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3 Medical Services Stocks Capitalizing on the Healthcare AI Boom
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The Medical Services sector is experiencing significant transformation fueled by advancements in technology, increased adoption of value-based care and focus on patient-centric solutions and precision medicine. Rising demand for remote treatment is accelerating digital healthcare growth, especially in telemedicine and AI-powered analytics. Providers are using these tools to improve diagnostics, streamline operations, and enhance outcomes, while value-based models promote preventive and personalized care.
According to a Precedence Research report, the global healthcare analytics market was valued at $53.1 billion in 2024 and is projected to witness a CAGR of 21.4% from 2025 to 2034, benefiting payers, professionals, and patients with advanced insights and services. Stocks like CVS Health (CVS - Free Report) , BrightSpring Health Services, Inc. (BTSG - Free Report) and GeneDx Holdings Corp. (WGS - Free Report) are poised to benefit from this shift. Meanwhile, as the U.S. healthcare system faces post-pandemic pressure, shifting payer mix and labor shortages, demand for skilled nursing professionals is surging. A 2024 Mercer report projects a shortfall of over 100,000 healthcare workers by 2028, including 73,000 nursing assistants. This will elevate labor costs, though tech-driven care models are driving new, specialized roles.
Industry Description
The Zacks Medical Services industry comprises third-party service providers and caregivers appointed by core healthcare companies for economies of scale. The industry includes pharmacy benefit managers, contract research organizations, wireless MedTech companies, third-party testing labs, surgical facility providers and healthcare workforce solution providers, among others. Over the years, this industry has strategically moved from volume-based to value-based care. The resurgence in medical tourism is further boosting the sector. This changing pattern of care calls for advanced facilities, thus increasing the need to appoint specialized external service providers. With the growing importance of effective healthcare management, the medical service industry has become an integral part of the modern healthcare system.
3 Trends Shaping the Future of the Medical Services Industry
Digital Revolution: The adoption of digital platforms within the medical device space is gaining prominence in the United States. A 2024 digital health market report by Statista suggests that this market will witness a 9.2% CAGR from 2024 to 2028. The increasing availability of unstructured health data, advanced analytics and the demand for personalized medical services underscore the growing importance of big data in healthcare. According to a Roots Analysis report, the global big data in healthcare market size is estimated to increase from $78 billion in 2024 to $540 billion by 2035, representing a CAGR of 19.20%. Other reports suggest that companies that adopted artificial intelligence technologies witnessed a 50% reduction in treatment costs and experienced more than 50% improvement in patient outcomes.
Healthcare Staffing Shortage to Continue: The lingering impact of COVID-19 as a global health emergency has driven many frontline workers to exit the field. Added to this, a drastic increase in the aging population in recent times (about 10,000 individuals aged 59-77 are joining Medicare plans daily) has made the healthcare staffing shortage more pronounced. According to McKinsey, while the global economy could generate 40 million new healthcare jobs by 2030, a significant gap remains. WHO projects a shortfall of 9.9 million physicians, nurses, and midwives worldwide over the same period, highlighting the urgent need for workforce expansion in health systems. Needless to say, this supply shortage has led to a significant rise in healthcare wages. Going by an HR for Health report, increased labor costs and staffing challenges have resulted in a rise in hospital expenses. Hospitals have experienced a 15.6% increase in labor expenses per adjusted discharge compared to pre-pandemic levels.
Revival in the Nursing Care Market: In 2025, the role of nurses continues to evolve with advancements in medical technologies and shifts in healthcare delivery models. Telehealth and remote patient monitoring have expanded nurses' reach beyond traditional hospital settings, enabling them to provide care in rural or underserved areas. Specialized nursing roles, such as nurse practitioners, critical care specialists and geriatric nurses, are in high demand due to the growing complexity of patient needs. Going by the Bureau of Labor Statistics, the overall employment of nurse anesthetists, nurse midwives and nurse practitioners is projected to grow 40% from 2023 to 2033, much faster than the average for all occupations. About 31,900 openings for nurse anesthetists, nurse midwives and nurse practitioners are projected each year, on average, over the decade.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Medical Services industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #67, which places it in the top 27% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates flourishing 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.
We will present a few stocks that have the potential to outperform the market based on a strong earnings outlook. But it’s worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms Sector and S&P 500
The Medical Services Industry has underperformed its sector and the S&P 500 over the past year. The stocks in this industry have collectively lost 13.4% during the said time frame compared with the Medical sector’s 12% dip and the S&P 500 composite’s surge of 10.6%.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing medical stocks, the industry is currently trading at 14.6X compared with the S&P 500’s 21.9X and the sector’s 19.3X.
