December 2, 2025 11:00 AM GMT US Healthcare Research | North America 2026 Hospital Outlook Survey Our AlphaWise survey of 100 US-based hospital executives supports a steady environment for medical devices into '26. The survey provides increased confidence in the continuation of capex spending momentum with some prioritization shifts, improving utilization and stable medical acuity. M We conducted an AlphaWise survey of 100 hospital executives in November 2025, representing a total of ~39,500 hospital beds ( ...

HCA Healthcare and CVS Health are firing on all cylinders.Broadly speaking, stocks have performed pretty well this year, with the S&P 500 up 16% since January. Two that have performed significantly better than that are HCA Healthcare (HCA 2.71%) and CVS Health (CVS 3.18%), both of which have soared by more than 70% year to date. In the wake of such gains, it's natural to wonder whether there's any upside left for these high-flying companies. Is there still time to invest in them, or is it too late? In this ...

Market Performance - Major U.S. equities indexes showed mixed results, with the Dow increasing by 0.4% and the S&P 500 rising by 0.1%, while the tech-heavy Nasdaq decreased by 0.2% [1] Company Highlights - Microchip Technology was the best-performing stock in the S&P 500, with shares climbing nearly 10% after the company raised its guidance due to strong bookings and an improved backlog [1] - American Eagle Outfitters saw a 15% increase in shares after reporting better-than-expected earnings, attributed to successful advertising campaigns featuring Sydney Sweeney and Travis Kelce [1] - Dollar Tree's shares rose approximately 3% as the discount retailer reported quarterly profits exceeding analysts' estimates and raised its outlook, benefiting from increased consumer demand for value [1] - Alexandria Real Estate Equities was the worst-performing stock in the S&P 500, with shares down 7% following weak guidance and a dividend cut [1] - Acadia Healthcare's shares fell 13% after the company warned of higher-than-expected liability costs [1] Industry Trends - Oil and gold futures advanced, indicating a positive trend in commodity markets [1] - The yield on the 10-year Treasury note decreased to 4.07%, reflecting changes in bond market dynamics [1] - The U.S. dollar weakened against the euro, pound, and yen, suggesting shifts in currency markets [1] - Prices for most major cryptocurrencies increased, indicating a positive trend in the digital asset space [1]

Core Insights - The Ensign Group reported strong operational execution in Q3, with revenue growth driven by higher patient volumes and improved clinical outcomes [1] - Management highlighted the importance of occupancy and skilled patient mix, attributing success to their decentralized, locally led model [1] - CEO Barry Port emphasized clinical performance as a key differentiator, with same-store facilities outperforming peers in government surveys and achieving record occupancy [1] Financial Performance - Revenue reached $1.30 billion, exceeding analyst estimates of $1.28 billion, representing a 19.8% year-on-year growth [6] - EPS (GAAP) was $1.42, missing analyst expectations of $1.49 by 4.9% [6] - Adjusted EBITDA was $151.1 million, beating analyst estimates of $147.1 million, with an 11.7% margin [6] - The company raised its full-year revenue guidance to $5.06 billion, a 1.1% increase from the previous guidance of $5.01 billion [6] - Full-year EPS (GAAP) guidance is $6.51, exceeding analyst estimates by 12.1% [6] - Operating margin remained stable at 7.4%, consistent with the same quarter last year [6] - Sales volumes increased by 15.1% year-on-year, compared to 9.9% in the same quarter last year [6] - Market capitalization stands at $10.35 billion [6] Strategic Insights - There is significant potential for skilled mix growth in mature facilities, with only 31.7% of same-store days currently skilled [6] - Organic growth remains a major focus for the company [6] - Managed care contracting in new markets, such as Alabama, is a gradual process that requires time to establish relationships [6] - Acquisition timing is primarily influenced by seller readiness, with a focus on maintaining discipline in pricing despite competitive pressures [6] - The company is expanding behavioral health services, with new units being added in Arizona and California to meet increased demand [6] - Ensign's facilities are positioned as high-quality, lower-cost alternatives, enabling gradual market share gains over time [6]

