The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how outpatient & specialty care stocks fared in Q2, starting with U.S. Physical Therapy (NYSE: USPH).

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.

In light of this news, share prices of the companies have held steady as they are up 3.9% on average since the latest earnings results.

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. This print exceeded analysts’ expectations by 2.1%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ sales volume estimates and a beat of analysts’ EPS estimates.

Chris Reading, Chief Executive Officer, said, “Volumes in our physical therapy business remain at record levels while we execute our plan for cost rationalization and improved efficiencies. Our injury prevention business continues a strong growth path, both organically and through carefully added acquisitions, which have broadened our service offerings and increased our exposure to new industry verticals. As a result of our efforts and expected progress we have updated our earnings guidance for the year.”

U.S. Physical Therapy scored the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 17.1% since reporting and currently trades at $85.64.

Is now the time to buy U.S. Physical Therapy? Access our full analysis of the earnings results 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 $1.46 billion, up 12% year on year, outperforming analysts’ expectations by 2.2%. The business had a very strong quarter with a solid 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 market seems happy with the results as the stock is up 15% since reporting. It currently trades at $125.58.

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

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, falling short of analysts’ expectations by 4.8%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates and customer base in line with analysts’ estimates.

agilon health delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The company added 7,000 customers to reach a total of 498,000. As expected, the stock is down 33.3% since the results and currently trades at $1.21.

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

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 $1.34 billion, up 4.5% year on year. This result met analysts’ expectations. Overall, it was a strong quarter as it also produced a solid beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates.

Select Medical had the weakest full-year guidance update among its peers. The stock is down 10.5% since reporting and currently trades at $13.25.

Read our full, actionable report on Select Medical 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. This print topped analysts’ expectations by 0.7%. More broadly, it was a mixed quarter as it also recorded a beat of analysts’ EPS estimates but a slight miss of analysts’ sales volume estimates.

The stock is down 2.2% since reporting and currently trades at $137.87.

Read our full, actionable report on DaVita 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 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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