Oscar Health Raises $400 Million Private Equity Investment

Oscar Health Raises $33 Million Venture Round On $1.75 Billion Valuation

Tech savvy insurance startup Oscar Health has closed a massive $400 million private equity investment based on a $2.7 billion valuation. The company added a full $1 billion to its value since September 2015, when it closed a $32 million investment from Google Capital on a $1.7 billion valuation. The new round was led by Fidelity, but included a laundry list of secondary investors including returning investors Google Capital, General Catalyst, Founders Fund, Lakestar, Khosla Ventures, and Thrive Capital. In total, Oscar has now raised $725 million since its 2013 launch.

Oscar launched offering insurance plans in New York during the 2013-2014 enrollment period. The company markets itself as a tech savvy option and targets a younger, generally healthier population. To attract these clients, Oscar offers free telehealth visits, free activity trackers, and no co-pay for preventative care visits and generic medications. Since launching, Oscar has expanded its territory to include California, New Jersey, and Texas. Oscar CEO Mario Schlosser notes that expanding into a new state costs the company around $20 million but confirms that the company plans to enter three to four new states per year to drive up its physical footprint and overall enrollment numbers.

Its most recent entry was California and Texas, both of which it entered in the last enrollment period. Plans received a lukewarm reception on California’s public exchanges this past year, only attracting 2,000 new enrollments, accounting for less than 0.1 percent of the 1.6 million Californian’s that chose plans on the exchange. The company fared better in Texas, which surpassed New Jersey in its first year to become Oscar’s second largest market. In total, Oscar grew its membership from 40,000 to 145,000 members during the 2015-2016 enrollment period. The company earns an average of $5,000 per member, generating an annual revenue of $750 million. Despite its strong revenue, Oscar continues to operate in the red, losing $120 million in its last year of operations due to expansion costs and higher than anticipated medical costs for its New York subscribers. Oscar hopes that after it expands nationally its initial ramp up costs will subside and that once its grows its membership levels to a more significant population it will have more power when negotiating prices with provider organizations. The company has reported that it hopes to hit one million subscribers within the next five years.


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