Core Insights - Wall Street experienced a significant decline on November 6, 2025, primarily due to a sell-off in technology stocks and concerns regarding the ongoing U.S. government shutdown, which is the largest in history [1][9] Investment Strategy - Equity investors are advised to focus on dividend growth stocks rather than high price-yielding stocks, as companies with a history of raising dividends typically demonstrate strong financial health, providing a defensive hedge against economic uncertainty [2][4] - Stocks with a strong history of year-over-year dividend growth are considered to form a healthier portfolio with greater potential for capital appreciation compared to simple dividend-paying stocks [3][6] Selected Dividend Growth Stocks - Five dividend growth stocks identified as solid investment choices include: - **Vertiv (VRT)**: Expected revenue growth of 27.5% year-over-year for 2025, long-term earnings growth rate of 30%, and an annual dividend yield of 0.08% [10][11] - **Tapestry Inc. (TPR)**: Projected revenue growth of 3.20% for fiscal 2026, long-term earnings growth rate of 7.60%, and an annual dividend yield of 1.46% [11] - **HCA Healthcare (HCA)**: Anticipated revenue growth of 7.4% for 2025, long-term earnings growth rate of 12.3%, and an annual dividend yield of 0.61% [12] - **Lam Research (LRCX)**: Expected revenue growth of 12.7% for fiscal 2026, long-term earnings growth rate of 20.3%, and an annual dividend yield of 0.63% [13] - **CBOE Global Markets (CBOE)**: Projected revenue growth of 13.2% for 2025, long-term earnings growth rate of 16.3%, and an annual dividend yield of 1.15% [14] Investment Criteria - Stocks selected for their strong fundamentals include criteria such as: - 5-Year Historical Dividend Growth greater than zero, indicating a solid dividend growth history [6] - 5-Year Historical Sales Growth greater than zero, reflecting strong revenue growth [7] - 5-Year Historical EPS Growth greater than zero, indicating solid earnings growth [7] - Next 3-5 Year EPS Growth Rate greater than zero, suggesting expected earnings growth to sustain dividend payments [7] - Price/Cash Flow less than the industry average, indicating undervaluation [8] - 52-Week Price Change greater than the S&P 500, ensuring stock appreciation [8] - Top Zacks Rank of 1 (Strong Buy) or 2 (Buy), indicating potential outperformance [8][10]

Core Insights - The market began 2025 positively but faced volatility due to tariff and geopolitical risks, with the Fed cutting rates by 25 basis points to 4.00–4.25% in September and signaling two more cuts for the year [1] - Despite inflation and rising unemployment, equities remain near record highs, driven by optimism over rate cuts, AI-driven earnings growth, and hopes for a soft landing [1] - Retail investors face challenges in stock selection amidst these conditions [1] Sales Growth as a Key Metric - Sales growth is preferred over earnings for evaluating stocks, as it reflects actual demand and provides visibility into a company's business model durability [3] - Companies that can grow revenues during economic downturns demonstrate pricing power and competitive advantages [3] - Constant sales growth leads to stronger cash flows, allowing for reinvestment, market expansion, or shareholder returns without excessive debt reliance [5] Stock Selection Criteria - Stocks with 5-Year Historical Sales Growth (%) greater than industry average and Cash Flow over $500 million are prioritized [6] - Additional metrics include P/S Ratio less than industry average, positive % Change in F1 Sales Estimate Revisions, Operating Margin greater than 5%, and Return on Equity (ROE) greater than 5% [7][8][9] Recommended Stocks - **Lamb Weston (LW)**: Expected sales growth rate of 1.3% for fiscal 2026, Zacks Rank 1 [12] - **Universal Health Services (UHS)**: Expected sales growth rate of 8.5% for 2025, Zacks Rank 2 [14] - **FirstEnergy Corp (FE)**: Expected sales growth of 6.6% in 2025, Zacks Rank 2 [14] - **NetEase, Inc. (NTES)**: Expected sales growth of 10.3% for 2025, Zacks Rank 2 [15] - **JPMorgan Chase & Co. (JPM)**: Expected sales growth of 2.1% in 2025, Zacks Rank 2 [16]

Company Overview - The Ensign Group, Inc's independent subsidiaries have provided post-acute care since 1999[6] - The company operates 348 facilities across 17 states[18] - The company has 39,000+ beds/units across the care continuum[18] - The company has 52,000+ employees[18] Financial Performance and Growth - The company's 2025 revenue guidance is $5 billion[18] - The company's 2025 EPS guidance is $6.40[18] - The company's skilled nursing operations have been operated less than three full years is 29.9%[59] - The company's same store SNF occupancy is 82.1%[18, 71] - The company's same store skilled mix days is 32.4%[18, 74] - The company's net cash provided by operating activities for the six months ended June 30, 2025, was $228 million[123] - The company's consolidated adjusted net income for Q2 2025 was $93.3 million, an increase of 22.1% compared to Q2 2024[126] - The company's revenue for the six months ended June 30, 2025, was $2.4008 billion, an increase of 17.3% compared to 2024[130] - The company's consolidated adjusted net income for the six months ended June 30, 2025, was $182.3 million, an increase of 20.1% compared to 2024[130] Real Estate Portfolio (Standard Bearer REIT) - Standard Bearer REIT has 140 properties[98] - Standard Bearer REIT's real estate fair value is $1.6 billion[98] - Standard Bearer REIT has 14,272 operating beds/units[98] - Standard Bearer REIT's weighted average lease tenor is 14.6 years[98] - 84.6% of Standard Bearer REIT is Ensign Operated[98]

