What Happened?
Shares of health insurance company Oscar Health (NYSE:OSCR) jumped 7.1% in the morning session after continued positive momentum as it announced a partnership to launch a new health insurance plan with grocery chain Hy-Vee.
The healthcare technology company is partnering with grocery and pharmacy chain Hy-Vee to launch a new employer health insurance plan called “Hy-Vee Health with Oscar.” The plan, which will debut in the Des Moines, Iowa area, utilizes a model known as an Individual Coverage Health Reimbursement Arrangement (ICHRA). This allows employers to provide workers with a set amount of money to purchase their own health insurance, potentially saving businesses 20% to 30% and employees up to $1,000 annually. The partnership is expected to expand Oscar's customer base and strengthen its competitive position. Adding to the positive momentum, the broader health insurance sector received a boost after news that prominent investors like Warren Buffett's Berkshire Hathaway had taken a new stake in industry giant UnitedHealth, lifting sentiment for peers like Oscar.
After the initial pop the shares cooled down to $15.37, up 4.6% from previous close.
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What Is The Market Telling Us
Oscar Health’s shares are extremely volatile and have had 62 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 17 days ago when the stock dropped 4.3% on the news that industry bellwether UnitedHealth Group (UNH) slashed its 2025 profit forecast after reporting a significant surge in medical costs, sending shockwaves across the health insurance sector. The core of the issue stems from an “unprecedented medical cost trend environment,” particularly within the Medicare Advantage market, which are privately run versions of the federal health insurance program. UnitedHealth, the largest provider in this space, now expects these costs to rise by 7.5% in 2025, a significant jump from its earlier 5% projection, with the potential to accelerate to almost 10% in 2026. In response, the insurer announced it will drop plans covering over 600,000 people. The company's lowered earnings forecast has raised investor concerns that these surging costs and utilization rates are an industry-wide problem, impacting the profitability of other carriers as well.
Oscar Health is up 13.4% since the beginning of the year, but at $15.37 per share, it is still trading 33.9% below its 52-week high of $23.27 from September 2024. Investors who bought $1,000 worth of Oscar Health’s shares at the IPO in March 2021 would now be looking at an investment worth $441.67.
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