Mark Bertolini CEO of OSCR values truth and
transparency;
“Your memory is too short to lie. Always tell the
truth, whether it hurts or not, your memory is too short”
I genuinely do not believe he would give guidance he was
confident in meeting;
- 20% CAGR and 5% operating margin
By 2027 (without enhanced subsidies)
This should result in;
? Revenue: $15.8-$16B
? Earnings: $790-$800M
? Adj. EBITDA: $$550-$600M
? Net income: $500-$550M
? EPS: $2.20
Valuation at that point (conservative)
Based on a price to earnings (PE) of 15-25 which is average
in the insurance industry, this would grant a fair value of $41-$52
Price to sales ratio
Many would not agree with using a price to sales ratio on an
insurance company, but Oscar’s high growth rates and disruptive
nature could potentially justify a PS ratio at some point in the
future.
If that were the case, the numbers get much more compelling.
Traditional mature insurance companies usually have a PS
ratio of 1-1.5x, but that is not an appropriate way to value Oscar
imo
Other high growth companies like Teladoc and Clover Health
have commanded PS ratios in the 2-4x range
Even if you put Oscar in the middle at a PS ratio of
1.5x-2.5x you are looking at $94-$156
That is a 5-10x from today’s prices
There will be many who scoff at this, but I think this is
much like valuing $SOFI as a legacy bank
The businesses are not the same
The traditional PE ratio in my mind is not effective here as
Oscar demands higher multiples due to its growth and profitability
You should not compare Oscar to mature, legacy insurance
companies just like you should not compare SOFI to brick and mortar
legacy banks. It’s silly
The businesses are worlds apart
I am ready for some stick for this post, but happy to debate.
It increases everyone’s learnings
Worst case scenario
A price to book ratio consistent with legacy insurers still
gives you a 2-3x return from current price levels within 2-3 years
A PB ratio of 3-4x gives you $27-$38
I would take that every day of the week
Final thoughts
Personally I do not think Oscar will be anywhere near $40 in
3 years time, I think they will likely exceed their guidance and
outperform
Bertolini increased Aetna’s valuation by 10x during his time
there.
For those not aware, enhanced subsidies were withheld from the
big beautiful bill currently in reconciliation so have to remain
with starter for now. Will trade this accordingly
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OSCR Views
Posted by steve on 6th of Jun 2025 at 02:44 pm
OSCR - Chart Link
OSCR - Chart Link
Tends to be somewhat loose trader
Example of Due Diligence Required
Posted by steve on 8th of Jun 2025 at 09:55 pm
$OSCR started a swing position
Future potential and valuation
Mark Bertolini CEO of OSCR values truth and transparency;
“Your memory is too short to lie. Always tell the truth, whether it hurts or not, your memory is too short”
I genuinely do not believe he would give guidance he was confident in meeting;
- 20% CAGR and 5% operating margin
By 2027 (without enhanced subsidies)
This should result in;
? Revenue: $15.8-$16B
? Earnings: $790-$800M
? Adj. EBITDA: $$550-$600M
? Net income: $500-$550M
? EPS: $2.20
Valuation at that point (conservative)
Based on a price to earnings (PE) of 15-25 which is average in the insurance industry, this would grant a fair value of $41-$52
Price to sales ratio
Many would not agree with using a price to sales ratio on an insurance company, but Oscar’s high growth rates and disruptive nature could potentially justify a PS ratio at some point in the future.
If that were the case, the numbers get much more compelling. Traditional mature insurance companies usually have a PS ratio of 1-1.5x, but that is not an appropriate way to value Oscar imo
Other high growth companies like Teladoc and Clover Health have commanded PS ratios in the 2-4x range
Even if you put Oscar in the middle at a PS ratio of 1.5x-2.5x you are looking at $94-$156
That is a 5-10x from today’s prices
There will be many who scoff at this, but I think this is much like valuing $SOFI as a legacy bank
The businesses are not the same
The traditional PE ratio in my mind is not effective here as Oscar demands higher multiples due to its growth and profitability
You should not compare Oscar to mature, legacy insurance companies just like you should not compare SOFI to brick and mortar legacy banks. It’s silly
The businesses are worlds apart
I am ready for some stick for this post, but happy to debate. It increases everyone’s learnings
Worst case scenario
A price to book ratio consistent with legacy insurers still gives you a 2-3x return from current price levels within 2-3 years
A PB ratio of 3-4x gives you $27-$38
I would take that every day of the week
Final thoughts
Personally I do not think Oscar will be anywhere near $40 in 3 years time, I think they will likely exceed their guidance and outperform
Bertolini increased Aetna’s valuation by 10x during his time there.
I think he will do the same and more with Oscar
Exciting time to be an Oscar investor.
Project,Monitor and Adjust
For those not aware, enhanced
Posted by steve on 8th of Jun 2025 at 09:57 pm
For those not aware, enhanced subsidies were withheld from the big beautiful bill currently in reconciliation so have to remain with starter for now. Will trade this accordingly