Oscar Health $OSCR: The Insurer That Fixed Itself - Can the Momentum continue?

I first covered the company shortly after its 2021 IPO, when it was a fashionable but deeply loss-making insurtech with roughly 500,000 members, about $3 billion in premiums, and a share price that had already halved from its debut. Back then my thesis was simple: US healthcare is a $4+ trillion market that works embarrassingly badly – America spends roughly 17% of GDP on health and gets worse outcomes than Europe – and the company best positioned to fix it from the inside is a technology-first insurer sitting at the heart of the payment flows.

Five years later, almost everything about Oscar has changed – except that core thesis. The company today has 3.2 million members, will generate close to $19 billion in revenue this year, just reported the most profitable quarter in its history with $679 million of net income, and is led not by a startup founder but by Mark Bertolini, the man who previously ran Aetna, one of the largest insurers in the world. And yet the stock trades at around $27.50 – roughly where it stood a few weeks after the IPO. Revenue has grown more than sixfold since then; the share price has gone nowhere. That is exactly the kind of disconnect I look for.

My investment case in one sentence: Oscar is the structural winner of the US individual health insurance market, has just proven it can grow through the worst regulatory shock in the market’s history, trades at a low single-digit multiple of its 2027/28 earnings power, and offers roughly 30% annualized upside on my Fair-PE model over the next three years – if management executes.

1. Product, Business Model, Brand and Moat

Oscar Health is a full-stack health insurer built on its own technology platform. The product is health insurance for individuals, families and small groups, sold primarily through the Affordable Care Act (ACA) marketplaces – the part of the US system serving the self-employed, gig workers, early retirees and employees of small businesses who do not get coverage through a large employer. This is precisely the segment where the customer actually chooses the insurer, which rewards a consumer brand and a good app rather than a corporate procurement department.

The member experience is where Oscar differentiates. Everything lives in one app: finding an in-network doctor, $0 virtual urgent and primary care visits with Oscar’s own telemedicine doctors, electronic health records, prescription management with home delivery, and dedicated care guides. Since 2025 the company has layered its agentic AI assistant ‘Oswell’ on top, which handles personalized navigation and increasingly automates service and claims workflows. What Germany has been trying and failing to build for a decade with the electronic patient file, Oscar members simply have. German readers will recognize the concept – digital insurers here copied parts of this playbook.

How do they earn money? Like any insurer: monthly premiums come in, medical claims and administration go out, and the float earns investment income. With $4.8 billion of cash and investments, the float is no longer trivial – at today’s interest rates it contributes meaningfully. The metric that matters is the combined ratio: medical loss ratio (MLR) plus the SG&A expense ratio. In Q1 2026 that combination was 70.5% plus 15.2% – about 86%, an outstanding figure even if Q1 is seasonally the strongest quarter. For the full year, guidance implies roughly 99% – finally and sustainably below the magic 100% line that Warren Buffett always points to as the threshold where an insurer gets paid to hold the float. A second, still small but strategically important revenue stream is +Oscar, the licensing of the technology platform to other payers and providers – the closest thing to a software business hiding inside this insurer.

The moat is real but often underestimated. Insurance licenses must be won state by state – Oscar was famously the first new insurer licensed in New York in a quarter century. Risk-based capital requirements mean you cannot simply buy your way in with venture money; you need regulatory trust, actuarial track record and local provider networks. On top of that sits the technology stack, built in-house over a decade, which legacy competitors running on 1990s mainframe systems cannot replicate quickly. And with roughly 10%+ market share in many of its states and a near-doubling of national individual-market share recently, scale economics in claims data and pricing are starting to compound. Oscar is hard to replace precisely because it combines three things that rarely coexist: a consumer brand, a regulatory footprint, and modern technology.

2. Market: Gigantic, Growing, Political

US healthcare spending exceeds $4.5 trillion per year, of which well over $1 trillion flows through private health insurance premiums. The individual market that Oscar focuses on covered roughly 24 million Americans at its 2025 peak. Structurally, this segment should keep growing: the share of self-employed, freelancers and gig workers rises every year, small employers increasingly move to defined-contribution models, and ICHRA (Individual Coverage Health Reimbursement Arrangements) lets employers of any size fund individual policies instead of running group plans – a potentially enormous funnel from the employer market into exactly the pool where Oscar is strongest.

