Oscar Health (OSCR) has been a standout performer in the healthcare sector this year, with its stock soaring by 90%. This surge has sparked curiosity among investors, who are eager to understand the factors driving this remarkable growth. While the healthcare industry may not be as glamorous as the space race or artificial intelligence, it is a massive and rapidly expanding market, with trillions of dollars spent annually in the United States. This presents a unique opportunity for innovative companies like Oscar Health to disrupt the status quo and capture a significant share of this market. In this article, I will delve into the factors contributing to Oscar Health's success, explore the potential for future growth, and offer my perspective on why this stock is still a compelling buy for investors in 2026 and beyond.
Disrupting the Health Insurance Market
Oscar Health was founded in 2012 with a bold vision: to revolutionize the health insurance market by providing a better customer experience at a competitive price. The company's success can be attributed to its ability to leverage the new Affordable Care Act (ACA) health insurance marketplace, which has seen a steady growth in customers over the past few years. Oscar Health has managed to expand its customer base at a similar pace while also taking market share from established players. This is achieved through a combination of innovative services, such as free telehealth, dedicated online customer service, and modern digital tools, which have significantly improved customer satisfaction.
One of the key advantages of Oscar Health is its ability to provide a superior customer experience at a price similar to traditional health insurance plans. This has allowed the company to attract a large and growing customer base, which is a critical factor in its success. However, it's important to note that Oscar Health has not been consistently profitable over its history, primarily due to the need to scale up its operations to operate in all 50 states. Now, with millions of customers, the company is finally leveraging its network to generate more revenue without the proportional increase in baseline expenses.
Profit Surprise and Future Potential
Oscar Health's financial performance has been a source of surprise for many investors, with the company setting new records for revenue and operating earnings. This year, Oscar Health has guided for $19 billion in revenue and $450 million in operating earnings, both of which are significant milestones for the company. Last quarter, the company reported $700 million in operating income, which was actually higher than its total guidance for 2026. This is a testament to the company's ability to manage its costs and generate revenue efficiently.
However, Oscar Health is also guiding to lose money over the next three quarters, which is a strategic move to hit or exceed its 2026 earnings guidance. This is a calculated risk that the company is willing to take to ensure its long-term success. With a vast population in the United States and only 3.2 million customers at the end of last quarter, there is plenty of room for Oscar Health to grow its insurance premiums in the years ahead. As long as the company operates efficiently, this will lead to billions of dollars in profits.
Why Oscar Health Stock Still Has Room to Run
One of the great investing adages is to let your winners ride, and Oscar Health stock is certainly a winner. While the stock has already surged by 90% this year, I believe there is still significant potential for growth in the years ahead. Oscar Health's $19 billion in 2026 premium revenue could more than double to $50 billion if it doubles its total customers to 6.5 million over the next five years. This is a realistic assumption, given the company's strong growth trajectory and the potential for continued expansion in the healthcare market.
Health insurers operate on thin margins, but even a 5% operating margin on $50 billion in premium revenue would mean $2.5 billion in annual operating income. Today, Oscar Health stock has a market cap of $8.6 billion, or just 3.5 times what the business may earn a few years from now. This makes Oscar Health stock a great buy today, even though it's up 90% this year. However, it's important to note that this is a long-term investment, and investors should be prepared to hold on for a significant period to realize the full potential of this stock.
Conclusion
Oscar Health has emerged as a standout performer in the healthcare sector, with its stock soaring by 90% this year. The company's success can be attributed to its ability to disrupt the health insurance market by providing a better customer experience at a competitive price. With a vast population in the United States and a growing customer base, Oscar Health has significant potential for future growth. While the stock has already surged by 90% this year, I believe there is still significant potential for growth in the years ahead. As long as the company continues to innovate and expand its operations, Oscar Health stock is still a compelling buy for investors in 2026 and beyond.
