Written by Summary
Oscar’s unique offering of easy-to-use consumer-facing insurance.
Macroeconomic trends that will drive more growth to the Health Insurance Marketplace.
Oscar’s consumer-facing brand that inspires customer-loyalty.
High margin SaaS segment of Oscar Health is growing.
OSCR stock has low valuation and high growth ceiling.
PeopleImages/iStock via Getty Images Introduction
Oscar Health (NASDAQ: OSCR ) is an insurance-tech company founded in 2012 after the passage of the Affordable Care Act. It aims to solve the problems created by the complexities and inefficiencies in the health care insurance industry through a user-friendly front-end and powerful algorithms that put the customer first. Thesis
Its stock has dropped over 80% since its IPO, for reasons that seem more related to broader market sentiment rather than any company specific reasons. Oscar Health represents a lucrative opportunity for investors due to its low valuation, unique offering of consumer-facing insurance, growth potential from its SaaS business, macroeconomic trends favorable to the company, and consumer-facing brand that separates it from the big health insurance companies. Oscar Health’s insurance offerings
Oscar is changing the way users interact with insurance. A patient starts by first going to the Oscar platform and engaging with their Care Team, which has 6 experts, including a registered nurse, to help the patient understand what’s covered under the plan. In addition, it where they find doctors and specialists and scheduling appointments and follow ups. Then, Oscar Health provides a good estimate of a patient’s costs before they go to the hospital. Many insurance companies don’t offer this easy access to cost data at all; for companies that do, Oscar’s tool is said to be the most advanced that exists.
Oscar Health analyzes data from previous hospital visits from other users, and is able to identify the best doctor to treat a certain issue (i.e. Oscar’s database will show one doctor as the best doctor for a broken ankle because he has successfully performed this surgery on 100 patients that year). The algorithm also tries to identify the most cost-effective provider to seek treatment. All of this information is calculated in Oscar’s backend and presented to users through their intuitive interface as well as their designated care team. Oscar To further show Oscar’s move towards transparency, look no further than their $3 drug list, where users pay only $3 for the 88 most common generic drugs consumed – ordered on the app and delivered to users. To summarize, Oscar makes healthcare more efficient and transparent through their reliance on big data and a customer friendly experience. Macroeconomic trends
One of the biggest tailwinds for the ACA market is the rise of the gig economy, which compromises individuals who operate as independent contractors. Without an official employer, these workers need to purchase their own insurance instead of being offered insurance from their work. Report says that as many as 55 million Americans are already gig workers. With workers increasingly seeking more flexibility in their work, estimates say that by 2023 half of the US workforce would be engaging in or have tried gig work. With only 594,000 members so far, Oscar has lots of room to grow from these secular tailwinds.
In the current healthcare system, almost 50% of health care insurance is issued by employers. When Americans change jobs every 4.2 years on average and their insurance is tied to their companies, their insurance inevitably changes as well. As a result, the average insurance member’s tenure is only 3 years . However, this presents a problem because it doesn’t give any incentive for the big established insurance companies to optimize their patients’ healthcare for the long-term. These sorts of structural mechanisms create an inefficient market, as seen by the rise of employer insurance premiums that have consistently outpaced the inflation rate.
In addition, this constant switching of insurance companies presents not only inconvenience for patients but also dangers. When patients have to switch insurance plans, they also lose their primary care provider who understands their conditions in depth. Furthermore, it would mean that patients need to personally keep track of their medical history and regimen. In terms of the health insurance companies themselves, not optimizing for long term care could mean cutting back on costs like preventative care – because they don’t see a return on investment for insurance companies in a short time period. With Oscar Health, since people are not forced to change insurance plans when they switch jobs, it can instead optimize for the patient’s long-term health, ultimately leading to […]
source Oscar Health: The Future Of Healthcare At A Reasonable Valuation
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