Oscar Health Stock: Undervalued or Overhyped? (Ticker: OSCR)

Summary

Chit Chat Stocks Episode Summary: Oscar Health Stock – Undervalued or Overhyped? (Ticker: OSCR)
Release Date: July 30, 2025
Hosts: Ryan Henderson and Brett Shafer

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1. Introduction to Oscar Health and the ACA Marketplace

In this episode, Ryan Henderson and Brett Schafer delve into Oscar Health (Ticker: OSCR), a company making waves in the health insurance sector. Brett initiates the discussion by highlighting the company's popularity on platforms like Twitter, noting significant investor interest and growth metrics. He remarks, “There are so many different moving parts with this business today that I think it gets a little misunderstood on the bull side” (01:22).

Ryan underscores the complexity of the American healthcare system, especially the Affordable Care Act (ACA) marketplaces, which Oscar Health primarily operates within. He states, “Oscar Health is kind of one that separated itself from the path it went through” (02:36), emphasizing their unique positioning compared to other disruptors in the industry.

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2. Personal Experiences with ACA Marketplaces

Brett shares his personal experience as an ACA marketplace user, detailing his choice of Ambetter (owned by Centene Corporation) due to affordability despite it being “clunky” (03:10). Ryan adds his frustrations with user interfaces, noting, “Once you finally get through it, you navigate it all that” (10:09). Both agree that while purchasing insurance through the marketplace is manageable, dealing with the insurance companies themselves can be cumbersome.

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3. Economics and Medical Loss Ratio (MLR)

The hosts explore the financial mechanics of health insurers, focusing on the Medical Loss Ratio (MLR), which mandates that insurers spend at least 80% of premium income on healthcare claims and quality improvements. Brett explains, “In the individual and small group markets, insurers must spend at least 80% of their premium income on health care claims” (11:46). This restricts profitability to a mere 20%, pushing insurers like Oscar Health to differentiate through user experience and technology.

Ryan elaborates on how Oscar Health leverages technology to streamline processes, stating, “Ease of use is the biggest thing and they're working against fortunately for them a lot of clunky solutions” (16:10).

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4. Management and Leadership Transition

A pivotal moment for Oscar Health came in March 2023 when the company faced a drastic drop in stock price and increasing losses. To steer the company back to profitability, Oscar Health hired Mark Bertolini, former CEO of Aetna, as the new CEO. Brett highlights Bertolini’s impact, saying, “He saved at least $100 million by renegotiating with pharmacy benefit managers” (23:46). Under his leadership, Oscar Health turned a net loss of $606 million in 2022 to a net income of $123 million over the past year, demonstrating a successful turnaround.

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5. Market Opportunity and Competition

Oscar Health currently holds a 7% market share within the ACA marketplaces across 18 states, with significant growth in states like Iowa, where their market share surged from 4% to 18% (09:19). Competitors include Centene, Elevance Health, and United Healthcare, all established players. However, Oscar’s focus on technology and customer experience sets them apart. Brett mentions, “Given the restrictions, as Ryan mentioned, given the fact that you can't even differentiate on the health plan finder websites, the fact that they're able to do that shows how much better the product is” (30:03).

The potential expansion of Individual Coverage Health Reimbursement Arrangements (ICHRA) could further amplify Oscar’s market opportunity by unlocking an estimated 75 million new payers, significantly expanding their addressable market (37:00).

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6. Valuation and Financial Analysis

The hosts discuss the complexities of valuing Oscar Health, cautioning against treating it purely as a tech company due to its insurance business constraints. Brett points out the importance of underwriting profitability over mere revenue growth, stating, “What matters first is underwriting profitable insurance” (50:44). Despite current challenges, including a revised 2025 guidance predicting an operating loss of $230 million, Oscar Health maintains a strong balance sheet with nearly $5 billion in liquid assets.

Ryan remains cautiously optimistic, noting, “There is much higher uncertainty here compared to a typical business” (50:06). However, he acknowledges the potential for significant upside if Oscar achieves its projected operating margins, potentially turning the stock into a “four bagger” (55:33).

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7. Future Prospects: Oscar Plus and Emerging Moat

Oscar Health’s ambitious initiative, Oscar Plus, aims to integrate unified data for patients and providers, enhancing the customer experience and creating additional revenue streams. Brett describes it as a “moonshot,” comparing it to systems like EPIC but tailored for Oscar’s network (46:43). This move could establish an emerging moat by differentiating Oscar through superior technology and integrated services.

