Oscar Health Stock (OSCR) Great Growth and Undervalued (Q4 2024 Earnings)

Oscar Health, Inc. (NYSE: OSCR) has emerged as a disruptive force in the health insurance industry, leveraging technology to enhance the healthcare experience for its members. With strong revenue growth and improving financial metrics, the company is gaining attention from investors looking for undervalued opportunities. Despite its stock underperforming the broader market over the past year, Oscar Health’s latest earnings report for Q4 2024 showcases impressive growth, a path toward sustained profitability, and a compelling valuation. In this article, we will analyze the company’s financial performance, stock valuation, growth potential, and risks to determine why OSCR remains an attractive investment.

About Oscar Health

Founded in 2012, Oscar Health, Inc. (NYSE: OSCR) is a technology-driven health insurance company based in New York. The company was established with a mission to simplify and improve the healthcare experience by leveraging data and digital tools to offer personalized, user-friendly insurance plans. Oscar Health provides a range of products, including individual and family health insurance plans, Medicare Advantage, and small group plans for businesses.

What sets Oscar apart is its emphasis on technology and customer-centric innovation. The company offers a seamless digital experience through its mobile app, enabling members to access telemedicine services, track healthcare expenses, and receive personalized care recommendations. By integrating artificial intelligence and data analytics, Oscar Health strives to improve healthcare transparency, lower costs, and enhance patient outcomes.

With a growing footprint across multiple states, Oscar Health continues to expand its membership base and refine its offerings, positioning itself as a leading innovator in the evolving health insurance market.

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Company Financial Performance

According to Stockanalysis, in the fourth quarter of 2024, Oscar Health reported total revenue of $2.39 billion, a substantial increase from $1.42 billion in the same period of 2023, marking a 67.77% year-over-year growth. The company's earnings per share (EPS) for Q4 2024 was -$0.62, a slight improvement from -$0.66 in Q4 2023, representing a 6.06% decrease in losses.

On a trailing twelve months (TTM) basis, Oscar Health achieved total revenue of $9.17 billion in 2024, up from $5.86 billion in 2023, reflecting a 56.58% increase. Notably, the company reported a positive EPS of $0.10 in 2024, a significant turnaround from the negative EPS of -$1.22 in 2023. Additionally, the free cash flow per share improved to $3.57 in 2024 from -$1.34 in the previous year, indicating enhanced financial stability.

Analysts forecast further growth in 2025, projecting revenue to reach $11.78 billion, a 28.48% increase from 2024. The EPS is expected to rise to $0.77, a remarkable 670% increase from the 2024 EPS of $0.10.

Stock Price Performance and Valuation

As of February 8, 2025, Oscar Health's stock is trading at $14.70 per share. Over the past year, the stock has experienced a 9.6% increase, which, while positive, underperformed compared to the S&P 500's 20.6% gain during the same period. This relative underperformance may present an opportunity for investors, as the stock appears undervalued.

The company's valuation metrics further support this perspective. Oscar Health's price-to-sales (P/S) ratio on a TTM basis is 0.39, with a forward P/S ratio of 0.32. The price-to-earnings (P/E) ratio stands at 147 on a TTM basis, with a forward P/E of 19.34. The price-to-free cash flow (P/FCF) ratio is notably low at 3.87. These metrics suggest that the stock is trading at a discount relative to its peers, indicating potential undervaluation.

Oscar Health Growth Potential

Strategic Market Expansion

In October 2024, Oscar Health announced plans to broaden its Affordable Care Act (ACA) marketplace offerings in 2025, aiming to make health insurance more accessible to a larger segment of the U.S. population. This initiative focuses on delivering services tailored to individual health needs, supported by established networks and technology solutions that assist members in managing their health and making informed decisions.

Furthermore, the company has outlined an ambitious plan to double its market reach by entering 150 new metropolitan areas over the next three years. This expansion is projected to increase Oscar's market share from the current 13% to approximately 18% by 2027. The company also anticipates achieving a 20% revenue compound annual growth rate (CAGR), a 5% operating margin, and earnings per share (EPS) of $2.25 by 2027.

Technological Innovation

Oscar Health's commitment to leveraging technology to enhance the member experience remains a cornerstone of its growth strategy. The company's digital platform offers seamless claims processing, virtual consultations, and personalized health recommendations, catering to the increasing consumer demand for convenient and transparent healthcare solutions. This technology-first approach not only differentiates Oscar from traditional insurers but also positions it to capitalize on the growing digital health market.

Risks to Consider

While Oscar Health presents compelling growth opportunities, investors should be mindful of potential risks. The company operates in a highly regulated industry, and changes in healthcare policies or regulations could impact its operations. Additionally, the competitive landscape of the health insurance market poses challenges, as larger, established players may have more resources to leverage.

Financially, although Oscar has demonstrated significant improvements, it has yet to achieve consistent profitability. The reliance on technology also exposes the company to cybersecurity risks, which could affect member trust and operational integrity.

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Conclusion

Oscar Health's impressive revenue growth, improving profitability metrics, and strategic expansion initiatives underscore its potential as a promising investment opportunity. Despite the risks associated with the regulatory environment and competitive pressures, the company's innovative approach to health insurance and its focus on technology-driven solutions position it well for future success. Given its current valuation and growth trajectory, Oscar Health (OSCR) presents a compelling case for investors seeking exposure to the evolving healthcare sector.