Late Friday, New York City-based health insurance company Oscar Health unveiled plans to kick off an initial public offering.
The tech-enabled company will list on the New York Stock Exchange under the symbol OSCR. Oscar temporarily listed the size of the offering as $100 million, although that value could change as the company hammers out the quantity of shares and price range it will be targeting.
WHY IT MATTERS
Founded in 2012 by Josh Kushner and Mario Schlosser, Oscar got its start as an individual-only insurance plan. The company now offers individual, small group and Medicare Advantage plans to roughly 529,000 Americans, according Oscar's Jan. 31 tally. It's active across 18 U.S. states, with the majority of its business residing in Florida, Texas and California. It has raised approximately $1.6 billion in funding from big names such as Alphabet, Khosla Ventures, General Catalyst and many others.
Oscar has long sought to differentiate itself from the majority of its competition through its use of technology. That approach began with user-friendly member apps, telehealth partnerships and even wearable health tracker programs during the days when these types of tools were less common among health insurers. It has since coalesced into a one-stop virtual platform for members, with 24/7 telehealth providers and healthy behavior engagement incentives among its core selling points.
Alongside its upcoming entry into the public markets, the accompanying S-1 filing comes with new information about the company's top-line financials and business strategy.
Oscar logged $1.67 billion in revenue during 2020 and $1.04 billion 2019. It did so, however, at a loss of about $407 million and $261 million, respectively, in those same years, contributing to the company's accumulated deficit of about $1.43 billion as of the end of 2020.
The company also doesn't intend to slow down its spending any time soon, noting within its summary of potential risks to investors that it expects "to make significant investments to further market, develop, and expand our business, including by continuing to develop our full stack technology platform and member engagement engine, acquiring more members, maintaining existing members and investing in partnerships, collaborations and acquisitions. In addition, we expect to continue to increase our headcount in the coming years," Oscar wrote in the S-1.
Despite the losses, Oscar made the case in its filing that the focus on technology and user experience has borne fruit in the size and engagement of its membership.
In terms of the latter, Oscar wrote that 47% of its overall subscribing membership and 44% of its 55-and-up subscribers are monthly active users. Eighty-one percent and 75% of these same groups have created a digital profile within the platform, the company said, and more than 71% of Oscar's subscribing members have used their assigned virtual care team for help when navigating healthcare services.
Oscar also highlighted a handful of recent partnerships with providers like the Cleveland Clinic and insurers like Cigna. The company said that these programs speak to the interest in Oscar's technology platform and member engagement engine, and offer the company "a foundation that will enable us to monetize our platform and diversify our revenue streams over time, if we choose to do so," according to the S-1.
THE LARGER TREND
Oscar is among the go-to names during any discussion of technology-enabled insurance companies, with others like Bright Health and Clover Health not far behind.
Clover, notably, also made a move into the public markets within the last few months by way of special purpose acquisition company, or SPAC. However, the Medicare Advantage-focused insurtech company recently found itself embattled by a short seller report criticizing Clover's business practices and spreading word of a Department of Justice inquiry. Clover's stock price took a hit following the report's publication, to which its CEO and president have since responded.
Oscar's announcement is also the latest in a long string of digital health and digital health-adjacent companies entering the public markets, either by way of IPO or SPAC. Among the more recent of these have been 23andMe, Hims & Hers, Talkspace, Amwell and Butterfly Network.