Moreover, Brett argues that Oscar possesses an emerging moat through its scale and technological advancements, which allow for risk diversification and a more extensive provider network. He asserts, “I think Oscar Health can do the same in health insurance and that they have, I would say, definitely an emerging moat” (59:07).

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8. Hosts' Final Thoughts and Investment Considerations

Concluding the episode, Brett and Ryan weigh the risks and rewards of investing in Oscar Health. Brett tentatively expresses interest, citing the company’s growth potential and management’s effectiveness in navigating industry challenges. Ryan mirrors this sentiment, acknowledging the short-term uncertainties but recognizing the long-term upside.

Brett summarizes, “There is more uncertainty here than the average stock that we look at,” but also emphasizes the potential for substantial returns if Oscar Health successfully scales and capitalizes on emerging opportunities like ICHRA and Oscar Plus (58:32).

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Key Quotes:

• Brett Schafer (01:22): “There are so many different moving parts with this business today that I think it gets a little misunderstood on the bull side.”

• Ryan Henderson (02:36): “Oscar Health is kind of one that separated itself from the path it went through.”

• Brett Schafer (23:46): “He saved at least $100 million by renegotiating with pharmacy benefit managers.”

• Brett Schafer (30:03): “Given the restrictions, as Ryan mentioned, given the fact that you can't even differentiate on the health plan finder websites, the fact that they're able to do that shows how much better the product is.”

• Ryan Henderson (55:06): “It seems pretty uncertain to me. Yeah, it feels like 5% was kind of a hopeful figure.”

• Brett Schafer (59:07): “I think Oscar Health can do the same in health insurance and that they have, I would say, definitely an emerging moat.”

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Conclusion

The "Chit Chat Stocks" hosts provide a comprehensive analysis of Oscar Health, balancing its innovative technological approach and market positioning against the inherent uncertainties of the health insurance industry. While acknowledging short-term financial challenges, they highlight Oscar’s potential for growth and establishing a competitive edge through technology and customer-centric strategies. Investors are encouraged to weigh the promising long-term prospects against the immediate risks associated with regulatory changes and market dynamics.

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For a more detailed analysis and additional charts, visit Chit Chat Stocks' Substack and explore their comprehensive research reports.

Transcript

[Brett Shafer]

Foreign.

[Ryan Henderson]

Welcome to Chitchat Stocks. On this show, hosts Ryan Henderson and Brett Shafer analyze businesses and riff on the world of investing. As a quick reminder, Chitchat Stocks is a CCM Media Group podcast. Anything discussed on Chitchat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now please enjoy this episode.

[Brett Shafer]

Foreign.

[Ryan Henderson]

You are listening to Chit Chat Stocks, a podcast that helps you find your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined, as always by Brett Schaefer. Today we have one of our monthly research report episodes and we are talking about a disruptive company, potentially disruptive company in the healthcare space. This has been one that's caught a lot of traction with investors and potentially one that's a little misunderstood as well. We're going through how to analyze an insurance business, how to analyze a health insurance business, too, because it's different than other industries. And we're going to go through the business model, the growth opportunities, and where we think Oscar stands today. But before we do, Brett, what inspired you to research Oscar?

[Brett Shafer]

Well, I think a lot of tweets out there. There's a lot of people interested in this company. We saw on some of like just the popularity around people using it on, you know, our sponsor Fiscal AI on Twitter, so many people talking about the company. And when you look at some of the first metrics and for anyone that's using, you know, a platform like Fiscal AI, there's a lot of growth metrics that'll pop out. But there are so many different moving parts with this business today that I think one, it gets a little misunderstood on the bull side. But then on the bear side, it's getting tossed into this health insurance downturn, really tough period for the industry, along with some of the potential fraud that's been going on and the investigations into people like UnitedHealthcare. So it's an industry that's large, highly profitable. There's major disruptions. So there could be an opportunity here for a promising stock and we're going to get into it. But Ryan, I have to ask first, are you a participant of the Affordable Care act marketplace? Do you buy your health insurance as an individual there?

[Ryan Henderson]

I do. And let's talk here about what that is because we might have some international listeners that have no idea what's going on there. So how did Oscar actually get started and lay the foundation for the American healthcare system? Overall, it is probably one of the most complicated and convoluted industries. I think for someone who hasn't especially I imagine international investors looking from the outside in, but even Americans, it's a little bit complicated. So take us through it.

[Brett Shafer]

Yeah. If and if either of us hadn't used these marketplaces, it would have been much harder for me to understand. So on March 23, 2010, the American Health care system was changed forever with the passing of the Affordable Care Act. Here's a court quote from industry analysis. The ACA affects virtually all aspects of the health system, including insurers, providers, state governments, employers, taxpayers and consumers. The law built on the existing insurance system making changes to Medicare, Medicaid and employer sponsored employer sponsored coverage. And a fundamental change was the introduction of the regulated health insurance exchange markets. The goal of the ACA is to get more people on health insurance. It allows for broader Medicaid inclusion. That's government sponsored stuff for poor parts of the population. There are these exchange markets and there's financial help for people to afford health care plans on these marketplaces. Since the passing, the percentage of uninsured Americans has been cut in half from around 15% of the population to 7.5% in 2023 today. And with Oscar Health, we're going to focus on these exchange markets, the ACA exchange markets, that's the Obamacare exchange markets, if you want to use the popular nickname there. It is their growth and the growth of these statewide exchange markets from both individuals and employers that has garnered investor excitement around Oscar Health, which I would say is maybe the only insurance disruptor from the 2020-2021 hype cycle that has turned into a real business. Well, maybe the 2025 might turn out to be an unprofitable year for them again. I know there's some other ones that are still hanging around like root and lemonade, but at least within health insurance you can go look at Clover stock price unless that's turned into a meme stock. Oscar Health is kind of one that separated itself from the path it went through, as we'll go through kind of the Carvana stock chart and has recovered quite a bit now. But back to the ACA marketplaces. They are state by state. They're either run by the state itself or with assistance of the federal government. The marketplaces are essentially just online exchanges where people who do not have insurance provided by an employer. So that would be someone like Ryan or I, we after we turn 26, buy our own insurance. For anyone that doesn't know internationally, if you're under the age of 26, you still get to get included on your parents plan. But you have to buy on the open market. And the theory is that a centralized exchange with all of the options out there will foster competition and reduce costs. Now, enrollees in the marketplace have soared since 2020 after stagnating for five years. This was due to huge tax breaks and discounts for coverage as a part of the American rescue plan in 2020. And then the Inflation Reduction act also extended these discounts through the end of 2025. As an individual, not an investor, I was disappointed to see this because then I realized, well, my health insurance premiums might be going up in 2026. Little disappointing than that, but the government assistance is expected to expire next year. This is a huge uncertainty for the entire industry, especially for someone like Oscar Health. That's really almost 100% in play in these ACA marketplaces. And we'll talk more about that later. Now, as we talked about, I have experience using this as an independent contractor and small business owner. Ryan does as well. Essentially, in November or December of the year, the state marketplace enters open enrollment and you pick your plan for the upcoming year. There are varying tiers based on monthly premiums, total healthcare coverage, and out of pocket expenses. For example, I pay a high deductible, one that's like 250 bucks a month. A little bit of a tax break. And you get. I get very cheap coverage, but it's cheap on a premium one basis. You have a up to $6,000 deductible, $9,000 out of annual out of pocket maximum. I'm doing one called Ambetter, which is owned by Centene Corporation. You get things like annual primary checkups are free, but most everything else you pay out of pocket up to that deductible. And the deductible is just an industry term for essentially you're going to pay that until the insurance kicks in. Now, I say that because on the marketplace you can either choose a cheaper premium option based on some of their tiers, or you can have a higher premium option that covers a lot of stuff that you might know is coming down the line. Now, I'm talking about my personal one, because when I was looking at this Oscar Health in the industry in general, I kind of thought, well, why did I choose this one called ambetter, which again is owned by Sentient Corporation? And I really couldn't tell you. I don't care about the brand. It simply seemed like the best, cheapest coverage I could get based on monthly premiums and my healthcare needs, which luckily are quite low. The mobile application website Are okay. It feels clunky when dealing with my doctor. And you have to use these, you know, this other software called MyChart, which is quite popular. That is a software suite that connects everything, but rather poorly in my opinion. But if we go back to the actual ACA Marketplace as a whole, there are restrictions set by the legislation that makes plans available somewhat commoditized. This is very, very important, at least in my opinion. When looking at the competition here. You cannot deny people coverage or exclude them due to preexisting conditions such as diabetes. Plans can only vary by age, location, family size and tobacco use. That's the four ways. I guess discrimination might be a weird way to use it, but it's only the four ways you can discriminate and charge people a different rate. Some people might think that's good, some people might think that's bad. As someone that tries to be healthy in my own life, I feel like I wish I could have other things that are factored in. But when looking at the business, no other considerations can be made. So you have. Essentially, it's tough to compete. You might have UnitedHealth vs Centene vs Oscar Health offer essentially the same insurance coverage for different people. Let's profit.

[Ryan Henderson]

Let's pause.

[Brett Shafer]

Yeah.

[Ryan Henderson]

How do you feel about this whole process? Okay. I mean. I mean buying from the market experience.

[Brett Shafer]

It'S, it's. The buying from the marketplace is fine. I wish there was more ability to have customizations versus different lifestyles, but I know that gets into discrimination and stuff like that. It's a whole kind of a fine line of what you're going to do. But buying through the ACA marketplace, and I'd be curious your opinion too, it's not too difficult once you understand the process after you do it a first time, you kind of understand how it works pretty easy. Now, dealing with the health insurance company, that's a whole different matter. And confusion can start probably immediately. But what are your thoughts? How is it? I guess have you done it in Texas yet?

[Ryan Henderson]

Yeah, I have. I did not think it was a very enjoyable experience there. This is probably the one thing I noticed is that software is certainly built. Certainly built better. Not by governments. Like, I think it's a more intuitive user experience and user interface when there's like a major financial incentive and it's. It's a private company doing it and they care about that. So I actually had a bit of a tough time. But yes, like you said, once you finally get through it, you navigate it all that. My only gripe here is unless you read reviews or you do sort of side research on these companies and these providers, you're solely going off of pricing whatever pricing is best for you. And that, like you said, is now pretty much commoditized. And you don't really have a sense of how, how the ease of use is, how the platform works, whether or not they're like a reliable provider and whether or not they're easy to ask, questions to, customer support, all that. You don't really have a sense of that until you actually start using them.

[Brett Shafer]

Yeah, yeah. But on the flip side, unlike an employer, after a year you can switch to someone else if you have, if you're upset with your current provider.

[Ryan Henderson]

True. Okay, let's keep going through this. Talk about the economics and how they've, I guess, changed and how they're somewhat restrictive across the industry.

[Brett Shafer]

Yeah. So profits are also commoditized, per. I wish I knew their acronym, but there's a whole research group called the KFF that does a lot of good coverage on here and explains a ton of stuff within the market. Quote, in the individual and small group markets, insurers must spend at least 80% of their premium income on health care claims and quality improvement efforts, leaving the remaining 20% for administration, marketing and profit. So this is the medical loss ratio, the percentage of health insurance premiums spent on claims every year. So essentially that 80% is. It's what, it's not the combined ratio, but whatever would be for another type of insurance. The medical loss ratio is essentially. Okay, look, your maximum that you can earn every year is going to be 20% of kind of a gross profit or maybe a contribution profit, if we're kind of going to use another term from something that other listeners might be, you know, understandable about using a different industry. This is restricted, it's maximized. So essentially, if you go over that, you have to pay it back every year. And that's their target for, for a health insurer now, you have to go through plan pricing every year. You have to go through a formal review price process with your state, and you have to almost predict what your costs are going to be in the year ahead to try to line up with that 80% as best as possible.

[Ryan Henderson]

Yeah. So just to kind of rehash that, basically, if they write $100 in, in insurance policies coverage, $100, they can't go paying out $50 in claims. Well, they could potentially, but then they'd have to make up for it and improve their business, whatever to get to that reimbursement $80.

[Brett Shafer]

Yeah, they couldn't make business, they couldn't make business improvements. They would have to I think reimburse their, their customers. But essentially think about this as an Investor. You have 80% of the premiums are going to go out the door every year at least maybe more if you're not underwriting perfectly. And then you have to be as best as possible, you know, have an efficient overhead cost, marketing, admin, customer support. You have that 20% to either spend on all that and then eke out a profit. Now insurers have this, they have this ceiling. So where can they differentiate themselves? You kind of think, all right, well the plans are almost a commodity. There's not much you can differentiate on. You have the 80% max on profit pools. You really have the user experience as Ryan mentioned that you start using some of these insurance companies and they're terrible. You have customizations for, for add on plans and different things that you can do with your plan with your customers. And then you have technology. Now that is where Oscar Health plans to disrupt the healthcare market.

[Ryan Henderson]

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[Brett Shafer]

About.

