The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Encompass Health (NYSE: EHC) and the rest of the outpatient & specialty care stocks fared in Q3.

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.

In light of this news, share prices of the companies have held steady as they are up 4.7% on average 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 $1.48 billion, up 9.4% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a narrow beat of analysts’ full-year EPS guidance estimates but a slight miss of analysts’ same-store sales estimates.

"During the quarter, we further increased our capacity to serve patients in need of inpatient rehabilitation care by opening three new hospitals and adding 39 beds to existing hospitals," said President and Chief Executive Officer Mark Tarr.

Encompass Health scored the highest full-year guidance raise of the whole group. Still, the market seems discontent with the results. The stock is down 7.2% since reporting and currently trades at $102.94.

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

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. The market seems happy with the results as the stock is up 7.2% since reporting. It currently trades at $15.23.

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

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 11.9% since the results and currently trades at $111.46.

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 print surpassed 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 delivered the fastest revenue growth among its peers. The stock is down 4.6% since reporting and currently trades at $83.96.

Read our full, actionable report on U.S. Physical Therapy 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 $1.44 billion, down 1.1% year on year. This result topped analysts’ expectations by 1%. Aside from that, it was a slower quarter as it logged full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ EPS estimates.

agilon health had the slowest revenue growth among its peers. The company added 5,000 customers to reach a total of 503,000. The stock is up 32.9% since reporting and currently trades at $0.97.

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

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