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U.S. Healthcare Services Industry Analysis

UpdatedSep 28, 2022
DataAggregated Company Financials
  • 7D-4.0%
  • 3M-1.4%
  • 1Y6.3%
  • YTD-7.6%

Over the last 7 days, the Healthcare Services industry has dropped 4.0%, driven by UnitedHealth Group declining 2.8%. Meanwhile, Cano Health actually outperformed within the industry, gaining 37% in the last week. Over the past 12 months, the industry was up 6.3%. Earnings are forecast to grow by 14% annually.

Industry Valuation and Performance

Has the U.S. Healthcare Services Industry valuation changed over the past few years?

DateMarket CapRevenueEarningsPEAbsolute PEPS
Wed, 28 Sep 2022US$1.1tUS$1.4tUS$46.1b18.4x24.6x0.8x
Fri, 26 Aug 2022US$1.2tUS$1.4tUS$46.1b19.7x26.4x0.9x
Sun, 24 Jul 2022US$1.2tUS$1.6tUS$50.7b20.1x23.7x0.8x
Tue, 21 Jun 2022US$1.1tUS$1.6tUS$50.7b17.9x21.1x0.7x
Thu, 19 May 2022US$1.2tUS$1.6tUS$50.7b18.4x23.1x0.7x
Sat, 16 Apr 2022US$1.2tUS$1.5tUS$49.3b20.8x25.3x0.8x
Mon, 14 Mar 2022US$1.1tUS$1.5tUS$49.8b18.4x23.1x0.8x
Wed, 09 Feb 2022US$1.2tUS$1.5tUS$48.9b20x24.1x0.8x
Fri, 07 Jan 2022US$1.1tUS$1.4tUS$50.2b22.9x22.8x0.8x
Sun, 05 Dec 2021US$1.1tUS$1.4tUS$50.1b20.2x21.8x0.8x
Tue, 02 Nov 2021US$1.1tUS$1.4tUS$48.9b22.4x23.3x0.8x
Thu, 30 Sep 2021US$1.1tUS$1.4tUS$46.2b22.1x23x0.8x
Sat, 28 Aug 2021US$1.1tUS$1.4tUS$46.5b20.1x23.4x0.8x
Sun, 04 Jul 2021US$1.1tUS$1.4tUS$46.4b20.3x24x0.8x
Wed, 07 Apr 2021US$1.0tUS$1.6tUS$48.2b20.8x21.5x0.7x
Sat, 09 Jan 2021US$946.4bUS$1.6tUS$45.3b18.6x20.9x0.6x
Fri, 02 Oct 2020US$824.2bUS$1.5tUS$49.6b18.7x16.6x0.5x
Mon, 06 Jul 2020US$807.8bUS$1.7tUS$44.6b18.4x18.1x0.5x
Thu, 09 Apr 2020US$704.3bUS$1.7tUS$37.0b25.9x19x0.4x
Wed, 01 Jan 2020US$828.9bUS$1.6tUS$34.6b21.8x23.9x0.5x
Sat, 05 Oct 2019US$665.2bUS$1.6tUS$30.0b19.3x22.1x0.4x
Price to Earnings Ratio


Total Market Cap: US$665.2bTotal Earnings: US$30.0bTotal Revenue: US$1.6tTotal Market Cap vs Earnings and Revenue0%0%0%
U.S. Healthcare Services Industry Price to Earnings3Y Average 22.1x202020212022
Current Industry PE
  • Investors are optimistic on the American Healthcare industry, and appear confident in long term growth rates.
  • The industry is trading at a PE ratio of 24.6x which is higher than its 3-year average PE of 22.1x.
  • The industry is trading close to its 3-year average PS ratio of 0.64x.
Past Earnings Growth
  • The earnings for companies in the Healthcare industry have grown 15% per year over the last three years.
  • Meanwhile revenues for these companies have declined 3.9% per year.
  • This means that less sales are being generated overall, but since cost of doing business is lower, profits have been increasing.

Industry Trends

Which industries have driven the changes within the U.S. Healthcare industry?

US Market-5.79%
Healthcare Services-3.95%
Managed Healthcare-3.63%
Healthcare Services-4.34%
Healthcare Distributors-4.78%
Healthcare Facilities-5.71%
Industry PE
  • Investors are most optimistic about the Healthcare Services industry which is trading above its 3-year average PE ratio of 18.5x.
    • Analysts are expecting annual earnings growth of 13.9%, which is higher than its past year's earnings decline of 0.4% per year.
  • Investors are most pessimistic about the Healthcare Facilities industry, which is trading below its 3-year average of 24.8x.
Forecasted Growth
  • Analysts are most optimistic on the Healthcare Facilities industry, expecting annual earnings growth of 20% over the next 5 years.
  • This is better than its past earnings growth rate of 2.3% per year.
  • In contrast, the Managed Healthcare industry is expected to see its earnings grow by 13% per year over the next few years.

Top Stock Gainers and Losers

Which companies have driven the market over the last 7 days?