[Ryan Henderson]

Simple, simple things like running. How does the technology work? What, what's the login process like? What's the navigation like? Yeah, claim automations customer support. These very what seem tend to get swept under the rug but they are probably the biggest differentiators and it's why a service like Oscar we're going to get into it has been able to grow is because primarily I would say and you can disagree with me here if if there's anything else it's ease of use. Ease of use is the biggest thing and they're working against fortunately for them a lot of clunky solutions.

[Brett Shafer]

Yeah when I was talking with and I'll shout them out fund to see investor they have a link to his report in the substack or sorry in the show notes he did a report on substack and it outlines Oscar Health and kind of his bold thesis on them. He I was conversing with him and he said it's similar to how the neo banks such as a SOFI or an Ally are competing with these ancient solutions from bank of America that still run on coding and software from the 60s and 70s. And there's such an not even just an innovative dilemma, but a tech debt that really is going to if all these existing players wanted to compete properly with modern solutions, they'd almost have to build something from the ground up. And given how slim your profit margins are and the incentives in the industry, it's really, really hard to convince them or incentivize them to do that. That's why you have an innovators dilemma. But all right, we should go through the business. I know we definitely hate our vegetables. To try to explain the ACA market, I don't really know if anyone truly understands it fully, but I think we got the basics. You have restrictions there and a lot of stuff is commoditized. Now let's go through Oscar Health's history. After getting frustrated with the initial rollout of the Affordable Care act, the founders Mario Schlosser, Joshua Kushner and Kevin Nazimi started the company in 2012. As the story goes, the trio wanted to leverage digital tools and technology to build a better health insurer focused on the customer. Customer being the person buying the health insurance. We all know how bad it is to deal with these existing healthcare players. There's even a South park episode on it. I haven't watched it, but I did see a clip on that. The group seemingly wants to grind you in submission and frustrate you enough until you give up. We've all experienced this in somewhere. At least we live if we live in the United States. Now if digital tools can fix this, it would enable a better customer experience and reduce administrative costs. Remember, admin costs are some of the key things that you want to at least minimize or be the most efficient on in order to get from that medical loss ratio of 80% to down to as much profit, you know, going to the parent company as possible. Their first insurance offering was launched on the New York Exchange, not the stock exchange, the New York ACA exchange in 2013. It then expanded to other states such as Florida, and is currently in 18 states as of 2025. Expansion has included things like, you know, small businesses, but with some major lumps along the way. They had to exit California. I think they have exited or have are about to fully exit Medicare Advantage because of profit worries. There's also a partnership with Cigna that is going away. However, on a net basis from a standing start, Oscar Health has grown to 2 million total members and its members have grown at a 51% annual rate since 2019. Ryan, for any of the video listeners or video watchers, is showing the total members chart on fiscal AI and it's jumped significantly since the start of 2020. Some of the growth can be attributed to that broad tailwind individuals adopting the ACA plans because of the subsidies, but I think most is due to Oscar stealing market share. Here are two quotes from their 2024 investor day. We've grown our ACA market share from 4% in 2021 to approximately 7% today. So they are a 7% market share of that ACA group. Now, you only have 2 million people there, but so that's a small percentage of the total health insurance population in the country. But of the 25 million people that use the ACA marketplace, that is still a sizable chunk. Now here's one that I think is interesting and shows that they have room to potentially even gain more market share if they can replicate their model in more markets and kind of grow with some of the markets they're already in. And they talk about the one of the places which is Iowa, that they've done quite well, quote. Iowa is a bit of a different story. This is one where we've had more of a consistent growth trajectory over time. We entered there with an exclusive provider network partner, and we've steadily expanded with them across the state to merely statewide. With this, our name has become synonymous with access to a reputable provider in very rural parts of the state. And now we've moved from 4% market share in Iowa to 18% today. So in some markets they're up to 15, 20%, even higher market share, which I think is highly impressive given they just started about a decade ago. Now. Why are people switching To Oscar Health plans. Well, we know it can't be because of a different base insurance due to the commoditization of the aca. At least in most regards. It comes down to customer experience, technology, backhand and branding. Oscar has the easy to use mobile application for scheduling and communications, makes things very easy on that end. They have a 4.9 star rating on the App Store, which I thought was a good sign. They also have NPS scores or Net Promoter Promoter scores that they highlight are about 60 to 70 today versus about zero for the rest of the industry. They have a what they call a care team that helps you find the best local providers for your situation. And they have $0 virtual care included with your membership. So essentially they have their own tel doc.

