1 Healthcare Stock Worth Your Attention and 2 to Turn Down

PODD Cover Image — 1 Healthcare Stock Worth Your Attention and 2 to Turn Down

Anthony Lee

Mon, Apr 28, 2025, 6:04 AM 4 min read

Personal health and wellness is one of the many secular tailwinds for healthcare companies. But financial performance has lagged recently as players offloaded surplus COVID inventories in 2023 and 2024, a headwind for overall demand. The result? Over the past six months, the industry has tumbled by 11.7%. This performance was worse than the S&P 500’s 5.1% loss.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here is one healthcare stock poised to generate sustainable market-beating returns and two that may face trouble.

Two Healthcare Stocks to Sell:

Acadia Healthcare (ACHC)

Market Cap: $2.04 billion

With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ:ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.

Why Are We Cautious About ACHC?

Flat sales over the last five years suggest it must find different ways to grow during this cycle
Disappointing admissions over the past two years imply it may need to invest in improvements to get back on track
Free cash flow margin shrank by 38.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $22.38 per share, Acadia Healthcare trades at 6.6x forward price-to-earnings. Read our free research report to see why you should think twice about including ACHC in your portfolio, it’s free.

AdaptHealth (AHCO)

Market Cap: $1.13 billion

With a network of approximately 680 locations serving patients across all 50 states, AdaptHealth (NASDAQ:AHCO) provides home medical equipment, supplies, and related services to patients with chronic conditions like sleep apnea, diabetes, and respiratory disorders.

Why Are We Hesitant About AHCO?

Sales trends were unexciting over the last two years as its 4.8% annual growth was below the typical healthcare company
ROIC of 2.4% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

AdaptHealth’s stock price of $8.47 implies a valuation ratio of 8.2x forward price-to-earnings. Check out our free in-depth research report to learn more about why AHCO doesn’t pass our bar.