The business setup behind Oscar Health is two-fold: They’re part tech company, part insurance company. But all aspects of the company will soon be going to market. Started by three college classmates after poor experiences with complicated healthcare billing systems, Oscar Health aims to make things as easy as possible for their members, and to remove the enigmatic aspect of health insurance and billing. Here’s what to know about the 2021 Oscar Health IPO, including Oscar Health fundraising that led up to this point and when to expect the market debut.
TL;DR
- Update: Oscar Health has gone public on March 3, 2021. It can be found under the ticker symbol OSCR.
- Oscar Health recently filed paperwork with the Securities Exchange Commission (SEC) declaring their intent to go public this year, aiming to raise $100 million by selling shares of Class A common stock.
- The company focuses on using proprietary technology to make the entire insurance process easier for members to navigate.
- The Affordable Care Act (ACA) spurred growth for Oscar in the early 2010s.
- The company currently offers insurance in 15 states across the country, including the four most populous statesCalifornia, Texas, Florida, and New York.
- Medicare-eligible adults also have plans available to them through Oscar.
A quick company history of Oscar Health
In 2012, both Mario Schlosser and Josh Kushner found themselves fed up with the health insurance industry. They weren’t alone; America’s healthcare system is notoriously controversial.
After Kushner sprained his ankle and Schlosser welcomed a new baby into the world, the two were both left tired, confused, and aggravated when dealing with the hospitals billing system.
So how did they handle their frustrations? They brought in a third classmate from their time at HarvardKevin Nazemiand the trio began working on their business. In creating Oscar Health, they sought an insurance company geared towards ease of use, transparency in pricing, and accessibility for all.
The focus of Oscar Health may have started with the goal of making an easily accessible and understandable way to navigate health insurance, but the company has adapted along the way. They dove further into the tech side of things in order to make their platform as robust as possible. In the years since its founding, Oscar’s goal has come to fruition. The company became the first health insurance company built on a full stack technology platform, according to the Oscar website.
Their app is noteworthy, as well. It’s one of the most successful in the entire healthcare industry, and it boasts the #1 spot in regards to member downloads. Additionally, nearly 88% of Oscar members have interacted with the company in a digital capacity, leading to very high levels of engagement within the member community. According to SEMrush, Oscars website garners over 1,250,805 visits per month. And according to Apptopia, their mobile app is downloaded just over 92 thousand times per month.
That’s something to be proud of, especially in an industry that’s notoriously difficult to maneuver.
Oscar Health fundraising ahead of the public offering
Oscar Health is no stranger to bringing in funding to their company. Actually, many would say quite the opposite. Since their founding, Oscar has raised over $1.6 billion in investments from 28 different investors, over 10 rounds of funding. That’s a lot of dough, but in Oscar’s eyes, it’s for good reason.
Lead investors include massive companies such as Alphabet (Googles parent company), Fidelity, and Founders Fund. This fundraising comes on the heels of over 74% in direct policy premiums over the past three years, according to a press release from Oscar Health.
Related: What to know about the GoodRX 2020 IPO
Oscar Health by the numbers
Here are Oscar Healths nitty-gritty numbers for the past fiscal year (compared to 2019 data), broken down by the folks over at TechCrunch:
- Total premiums earned: $1.67 billion (+61% from $1.04 billion)
- Premiums ceded to reinsurers: $1.22 billion (+113%, from $572.3 million)
- Net premium earned: $455 million (-3% from $468.9 million)
- Total revenue: $462.8 million (-5% from $488.2 million)
- Total insurance costs: $525.9 million (-8.7% from $576.1 million)
- Total operating expenses: $865.1 million (+16% from $747.6 million)
- Operating loss: $402.3 million (+56% from $259.4 million)
The most glaring figure in this set of figures is last years decrease in revenue, paired with a substantial increase in operating expenses. You dont need a Harvard MBA to know that these movements are supposed to be flippedif you want to be profitable, that is. Yes, a five percent decrease in revenue can be attributed to many things, primarily the coronavirus pandemic. On the contrary, a 16% increase in operating expenses in just one year raises some eyebrows.
Spending to increase revenue capacity is a tried-and-true strategy, and Oscar seemingly has no plans of deviating from it. In their S-1 filing with the SEC, the company said that they plan to do the following:
Make significant investments to further market, develop, and expand our business, including by continuing to develop our full stack technology platform and member engagement engine, acquiring more members, maintaining existing members and investing in partnerships, collaborations and acquisitions. In addition, we expect to continue to increase our headcount in the coming years.
This amounts to a plethora of goals for Oscar Health.
Path to the Oscar Health IPO
Oscar Health has already publicly filed their paperwork with the SEC, which means that an IPO is officially on its way this year. Unlike many companies, they’re not trying to keep their confidential filing for as long as possible. In some investor’s eyes, this might be a good sign.
Morgan Stanley and Goldman Sachs, along with other financial service companies, have been tapped to guide the health insurance company to market. Goldman Sachs is acting as lead underwriter for the IPO, which should make potential investors smileIPOs underwritten by GS over the course of the last year have averaged a return of 86.4% for their investors. This enthusiasm has shown in their own stock, which has grown 39.16% in the past year.
When is the Oscar Health IPO date?
The official listing date for Oscar Health has not yet been confirmed. What we do know, however, is that the company will be traded on the New York Stock Exchange (NYSE). Given the company’s tech-centric focus, it’s interesting they didn’t go with the NASDAQ. Whatever their reason for choosing the NYSE, the companys securities will trade under the ticker symbol “OSCR” as soon as it debuts on the exchange.
What investors should know
Health insurance is a notoriously hard industry to gain footing in. With large companies like Anthem, Humana, UnitedHealth, and HCSC still maintaining a stronghold over most of the market share, breaking in and becoming a household name is typically much easier said than done.
But Oscar is clearly flipping the switch.
Oscar does have some features that set it apart from traditional health insurance companies, ones that give it a competitive edge and may allow it to break into the market better than others. Chief among these features is the companys clear and concise dedication to using new technology to the advantage of all parties involvedpatients, practitioners, and Oscar themselves. Accessibility is a huge focus for Oscar, too. This is super pivotal considering the increasing relevance of disabled rights.
The coronavirus pandemic has pushed a sharp increase in telemedicine. What was considered by many to be a fringe or niche sector of healthcare has taken center stage this past year, giving healthcare providers the ability to connect and engage with their patients without either of them having to leave their homes. Here, Oscar is far ahead of the curve. The company will, however, have to turn profitable at some point in the near future in order to remain afloat and to protect their chances of becoming a viable player in the industry.
For companies like Oscar that are invariably bent on R&D, profit tends to take a backseat…but it can’t stay that way forever.
The platforms direct-to-consumer model is also something that gives them a leg up. In this day and age, people often want to deal directly with the person calling the shots, so to speak. By cutting out the middleman, Oscar makes itself highly accessible to its members. And with the new administration taking the helm of the country this past month, its likely that the Affordable Care Act (ACA)a large part of what has driven Oscars success so farwill remain safe and intact for the foreseeable future.
Bottom line
All investments should come only after youve done your research on a company, their revenue model, and their future goals and expectations. In a highly competitive industry like health insurance, the odds might be stacked against Oscar, and it remains to be seen if the company can differentiate itself enough from the stiff competition. Until then, retail investors across the nation anticipate the Oscar Health IPO date in 2021.
Related: What to know about the HIMS 2021 IPO