Zacks Industry Outlook Highlights Quest Diagnostics, Encompass Health, Amedisys and Addus HomeCare

For Immediate ReleaseChicago, IL – October 24, 2024 – Today, Zacks Equity Research discusses Quest Diagnostics Inc. DGX, Encompass Health Corp. EHC, Amedisys, Inc. AMED and Addus HomeCare Corp. ADUS.Industry: Outpatient and Home HealthcareLink: https://www.zacks.com/commentary/2355840/4-stocks-to-buy-in-an-evolving-outpatient-home-health-industryThe Zacks Medical - Outpatient and Home Healthcare industry has been witnessing a rapid shift toward digital healthcare treatment. In the past few years, there has been a significant rise in demand for telemedicine-focused online medical and artificial intelligence (AI)-powered technology services.Post-pandemic, many healthcare companies that were traditionally not technology-based transformed to survive in the market. Per a report by Precedence Research, the global home healthcare market was valued at $373.56 billion in 2023 and is anticipated to reach $1,469.92 billion by 2033 at a CAGR of approximately 14.8%. Another factor prompting these MedTech players to embrace digital healthcare is the skyrocketing healthcare costs.On a positive note, rising dependence on telehealth and AI is likely to help the industry thrive in the near term. Quest Diagnostics Inc., Encompass Health Corp., Amedisys, Inc. and Addus HomeCare Corp. are likely to gain from the prospects.Industry DescriptionThe industry comprises companies that offer ambulatory care in an outpatient setting or at home. They use advanced medical technologies for diagnosis, treatment and rehabilitation services. The players include operators of HMO medical centers, kidney dialysis centers and other outpatient care centers.After navigating a tough pandemic era, the payers and providers have been seeing steady growth on the back of innovation in services. This buoys optimism about prospects over the next few years, although persistent inflation in consumer prices could dent the outlook.The potential for scaling up innovation, prompted by the pandemic’s pressure on the healthcare system, is an added plus. Also, the acceleration of value-based care models and the increasing application of technology across the healthcare industry are likely to continue in the long run.Major Trends Shaping the Future of the Outpatient and Home Healthcare IndustryCost Effectiveness: The primary advantage of outpatient clinics is cost-effectiveness. Outpatient medical care clinics do not retain patients for long hours (overnight) or charge exorbitantly. Modern-day outpatient clinics offer a broad spectrum of treatment and diagnostic options and even minor surgical procedures. Financial incentives like health plans and government program payment policies supporting services in lower-cost care settings have also been driving outpatient care.Additionally, with value-based models of care steadily emerging as the future of healthcare, the shift from fee-for-service (FFS) to alternative payment models (APM) is an ongoing parallel trend. FFS will be crucial to care organizations as a benchmark through which providers can assess APM.AI’s Dominant Role: AI has been a roaring success in healthcare. Outpatient companies prefer bots and automated techniques for managing health information. With the help of AI, hospitals have been achieving better outcomes, with patients receiving more efficient and personalized care. The outpatient industry has been generating huge profits from electronic health records (EHRs) and ePrescriptions.Virtual Healthcare Assistants: Virtual assistants and chatbots can help patients by answering questions about their care and connecting them with the information they need to make more informed decisions about their care. Increasingly, they will interface with EHR systems and be used to book and schedule appointments. They can also help patients stay compliant by reminding them to take medications or exercise.Dependence on Telehealth: The pandemic has accelerated healthcare innovation. Home healthcare can gain from the benefits provided by Medicare (and several other payers) that comprise a broad range of services that can be delivered in a patient’s home, including post-operative and chronic wound care. Home healthcare has seen a surge in the utilization of the telehealth platform in response to the pandemic. With a rise in the elderly population and the increasing costs of in-person health care, the demand for home-based health care is on the rise. People with chronic illnesses and disabilities also require home-based care.Currently, Internet of Things (IoT)-powered virtual hospitals and telemedicine are quite popular. This trend includes both telemedicine and wearable devices connected to the global network, known as the IoT. By using connected devices to remotely monitor patients and provide communication channels for healthcare professionals, more elements of care can