.

U.S. Physical Therapy achieved the fastest revenue growth among its peers. The stock is down 20.5% since reporting and currently trades at $70.03.

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

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 $363.8 million, up 16.3% year on year. This number topped analysts’ expectations by 2.3%. Aside from that, it was a mixed quarter as it also recorded a solid beat of analysts’ revenue estimates but EPS in line with analysts’ estimates.

LifeStance Health Group pulled off the highest full-year guidance raise among its peers. The stock is up 30.3% since reporting and currently trades at $6.26.

Read our full, actionable report on LifeStance Health Group 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.

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