Oscar Health: Should You Buy OSCR Stock At $17?

Core Insights - The health insurance sector is facing significant challenges due to rising medical costs, which are impacting profitability across the industry [3][12] - Oscar Health's stock, currently priced around $17, is considered a potential buying opportunity despite being 30% below its 52-week peak [4][5] - Oscar Health has shown strong revenue growth, with a 59% average increase over the last three years, and a 54.2% rise in revenues from $6.5 billion to $10 billion in the past 12 months [15] Industry Overview - Centene's retraction of its financial outlook led to a 40% decline in its stock, causing a ripple effect in the health insurance sector, with Oscar Health down 19%, UnitedHealth down 6%, Molina down 22%, and CVS down 4% [2] - The increase in medical costs is attributed to a higher number of less healthy individuals enrolling, an increase in medical procedures, and persistently high drug prices [3] Company Performance - Oscar Health's current valuation metrics indicate it is slightly undervalued compared to the S&P 500, with a price-to-sales (P/S) ratio of 0.5 versus 3.1 for the S&P 500 [6][8] - The company's profit margins are significantly lower than most companies within the Trefis coverage universe, reflecting the industry's typical thin margins [9][12] - Oscar Health's balance sheet is robust, with a low Debt-to-Equity Ratio of 5.8% compared to 19.4% for the S&P 500, and a strong Cash-to-Assets Ratio of 51.1% [10][15] Financial Metrics - Oscar Health's operating cash flow (OCF) was $1.2 billion, with a low OCF margin of 12.1% compared to 14.9% for the S&P 500 [15] - The company's net income for the last four quarters was $123 million, resulting in a net income margin of 1.2% compared to 11.6% for the S&P 500 [15] - The stock has experienced significant volatility, having tumbled 94.2% from its peak in March 2021 to December 2022, and is still recovering [16]