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

When it comes to healthcare stocks, many investors pay attention to the usual suspects: Eli Lilly, Novo Nordisk, CVS Health, or Johnson & Johnson. These companies have built up enormous brand equity thanks to blockbuster drugs and widely recognized pharmacy management services.

With the exception of CVS, whose shares have risen 46% so far this year, none of the other companies have generated robust stock price returns so far in 2025. Lilly, Novo, and Johnson & Johnson are seeing share price pressure over concerns that President Donald Trump's administrative actions could impact the pharmaceutical industry -- particularly as it relates to tariffs and medication pricing.

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One healthcare player that is (so far) outmaneuvering investor trepidation throughout 2025 is telemedicine company Hims & Hers Health (NYSE: HIMS). Its share price is up 138% in 2025 (as of June 17). While buying into Hims and Hers stock to follow the momentum is tempting, I think a different, dirt cheap health insurance stock is positioned for a breakout akin to Hims & Hers Health. And no, I'm not talking about the beaten-down UnitedHealth Group.

Rather, I think Oscar Health (NYSE: OSCR) could be the next big multibagger in healthcare stocks. Curious? Read on to learn more about Oscar Health and why I'm so bullish on the stock.

Image source: Getty Images.

What does Oscar Health do, and why might it draw comparisons to Hims & Hers?

When it comes to accessing patient care, consumers have a couple of options. On one hand, they can take time to go to brick-and-mortar retailers like CVS to fulfill a prescription or take the time to schedule an appointment and wait in a busy doctor's office. Alternatively, they can streamline their efforts by using Hims & Hers telemedicine services to gain back some time (and possibly some money) while still accessing necessary health services and medications.

This technology-first approach has served Hims well, particularly as it relates to acquiring customers across younger demographics such as Millennials and Gen-Z. This approach is by design as younger patients tend to be more receptive to the idea of accessing critical information (i.e., patient care) online as opposed to the traditional, time-consuming methods that include finding a doctor in your network, making an appointment, and waiting.

Oscar is using a similar approach to transform access to health insurance. The company hopes to capture a strategic lead over competitors with a tech-first digital platform. While some legacy insurers have also invested in technology infrastructure, they did so by retrofitting archaic and antiquated manual processes into a technology platform that likely doesn't fit well with their original business models.

Another important item to note is that Hims & Hers does not offer as comprehensive a service as going to a traditional doctor. In other words, Hims & Hers currently focuses on a handful of treatments across specific segments like mental health, sexual health, and weight management. Likewise, Oscar has a niche focus on Affordable Care Act (ACA) members and small employers that aren't covered by legacy health insurance providers.

While Oscar's upside might appear limited given its niche focus, a look at its metrics suggests it still has some strong growth prospects.

Oscar's financial profile is rock solid

Despite an intense competitive landscape in the health insurance market, Oscar has identified pockets that it can dominate, as evidenced by the steepening slope of the revenue line over the last five years, coupled with rising cash flow and liquidity.

Data by YCharts.

The biggest risk surrounding Oscar right now has to do with potential changes in the regulatory landscape as it pertains to the ACA. While policy changes could put some pressure on Oscar's core business, the company is working to diversify its revenue stream by expanding into related markets -- just as Hims & Hers has done in recent years by getting into the weight management space, competing with the likes of Lilly and Novo.

Image source: Oscar Health.

Data that Oscar Health recently provided to investors shows that its primary market of traditional ACA members totals roughly 21 million. However, by expanding into individual coverage health reimbursement arrangements (ICHRAs) with small and medium-sized businesses (SMB), Oscar could open up its total customer pool to 75 million -- growing its total addressable market (TAM) from $160 billion today to $720 billion. This expansion effort should help keep the company's growth prospects on track.

Is Oscar Health stock a buy?

Given that Oscar Health's modest market capitalization of just $4 billion is roughly in line with its cash balance, it would seem that Wall Street isn't placing much value on the company's insurance business. I suspect the market may be pricing in the potential for significant downside from changes to the ACA. It may also have some skepticism about the company's pursuit of ICHRAs with small businesses.

This suggests another parallel between what Oscar is trying to achieve and what Hims was building during its early days. At the start, Hims faced some doubts over customer acquisition, subscriber retention, and its ability to truly compete with larger, legacy patient care providers. But look at Hims & Hers' share price gains now. Some of those gains are rooted in a turning-of-the-page bullish narrative from some pockets of the investment community.

To be clear, there are potential near-term headwinds at Oscar, but I find the long-term vision is compelling. I'm cautiously optimistic that the company has what it takes to build, grow, and sustain a diversified healthcare platform -- just as Hims & Hers has done -- and that shares will see a sharp rise sooner than some may be anticipating.

Should you invest $1,000 in Oscar Health right now?

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Adam Spatacco has positions in Eli Lilly and Novo Nordisk. The Motley Fool has positions in and recommends Hims & Hers Health. The Motley Fool recommends CVS Health, Johnson & Johnson, Novo Nordisk, and UnitedHealth Group. The Motley Fool has a disclosure policy.