I will not sugarcoat the political dimension, because 2025/26 demonstrated it brutally. The enhanced premium subsidies introduced during the pandemic expired at the end of 2025 after Congress failed to extend them – despite a government shutdown fought over the issue and even a White House proposal for a two-year extension. Average premium payments for subsidized enrollees roughly doubled in 2026, and the market-wide enrollment is shrinking as a result. This is the cyclicality of this business: not economic cycles, but regulatory ones. The flip side: affordability has become a top voter concern ahead of the midterms, the majority of ACA enrollment growth happened in Republican-won states, and the political pressure to restore some form of subsidy support is substantial. Any extension would be a pure upside catalyst from here – Oscar’s 2026 guidance already assumes the subsidies are gone.

And here is the remarkable part: in the first open enrollment without enhanced subsidies, Oscar grew membership 56% year-over-year while the overall market contracted. The company priced its 2026 plans for the new reality, launched cheaper product tiers, and took share aggressively from competitors who retreated. Markets like this reward whoever has the lowest cost structure – and a 15.2% SG&A ratio against legacy peers in the high teens to twenties is exactly that advantage.

3. Culture and Management: Founder DNA, Operator Discipline

Oscar was co-founded in 2012 by the German Mario Schlosser together with Josh Kushner and Kevin Nazemi – backed early by Thrive Capital, Tiger Global, Founders Fund and other top-tier investors. I always liked the founding culture: engineers building an insurer, not actuaries adding an app. I also know people who worked there and spoke very positively about the culture and Schlosser personally.

Schlosser handed the CEO role in 2023 to Mark Bertolini, the former chairman and CEO of Aetna, and has since stepped away from the company. One can mourn the founder romance – I partly do – but for this specific phase, Bertolini is arguably the best CEO Oscar could have hired. He knows the regulatory machinery, the actuarial discipline and the Washington corridors like few people alive. The 2025 crisis proved the value of that experience: when market-wide risk scores spiked and Oscar was forced into a heavy loss year, management refiled rates in states covering 98% of membership within weeks, repriced the entire 2026 book, cut the SG&A ratio to record lows, and guided the company back to profitability in a single cycle. That is operator discipline that young insurtechs like Bright Health or Friday Health Plans – both of which died in exactly this market – never had. The strategy remains long-term: the stated ambition is to be the leading platform of a consumer-driven individual market that management believes will structurally absorb the employer market over the next decade.

4. Financials: The Reset Year Is Over

The numbers tell the story of a company that went through fire and came out stronger:

Three things stand out. First, the growth is extraordinary for an insurer: revenue roughly doubled from 2024 to 2026e, driven by both membership and double-digit rate increases. Second, 2025 was a genuine reset year – market-wide morbidity jumped as healthier members anticipated the subsidy cliff, the MLR spiked to 87.4%, and Oscar posted a $443 million net loss. Third, the recovery is already visible in hard numbers, not promises: Q1 2026 delivered a 70.5% MLR (490 basis points better year-over-year), a record-low SG&A ratio, $704 million of operating earnings and $2.6 billion of operating cash flow in a single quarter. The insurance subsidiaries hold $1.7 billion of capital including $809 million of excess capital – the capital-increase worry from my original analysis is off the table; the company even added a $475 million revolver purely for flexibility.

On margins, one has to stay honest: this is insurance, not SaaS. The full-year operating margin in 2026 will be roughly 1.5–2.5% on $19 billion of revenue, because Q1 seasonality (deductibles reset in January, so claims are low) reverses through the year. But the trajectory matters: management’s mid-term framework targets around 5% operating margin, which on a growing revenue base of $20bn+ translates into $1bn+ of operating profit and a return on equity comfortably in the high teens – supported by a tax shield from years of accumulated losses. EBITDA is the wrong lens for an insurer; MLR, SG&A ratio, combined ratio and ROE are the metrics I track here, and all four are moving in the right direction simultaneously for the first time in Oscar’s public history.

5. Valuation: The Fair-PE Model

As always, I value the stock with my Fair-PE model: I derive a fair price-earnings ratio from quality, growth, moat, margin profile and risk, apply it to my three-year EPS projection, and translate the gap into an expected annualized return. For Oscar I arrive at a fair PE of 23 – a clear premium to legacy managed-care peers (Centene, Molina at 8–12x) to reflect the superior growth, the technology platform optionality and the structural share gains, but far below what a software multiple would imply, acknowledging that the bulk of revenue will always flow through to medical care.