CompanyLast Price7D1YValuation
CANO Cano HealthUS$8.6936.9%
CO Global Cord BloodUS$2.9926.1%
NRC National ResearchUS$39.703.8%
DCGO DocGoUS$9.773.1%
CMAX CareMaxUS$7.133.5%
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Sep 16

CareMax: Numbers Are Strong, Compelling Value On Offer

Summary CareMax has caught a strong bid lately following a number of catalysts that deliver forward earnings growth. Shares appear to be fairly valued at current multiples, although, negative earnings are also noted. Alas, the Steward Healthcare transaction provides meaningful accretion to pre and post-tax earnings. Net-net, CMAX presents with compelling value and I rate it a speculative buy. Investment summary Recent company-specific tailwinds have seen shares of CareMax, Inc. (CMAX) catch a strong bid in H2 FY22 and re-rate to the upside. Whilst there's an element that's beta-related from the July bounce in equities, there's still plenty of idiosyncratic premia to harvest in this name. With the Steward Healthcare transaction now complete, we now have more conclusiveness on its accretion to pre-and-post-tax earnings. Shares are also fairly priced at 1.2 book value, and net-net, I rate CMAX a speculative buy. CMAX Q2 earnings provide insights to FY22 full-year expectations CMAX came in with a fairly strong set of numbers that saw upside against consensus at the top line. Revenue lifted 280% YoY to $172 million ("mm"). Meaningful growth was observed across Medicare and Medicaid at-risk revenue, each up triple digits YoY. In fact, Medicare members grew by 3,000 sequentially from Q1 this year, as the company converted this amount to full-risk revenue, thus helping secure the uptick in turnover. Meanwhile, the consolidated medical expense ratio ("MER") for Q2 came in at 73.6% and sub-70% when excluding the medical service organization ("MSO") business. This does speak to the company's success rate in ensuring patient health and safety. Management believes that if CMAX can achieve its MER targets and new MSO membership nudges past 85%, this could represent an annualized medical margin addition of $10mm [even with no additional members after hitting these targets]. CMAX defines medical margin as: [Medicare & Medicaid at-risk revenue minus external provider costs]. This number came in smaller than in Q2 FY21, adding ~240bps to the reported MER. Further, cost of care numbers jumped 13% YoY to $30mm, as compensation adjustments were rolled out in April, plus from an uptick in pharmacy script volume [stretching up associated COGS]. More so, however, was that CMAX booked its first quarter of turnover from facility costs at the 3 de novo facilities opened recently in both Texas and New York. It continues to push towards opening 15 de novo centers for FY22 total. One key standout has been the company's contribution margin ("PCM") from FY20 to date, as seen in Exhibit 1. Trends have exhibited a growth from low points in Q2 FY21 and are now back above FY20 levels, and this serves as a key tailwind to non-GAAP earnings looking ahead. CMAX defines platform contribution as [revenue, minus the sum of external provider costs and cost of care]. What's been equally as pleasing is growth in these numbers has occurred alongside a simultaneous increase in new centers, patients and markets. Exhibit 1. CMAX patient contribution margin trends from FY20–date Satisfactory growth trends across all segments PCM now back above FY20 levels Data: CMAX 10-Q Q2 FY22, pp.26: "Platform Contribution"; see: table, "Non-GAAP Operating Metrics". As seen in Exhibit 2, the leverage of new centers to PCM has been a positive relationship. The pace of new center openings has ratcheted PCM up by double-digits following each period where de novo centers are completed. This is a satisfactory set of numbers when looking ahead, and serves as a bedrock to the company's planned growth trajectory. Should the company continue along this trend, this adds a bullish asymmetry to the risk/reward balance. Exhibit 2. There's a high degree of 'operating leverage' from new center openings on a sequential basis. Adds to predictability of future cash flows in gauging corporate value. Suggests efficiency in turning costs associated to new centers into contribution margin. Note: All figures in $mm or [%]. "Operating leverage from Centres to PCM" defined as QoQ percentage change in new centres / change in platform contribution margin. (Image: HB Insights. Data: HB Insights, CMAX SEC Filings) Price action – downtrend continues, seriously testing resistance Given the stock's relatively new entrance to public life [it listed in Q3 FY20'] I wanted to see how the market's reacted since its NASDAQ debut. As seen in Exhibit 3, shares have walked the stairs down south in H2 FY22 in continuation with the longer-term downtrend shown below. However, there's been a key change in price action to coincide with the Steward Health transaction [discussed later]. The stock has caught a bid since this point and tested lows of ~$3.45–$3.50 on 2 occasions before bouncing away and testing the long-term resistance level [light blue line shown to ceiling of resistance seen below]. In addition, long-term trend indicators have stretched up in the July bounce in equities, adding validity to the recent uptick. Momentum has, however, pulled back to range and is unsupportive of the same. We need to see shares test the upper resistance level shown and break through this point for CMAX to catch another strong bid up to our price target. Exhibit 3. Long-term downtrend since listing in FY20' Both price distribution and volatility has been held within this range. Now testing resistance at the levels seen below. Note: 12-month chart shown with daily bars, with momentum and on balance volume in the 2 subsequent windows, respectively. (Data: HB Insights, Refinitiv Eikon) In addition, on the 9-month daily cloud chart seen below, shares are trading in the cloud and now garnering cloud support at current levels. The lag line [shown in white] is also stretched up above the cloud, and combined, these 2 features have me constructive on the validity on the bullish trend.