As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the outpatient & specialty care industry, 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 satisfactory Q2. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.

While some outpatient & specialty care stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.2% since the latest earnings results.

Weakest Q2: 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 $1.39 billion, down 5.9% year on year. This print fell short of analysts’ expectations by 4.8%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ EPS estimates.

agilon health delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The company added 7,000 customers to reach a total of 498,000. Unsurprisingly, the stock is down 36.6% since reporting and currently trades at $1.15.

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

Best Q2: 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 $197.3 million, up 18% year on year, outperforming analysts’ expectations by 2.1%. The business had a very strong quarter with a solid beat of analysts’ sales volume and EPS estimates.

U.S. Physical Therapy achieved the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 7.9% since reporting. It currently trades at $78.87.

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 $3.38 billion, up 6.1% year on year, exceeding analysts’ expectations by 0.7%. Still, it was a mixed quarter as it posted a slight miss of analysts’ sales volume estimates.

As expected, the stock is down 8.5% since the results and currently trades at $129.

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 12% year on year. This print topped analysts’ expectations by 2.2%. Overall, it was a very strong quarter as it also put up an impressive beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates.

Encompass Health achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 13.8% since reporting and currently trades at $124.28.

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

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 $826.2 million, up 8.4% year on year. This result surpassed analysts’ expectations by 1.2%. It was a strong quarter as it also recorded a beat of analysts’ EPS and sales volume estimates.

The stock is flat since reporting and currently trades at $22.22.

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

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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