CBx Daily

Obamacare’s Oscar Health Announces IPO Despite Margin Difficulty

Feb 24

By Darianne Hudson

  • Oscar Health has filed to go public filed its initial IPO with the SEC
  • The health provider expanded by taking advantage of Obamacare and has raised $1.6B in funding

Oscar Health is one of the largest insurance startups since its founding, and is now planning a $100 million initial public offering. The company was able to quickly take advantage of Obamacare’s online enrollment opportunities because of their innovative approach to healthcare. With the global market for healthcare insurance expected to reach $4 trillion by 2027, how healthy will Oscar’s IPO actually be to fund its growth initiatives?

Why This Matters: Oscar’s value proposition as a tech-driven insurer is compelling, but many are watching to see if it can gain meaningful market share in an industry overrun by traditional insurers. To date Oscar Health has raised $1.6 billion in funding from investors, and currently offers insurance in 15 states totaling 529,000 plan members. The company also provides digital care offerings, such as its Virtual Primary Care service, they’ve seen a spike in usage since the onset of the COVID-19 pandemic.

The health provider expanded by taking advantage of Obamacare and has raised $1.6B in funding

Although the company disrupted the market and attracted a lot of funding early on, it has been difficult for it to compete in an industry dominated by a handful of large insurers. As of December 31, 2020, Oscar had $826.3 million in cash and $1.8 billion in total liabilities. The company has seen steady growth by enrolling individuals, but that growth has not translated to profits that offset operating costs and debts.

What’s Next: Enrollment is still growing for Oscar Health with more opportunity emerging as the Affordable Care Act expands. While the margins for profitability show no signs of changing, Oscar sits among other insurtech companies that went public despite negative margins. Its assurance to investors is the long-term nature of a return. All eyes are on this company’s long-game. The expected IPO pricing date has yet to be determined.

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