Oscar Health, Inc. (NYSE: OSCR) Stock Analysis
As of February 15, 2025

1. Company Overview

Oscar Health, Inc. (OSCR) is a technology-driven health insurance provider, primarily focused on individual and small group insurance plans in the United States. Founded in 2012, Oscar aims to simplify healthcare through a consumer-centric approach, digital tools, and personalized member engagement. The company leverages data analytics and a mobile-first strategy to enhance member experience, streamline administrative processes, and foster better health outcomes.

Key Business Segments

1.  Individual & Family Plans (IFP)

o   Primary market focusing on Affordable Care Act (ACA) exchanges.

o   Digital-first enrollment and member services, including telemedicine integration.

2.  Small Group Insurance

o   Coverage solutions for businesses with fewer than 50 employees.

o   Emphasis on cost transparency and digital engagement to reduce administrative complexity.

3.  Co-branded Partnerships

o   Collaborations with provider systems, offering Oscar-branded plans with integrated care networks.

o   Localized strategies aiming to leverage provider relationships and optimize cost structures.

4.  Technology & Member Engagement

o   Proprietary platform supporting claims processing, data-driven insights, and personalized care guidance.

o   Virtual care features (telehealth) integrated with member dashboards, aiming to reduce friction in care coordination.

Strategic Initiatives

• Geographic Expansion: Entering new states and markets while deepening penetration in existing regions.
• Product Portfolio Diversification: Exploring Medicare Advantage, Medicaid, and other insurance lines.
• Digital Innovation: Ongoing investment in analytics, user interface enhancements, and AI-driven tools to improve underwriting, member services, and care coordination.
• Operational Efficiency: Targeting lower medical loss ratios (MLRs) and administrative expenses through refined risk management and cost containment measures.

2. Financial Performance

a. Revenue and Growth

• TTM Revenue (as of Dec 31, 2024): $9.18 Billion
• YoY Revenue Growth (TTM): +56.58%

Analysis
Oscar’s revenue has surged above $9 billion, reflecting robust growth from individual and small group plans. A 56.58% year-over-year increase indicates strong member enrollment gains, aided by ACA expansion, digital marketing efforts, and brand visibility.

b. Profitability

• Net Income (TTM): $25.43 Million
• EPS (TTM): $0.10
• Profit Margin (TTM): 0.28%
• Return on Equity (ROE): 2.87%
• Return on Assets (ROA): 0.85%
• Return on Invested Capital (ROIC): 2.79%

Analysis
Oscar has turned profitable with net income of $25.43 million and a modest 0.28% profit margin. While the margin is low, transitioning from losses to profitability marks a significant milestone for a rapidly scaling insurance technology (insurtech) company. The positive ROE and ROA indicate improving efficiency, though they remain relatively modest.

c. Margins

• Gross Margin (TTM): ~20.10%
• Operating Margin (TTM): 0.62%
• Profit Margin (TTM): 0.28%

Analysis
Gross margin near 20% is typical for health insurers managing high claims expenses. The operating margin at 0.62% underscores Oscar’s tight cost structure, given ongoing investments in technology and marketing. However, the positive shift into operational profitability is a key indicator of progress.

d. Cash Flow

• Operating Cash Flow (TTM): $978.19 Million
• Capital Expenditures (TTM): -$27.90 Million
• Free Cash Flow (TTM): $950.30 Million
• FCF Per Share (TTM): $3.80

Analysis
Oscar’s free cash flow of $950.30 million demonstrates its ability to generate liquidity from operations, even as net margins remain slim. Strong operating cash flow supports the company’s technology investments and potential expansions into new markets or products.

3. Balance Sheet

• Total Assets: $4.84 Billion
• Total Liabilities: $3.82 Billion
• Shareholders’ Equity: $1.02 Billion
• Total Debt: $360.84 Million
• Cash & Equivalents: $2.15 Billion
• Net Cash (Debt): $1.17 Billion
• Debt/Equity: 0.36
• Current Ratio: 0.82
• Quick Ratio: 0.73

Analysis
Oscar holds a sizable cash position of $2.15 billion, translating to net cash of $1.17 billion. This liquidity cushion provides flexibility for strategic acquisitions, technology enhancements, and potential downturns. A moderate debt-to-equity ratio (0.36) suggests prudent use of leverage. However, the current and quick ratios below 1.0 reflect the nature of insurance liabilities and near-term obligations, making effective cash and claims management essential.

