The companies in the US health insurance industry are getting decimated this year. People rush to see the doctor en masse as 12 million are in danger of losing health insurance due to budget cuts in President Trump’s Big Beautiful Bill. As a result, utilization rates are skyrocketing as people claim health benefits while they still have them. Medical loss ratios across the industry, usually averaging between 80% and 85%, are now approaching and often exceeding 90%, eating into profits. No company has been left unscathed.
The market caps of Centene and Molina have been cut in half and even the stock of industry behemoth UnitedHealth is down 45% in 2025. Oscar Health, a fast-growing startup aiming to disrupt the industry via technology, personalization and better pricing, is down by a third this month alone. On the other hand, where there is a crisis, there is opportunity. Judging from the chart below, this seems to be precisely the case with Oscar.
The stock’s current selloff fits in the position of wave (c) of a simple (a)-(b)-(c) zigzag correction, whose wave (a) was a leading diagonal. This three-wave structure follows a five-wave impulse pattern, marked (1)-(2)-(3)-(4)-(5), which lifted Oscar from just over $2 to nearly $24 in 2023 and 2024. Put together, these structures produce an almost complete Elliott Wave cycle to the upside.
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If this count is correct, we can expect the uptrend to resume as soon as wave 5 of (c) is over. The strong support near $10 per share, which coincides with the 61.8% Fibonacci level, could help the bulls stage a reversal for the start of wave III up. In addition to this bullish technical setup, Oscar’s fundamentals look promising, as well.
Even in the current crisis engulfing the industry, the company guides for a medical loss ratio of 86-87% in 2025, which is much better than Centene’s just reported 93% and Molina’s 90.4%. Oscar is also on track to grow revenue by another 33% this year, on top of last year’s 56% growth, with 32 more states yet to enter. We think that once healthcare utilization rates normalize, management would have a very good chance of reaching its goal of $2.25 in 2027 EPS. That would make the current prices look like a bargain in two years’ time, which is why we’ve included Oscar in our stock portfolio.
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