be delivered remotely.Staffing Shortages: The U.S. healthcare industry has been experiencing a severe shortage of workers at every level. Among support personnel, there is a laxity of home health aides. The increasing international migration of health workers may aggravate health workforce shortfalls, especially in low-income and lower-middle-income countries. Another reason for the acute staffing shortage is high burnout due to physical, emotional and mental exhaustion. Thus, these overworked employees are leaving the profession at an accelerating rate.Healthcare staffing shortages lead to poor patient outcomes, which can include hospital-acquired infections, patient falls and increased probabilities of death. With a lesser number of staff available in hospital settings for patient care, there has been a gradual shift toward home healthcare for non-critical patients who can be monitored remotely.Zacks Industry RankThe Zacks Medical - Outpatient and Home Healthcare industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #28, which places it in the top 11% of nearly 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates promising near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.Before we present a few outpatient home health stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry's Stock Market PerformanceThe industry has outperformed both its sector and the Zacks S&P 500 Composite in the past year.The industry has gained 39.7% over this period compared with the S&P 500’s rise of 37.1% and the broader sector’s rise of 13.5%.Industry's Current ValuationOn the basis of the forward 12-month price-to-earnings (P/E), commonly used for valuing medical stocks, the industry is currently trading at 21.4X compared with the S&P 500’s 22.2X and the sector’s 22.7X.Over the last five years, the industry has traded as high as 25.8X and as low as 17.3X, with the median being at 20.6X.4 Outpatient and Home Healthcare Stocks to Add Right NowAddus HomeCare: Addus HomeCare, a key provider of home care services, announced its second-quarter 2024 results in August, wherein it registered a solid uptick in its net service revenues. Management confirmed that its personal care revenues (accounting for 74.2% of overall revenues) improved year over year on a same-store basis, reflecting higher volumes and rate increases in key markets. Home health and Hospice revenues were also up year over year. ADUS presently sports a Zacks Rank of 1 (Strong Buy).For this Frisco, TX-based company, the Zacks Consensus Estimate for 2024 revenues suggests growth of 8.1%. The same for earnings indicates an increase of 13.5%.The company’s return on equity (ROE) of 9.8% compares favorably with the industry’s 8.2%.Quest Diagnostics: Quest Diagnostics, a well-known diagnostic information services provider, reported its third-quarter 2024 results yesterday. The company registered an uptick in its overall top-line and bottom-line performances. Per management, the quarter’s performance was driven by new customer wins and expanded business with physicians and hospitals, as well as recent acquisitions, including LifeLabs.Management’s statement regarding Quest Diagnostics being on track to complete eight acquisitions by the year's end also looked promising. DGX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.For this Secaucus, NJ-based company, the Zacks Consensus Estimate for 2024 revenues suggests growth of 3.1%. The same for earnings indicates an increase of 2.1%.The company’s ROE of 15.3% compares favorably with the industry’s 8.2%.Encompass Health: Encompass Health, the owner and operator of inpatient rehabilitation hospitals in the United States, announced last month the opening of Encompass Health Rehabilitation of Fort Mill in South Carolina. EHC carries a Zacks Rank of 2.For this company, which currently operates from Birmingham, AL, the Zacks Consensus Estimate for 2024 revenues suggests growth of 10.6%. The same for earnings indicates an increase of 14.8%.The company’s ROE of 17.8% compares favorably with the industry’s 8.2%.Amedisys: Amedisys, a well-known provider of home health, hospice and high-acuity care, reported its second-quarter 2024 results in July. The company recorded an uptick in its overall net service revenues, as well as met service revenues from the Home Health and Hospice divisions. AMED presently carries a Zacks Rank of 2.For this Baton Rouge, LA-based company, the Zacks Consensus Estimate for 2023 revenues suggests growth of 5.1%. The same for earnings indicates an increase of 8.1%.The company’s ROE of 12.4% compares favorably with the industry’s 8.2%.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amedisys, Inc. (AMED): Free Stock Analysis Report Quest Diagnostics Incorporated (DGX): Free Stock Analysis Report Addus HomeCare Corporation (ADUS): Free Stock Analysis Report Encompass Health Corporation (EHC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks