Congratulations to all of our patient investors. It looks like disruptive healthcare stocks are back.shares of oscar health (OSCR 6.87%) It rose 30% on Friday, February 10, following the company’s latest earnings report.
It is one of several companies building a health benefits administration business around a technology platform. It’s not yet clear if it can benefit shareholders, but signs that it could head in that direction are already pushing its share price up 101% in 2023.
Can Oscar Health continue its rally, or will the recent rally never end? Here’s what you need to know before you take a chance on this stock.
Why Oscar Health’s stock has already doubled this year
Part of Oscar Health’s big stock market surge this year can be attributed to its low starting point. Shares tumbled last December after the company warned investors it would temporarily stop accepting new members in Florida.
In 2021, Oscar tried to launch +Oscar. technology Platform for third party payers and providers. The news that Oscar Health is putting the brakes on membership enrollment in Florida comes just months after the company told investors it was pausing full-service +Oscar trading to focus on its revenue goals. .
Oscar Health’s stock has surged this year as it may approach profitability sooner than investors expected. In the fourth quarter of 2022, the ratio of the company’s total medical and administrative expenses divided by premiums collected was down about 5% year-on-year.
of Stocks have soared recently After the company reported earnings as management cut its 2023 combined ratio below 100%.
Why buy Oscar Health stock now?
At the very least, Oscar Health retains existing members and attracts new members. The company closed last December with more than 1.15 million members, despite turning down new subscribers in Florida. This is a 93% increase for him over the previous year, and the premiums he earns have more than doubled.
Rolling out the full tech stack to third parties didn’t go as planned, but +Oscar isn’t quite done. Recently, a Miami-based group of providers became the first to sign up for a more streamlined tool designed to improve member engagement. It’s still early days, but it could be an important step toward becoming more of a technology platform rather than an insurance company.
cautious reason
Oscar Health has been around since 2012 and is still in the red. With an unsustainable combined ratio of 105.8%, the company has lost a whopping $610 million in 2022.
Oscar Health claims to be the first insurance company built around a full-stack technology platform, but it’s much more.Other startups in the last few years, including clover health investment and Bright Health Group It also promised to disrupt the insurance industry with flashy new technology. None are working.
OSCR Net Income (TTM) data by Y-chart
Instead of disrupting the U.S. health insurance industry, Oscar Health and its technology-enabled peers continue to lose more and more money.
If Oscar Health is doing anything to challenge its biggest competitor, it’s not showing results. Profits for stocky old health insurance companies such as . united health group and Signa.
not yet purchased
While the rapid growth in subscriber numbers is encouraging, investors cannot afford to overlook Oscar Health’s chronic losses since it began using the public markets for capital.
If this has also been a difficult time for the U.S. health insurance industry, the disappointing performance may be forgiven. Unfortunately for Oscar Health, its biggest competitor reports that its profits have soared in the last two years.
The US health insurance industry may be ripe for disruption. That said, it’s best to keep this stock on your watchlist until earnings start moving in the right direction.
Cory Renauer The Motley Fool has no positions in any of the listed stocks. The Motley Fool Disclosure policy.