Over the last five years, the industry has traded as high as 20.12X, as low as 13.4X, and at the median of 14.6X, as the charts below show.
Price-to-Earnings Forward Twelve Months (F12M)
Price-to-Earnings Forward Twelve Months (F12M)
3 Stocks to Buy Right Now
Below, we present three stocks from the Medical Services industry that have been witnessing positive earnings estimate revisions and carry a Zacks Rank #1 (Strong Buy) or #2 (Buy) at present.
GeneDx: This genomics company provides genetic testing services. It primarily offers pediatric and rare disease diagnostics with a focus on whole-exome and genome sequencing, as well as data and information services. The company is also developing an AI-based platform for NGS analysis, interpretation, and clinical reporting for rare disease, hereditary risk, and cancer testing.
This Zacks Rank #1 stock’s 2025 expected earnings growth rate is 336%. The Zacks Consensus Estimate for WGS’ 2025 revenues indicates a rise of 22.5% from 2024.
Price and Consensus: WGS
CVS: It is a pharmacy innovation company with integrated offerings across the entire spectrum of pharmacy care. CVS Health is investing in advanced technological capabilities to cut down costs and improve customer experience. Improved Medicare Advantage star ratings for the 2025 payment year are a positive development for the company.
CVS Health’s 2025 and 2026 earnings growth rates are pegged at 12.6% and 14.3%, respectively. CVS has a long-term expected earnings growth rate of 11.4%. The stock holds a Zacks Rank #2 currently.
Price and Consensus: CVS
BrightSpring: The company operates as a home and community-based healthcare services platform in the United States. BrightSpring is delivering significant improvements in care quality across its diversified service portfolio, boosting stakeholders' and investors' sentiment. In Home Health, over 80% of branches are now rated 4 stars or higher, with the 60-day hospitalization rate continuing to decline.
BrightSpring’s 2025 expected earnings growth rate is 82.1%. The Zacks Consensus Estimate for BTSG’s 2025 revenues indicates a rise of 9.1% over 2024. The stock carries a Zacks Rank #2 at present.
Price and Consensus: BTSG
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3 Medical Services Stocks Capitalizing on the Healthcare AI Boom
The Medical Services sector is experiencing significant transformation fueled by advancements in technology, increased adoption of value-based care and focus on patient-centric solutions and precision medicine. Rising demand for remote treatment is accelerating digital healthcare growth, especially in telemedicine and AI-powered analytics. Providers are using these tools to improve diagnostics, streamline operations, and enhance outcomes, while value-based models promote preventive and personalized care.
According to a Precedence Research report, the global healthcare analytics market was valued at $53.1 billion in 2024 and is projected to witness a CAGR of 21.4% from 2025 to 2034, benefiting payers, professionals, and patients with advanced insights and services. Stocks like CVS Health (CVS - Free Report) , BrightSpring Health Services, Inc. (BTSG - Free Report) and GeneDx Holdings Corp. (WGS - Free Report) are poised to benefit from this shift. Meanwhile, as the U.S. healthcare system faces post-pandemic pressure, shifting payer mix and labor shortages, demand for skilled nursing professionals is surging. A 2024 Mercer report projects a shortfall of over 100,000 healthcare workers by 2028, including 73,000 nursing assistants. This will elevate labor costs, though tech-driven care models are driving new, specialized roles.
Industry Description
The Zacks Medical Services industry comprises third-party service providers and caregivers appointed by core healthcare companies for economies of scale. The industry includes pharmacy benefit managers, contract research organizations, wireless MedTech companies, third-party testing labs, surgical facility providers and healthcare workforce solution providers, among others. Over the years, this industry has strategically moved from volume-based to value-based care. The resurgence in medical tourism is further boosting the sector. This changing pattern of care calls for advanced facilities, thus increasing the need to appoint specialized external service providers. With the growing importance of effective healthcare management, the medical service industry has become an integral part of the modern healthcare system.
3 Trends Shaping the Future of the Medical Services Industry
Digital Revolution: The adoption of digital platforms within the medical device space is gaining prominence in the United States. A 2024 digital health market report by Statista suggests that this market will witness a 9.2% CAGR from 2024 to 2028. The increasing availability of unstructured health data, advanced analytics and the demand for personalized medical services underscore the growing importance of big data in healthcare. According to a Roots Analysis report, the global big data in healthcare market size is estimated to increase from $78 billion in 2024 to $540 billion by 2035, representing a CAGR of 19.20%. Other reports suggest that companies that adopted artificial intelligence technologies witnessed a 50% reduction in treatment costs and experienced more than 50% improvement in patient outcomes.
