Profit Therapy: 3 Medical Stocks Ready to Deliver Q4 Beat

The fourth-quarter 2025 earnings season for the Medical sector is gaining momentum, with early reporters highlighting a broad-based recovery in operating trends. Key growth drivers include stronger outpatient volumes, higher admissions, improved revenues per equivalent admission, rising utilization, premium rate hikes and accelerating adoption of tech-enabled services. However, these tailwinds are being partially offset by escalating medical costs, driven by higher utilization intensity, and continued increases in salaries and benefits, tempering margin expansion.

Drawing on our proprietary research and market insight, we’ve identified three stocks — Tenet Healthcare Corporation THC, Universal Health Services, Inc. UHS and Option Care Health, Inc. OPCH — that appear well-positioned to beat earnings estimates this season.

According to the latest Earnings Trends report dated Feb. 4, the medical sector (one of the 16 broad Zacks sectors within the Zacks Industry) is projected to experience a 1.5% decline in earnings for the fourth quarter, while revenues are anticipated to rise by 9.1%.

Factors at Play for Medical Stocks in Q4

The medical sector encompasses a broad and interconnected ecosystem, including hospitals, physician services, nursing care facilities, health insurers, pharmaceutical firms, medical device makers, and outpatient and home healthcare providers. Supported by demographic tailwinds such as an aging population and steadily rising healthcare utilization, the sector continues to generate consistent revenue growth across most verticals.

Near-term profitability, however, remains constrained. Elevated spending on digital platforms, automation and clinical innovation has lifted operating expenses, while persistent wage inflation and rising employee benefit costs have intensified margin pressure. For insurers, softer government plan enrollment weighed on premium growth, even as treatment intensity and service utilization increased. At the same time, regulatory scrutiny, reimbursement limits and payment reforms restricted flexibility and dampened investor confidence.

To offset escalating costs, several insurers implemented premium rate increases, providing partial earnings support. New product launches and expanded digital capabilities further improved engagement, streamlined workflows and enhanced operating efficiency. Meanwhile, strong demand for affordable healthcare options and government plan redeterminations likely supported growth in higher-margin commercial memberships.

Patient volumes strengthened during the quarter, reflecting higher ambulatory visits, increased elective procedures and rising specialty care utilization. Improved revenue per admission supported top-line momentum. Yet, this activity brought higher medical supply usage and treatment costs, limiting margin expansion. Lingering supply chain disruptions and tariff uncertainty further raised procurement expenses for select components and equipment.

Technology-led transformation remained a key structural driver. Broader adoption of artificial intelligence, analytics and automation has improved clinical productivity, enhanced diagnostic accuracy, reduced inefficiencies and enabled providers to deliver faster, cost-effective care.

How to Identify Potential Outperformers?

Spotting healthcare stocks poised for an earnings beat is not easy in today’s crowded market. But our proprietary methodology cuts through the noise, pinpointing companies with strong potential to outperform. Backed by in-depth research and market insight, we have leveraged the Zacks Stock Screener to identify top healthcare names that stand out ahead of their earnings releases.

These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to surpass expectations. Our research shows that for stocks with this combination, the chances of an earnings beat are as high as 70%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Our Picks in the Medical Sector

One might start with Dallas, TX-based Tenet Healthcare, which is one of the major medical facility operators. It is witnessing a favorable payer mix and improved acuity, along with growing demand for ambulatory care. It has an Earnings ESP of +2.72% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus mark for fourth-quarter revenues is pegged at $5.45 billion, indicating 7.5% year-over-year growth. The EPS estimate of $4.08 indicates an 18.6% increase from the year-ago level, which has increased by 3 cents over the past week. The Zacks Consensus Estimate for fourth-quarter adjusted admissions indicates 3.9% year-over-year growth. The same for net patient revenue per adjusted admissions signals 5.2% increase.

It beat earnings estimates in each of the past four quarters, the average surprise being 27.6%.

Tenet Healthcare Corporation Price and EPS Surprise

Tenet Healthcare Corporation price-eps-surprise | Tenet Healthcare Corporation Quote

You may also watch Universal Health Services, which is one of the major hospital operators. Headquartered in King of Prussia, PA, the company’s fourth quarter earnings are expected to have benefited from robust performance in both Acute Care and Behavioral Health segments, increased adjusted admissions and patient days.

The Zacks Consensus Estimate for operating income from Behavioral Health Care Services indicates 20.9% year-over-year growth. The consensus estimate for Universal Health’s fourth-quarter earnings is pegged at $5.91 per share, which indicates 20.1% year-over-year growth. The consensus mark for revenues of $4.48 billion predicts a 9% increase. UHS has an Earnings ESP of +8.33% and a Zacks Rank #2.

It beat earnings estimates in all the past four quarters, with an average of 15.2%.

Universal Health Services, Inc. Price and EPS Surprise

Universal Health Services, Inc. price-eps-surprise | Universal Health Services, Inc. Quote

Finally, we have Bannockburn, IL-based Option Care Health, which provides home and alternate site infusion services. Rising contribution from commercial and government payers is expected to have supported its fourth quarter results. Continued growth in demand for solutions to complex patient conditions in nonhospital settings remained a tailwind.

The Zacks Consensus Estimate for Option Care’s bottom line for the to-be-reported quarter is pegged at 46 cents per share, which signals 31.4% jump from a year ago and remained stable over the past week. The consensus mark for revenues is pegged at $1.46 billion, signaling 8.4% year-over-year growth. OPCH has an Earnings ESP of +1.54% and a Zacks Rank #3.

It beat earnings estimates in each of the past four quarters, with an average surprise of 6.1%.

Option Care Health, Inc. Price and EPS Surprise

Option Care Health, Inc. price-eps-surprise | Option Care Health, Inc. Quote

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This article originally published on Zacks Investment Research (zacks.com).

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