If this happened, Oscar could easily earn a price-to-sales multiple comparable to Salesforce's current 10.5. SaaS-style margin expansion could coincide with continued growth at or above current levels for a few years. If it did, SaaS's superior unit economics mean improved margins and multiples might not be far behind.
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But, as a software player, Oscar would need to increase sales less than 20 times in coming years to match those of. UnitedHealth currently earns 175 times Oscar's revenue. This includes in harder-to-understand areas like population health.
But the company's true promise lies in its technology. That Oscar has previously shown profitable unit economics in traditional health insurance is great, especially given its small size. Instead, they should be thinking hard about engagement - and data. Investors should not just be focused on Oscar's premiums or underwriting results, as they might with a traditional health insurer. It's far better positioned to keep improving its technology, products, and services than most rivals, a huge advantage as the healthcare industry continues to evolve. It has a codebase that is updated more than 50 times each day. Former top executives from these carriers have also recently launched start-up health insurers of their own, such as Bright Health Group, co-founded by UnitedHealth's former CEO and CFO.īut Oscar has zero legacy infrastructure to worry about. They can invest in new technology like this also, and, in some ways, finally are. To be sure, old-line competitors like UnitedHealth Group have deca-billion-dollar bottom lines. By sharing risk with smaller carriers now, Oscar can keep acquiring data while largely bypassing the traditional regulatory and marketing expenses associated with launching new health plans in each state.
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Similarly, Oscar's ability to better engage users and collect more data than competitors will ultimately become its economic moat.ĭata will allow Oscar to do things like recommend the best value-for-money doctors in your zip code - or nudge you to early interventions that might save you money or extend your life down the line.Ĭurrently, +Oscar clients can choose to either pay licensing fees or risk-share directly with the company. Rather, with every new click or input we give them, we make their algorithms smarter, more useful, and harder for new entrants to match. Facebook, Google, and Amazon do not have moats simply because of the number of people who use them. It's all about the dataĪs with many other industries, the name of the new healthcare game is data. Before even graduating college, CEO Mario Schlosser was a Visiting Scholar in Stanford's computer science department, where he co-authored 10 leading publications, including one of the most cited computer science papers of the decade. Its founding team and earliest technical hires have technical backgrounds unparalleled in the industry's history. Even now, the company admits it has a long way to go to build the end-to-end, FAANG-quality systems it envisions.īut Oscar's technology is already superior to much of the industry's. In its earliest start-up days, Oscar did not have the resources to even deploy its own technologies. As parent Oscar continues to sign on famous providers like HCA Healthcare, Colorado Health Systems, and Memorial Hermann in Houston, additional +Oscar deals with these groups or their partners may follow. It has now closed deals with some of the biggest names in American healthcare, including the Cleveland Clinic and Cigna. It is not yet even reported as a separate segment.īut +Oscar is already making impressive inroads.
+Oscar forecasts it will gross only $50 million of fee-based revenue in 2022. Today, +Oscar is a minuscule division of a comparatively small firm. This gives them ready access to high-quality cloud-based technologies to lower costs, drive efficiency, and improve member experiences and outcomes in ways they cannot themselves. +Oscar allows other insurers and risk-bearing providers, especially smaller and regional player, to rent Oscar's full-stack technology platform.
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