Late last month we wrote, based on a report from Fortune, that tech saavy up-and-coming health insurer Oscar was raising at least $150 million in a round led by Fidelity. That round is now confirmed, according to Forbes, and it's for more than initially reported: a total of $400 million. The deal reportedly values Oscar at $2.7 billion, just a bit shy of the $3 billion valuation Fortune predicted. In addition to Fidelity, previous investors Google Capital, General Catalyst, Founders Fund, Lakestar, Khosla Ventures, and Thrive Capital all contributed to the round, which brings Oscar's total funding to $765 million.
The large cash infusion comes at a time when Oscar is also growing rapidly and shifting its strategy in some states. Since the start of 2015 the company has grown from 17,000 members to 145,000 members, and expanded its business from New York and New Jersey to Texas and California. According to a recent report by Bloomberg, CEO Mario Schlosser is shooting for 1 million members by 2021.
The approach to getting to that number has changed recently, Bloomberg reported. Rather than trying to support a wide range of in-network providers to maximize consumer choice, Oscar is moving toward tight, exclusive networks with just a few hospitals and care providers. That plan dovetails nicely into risk-sharing arrangements like Oscar has with California's Providence Health, where, according to Bloomberg, Oscar and Providence will share costs and profits rather than Oscar paying Providence per visit or per procedure.
As a small newcomer in an industry dominated by large, longstanding players, Oscar has attempted to differentiate itself with a positive user experience, proactive customer engagement, and an inclination to move beyond the traditional role of the health insurer -- which sometimes means incorporating digital health technology. Early on, Oscar partnered with Teladoc to bring telehealth services to members.
In December 2014, the company also delved into fitness tracking wearables, teaming up with Misfit to get more of its members moving. As part of the deal, each Oscar member gets a free Misfit Flash tracker and the opportunity to earn up to $20 a month in Amazon.com credit by meeting step goals.
Oscar, itself, has a mobile app (for both iOS and Android) that includes step tracking, a doctor finder, access to health history, and the doctor on call feature. The iOS version of the app also connects to Apple Health. Earlier this month, Oscar improved the search features on its app. A search function on the app allows members to find care by type of doctor, doctor name, reason for visit, drugs, or places. The search results also furnish the member with other cheaper options for care, including telemedicine options.