We came across a bullish thesis on Oscar Health, Inc. (OSCR) on Substack by Oguz Erkan. In this article, we will summarize the bulls’ thesis on OSCR. Oscar Health, Inc. (OSCR)’s share was trading at $12.62 as of April 28. OSCR’s trailing and forward P/E were 126.20 and 17.76 respectively according to Yahoo Finance.
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Oscar Health embodies the rare combination of visionary founding, superior product-market fit, and financial momentum that investors seek in a long-term compounder. Born from Mario Schlosser’s personal frustration with the U.S. healthcare system, the company launched in 2012 with a mission to fix insurance through technology, capitalizing on the Affordable Care Act (ACA) to offer a digital-first, consumer-centric alternative to traditional insurers. Its early entry into ACA marketplaces led to rapid adoption, with 40,000 enrollees and $180 million in revenue in year one. Oscar reimagines health insurance not as a bureaucratic obstacle but as a service, with a proprietary cloud-native platform enabling members to enroll in minutes, book $0 virtual visits, and manage claims seamlessly through a unified app. This experience is underpinned by Oscar’s “Total Cost of Care” strategy, which proactively manages health outcomes to minimize major medical costs. That approach is translating into financial results: Oscar posted a Q4 2024 medical loss ratio (MLR) of 81.7%, outperforming industry giants like Cigna and UnitedHealth.
Operationally, Oscar’s efficiencies are just as compelling. Its modern tech stack automates administrative tasks, enabling SG&A reductions from 24.3% of revenue in 2023 to 19.1% in 2024, with a 16% target by 2026 — well below peers. The result is a rare dual achievement of improving margins and high customer satisfaction, evidenced by its Net Promoter Score of 66, far above industry norms. While skeptics question its durability in an entrenched industry, Oscar is making its case through superior economics and member loyalty. The company now covers 1.7 million members, but its true opportunity lies ahead. The ACA marketplace serves 21 million today, but the SMB market — where employers reimburse workers for ACA-compliant plans — represents a 75 million-member expansion opportunity. This shift is accelerating, with a 170% YoY rise in SMB ACA reimbursements. Even without large employer penetration, Oscar’s addressable market nears 100 million individuals, or $300 billion in premium potential.
Crucially, profitability is no longer a distant hope. Oscar expects 22% revenue growth, a 100 bps MLR improvement, and $225 million in operating earnings in 2024. With declining MLR and SG&A trends, margin expansion appears inevitable. Political risk from ACA subsidy changes exists, but a full repeal is unlikely, and Oscar expects to earn $2.2 EPS in 2027 even without enhanced subsidies. With $1 billion in equity, low debt, and $1.24 billion in regulatory capital, Oscar has ample firepower to fund growth. The risk/reward is highly asymmetric, with long-term upside driven by market expansion, profitability gains, and strategic resilience.