Oscar Health Seeks U.S. IPO Despite Contracting Revenue

Summary

• Oscar Health has filed to raise capital via a U.S. IPO of its Class A stock.
• The firm provides healthcare insurance to U.S. consumers.
• OSCAR has produced contracting revenue and high and increasing operating losses in 2020.
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Quick Take

Oscar Health (OSCR) (OSCAR) has filed to raise $100 million in an IPO of its Class A common stock, according to an S-1 registration statement.

The firm provides a technology-driven healthcare insurance platform in the United States.

OSCAR has produced contracting topline revenue and high operating losses in 2020.

I’ll provide a final opinion when we learn more about the IPO from management.

Company & Technology

New York, New York-based Oscar was founded to develop a modern healthcare insurance delivery system directly for individual consumers and through businesses in the U.S.

Management is headed by co-founder and CEO Mario Schlosser, who was previously co-founder of Vostu, a social gaming company in Latin America and senior investment associate at Bridgewater Associates, 'where he developed analytical trading models.'

Below is a brief overview video of a sample 'Conversation with Oscar':

Source: Oscar Health

Oscar has received at least $1.74 billion from investors including Alphabet (GOOG) (GOOGL), Fidelity Management Research, Formation8, General Catalyst, Khosla Ventures and Thrive Capital.

Patient Acquisition

The firm seeks consumer policy holders in 18 U.S. states and counts more than 529,000 plan members as of December 31, 2020.

In addition, the company also provides virtual care offerings, such as its Virtual Primary Care service, which has grown in usage since the onset of the COVID-19 pandemic.

General & Administrative expenses as a percentage of total revenue have risen as revenues have decreased, as the figures below indicate:

G&A	Expenses vs. Revenue
Period	Percentage
2020	36.0%
2019	22.7%

Click to enlarge

Source: Company registration statement

The General & Administrative efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of General & Administrative spend, was negative (0.2x).

Market & Competition

According to a 2020 market research report by Grand View Research, the

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.