Shares of health insurance technology Oscar Health (OSCR -3.09%) dropped 11% in September, according to data provided by S&P Global Market Intelligence. The company has lost nearly 50% of its value since its initial public offering in February as its loss widens, and that streak continued into September.
Oscar offers a compelling business model of better health insurance that combines a digital experience with affordability and a focus on customer service. Customers are catching on, and membership increased from 417,000 at the end of the 2020 second quarter to more than 560,000 at the end of the 2021 second quarter, a 35% increase. Even better, premium subscriptions increased at a higher rate of 45% over the same period.
The company posted almost $530 million in premiums earned in Q2, which was a 364% increase year over year. CEO Mario Schlosser said in a statement, "Our second quarter results tell a clear story: that our member-centric, tech-first approach to healthcare continues to generate market demand and value for our members and +Oscar clients."
The company is expanding rapidly, entering new markets, and increasing its joint venture with healthcare giant Cigna to offer digitally powered healthcare plans for small businesses.
The company's combined loss ratio, which measures how much it's paying off compared to how much it's keeping, was over 100%, and it won't be able to post a profit unless it brings that down. For the full fiscal year, it's expecting a combined loss ratio of 107% to 109%. Net loss widened by $32 million in Q2 to $73 million, mostly due to testing and treatment for COVID-19. That's a setback, and clearly investors weren't impressed. But the good news is that when the pandemic begins to ease, and as the company keeps adding customers, Oscar should be on a better path toward profitability.
Oscar offers an improved healthcare insurance experience, and it's demonstrating growth in a highly regulated industry. It has real promise as a growth company, and at the current low price, it's not too highly valued, trading at a price-to-sales ratio of 2.5. However, expect volatility. If you are a risk-tolerant investor, you might want to consider picking up shares of Oscar.