Chicago, IL – December 22, 2025 – Today, Zacks Equity Research will discuss Encompass Health Corp. EHC, DaVita Inc. DVA, Option Care Health, Inc. OPCH, and The Pennant Group, Inc. PNTG.
Link: https://www.zacks.com/commentary/2806599/4-outpatient-home-health-stocks-in-focus-as-market-dynamics-change
Zacks Medical – The ambulatory and home health care industry is rapidly moving toward digital healthcare delivery. In recent years, there has been a significant increase in demand for telemedicine-based platforms and artificial intelligence (AI)-powered medical technologies. As the global aging population grows, many healthcare providers that have not traditionally focused on technology are being asked to implement technology-enabled solutions to remain competitive.
According to a report by Grand View Research, the global home healthcare market was valued at $416.4 billion in 2024 and is expected to reach $747.7 billion by 2030, at a CAGR of approximately 10.2%. Rising healthcare costs are another key driver for medtech companies to accelerate the transition to digital healthcare.
Increasing reliance on telemedicine and AI could lead to industry growth in the short term. Encompass Health Corp., DaVita Inc., Option Care Health, Inc., and The Pennant Group, Inc. could benefit from this outlook.
This industry consists of companies that provide outpatient or home-based outpatient care. They use advanced medical technology for diagnosis, treatment, and rehabilitation services. Participants include operators of HMO medical centers, kidney dialysis centers, and other outpatient treatment centers. After weathering the challenging pandemic era, payers and providers are experiencing steady growth on the back of service innovation.
This increases optimism about the outlook for the coming years, although the outlook could worsen if consumer price inflation persists. The potential for innovation to scale up is also a further positive as the pandemic puts pressure on health systems. Additionally, the acceleration of value-based care models and increased application of technology across the healthcare industry is likely to continue in the long term.
Aging Population: One of the key drivers of the home healthcare market is the aging of the global population. As people live longer, the demand for services that address chronic disease management, rehabilitation, and daily living assistance increases. As the elderly population increases, the need for home health care services is expected to increase. As people age, they naturally prefer receiving medical services in a familiar and comfortable environment.
Cost-effectiveness: The main advantage of outpatient clinics is cost-effectiveness. Outpatient clinics do not hold patients for long hours (overnight) or charge exorbitant fees. Modern outpatient clinics offer a wide range of treatment and diagnostic options, and even minor surgical procedures. Financial incentives, such as health insurance and government program payment policies that support services in low-cost care settings, also promote outpatient treatment.
Additionally, lower emergency department visit, readmission, and hospitalization rates for patients receiving home care prevent costly and preventable incidents, further driving healthcare cost savings.
Key role of AI: AI has been a huge success in the healthcare sector as it helps enhance patient care through remote monitoring. AI-powered medical devices continuously monitor a patient's health status and forward that data to healthcare providers. The analytical capabilities of AI allow healthcare providers to analyze patient data and detect changes in patient conditions to quickly respond.
This further aids in timely intervention and reduces readmissions. Additionally, AI could make it much easier for caregivers, providers, and patients to manage complex home care plans. AI can streamline care management by coordinating caregiver activities and automatically scheduling doctor appointments.
Technological advances: Virtual assistants and chatbots assist patients by answering questions about their care and providing them with the information they need to make more informed decisions about their care. They are increasingly being used to schedule and schedule appointments in conjunction with electronic medical record systems. It can also help patients adhere to their medications by reminding them to take their medications and exercise.
Home health care can benefit from benefits provided by Medicare (and some other payers). Medicare includes a wide range of services that can be provided in a patient's home, such as postoperative and chronic wound care. Home health care has seen a surge in the use of telehealth platforms in response to the pandemic. Demand for home health care is increasing as the elderly population increases and the cost of in-person medical care increases. People with chronic illnesses or disabilities also need home care.
