Oscar Health, Inc. 2024 Financial Report: A Strong Turnaround and Growth Potential

Oscar Health, Inc. Financial Report Analysis

Key Insights and Summary:

Oscar Health, Inc. recently filed its financial report for the year ended December 31, 2024, revealing a significant turnaround in its financial performance. The company reported a net income of $25.43 million, a substantial recovery from losses of $(270.73 million) in 2023 and $(606.28 million) in 2022. This positive trend reflects improved operational efficiencies and a strategic focus on profitability in a challenging healthcare market.

Recommendation: Buy. Oscar Health is experiencing a notable recovery in both earnings and operational metrics. With continued improvements projected for 2025, the stock appears well-positioned for growth, provided the company effectively manages its costs and expands its market share.

Financial Performance Overview

1. Revenue Growth:

• Total Revenue: Increased to $9.18 billion in 2024 from $5.86 billion in 2023.
• Premium Revenue: The growth in premiums reflects the addition of members and increased healthcare demand, with approximately 1.68 million effectuated members as of December 31, 2024.

2. Medical Expenses:

• Total Medical Expenses: Rose to $7.33 billion from $4.64 billion in 2023. This increase underscores the challenges of managing rising healthcare costs, primarily due to increased claims activity.

3. Profitability Metrics:

• Earnings from Operations: Improved to $57.27 million in 2024 compared to losses in prior years, indicating effective management of operational costs.
• Net Income: Turned positive, marking a significant recovery in profitability.

4. Earnings Per Share (EPS):

• Basic EPS: Reported at $0.11 for 2024, a substantial improvement from a loss of $(1.22) in 2023.

Cash Flow Analysis

• Operating Cash Flow: Revealed net cash provided by operating activities at $2.1 million, reflecting a need for ongoing improvement in cash generation relative to earnings.
• Investing Activities: A cash outflow of $(145.05 million) indicates significant investments in growth, though it raises concerns about liquidity.
• Financing Activities: Total cash provided was $68.39 million, largely attributed to proceeds from long-term debt, suggesting that the company is leveraging debt to fund its growth initiatives.

Balance Sheet Highlights

1. Total Assets: Increased to $1.33 billion, reflecting growth in both cash and investments.
2. Total Liabilities: Slightly reduced to $312.53 million, indicating improved leverage and financial health.
3. Stockholder's Equity: Enhanced to $1.01 billion, showcasing the company’s ability to retain earnings and grow its equity base.

Competitive Landscape and Market Conditions

Oscar operates primarily in the health insurance market, which faces significant competition from both traditional insurers and emerging health tech companies. The partnership with Cigna (Cigna+Oscar) to serve the small group employer market, however, is set to expire at the end of 2024, which may impact membership numbers and revenue. The company must navigate this transition while capitalizing on its technology-driven healthcare services to differentiate itself.

Regulatory and Legal Considerations

The company continues to face regulatory scrutiny, evidenced by ongoing reviews that may impact operational practices. Additionally, a pending securities class-action lawsuit could pose financial risks, though management maintains confidence in its defenses.

Conclusion

Oscar Health, Inc. has made significant strides towards profitability, with improved revenue and operational metrics reflecting a focused business strategy. However, challenges remain in managing medical expenses and navigating regulatory pressures. Investors should monitor the company's ability to sustain this momentum in 2025 and beyond.

Final Recommendation: Buy. Given the current trajectory of recovery and growth prospects, Oscar Health presents a compelling investment opportunity in the evolving healthcare landscape.