Move Over Hims & Hers Health: This Insurance Business Could Be the Next Monster Healthcare Stock (Hint: It's Not UnitedHealth)

While major healthcare stocks face headwinds from potential policy changes, telemedicine company Hims & Hers Health is up 138% YTD. The author suggests Oscar Health (OSCR), a tech-first health insurance company focused on ACA members and small employers, could be the next breakout stock, drawing parallels to Hims & Hers' success in targeting niche markets and leveraging technology; Oscar's potential expansion into individual coverage health reimbursement arrangements (ICHRAs) could significantly increase its addressable market.

Analysis

The healthcare sector is currently exhibiting divergent stock performance, with established pharmaceutical companies like Eli Lilly, Novo Nordisk, and Johnson & Johnson facing share price pressure from potential administrative actions related to tariffs and medication pricing, while CVS Health has seen a 46% YTD increase. In contrast, Hims & Hers Health (HIMS), a telemedicine company, has demonstrated remarkable growth, with its share price surging 138% YTD as of June 17, 2025, by focusing on a technology-first approach to attract younger demographics for specific health services. Oscar Health (OSCR) is presented as a potentially similar breakout opportunity, employing a comparable tech-driven strategy to disrupt the health insurance market by targeting niche segments such as Affordable Care Act (ACA) members and small employers. Oscar Health's financials indicate a strong growth trajectory with a steepening revenue curve over the past five years, alongside rising cash flow and liquidity. The company aims to expand its total addressable market from $160 billion to $720 billion by venturing into individual coverage health reimbursement arrangements (ICHRAs) for small and medium-sized businesses, thereby potentially increasing its customer pool from 21 million to 75 million. Despite these prospects, Oscar Health's modest market capitalization of approximately $4 billion, which is roughly in line with its cash balance, suggests Wall Street may be undervaluing its core insurance business, possibly due to concerns over potential ACA regulatory changes and skepticism about its ICHRA expansion strategy. This market sentiment echoes the initial doubts faced by Hims & Hers regarding customer acquisition and competitive strength.

Key Decisions for Investors

• Investors could consider Oscar Health for its potential as a high-growth, technology-driven disruptor in the health insurance space, particularly given its strategy to significantly expand its total addressable market through ICHRA penetration.
• Key factors to monitor include any regulatory shifts impacting the Affordable Care Act, which forms Oscar Health's current core market, and the company's execution success in capturing the ICHRA market with small and medium-sized businesses.
• The current market valuation, roughly equivalent to its cash balance, may present an attractive risk/reward profile if Oscar Health successfully navigates regulatory uncertainties and executes its growth strategy, but also signals significant market skepticism warranting careful due diligence on its competitive positioning and operational capabilities.