4. Valuation

• Current Stock Price (as of Feb 14, 2025): $13.56
• Market Capitalization: $3.37 Billion
• PE (TTM): 134.60
• Forward PE: 17.71
• PS (TTM): 0.35
• PB (TTM): 3.32
• P/FCF (TTM): 3.54
• EV/EBITDA (TTM): 24.62
• EV/Sales (TTM): 0.24

Analysis
A trailing PE ratio above 130 appears high, reflecting market optimism around Oscar’s growth potential and the limited earnings base. The forward PE near 18 suggests expectations of substantial earnings improvement. A Price/Sales ratio of 0.35 is relatively low, indicating the stock trades at a discount relative to revenue. Meanwhile, the strong free cash flow yield (FCF margin of 10.35%) may appeal to investors seeking growth with near-term liquidity.

5. Market Performance

• 52-Week Range: $12.43 – $23.79
• 52-Week Price Change: -19.98%
• Beta (5Y): 1.73

Analysis
Oscar’s share price has declined around 20% over the last year, reflecting broader volatility in the health insurance and insurtech space. A beta of 1.73 indicates higher-than-average market sensitivity, with shares reacting strongly to regulatory shifts, ACA policy changes, or sector sentiment.

6. Financial Health and Risks

a. Liquidity & Leverage

• Current Ratio: 0.82
• Quick Ratio: 0.73
• Debt/Equity: 0.36

Oscar’s liquidity ratios are below 1.0, typical for insurers managing short-term claims obligations. A moderate leverage ratio signals manageable debt, supported by a strong net cash position.

b. Profitability & Cash Flow

• Positive Net Income & FCF: Turning profitable is a critical milestone for an insurtech, with $25.43 million in net income and $950.30 million in free cash flow.
• Cost Structure & Scalability: Maintaining low MLR and efficient SG&A remains essential for margin expansion.

c. Operational & Market Risks

• Regulatory Environment: Healthcare legislation, ACA reforms, and state-by-state insurance regulations can significantly impact Oscar’s enrollment and pricing.
• Competitive Landscape: Larger, established insurers have deeper resources, brand recognition, and provider networks. Oscar competes on user experience, technology, and cost transparency.
• Tech & Data Security: Reliance on digital platforms exposes Oscar to cybersecurity threats and the need for continuous platform enhancements.

d. Regulatory & External Risks

• Medicare & Medicaid Expansion: Potential legislative changes can open new markets or create pricing pressures.
• Macroeconomic Factors: Economic downturns may affect consumer spending on insurance or prompt shifts in coverage types.

7. Conclusion

Pros

1.  Strong Revenue Growth: +56.58% YoY indicates effective member acquisition and retention.

2.  Transition to Profitability: Achieving positive net income and robust free cash flow is a key milestone.

3.  Significant Cash Reserves: $1.17 billion net cash provides flexibility for investment, expansion, and risk mitigation.

4.  Tech-Driven Model: A proprietary platform and digital tools position Oscar favorably in an evolving healthcare market.

Cons

1.  Thin Margins: Operating margin at 0.62% leaves limited room for error, with high claims expenses typical in insurance.

2.  Volatile Share Price: A 52-week decline of ~20% and a beta of 1.73 highlight market sensitivity to sector developments.

3.  Regulatory Uncertainty: Changes in ACA or state regulations could rapidly alter enrollment and pricing dynamics.

4.  Competitive Pressure: Large incumbents have scale advantages and more established provider networks, challenging Oscar’s market share growth.

Final Note
Oscar Health’s digital-first approach, growing membership base, and recent pivot to profitability underscore its potential as a disruptive player in health insurance. Yet the company must navigate a complex regulatory landscape, strong competition, and inherent insurance risks. For investors, Oscar represents an opportunity to invest in an emerging insurtech model with substantial growth prospects, balanced against the volatility and operational challenges typical of the sector.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investing involves risk, including the loss of principal. Past performance is not indicative of future results. Consult a qualified financial advisor before making any investment decisions.