In a rapidly evolving healthcare landscape, Oscar Health is emerging as a formidable player, poised to reshape the individual health insurance market. Founded with a vision to make healthcare more accessible and affordable, Oscar has leveraged its innovative technology platform and member-centric approach to achieve remarkable growth and set ambitious targets for the future.
From its inception, Oscar has differentiated itself through its focus on technology-driven solutions and superior member experiences. This strategy has paid off, with membership skyrocketing from 542,000 in 2021 to approximately 1.5 million by April 2024, representing a compound annual growth rate (CAGR) of about 40%. This explosive growth has positioned Oscar as a significant force in the Affordable Care Act (ACA) marketplace, capturing around 7% of the total ACA market share across 18 states.
Oscar’s financial journey has been one of transformation. After years of losses, the company achieved Insurance Company Adjusted EBITDA profitability in 2023, a significant milestone in its path to sustainability. Building on this success, Oscar is targeting Total Company Adjusted EBITDA profitability in 2024, with guidance projecting total revenue between $8.3 billion and $8.4 billion, and Adjusted EBITDA ranging from $125 million to $175 million.
Looking ahead, Oscar’s ambitions are even bolder. The company is projecting a revenue CAGR of approximately 20% from 2024 to 2027, aiming to achieve a 5% operating margin by 2027. These targets reflect Oscar’s confidence in its strategic initiatives and its ability to capitalize on market opportunities.
Oscar’s strategy for sustained growth and profitability rests on four key pillars:
Market Expansion and Operational Excellence: Oscar plans to expand its footprint to an additional 150+ Metropolitan Statistical Areas (MSAs) by 2027. This expansion, coupled with a focus on operational efficiency, is expected to drive both top-line growth and margin improvement.
Enhanced Member Experience: With an impressive Net Promoter Score (NPS) of 66 and an 82% member retention rate, Oscar is doubling down on its commitment to superior member experiences. Initiatives include launching personalized plans, enhancing digital tools, and improving care navigation.
Technology as a Growth Engine: Oscar’s proprietary technology platform, which has enabled 98%+ claims auto-adjudication, is not just an internal asset. Through +Oscar, the company is externalizing its technology solutions to serve other healthcare entities, with approximately 500,000 external client lives already on the platform.
Market Innovation through ICHRA: Oscar sees significant potential in the Individual Coverage Health Reimbursement Arrangement (ICHRA) market. By partnering with ICHRA platforms, Oscar aims to expand beyond the traditional ACA market and capture a share of the estimated 75 million lives in the small and medium-sized business (SMB) employer market.
Oscar’s focus on ICHRA is particularly noteworthy. As employers seek more flexible and cost-effective health benefit solutions, ICHRA presents a compelling alternative to traditional group coverage. By allowing employers to provide tax-advantaged funds for employees to purchase individual health plans, ICHRA aligns well with Oscar’s strengths in the individual market. The company is positioning itself to be a leading carrier in this emerging ecosystem, potentially unlocking a vast new market beyond traditional ACA enrollees.
Central to Oscar’s strategy is its integrated technology platform. This ecosystem, built on a single source of truth, enables personalized member experiences, high-value clinical care, and operational efficiencies. The company is also at the forefront of AI adoption in healthcare, exploring over 20 high-value AI use cases across its platform, from automating member service interactions to enhancing clinical documentation.
Despite its optimistic outlook, Oscar faces several challenges. The potential expiration of enhanced ACA subsidies in 2026 could shrink the individual market size, impacting growth projections. Additionally, as Oscar expands into new markets and products like ICHRA, it will need to carefully balance growth ambitions with profitability goals. The success of its technology externalization efforts through +Oscar will also be crucial in achieving its long-term objectives.
Oscar Health stands at the intersection of technology, healthcare, and insurance, uniquely positioned to capitalize on the evolving dynamics of the U.S. health insurance market. By focusing on member experience, leveraging its technology platform, and innovating with products like ICHRA, Oscar aims to not just participate in the market but to fundamentally reshape it. As the company moves towards its 2027 targets, all eyes will be on Oscar to see if it can deliver on its promise of making healthier lives accessible and affordable for all.
The Momentum Edge
Oscar Health is showing the type of revenue and earnings growth that institutional investors love to see. Sales have grown from just $488 million in 2019 to over $7.2 billion annually.
The company expects to keep growing at a blistering pace and have finally turned the corner into a profitable enterprise.
Oscar Health is a technology company that just happens to sell health insurance. Their innovative cutting-edge approach should drive continued profit growth and attract the kind of buying pressure that sends the stock soaring.
The institutions are taking notice and are accumulating the shares.
T. Rowe Price and Renaissance are both buying.
So Is Viking Global, one of the wildly successful Tiger Cubs trained by hedge fund legend Julian Robertson.
Severla of the best-known Quant shops including jane Street, Two Sigma and Citadel are buyers of Oscar Health shares.
So is renowned growth stock firm Driehaus and Associates.
The blistering growth at Oscar Health has caught Wall Street by surprise. The firm has posted four straight positive earnings surprises and I will not be surprised to see a fifth when they company reports earnings next month.
Analysts have been scrambling to rise estimates for the next few quarters which usually leads to an increase in buying pressure.
You can buy shares of Oscar Health up to $23.75