Healthcare Staffing Shortage to Continue: The lingering impact of COVID-19 as a global health emergency has driven many frontline workers to exit the field. Added to this, a drastic increase in the aging population in recent times (about 10,000 individuals aged 59-77 are joining Medicare plans daily) has made the healthcare staffing shortage more pronounced. According to McKinsey, while the global economy could generate 40 million new healthcare jobs by 2030, a significant gap remains. WHO projects a shortfall of 9.9 million physicians, nurses, and midwives worldwide over the same period, highlighting the urgent need for workforce expansion in health systems. Needless to say, this supply shortage has led to a significant rise in healthcare wages. Going by an HR for Health report, increased labor costs and staffing challenges have resulted in a rise in hospital expenses. Hospitals have experienced a 15.6% increase in labor expenses per adjusted discharge compared to pre-pandemic levels.
Revival in the Nursing Care Market: In 2025, the role of nurses continues to evolve with advancements in medical technologies and shifts in healthcare delivery models. Telehealth and remote patient monitoring have expanded nurses' reach beyond traditional hospital settings, enabling them to provide care in rural or underserved areas. Specialized nursing roles, such as nurse practitioners, critical care specialists and geriatric nurses, are in high demand due to the growing complexity of patient needs. Going by the Bureau of Labor Statistics, the overall employment of nurse anesthetists, nurse midwives and nurse practitioners is projected to grow 40% from 2023 to 2033, much faster than the average for all occupations. About 31,900 openings for nurse anesthetists, nurse midwives and nurse practitioners are projected each year, on average, over the decade.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Medical Services industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #67, which places it in the top 27% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates flourishing 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.
We will present a few stocks that have the potential to outperform the market based on a strong earnings outlook. But it’s worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms Sector and S&P 500
The Medical Services Industry has underperformed its sector and the S&P 500 over the past year. The stocks in this industry have collectively lost 13.4% during the said time frame compared with the Medical sector’s 12% dip and the S&P 500 composite’s surge of 10.6%.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing medical stocks, the industry is currently trading at 14.6X compared with the S&P 500’s 21.9X and the sector’s 19.3X.
Over the last five years, the industry has traded as high as 20.12X, as low as 13.4X, and at the median of 14.6X, as the charts below show.
Price-to-Earnings Forward Twelve Months (F12M)
Price-to-Earnings Forward Twelve Months (F12M)
3 Stocks to Buy Right Now
Below, we present three stocks from the Medical Services industry that have been witnessing positive earnings estimate revisions and carry a Zacks Rank #1 (Strong Buy) or #2 (Buy) at present.
You can see the complete list of today’s Zacks #1 Rank stocks here.
GeneDx: This genomics company provides genetic testing services. It primarily offers pediatric and rare disease diagnostics with a focus on whole-exome and genome sequencing, as well as data and information services. The company is also developing an AI-based platform for NGS analysis, interpretation, and clinical reporting for rare disease, hereditary risk, and cancer testing.
This Zacks Rank #1 stock’s 2025 expected earnings growth rate is 336%. The Zacks Consensus Estimate for WGS’ 2025 revenues indicates a rise of 22.5% from 2024.
Price and Consensus: WGS
CVS: It is a pharmacy innovation company with integrated offerings across the entire spectrum of pharmacy care. CVS Health is investing in advanced technological capabilities to cut down costs and improve customer experience. Improved Medicare Advantage star ratings for the 2025 payment year are a positive development for the company.
CVS Health’s 2025 and 2026 earnings growth rates are pegged at 12.6% and 14.3%, respectively. CVS has a long-term expected earnings growth rate of 11.4%. The stock holds a Zacks Rank #2 currently.
Price and Consensus: CVS
BrightSpring: The company operates as a home and community-based healthcare services platform in the United States. BrightSpring is delivering significant improvements in care quality across its diversified service portfolio, boosting stakeholders' and investors' sentiment. In Home Health, over 80% of branches are now rated 4 stars or higher, with the 60-day hospitalization rate continuing to decline.
BrightSpring’s 2025 expected earnings growth rate is 82.1%. The Zacks Consensus Estimate for BTSG’s 2025 revenues indicates a rise of 9.1% over 2024. The stock carries a Zacks Rank #2 at present.
Price and Consensus: BTSG