Oscar Health (OSCR), the startup health insurance company heavily built on its technology capabilities, debuted on the New York Stock Exchange Wednesday at $36 per share, under the IPO price of $39 per share, with a valuation of more than $7 billion.
But the fall didn't blunt the enthusiasm of CEO Mario Schlosser, who joined Yahoo Finance to discuss the decision to go public, as well as how he envisions the company to impact the health insurance industry in coming years.
"Ten years from now, I think we'll have contributed to lowering health-care costs, and that remains our far end goal and what we do everything at Oscar," he said.
In its S-1 filings, Oscar noted it has not been profitable since inception in 2012 and cannot guarantee it will ever turn a profit, as it faces steep competition from larger companies with deeper pockets and broader networks.
"Some of the health insurers with which we compete have greater financial and other resources, offer a broader scope of products, and may be able to price their products more competitively than ours," the company noted in its filing.
But with more stability now apparent in individual markets, being the lowest-priced plan isn't the only winning factor.
"We were only the lowest priced in 10% of markets in the last open enrollment, and yet we outgrew the market by a factor of 4 or 5 again, while lowering our medical loss ratio, while lowering overhead costs as well. That triple whammy is very difficult to get if you're an insurance company," Schlosser said.
"We have so many ideas again for next year for expansions, benefit designs, and so on that we can uniquely put in place," he added.
Oscar's advantage remains in its concierge service, free telehealth capabilities, and the overall tech "stack" it has built from scratch, Schlosser said.
"We are the only insurance company out there that has built its own claims system. I think that's an investment that will pay of for the next 10 years or so," Schlosser said.
Oscar was co-founded by Josh Kushner, brother of Jared Kushner, and has been successful in fundraising over the years, and is backed by Google parent Alphabet (GOOG), as well as other notable investors. After launching in New York City and gaining 15,000 members in its first year, the company now boasts more than half a million covered lives in 291 counties in 18 states.
In recent years, uncertainty over the future of the Affordable Care Act (ACA) put pressure on the company, which counts 79% of its covered lives from the individual insurance marketplace.
"We went through a couple years where, literally, it wasn't clear to me when I would wake up in the morning whether the ACA was going to still be around," Schlosser said.
Employer-based coverage makes up a majority of plans in the U.S., but the recent economic trends amid the pandemic point to a much bigger individual market. On Wednesday, the Biden administration announced more than 200,000 individuals signed up during a special enrollment period on the marketplace.
"I'm convinced in the long term we're going to individualize this market more and more," Schlosser said.
But the company isn't only focused on the individual market anymore, Oscar also has branched out to include partnerships with the likes of the Cleveland Clinic, with which it has a co-branded plan, as well as Cigna (CI) with which it partners for the small employer space. It is also moving into Medicare Advantage, another highly competitive market.
Partnerships that are going to be a key to the company's growth, Schlosser said Wednesday.
"Whether its health insurance companies we're building plans with or health systems ... we build plans for and with, generally we pushed the envelope there and created models that will be copied and imitated," he said. "And that's fine with us."
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