Oscar Health: Reasons Attracting Investors' Attention

Why is Oscar Health in the Spotlight?

The year 2025 is shaping up to be a challenging year for investors in the U.S. health insurance sector. Significant declines in stock prices have affected all players in the industry, including Oscar Health (OSCR), which has also suffered from this negative environment. Launched in an IPO in 2021 with a valuation of $7.9 billion, the company's shares have lost 94% of their value by 2023. Today, however, with a market value of $4.3 billion and projected revenues of $12 billion for 2025, it indicates that Oscar Health's current size is not being adequately appreciated.

Innovative Approach with Technology

Since its founding in 2012, Oscar Health has embraced a business model that integrates health insurance with technology. The company operates under the Affordable Care Act (ACA), offering individual and family plans. Digital platforms and mobile applications make the insurance processes more efficient for members, while telehealth services and the customer relationship tool Rosco provide advantages such as guidance, risk management, and cost control.

Financial Performance and Profitability

Oscar Health's revenues were $1.9 billion in 2021, and by the first half of 2025, this figure rose to $10.5 billion. The number of members also increased from 578,000 to 2 million during the same period. However, this rapid growth has created challenges in terms of profitability. The company reported a net loss of $228 million in the first half of 2025 due to an increase in medical loss ratios. Planned premium increases and cost optimization for 2026 could offer potential for a return to profitability.

Market Valuation and Multiples

Oscar Health’s current market value remains attractive when compared to its growth and profitability potential. With a market value of $4.3 billion and a projected revenue of $12 billion, the Price/Sales ratio is approximately 0.36x. Additionally, the forward Price/Earnings ratio based on 2026 projections is only around 7.2x, which is significantly below the industry average.

Risks and Opportunities

The U.S. health insurance sector, which has a size of $1.7 trillion, is expected to grow at a rate of 6% per year by 2030. However, regulatory changes in the sector could directly impact Oscar Health's revenue and profitability projections. New obligations for Medicaid users introduced by regulations coming into effect in July 2025, as well as the expiration of ACA premium tax credits, could increase premium costs. These uncertainties are among the key factors shaping the company’s future.

In summary, while Oscar Health stands out with its technological investments and strong liquidity position, regulatory changes and profitability targets are also factors that investors need to consider. Given the company's current market value and growth potential, Oscar Health continues to be on the radar of investors with a balance of opportunities and risks.