My EPS path: roughly $1.10 for 2026 (in line with guidance of $250–450 million operating income plus the structural investment income on a growing float), rising toward $2.10 in 2027 as the repriced book earns a full year of normalized margins, and approximately $2.80 in 2028 with continued membership growth, ICHRA adoption and operating leverage. Applying the fair PE of 23 to 2028 earnings yields a fair value of around $64 per share. From today’s ~$27.50 that implies roughly 134% cumulative upside, or approximately 30% per year over the next three years. Even if I haircut my 2028 EPS by a quarter, the model still produces close to 20% annualized returns. The margin of safety lies in the fact that the market currently prices Oscar at barely 10x my 2027 estimate – for a company growing revenue 50%+ this year. For context: when I compare this to other ‘tech-enabled insurance’ stories like Lemonade, which trades at a far richer sales multiple with a fraction of Oscar’s scale and no comparable profitability, the relative value is striking.

6. Latest News and Earnings

The Q1 2026 report, published on May 6, was the strongest in company history: revenue of $4.65 billion (+53%), net income of $679 million or $2.07 per diluted share – against consensus expectations of around $1.21 – and reaffirmed full-year guidance across every metric. Membership stood at 3.17 million at quarter end, with about 3.0 million paid members as of April 1; management expects gradual churn over the year back toward pre-ARPA retention patterns, which is already embedded in guidance. Roughly $68 million of favorable prior-period reserve development – versus unfavorable development a year ago – signals that the 2026 pricing assumptions are conservative rather than aggressive.

The stock has responded: from the panic low of $10.69 last year, the shares have nearly tripled to the current ~$27.50, briefly touching $28.60 this week – a new 52-week high. Wall Street is, characteristically, behind the curve: the analyst consensus still sits at ‘Hold’ with price targets that the stock has already run through, and the sell side has been raising targets reactively after each print. Politically, the subsidy debate continues in Washington with multiple extension proposals on the table ahead of the November midterms – any resolution would remove the last big overhang.

7. Conclusion and Investment Case

Oscar Health has completed the transformation from cash-burning insurtech darling to a profitable, structurally advantaged insurer growing 50%+ – and the market has only partially repriced it. The original vision from my first analysis is intact: a technology platform at the heart of the world’s largest and most dysfunctional healthcare market, now with the scale, the balance sheet and the management to actually capture it.

The catalysts I see for a further rerating: first, the simple arithmetic of profitability – once full-year 2026 confirms positive earnings, an entire class of investors that cannot own loss-making companies enters the shareholder base. Second, any extension or replacement of the enhanced ACA subsidies, which would turn an assumed headwind into a tailwind worth millions of market-wide enrollees. Third, ICHRA adoption opening the employer market – the long-term prize that could multiply the addressable membership pool. Fourth, weak competitors: the individual market shakeout has already eliminated the venture-funded imitators, and legacy giants like UnitedHealth are consumed by their own crises of cost, reputation and regulatory scrutiny – Oscar, somewhat like Tesla against the legacy automakers in its best years, simply moves faster. And fifth, the +Oscar platform: every external license sold shifts the revenue mix toward software economics and would force the market to rethink the multiple.

The risks remain real – this is a regulated, politically exposed, low-margin business where one bad pricing year can erase two good ones, as 2025 demonstrated. Momentum also should help short-term with the stock

Risk Disclaimer & Conflict of Interest

This article reflects the personal opinion of the author and does not constitute investment advice or a recommendation to buy or sell any security. Equity investments involve substantial risks, including the possible total loss of capital. Oscar Health operates in a highly regulated, politically sensitive market; changes to ACA subsidies, risk-adjustment mechanics or medical cost trends can materially impair the investment case. All figures are based on publicly available information as of June 2026 and may contain errors; forward-looking estimates are inherently uncertain. Please conduct your own research before making any investment decision.

Disclosure: The author holds a personal position in Oscar Health, and the stock is part of the portfolio of the cost-efficient Haas Invest4 Innovation Fund (invest4.net), which the author manages. The author may buy or sell shares at any time without prior notice.