The healthcare sector has performed fairly well so far in 2026 due to several factors: GLP-1 medications continue to drive new business and interest, while groundbreaking AI applications help enhance and accelerate the drug discovery process. On top of that, potential mergers and acquisitions activity, as big pharmaceutical companies face a major patent cliff, could provide opportunities for new firms to stand out.
Despite some sector-wide risks—besides the patent cliff, the potential for cuts to Medicaid funding and regulatory pressure on drug pricing are among the biggest unknowns—many companies in healthcare have posted strong earnings and have the capacity for noteworthy growth going forward. Two of the firms below have already performed very well this year, and the third has some compelling factors that may help it to mount a comeback in the final months of 2026.
Oscar's Big Run May Continue as Profitability Improves
Health insurance provider Oscar Health Inc. (NYSE: OSCR) recently hosted its 2026 investor day, in which it increased its outlook for full-year earnings from operations, which is now $100 million higher at the midpoint and expected to fall between $600 million and $800 million. Management also expects a greater improvement in the medical loss ratio as it reaffirmed its total annual revenue expectations of up to $19 billion.
One reason for this optimism is that the company has been consistent in improving its profitability for some time now, following a sustained period of losses. The company generates positive net income and adjusted EBITDA while also building a business capable of generating billions in annual revenue through enrollments in the Affordable Care Act marketplace. In the latest quarter, Oscar beat earnings estimates by a full 70 cents while also posting more than 70% in year-over-year (YOY) revenue improvement.
Shares of OSCR have more than doubled so far this year, rising by about 106% year to date (YTD). Despite several Hold ratings, analysts still see more room to run, with a consensus price target of nearly $34 per share, representing about 15% additional upside.
Hinge's Growing Pains Could Be Well Worth the Risk
Hinge Health Inc. (NYSE: HNGE) represents a new type of healthcare firm that was essentially unimaginable just a few years ago: it's a company offering virtual programs for patients seeking to manage musculoskeletal concerns. Hinge provides a platform that guides users through personalized therapy, clinical recommendations, behavioral support, and more. Given that musculoskeletal conditions are among the largest categories of employer healthcare spending, Hinge has a total addressable market in the tens of billions of dollars per year.
Hinge's most important customers have been recurring enterprise clients, including large employers and labor organizations, that offer its services to their members. Combined with high gross margins, the company has been able to excel in terms of profitability: last quarter, it posted an earnings beat of 31 cents per share on top of 53% YOY revenue growth. The firm boosted its full-year outlook for both revenue and operating income thanks to strong enrollment yields.
Not all corners of Hinge's business are equally strong, however, as its recent acquisition of Cylinder Health reveals. Cylinder will enable Hinge to expand into the lucrative gastrointestinal care area, but it currently operates at a loss and will require deployment of capital to fully integrate into Hinge's business over the coming two years.
Shares of HNGE have risen over 100% YTD, but analysts still see an approximately 8% upside. A large majority also views the stock as a solid Buy.
Insmed's New Lung Disease Treatment Could Help Reverse Poor Share Performance
Biopharma firm Insmed Inc. (NASDAQ: INSM), known for its leading inhaled antibacterial therapy Arikayce, took a different path in terms of share price from the firms above. It has declined by about 32% YTD. Although one might expect it to now trade at a bargain valuation, it remains expensive with a price-to-sales (P/S) ratio of about 43.
Still, the recent price drop may be enough to compel investors to look at this firm, just over a year after its next major drug offering, Brinsupri, received U.S. FDA approval to be the first targeted treatment for non-cystic fibrosis bronchiectasis. The drug remains the only option available for patients facing this serious and chronic lung condition.
Insmed's revenue roughly quadrupled YOY last quarter on the strength of Brinsupri's launch, and its losses were far narrower than analysts expected. The company expects lots more room for growth, too: it anticipates global peak sales for Brinsupri to climb above $7 billion, particularly if it can help to address certain comorbidities as well. It's no wonder, then, that INSM shares receive a near-unanimous Buy rating from analysts, alongside a prediction of roughly 70% upside.
The article "3 Healthcare Stocks Showing Why the Sector Still Has Momentum" first appeared on MarketBeat.
