The health insurance industry is well-positioned for growth due to rising healthcare costs, the incidence of chronic diseases, and the rising demand for high-quality healthcare. Also, advances in medical technology and an aging population are significant factors driving growth in the health insurance sector.
The medical industry thrives due to rising demand for healthcare products and services, contributing to massive returns. Also, technological improvements have played a vital part in expanding the medical industry. Technology advancements have enhanced not just the quality of healthcare products and services but also the efficiency and accessibility for patients globally.
With technological improvements, the use of telemedicine, and changing healthcare needs, the need for medical supplies is likely to rise. The global medical supplies market is expected to reach $163.5 billion by 2027, increasing at a CAGR of 3.4%.
Moreover, the global health insurance market is projected to grow at a CAGR of 9.4% to reach $136.43 billion by 2032. The growing awareness of the need for health insurance and rising healthcare expenditures are propelling the global health insurance market forward. Also, the increasing adoption of digital platforms for insurance services is likely to drive market growth in the coming years.
With these favorable trends in mind, let’s delve into the fundamentals of the three A-rated Medical – Health Insurance stocks, beginning with number 3.
Stock #3: HealthEquity, Inc. (HQY)
HQY provides technology-enabled services platforms to consumers and employers in the United States.
HQY’s forward non-GAAP PEG of 1.61x is 20.6% lower than the industry average of 2.03x.
HQY’s trailing-12-month EBIT margin of 8.93% is significantly higher than the 0.15% industry average. Its trailing-12-month levered FCF margin of 20.98% is significantly higher than the 0.23% industry average.
HQY’s total revenue for the second quarter ended July 31, 2023, increased 18.1% year-over-year to $243.55 million. Its gross profit came in at $150.93 million, up 28.1% year-over-year.
Also, its net income came in at $10.58 million, compared to a net loss of $10.65 million for the same period. Its EPS came in at $0.12, compared to a loss per share of $0.13.
The consensus revenue estimate of 983.65 million for the year ending January 2024 represents a 14.2% increase year-over-year. Its EPS is expected to grow 46% year-over-year to $1.99 for the same period. It surpassed EPS estimates in all four trailing quarters. HQY’s shares have gained 9.3% over the past year to close the last trading session at $69.35.
HQY’s POWR Ratings reflect this optimistic outlook. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
HQY has an A grade for Growth. Within the A-rated Medical – Health Insurance industry, it is ranked #9 out of 12 stocks. Click here for the additional POWR Ratings for Value, Sentiment, Stability, Momentum, and Quality for HQY.
Stock #2: Clover Health Investments, Corp. (CLOV)
CLOV provides medicare advantage plans in the United States. The company, through its Clover Assistant, a software platform that provides preferred provider organization and health maintenance organization health plans for medicare-eligible consumers.
CLOV’s forward Price/Sales multiple of 0.32 is 92% lower than the industry average of 4.01. Its forward EV/Sales multiple of 0.17 is 95.2% lower than the industry average of 3.51.
CLOV’s trailing-12-month asset turnover ratio of 1.71x is 353.9% higher than the industry average of 0.38x.
CLOV’s cash, cash equivalents, restricted cash, and investments came in at $689.82 million for the period that ended June 30, 2023, compared to $555.29 million for the period that ended December 31, 2022. Its total assets came in at $1.26 billion, compared to $808.62 billion for the same period.
Analysts expect CLOV’s revenue to increase 3.1% year-over-year to $2.06 billion for the year ending December 2024. Its EPS is expected to increase by 23.4% for the same period. The stock has gained 36% over the past six months to close the last trading session at $1.32.
CLOV has a B grade for Quality. It is ranked #8 in the same industry.
Beyond what is stated above, we’ve also rated CLOV for Growth, Value, Momentum, Sentiment, and Stability. Get all CLOV ratings here.
Stock #1: Oscar Health, Inc. (OSCR)
OSCR is a health insurance company that has built a full-stack technology platform focused on serving its members. It is engaged in offering individual and family, small group, and Medicare advantage plans and +Oscar platform.
OSCR’s forward Price/Cash Flow multiple of 7.26 is 33.3% lower than the industry average of 10.88. Its forward Price/Sales multiple of 0.25 is 89.1% lower than the industry average of 2.28.
OSCR’s trailing-12-month asset turnover ratio of 1.07x is 400.5% higher than the industry average of 0.21x.
During the fiscal second quarter that ended June 30, 2023, OSCR’s total revenue amounted to $1.52 billion, up 49.6% year-over-year. Also, its total current liabilities came in at $3.24 billion for the period that ended June 30, 2023, compared to $3.26 billion for the period that ended December 31, 2022. Its total assets came in at $4.56 billion, compared to $4.52 billion for the same period.
Street expects OSCR’s revenue to increase 7.3% year-over-year to $5.72 billion for the year ending December 2023. Its EPS is expected to increase by 49.8% for the same period. Over the past nine months, the stock has gained 135.2% to close the last trading session at $6.42.
OSCR is ranked #7 in the same industry. It has a B grade for Growth, Value, and Sentiment. To see additional OSCR’s ratings for Stability, Momentum, and Quality, click here.
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HQY shares were trading at $70.57 per share on Thursday afternoon, up $1.22 (+1.76%). Year-to-date, HQY has gained 14.49%, versus a 17.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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