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This Week's Bonus Article Hinge Health's AI Moat Might Be Its Patient Movement DataReported by Leo Miller. First Published: 2/23/2026. 
Key Points - PwC expects medical cost inflation to remain elevated, which strengthens the appeal of cost-reduction platforms like Hinge Health.
- Hinge’s MSK model is built to reduce therapy intensity and potentially avoid costly surgeries, supporting insurer adoption.
- Strong results are tempered by elevated stock-based compensation, though management expects SBC to normalize.
- Special Report: [Sponsorship-Ad-6-Format3]
The cost of healthcare in the United States is rising sharply. In its 2026 healthcare outlook, PricewaterhouseCoopers (PwC) highlighted persistent inflationary pressure on the system. "The US healthcare system is heading into another year of powerful inflationary forces exerting pressure, with few deflationary forces in sight." PwC estimates that group insurance medical costs rose 8.5% in 2024 — the fastest pace since 2012 — and reports the same 8.5% increase in 2025, with a similar rise forecast for 2026. Against this backdrop, Hinge Health (NYSE: HNGE), a mid-cap healthcare stock, is worth a closer look. Hinge's business model centers on lowering healthcare costs, and some of the industry's largest players are taking notice. Below is a closer look at the fast-growing company and its outlook after an encouraging earnings report. Understanding HNGE: Lowering Musculoskeletal Costs in Healthcare Hinge Health focuses on one segment of care: musculoskeletal (MSK) physical therapy. Its virtual MSK platform delivers personalized therapy programs patients can complete at home via a mobile app, coupled with wearable devices, AI coaching, and human support teams. Hinge reports that in 2024 its platform cut the human-hours required to support patients by about 95% relative to traditional physical therapy services. Reducing human hours helps lower costs, an important reason insurers and employers contract with Hinge. For MSK conditions, surgeries are the largest cost driver. Hinge contends that consistent, low-friction intervention through its platform reduces the chance patients eventually need surgery. Because patients can use Hinge's app at home rather than scheduling and traveling to in-person sessions, they may adhere to exercises more often, which can lower downstream surgical risk and save insurers money. One study that evaluated nearly 7,000 patients — roughly half using Hinge and half receiving traditional care — found the incidence of spinal fusion surgeries was 56% lower among Hinge users. Insurers are taking notice. Hinge now works with more than 2,800 self-insured corporations, including 45% of the Fortune 500, and is integrated with the U.S.'s five largest health plans, such as UnitedHealth Group (NYSE: UNH), and the three largest pharmacy benefit managers. Those integrations make it easier for new employers and insurers to adopt the platform. Hinge Soars After Latest Earnings Report, But SBC Is Elevated In its latest quarter, Hinge reported revenue of $171 million, up 46%. Adjusted earnings per share rose 23% to $0.49, and both metrics beat expectations, sending shares up about 17%. For 2026 the company projects full-year revenue growth of 25%, a deceleration from 2025's 51% growth, while forecasting an adjusted operating margin rising from 20% to 21%. Free cash flow jumped to $180 million in 2025 — roughly a 300% increase from 2024. One major caveat: Hinge's stock-based compensation (SBC) is large. SBC is a non-cash way to compensate employees, but if the company had paid the same amount in cash it would have materially affected its cash position. Hinge reported $643 million in SBC, more than three times the free cash flow it generated, which complicates the cash-flow picture and makes headline FCF less straightforward to interpret. On the positive side, management expects SBC to fall substantially, projecting quarterly averages of roughly $20 million to $25 million over the next four to eight quarters. HNGE: An Intriguing AI Play on Healthcare The MarketBeat consensus price target on Hinge Health sits near $57, implying about 35% upside. Price targets updated after the earnings release average roughly $55, which still implies close to 31% potential upside. Hinge's model also provides a potential defense against AI-driven competition. The company has accumulated proprietary patient movement data from users performing workouts and interacting with its AI assistant — datasets that are difficult for competitors to replicate. That data can help improve personalized care and the platform's effectiveness over time. The stock trades at a forward price-to-earnings ratio near 21x and has a market capitalization under $4 billion. There are reasons to be optimistic — traction with insurers, potential surgical-cost reductions, and improving margins — but investors should weigh those positives against elevated SBC (even if declining), decelerating revenue growth, and the potential for significant volatility in a market that can be skeptical of software-driven healthcare plays.
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