Oscar Health (NYSE: OSCR) has recently become one of the hottest stocks on Wall Street, soaring on heavy trading volume as the company delivers robust earnings, dramatic growth in its member base, and a clear path to profitability. With a forward P/E of just 7 on projected 2027 earnings, Oscar is positioning itself as a rare fivefold opportunity in the U.S. health insurance sector. What’s driving this rally, where are the risks, and how real is the upside?

Impressive Growth and a Turn to Profitability
According to its June 2024 investor day presentation, Oscar Health is forecasting 2024 revenue of $8.3–8.4 billion—up sharply from just a few years ago. Adjusted EBITDA is projected at $125–175 million for this year, with management targeting a 5% operating margin by 2027. Notably, the company’s insurance subsidiaries already achieved positive EBITDA in 2023, and Oscar expects 20% annual revenue growth through at least 2027.

Rapid Membership Expansion and Market Share Gains
By April 2024, Oscar had 1.5 million ACA (Obamacare) members—up from just 542,000 three years ago, representing a 40% three-year compound annual growth rate (CAGR). Oscar commands about 7% of the national ACA market today, and aims to reach 18% share within its markets by 2027, expanding its footprint to 70% of the national opportunity. Growth drivers include entry into new states, product innovation, and major advances in Individual Coverage Health Reimbursement Arrangements (ICHRA), potentially expanding Oscar’s reach to 16 million members within a few years.

Technology Edge and Operational Excellence
Oscar’s business model is rooted in advanced technology, offering members a digital-first experience with tools for finding providers, managing care, and integrated AI-powered support. In Q4 2023, 68% of members who sought care used Oscar’s provider search tool, 77% of chronic care members engaged with digital care teams, and member NPS scores (66–75) are well above industry norms. Technology isn’t just for members—over 98% of claims are adjudicated automatically, driving efficiency and margin expansion each year.

Cost Management and Expanding Margins
Oscar has dramatically improved its Medical Loss Ratio (MLR), reducing it from 88% to around 80% (2027 target), while lowering SG&A ratio to just 16%. The company’s aggressive contracting with providers, data-driven disease management, and tight expense control have resulted in industry-leading cost trends. The result: a consistent upward trend in profitability and cash generation, unique for a company at this stage of rapid expansion.

A Deep Value Play: P/E of 7 on 2027 Earnings—5x Upside?
Oscar expects to earn over $2.25 per share by 2027, implying a forward P/E multiple of just 7—far below the sector average. If enhanced federal ACA subsidies are extended and Oscar executes on ICHRA and digital innovation, the company could see a tripling or even quintupling of its market cap over the next few years. Analysts highlight Oscar as a rare, scalable, tech-first insurer with massive room for further market share gains and profit leverage.

Risks and Challenges: Not All Smooth Sailing
Like all health insurers, Oscar faces significant regulatory risk, intense competition from established incumbents, and sensitivity to medical claims volatility. The company’s long-term growth is tied to the continuation of federal ACA subsidies and favorable policy. Should subsidies lapse or regulatory frameworks shift, growth could slow, but Oscar’s expansion into ICHRA and its ongoing product innovation provide important offsets.

Outlook: Can OSCR Surpass Expectations?
With accelerating operational performance, improving profitability, cutting-edge technology, and a rapidly growing member base, Oscar Health is positioning itself as a next-generation leader in U.S. health insurance. If current trends hold and the company delivers on its 2027 targets, the stock’s upside could be dramatic, offering a rare deep-value growth story in a defensive, recession-resistant sector.