It has been a turbulent start to the year for the healthcare industry, as concerns about major cuts to Medicare and Medicaid coincide with the impact of tariffs on supplies and many other variables. Nonetheless, healthcare stocks have fared well compared to the energy and information technology sectors. The Health Care Select Sector SPDR Fund (NYSEARCA: XLV), an exchange-traded fund (ETF) with a broad portfolio of stocks across the sector that is typically viewed as a benchmark for healthcare names in general, is down less than 2% year-to-date (YTD). By comparison, the S&P 500 is down close to 3% over the same period.
Healthcare can be a tricky area for investors because of the predominance of recently established firms seeking a breakthrough medicine or technology to bring to market. These companies can experience massive share price growth when they see a successful trial or receive approval for a new product, but many also falter before that happens.
Instead, investors considering a healthcare play in 2025 might focus on one of the following companies, each well established with decades of history. All of the companies below are highly rated by Wall Street analysts, making them worth watching in the coming weeks and months.
Centene Enjoys Solid Membership and Revenue Growth, Advantages of Scale
[content-module:CompanyOverview|NYSE: CNC]Centene Corp. (NYSE: CNC) provides a wide range of healthcare services and products, including those through Medicare and Medicaid, as well as insurance. The company derives a majority of its revenue from Medicaid—this has been a boon for the company, as it managed to weather the massive sell-off across the market in early April after the Trump administration announced sweeping tariffs.
On the other hand, Centene's reliance on Medicaid could leave it vulnerable if Congress makes cuts to the program. However, recent trends show that the company's non-Medicaid business is expanding rapidly. For the first quarter of 2025, Centene reported membership increases to its Marketplace and Medicare segments of 29% and 22% year-over-year (YOY), respectively. This supported adjusted diluted earnings per share (EPS) improvement of 28% YOY and premium and service revenue growth of 17% over the same period. Centene also reiterated its full-year guidance, signaling optimism for the coming quarters.
Centene enjoys strong momentum in revenue growth, and its size and scope allow it to negotiate for improved pricing on items that may see price increases due to tariffs.
Tenet Healthcare Stock Gets Bullish Boost After Q1 Earnings Beat and Ambulatory Expansion Plans
[content-module:CompanyOverview|NYSE: THC]A major provider of general and specialized hospital services and ambulatory care, Tenet Healthcare Corp. (NYSE: THC) is a favorite among analysts based on 13 Buy ratings and four Holds. In early May, analysts at Goldman Sachs and Morgan Stanley increased their price targets for Tenet, and the company now enjoys upside potential of 17%.
This fresh optimism for Tenet shares is likely driven by the company's outperformance in its first-quarter 2025 earnings report. Tenet beat adjusted diluted EPS estimates by a full $1.25 per share, achieving a YOY improvement of more than 35%. The company's strong bottom-line performance may be due to an increase in same-store hospital admissions relative to the same quarter last year.
Tenet's ambitious expansion plans for its Ambulatory segment will be key to continued growth. The company plans to spend $250 million per year on operations in this area and has added six new centers in Q1 2025. Close to $350 million in share repurchases and solid improvement in deleveraging the balance sheet will likely provide stability and increased shareholder value.
Encompass Sees Big Gains Following Earnings Beat, Optimism Remains Going Forward
[content-module:CompanyOverview|NYSE: EHC]Post-acute health services firm Encompass Health Corp. (NYSE: EHC) also posted better-than-expected results in its last earnings report, prompting several analysts to bolster their price targets.
Investors may want to watch how this firm continues to perform—EHC shares are up more than a quarter YTD, with the sharpest spike in price coinciding with news of the earnings beat.
Analysts expect Encompass to continue building on this success, seeing 10% projected earnings growth over the near term. Whether the company's share price will continue to climb remains to be seen.
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