Digital Health Insurer Oscar Health Raises $145 Million On $1.5 Billion Valuation


Oscar Health, a New York-based health insurer trying to build a customer base of millennials by selling tech-savvy insurance, has raised a $145 million funding round led by Peter Thiel and Brian Singerman of Founders Fund, with additional participation from Wellington Management Company and Goldman Sachs. The new funding brings the two year-old startup’s total funding level to an impressive $320 million. More impressively, Oscar has increased its valuation to $1.5 billion, up 88 percent since its last funding round 11 months ago, when it was valued at $800 million.

The new funding comes on the heels of Oscar’s second enrollment period in New York and first in New Jersey. Oscar’s recognizable cartoon character advertising could be spotted all over New York’s subways leading up to the open enrollment period, and by all accounts the enrollment period was a success for the company, driving up its customer base 135 percent, from 17,000 to 40,000. Oscar estimates that it now owns 12 to 15 percent of the marketplace for individual health insurance. With its new customers in place, Oscar is expected to generate roughly $200 million in annual revenue this year.

Oscar is attacking the New York health insurance market by targeting younger, tech-savvy customers. Oscar has launched a number of common-sense initiatives that resonate with this audience, including free telehealth services, free office visits, and free generic prescriptions. Oscar’s hope is that it can control spiraling healthcare costs by targeting a younger demographic, and then providing them free and easy to access primary care services and prescription medications. Oscar is also giving away free Misfit activity trackers and is paying its customers $1 per day for each day they walk a minimum number of steps; thus far, 66 percent of the company’s customers have signed up for the program.

With billions of dollars in insurance subsidies provided through the ACA now available to help younger consumers pay for insurance, the timing is right for Oscar and the market is responding to its product. With its new funding, Oscar will reportedly spend the summer preparing to launch insurance plans in Texas and California for the 2015/2016 enrollment period later this year.

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  • Cypherpunks (a public account)

    If these investors only took 10% on a $1.5B valuation and Oscar can deliver, then that’s amazing and the Oscar team should get a lot of credit. But these announcements never include full details of the investment, and if the VCs negotiated preferences, then that big $1.5B number might be arbitrary and not necessarily a true valuation.

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