Summary of BrightSpring Health Services (BTSG) Conference Call Company Overview - **Company**: BrightSpring Health Services (BTSG) - **Industry**: Healthcare, specifically home and community health care and pharmacy services Key Points and Arguments Financial Performance - **Q1 Performance**: The company reported a strong Q1, beating expectations and raising guidance, primarily driven by specialty pharmacy performance [2][4] - **Historical Growth**: The company has achieved a mid-teens CAGR in EBITDA and revenue over nearly a decade, with broad-based growth across service lines [4][5] - **Volume Growth**: Volume growth is supported by quality service across all lines, operational efficiencies, and accretive mergers and acquisitions (M&A) [5][6] Specialty Pharmacy Growth - **Oncology and Rare Diseases**: Specialty pharmacy, particularly in oncology and rare diseases, has seen significant growth, with a reported 30% growth year-over-year for the last three years [9][10] - **Innovation in Therapies**: Continuous innovation in therapies is driving demand, with expectations of 12 to 18 new products entering the market in the next 18 months [13] Service Lines and Market Dynamics - **Home and Community Focus**: BrightSpring aims to be a leading provider in home and community health care, with strong demand for services [6][17] - **Provider Business Growth**: The provider business experienced around 10% year-over-year growth, even with fewer days in the quarter compared to the previous year [7] - **Pharmacy Services**: The pharmacy business is expected to grow in the mid-single digits, with potential for double-digit growth in specific areas like infusion and specialty oncology [25][26] M&A Strategy - **Acquisition Focus**: The company has executed several smaller tuck-in acquisitions and plans to continue this strategy, particularly in home health, hospice, and rehab [15][58] - **Community Living Divestiture**: The divestiture of the community living business is expected to close by the end of the year, which will help improve leverage ratios [54][55] Regulatory Environment - **Impact of Inflation Reduction Act (IRA)**: The IRA has both positive and negative implications for the company, particularly concerning drug pricing and access to medications [35][38] - **Tariffs on Drugs**: Potential tariffs on drugs are being monitored, with the company confident in its supply chain resilience due to a significant portion of drugs being sourced domestically [42][46] Operational Efficiency - **EBITDA Margin Target**: The company targets a 6% EBITDA margin, focusing on lean operations and technology to enhance efficiency across business lines [34] - **Integrated Care Opportunities**: The company is exploring integrated care models that combine various services to improve patient outcomes and reduce hospitalizations [31][33] Future Outlook - **Leverage Reduction**: The company aims to reduce leverage to around three times by the end of the year, supported by cash generation and growth [55][56] - **Market Positioning**: BrightSpring is positioned to leverage its scale and operational capabilities to navigate regulatory changes and market dynamics effectively [50][51] Additional Important Insights - **Quality and Compliance**: The company emphasizes its commitment to quality and compliance, which has resulted in better performance metrics compared to industry averages [22] - **Patient-Centric Approach**: The focus on delivering high-quality, patient-centered services is seen as a key driver for growth and market share [20][21]

Core Insights - HCA Healthcare reported strong Q1 2025 results, exceeding market expectations in both earnings and revenue [1] - The company achieved an adjusted EPS of $6.45, surpassing the anticipated $5.75, and reported revenue of $18.32 billion, slightly above the expected $18.26 billion [1][2] Financial Performance - Adjusted EPS for Q1 2025 was $6.45, a 20.3% increase from Q1 2024's $5.93 [2] - Revenue reached $18.32 billion, reflecting a 5.7% year-over-year growth from $17.34 billion in Q1 2024 [2] - Net income was reported at $1.61 billion, a 1.2% increase from $1.59 billion in Q1 2024 [2] - Adjusted EBITDA for the quarter was $3.73 billion, up 11.3% from $3.35 billion in Q1 2024 [2] - Cash flows from operations decreased to $1.65 billion, down 33.1% from $2.47 billion in Q1 2024 [2] Company Overview - HCA Healthcare is a leading for-profit operator of healthcare facilities in the U.S., managing hospitals, surgery centers, and emergency care centers [3] - The company focuses on patient care and invests in technology and staff to drive growth [3] - Key success factors include adapting to regulatory changes and optimizing healthcare delivery through digital transformation [3] Operational Challenges - The company faces challenges in maintaining profitability due to rising labor costs and reimbursement pressures [4] - Despite these challenges, operational efficiency was strong, supported by increased demand for healthcare services [5] - Regulatory challenges persist, particularly due to reliance on Medicare and Medicaid [6] - Same-facility equivalent admissions increased by 2.8%, while outpatient surgeries declined by 2.1% in Q1 2025 [6] Human Capital Management - Improvements in human capital management were noted, with salaries and benefits as a percentage of revenue decreasing from 44.4% in Q1 2024 to 43.6% in Q1 2025 [7] - The company expanded its operational footprint, increasing the number of hospitals to 190 and outpatient centers to approximately 2,400 [7] Future Outlook - HCA management reaffirmed guidance for full-year 2025 revenue between $72.8 billion and $75.8 billion, with adjusted EBITDA projected between $14.3 billion and $15.1 billion [8] - The company will continue to monitor regulatory changes and labor market dynamics, with strategic investments in technology and human capital expected to support operational capabilities [9]