Talent Shortages: The U.S. healthcare industry faces severe talent shortages at all levels. Among the support staff, there is a shortage of home medical support staff. Increased international movement of health workers is likely to exacerbate health worker shortages, especially in low-income and lower-middle income countries. Another reason for the severe talent shortage is high burnout rates resulting from physical, emotional, and mental fatigue. Therefore, these overworked employees are leaving their jobs at an accelerating rate.
The Zacks Medical – Ambulatory and Home Healthcare industry falls under the broader Zacks Medical sector. The company has a Zacks Industry Rank #55, which puts it in the top 23% of about 250 Zacks industries.
The Zacks Industry Rank for this group is essentially the average of the Zacks Rank of all its member stocks, indicating a positive near-term outlook. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by more than 2 to 1.
Before we introduce some home health stocks to consider for your portfolio, let's take a look at the industry's recent stock market performance and valuation.
The industry has outperformed its sector peers over the past year, but underperformed the S&P 500 composite index.
The industry has gained 5.1% in that period, compared to the S&P 500's gain of 15.2% and the broader sector's gain of 4.3%.
Based on the trailing 12-month price-to-earnings ratio (P/E), which is commonly used to value healthcare stocks, the Healthcare industry currently trades at 18.1x, compared to the S&P 500's 22.9x and the sector's 20.9x.
Over the past five years, industry multiples have been as high as 23.4x and as low as 16.1x, with a median of 19.2x.
Pennant Group: Parent company of Pennant Group, a group of home health care, hospice and senior housing companies. Last month, Pennant Group reported its third quarter 2025 results and confirmed solid improvement in overall sales. The Home Health and Hospice Services and Senior Living Services segments recorded significant increases in revenue. The company also posted strong results in total home health admissions and total Medicare home health admissions. The increase in total hospice admissions and average hospice daily census during the second quarter was also impressive. PNTG has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for this Eagle, ID-based company's 2025 earnings is suggesting growth of 33.5%. Profit also showed a similar increase of 22.3%.
The company's return on equity (ROE) is 9.4%, which compares favorably to the industry's 8.6%.
Encompass Health: Encompass Health, a renowned owner and operator of inpatient rehabilitation hospitals, announced the opening of Encompass Health Rehabilitation Hospital in Lake Worth this month. The company reported its third quarter 2025 results in October and recorded increased overall revenue growth. Encompass Health opened three new hospitals and added 39 beds to existing hospitals during the quarter, according to management. EHC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Birmingham, AL-based company's Zacks Consensus Estimate for its 2025 earnings is expected to grow 10.4%. Earnings similarly showed an increase of 19.6%.
The company's ROE is 17.8%, which compares favorably to the industry's 8.6%.
DaVita: DaVita, a world-renowned comprehensive kidney care provider, reported its third quarter 2025 results in October. The company recorded increases in sales and dialysis patient services revenue. The quarter also recorded an increase in revenue per treatment. We also saw the opening of dialysis centers in the United States and the acquisition of centers overseas. DVA carries a Zacks Rank #3.
The Denver, Colorado-based company's Zacks Consensus Estimate for its 2025 earnings is suggesting growth of 5.8%. Earnings showed a similar increase of 8.7%.
The company's profit margin is 8.9%, which compares favorably to the industry's 5%.
Option Care Health: Option Care Health is a well-known independent provider of home and alternative site IV services. In October, the company reported its third quarter 2025 results, recording a significant increase in net revenue and profit. OPCH currently has a Zacks Rank of 3.
The Bannockburn, IL-based company's Zacks Consensus Estimate for 2025 earnings is expected to grow 12.9%. Profit also showed a similar increase of 39.8%.
The company's ROE is 17.9%, which compares favorably to the industry's 8.6%.
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DaVita Inc. (DVA): Free Stock Price Analysis Report
Encompass Health Corporation (EHC): Free Stock Analysis Report
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Option Care Health, Inc. (OPCH): Free Stock Analysis Report
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