Zacks Industry Outlook Quest Diagnostics, DaVita, Option Care Health and Addus HomeCare

For Immediate ReleaseChicago, IL – January 17, 2025 – Today, Zacks Equity Research Equity Quest Diagnostics Inc. DGX, DaVita Inc. DVA, Option Care Health, Inc. OPCH and Addus HomeCare Corp. ADUS.Industry: Outpatient and Home HealthcareLink: https://www.zacks.com/commentary/2398152/4-stocks-to-monitor-in-a-dynamic-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. The rising elderly global population is necessitating many healthcare companies that were traditionally not technology-based to provide technology-enabled services 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., DaVita Inc., Option Care Health, 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 IndustryAging Population: One of the primary drivers of the home healthcare market is the aging global population. As people live longer, there is a growing demand for services that cater to chronic disease management, rehabilitation and daily living assistance. The rising elderly population is expected to fuel the need for home healthcare services.Cost 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.Technological Advancements: 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.Home healthcare can gain from the benefits provided by Medicare (and several other payers), which 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.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 has a Zacks Industry Rank #86, which places it in the top 34% 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 its sector but has underperformed the Zacks S&P 500 Composite in the past year.The industry has gained 13.4% over this period compared with the S&P 500’s rise of 26.7% and the broader sector’s decline of 5.9%.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 20.1X compared with the S&P 500’s 22.2X and the sector’s 20.2X.Over the last five years, the industry has traded as high as 25.4X and as low as 17.1X, with the median being at 20.4X.4 Outpatient and Home Healthcare Stocks to Monitor NowDaVita: DaVita, a renowned global comprehensive kidney care provider, reported its third-quarter 2024 results in October 2024. The company registered an uptick in its overall top-line and dialysis patient service revenues. The opening of dialysis centers within the United States and opening and acquiring centers overseas were also seen. DVA sports a Zacks Rank #1 (Strong Buy).For this Denver, CO-based company, the Zacks Consensus Estimate for 2025 revenues suggests growth of 3.7%. The same for earnings indicates an increase of 15.7%.The company’s return on equity (ROE) of 88.2% compares favorably with the industry’s 8.1%.Quest Diagnostics: Quest Diagnostics, a well-known diagnostic information services provider, announced the availability of personalized, one-on-one health coaching for purchase on questhealth.com in December 2024. The company reported its third-quarter 2024 results in October.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 end of 2024 also looked promising.DGX carries a Zacks Rank #3 (Hold). 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 2025 revenues suggests growth of 8.6%. The same for earnings indicates an increase of 9.1%.The company’s ROE of 15.3% compares favorably with the industry’s 8.1%.Option Care Health: Option Care Health is a renowned independent provider of home and alternate site infusion services. On Monday, the company announced its preliminary results for the fourth quarter and full year 2024. Per the estimates, it registered a solid uptick in its net revenues for both the fourth quarter and the full year.OPCH presently carries a Zacks Rank of 3. For this Bannockburn, IL-based company, the Zacks Consensus Estimate for 2025 revenues suggests growth of 7.9%. The same for earnings indicates an increase of 2.6%.The company’s ROE of 15.3% compares favorably with the industry’s 8.1%.Addus HomeCare: Addus HomeCare, a key provider of home care services, completed the acquisition of the personal care operations of Gentiva in December 2024. The company also announced its third-quarter 2024 results in November, wherein it registered a solid uptick in its net service revenues.Per management, the Gentiva buyout was expected to enable it to expand its market reach, especially in Texas. Management also believes that having broader market coverage will likely support the company’s ability to hire and retain caregivers and provide it with an advantage in developing value-based contract arrangements.ADUS presently has a Zacks Rank of 3. For this Frisco, TX-based company, the Zacks Consensus Estimate for 2025 revenues suggests growth of 24.5%. The same for earnings indicates an increase of 14.6%.The company’s ROE of 9.6% compares favorably with the industry’s 8.1%.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. 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(DVA): Free Stock Analysis Report Addus HomeCare Corporation (ADUS): Free Stock Analysis Report Option Care Health, Inc. (OPCH): 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