3 Medical Service Industry Stocks Set to Counter Workforce Issues
Against this backdrop, companies like BrightSpring Health Services BTSG, InnovAge INNV and PACS Group, Inc. PACS appear well-positioned to benefit.At the same time, ongoing workforce constraints are putting pressure on traditional, labor-intensive care settings. A 2024 report from Mercer projected a nationwide healthcare worker shortage of 100,000 by 2028, worsening the existing disparities in healthcare access in certain states. Within this, nursing assistants are expected to face the largest deficit among other analyzed healthcare occupations, with a projected shortfall of nearly 73,000 workers. This signals a need to improve talent attraction and retention strategies for this segment.
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, 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. According to an IMARC Group report, the U.S. digital health market reached $185 billion in 2025 and is projected to see a CAGR of 15.9% through 2034.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. The “Big Data in Healthcare” market continues to witness strong forecasts. According to a Towards Healthcare report, the global big data in healthcare market size is valued at $110.97 billion in 2025 and is projected to witness a CAGR of 19.2% between 2026 and 2035. 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: It has been more than five years since the pandemic ended, but the pressure it placed on the global health workforce continues to leave a lingering impact. Many frontline professionals exited the field or reduced hours amid burnout and fatigue, while an aging population and the growing cases of chronic diseases have intensified the demand for care. WHO projects a shortfall of 11 million physicians by 2030, mostly in low and lower-middle-income countries. Analysis by the McKinsey Health Institute finds that closing this shortage could avert 189 million years of life lost to early death and lived with disability, representing 7% of all disease burden. It could also deliver a $1.1-trillion boost to the global economy, roughly matching the GDP of Switzerland. Needless to say, this supply shortage has led to a significant rise in healthcare wages. The American Hospital Association reports total hospital expenses climbed 7.5% in 2025, more than twice the rate of growth in hospital prices. Hospitals spent about $43 billion pursuing insurer payments for care already delivered, addressing the growing administrative burden from insurer claim denials and prior authorization.
Revival in the Nursing Care Market: In 2025, the role of nurses continued 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. According to August 2025 Bureau of Labor Statistics data, nurse practitioners (NPs) rank among the top five fastest-growing occupations in the United States over the next decade. The overall employment of nurse anesthetists, nurse midwives and NPs is expected to rise 35% between 2024 and 2034, much faster than the average for all occupations, with 32,700 openings forecast annually over the period.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Medical Services industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #144, which places it in the bottom 40% of 243 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates gloomy near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
We will present a few stocks that have the potential to outperform the market based on a strong earnings outlook. But it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms Sector & S&P 500
The Medical Services Industry has lagged its sector and the S&P 500 over the past year. The stocks in this industry have collectively lost 3.1% compared with the Medical sector’s 3.5% dip. The S&P 500 composite has risen 20% in the same period.
1-Year Price Performance
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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 14.8X compared with the S&P 500’s 21.5X and the sector’s 19.9X.
Over the last five years, the industry has traded as high as 18.8X, as low as 13.2X, and at the median of 15.4X, as the charts below show.
Price-to-Earnings Forward 12 Months (F12M)
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Price-to-Earnings Forward 12 Months (F12M)
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3 Stocks to Buy Right Now
Below, we present three stocks from the Medical Services industry that have been witnessing positive earnings estimate revisions. These three companies sport a Zacks Rank #1 (Strong Buy) at present.
You can see the complete list of today’s Zacks #1 Rank stocks here.
BrightSpring: Louisville, KY-based BrightSpring Health ServicesBTSG-- provides complementary home and community-based health services for complex populations. In 2025, the company filled above 43 million prescriptions through more than 175 pharmacies nationwide. More than 90% of BrightSpring’s Home Health branches were rated 4 STAR or higher, with a timely initiation of care at an industry-leading 99.4%. BrightSpringBTSG-- also views acquisition as a key strategic lever for long-term value creation.
The Zacks Consensus Estimate calls for the company’s 2026 earnings to surge 61% on a revenue growth rate of 14.8%. BTSGBTSG-- has a long-term estimated earnings growth rate of 47.2% compared with the industry’s 14.7% growth.
Price & Consensus: BTSG
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InnovAge: Based in Denver, CO, InnovAgeINNV-- is a renowned healthcare delivery platform. It provides comprehensive healthcare programs to frail, predominantly dual-eligible seniors through the Program of All-inclusive Care for the Elderly (PACE). In the past seven fiscal years, the company has acquired and integrated four PACE organizations, representing the expansion of the InnovAge Platform into one new state and five new markets.
The Zacks Consensus Estimate suggests the company’s fiscal 2026 earnings to skyrocket 213.6% year over year on a projected revenue growth rate of 10.6%. INNV’s fiscal 2027 expected earnings growth rate of 36% is well ahead of the industry’s 13.9% growth.
Price & Consensus: INNV
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PACS Group: Utah-based PACSPACS-- Group is a post-acute healthcare company primarily focused on delivering high-quality skilled nursing care through a portfolio of independently operated facilities. Following significant expansion in 2024, the company’s focus in 2025 shifted toward optimizing the performance of those acquired assets while selectively increasing real estate ownership within the portfolio. PACS Group also executed eight additional strategic acquisitions within existing markets, deepening its local scale.
The Zacks Consensus Estimate for the company’s 2026 earnings indicates a 71.3% year-over-year jump on revenue growth of 7.7%. PACS has an earnings yield of 6%, well ahead of the industry’s 4.2% yield.
Price & Consensus: PACS
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This article originally published on Zacks Investment Research (zacks.com).
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