[Ryan Henderson]

That is an extraordinary net promoter score for the industry. The zero.

[Brett Shafer]

I think it just goes to show.

[Ryan Henderson]

The frustration of this whole process. And I, I've had it as a customer. Like navigating some of these archaic websites and portals is like drives me up a wall. It's having a real advantaged platform, one that's better, easier for the user. It's actually a massive differentiator in this industry.

[Brett Shafer]

I just looked it up right now and I hope this blog is correct. It says that Oscar Health is available in the Austin and San Antonio area. So maybe you need to make a switch, Ryan, this upcoming time.

[Ryan Henderson]

All right, let's talk about management. Unless there's anything we missed on the ACA marketplace and their position, I think.

[Brett Shafer]

Well, there's a quote from the founder. He says their goal is no manual work, no friction in the middle, and no delays in any processing. I think that's about it. And I mentioned 15 to 20% market share to me, seems doable. If they can replicate what they've done in existing markets, they have the blueprint to keep growing from that 7%.

[Ryan Henderson]

Okay, let's talk management team. There's been a change at the helm here. You talked about the founders, the three co founders. It. They are not. Well, they're still involved, but they're not running the company today. They brought someone else in. Who is he? What impact has he had on the business?

[Brett Shafer]

All right, so along with the other insurance disruptors, their stock price, Oscar health collapsed in 2020. It went from $30 down to around $2 at the bottom. So 90% plus drawdown. I think that might even be 95%. Either way, investors got wiped out. I think everyone was scared. And you can understand why because you can look at this net income chart going from 2019 to 2022 and net income just got worse and worse. It hit a net loss of $606 million in 2022. I'm sure if we were looking at it then we would have said, how do we know if this company can ever get profitable? They seem to be just like the lemonades or the roots or the Clover Healths or all the other ones in the industry that can't seem to generate a profit. And the technology founders like Schlosser, who was the current CEO at the time, had built a great customer experience. But hey, look, you couldn't, they couldn't run a profitable insurance company. So in March of 2023, right near the lows, Oscar Health made a decision that might have saved the company. They hired Mark Bertolini. Bertolini is an experienced insurance executive who was the previous leader of Aetna Aetna. He helped produce a 27 IRR for shareholder shareholders over eight years before selling to CVS in 2018. With the management change, Schlosser is now head of technology and product while Bertolini is the CEO. I think that is a good match. Bertolini is tasked with running a profitable insurer while Schlosser is in charge of building technology and digital tools to help improve customer experiences and save on costs. I'm assuming that's what he was doing already, but they just needed someone that actually knew how to run a modern health insurance company. And when joining the company, Bertolini was asked if there was any low hanging fruit to pick up. And he's kind of charismatic guy. He said there were watermelons rolling around on the floor. I think that's a good analogy for how they had easy ways to improve, for example, their negotiations with pharmacy benefit managers. And essentially they weren't negotiating at all. So they're just taking the price from the pharmacy benefit managers. And they saved I think at least $100 million, if not hundreds of millions of dollars by having basically regular renegotiations to improve on their cost. Now, unsurprisingly, net income has made a quick recovery and we're now profitable. Over the last 12 months, $123 million in net income. More on. I know there's going to be some listeners that know about the 2025 guide. We'll get to that later. Bertolini has performance stock units tied to the share price hitting $11, $16 and $39 a share. We're at about $15 today. So not a huge or I think a good point where if the stock price say, goes to 40, he's going to be handsomely rewarded. And at 68 years old, I believe he was brought on to get Oscar Health consistently profitable before passing the baton onto someone else. If he succeeds, he will be rewarded handsomely. According to the proxy filing, he has about 2.4% of the outstanding stock when including options and performance stock units that could vest, which could be worth around $250 million. If Oscar stock reaches $50 a share, that's, I think, a good financial incentive for any executive. If we want to get to voting, though it's not controlled by Schlosser, but Joshua Kushner and Thrive capital, which have 70% combined voting power. They are a software and technology venture capital firm. Oscar Health is likely one of their big winners. One thing that might hold up or be something that happens eventually is they want to return capital to their outside investors. I guess from a voting perspective, it's much larger than their actual economic stake. But that's just something to watch out as the controlling interest could change eventually. This is just something with the executive and board that, that, that could happen. I like the skin in the game here, though. The founders control the company. Schlosser is in charge of the technology and seems to have built a really good product. And Bertolini is incentivized to build a profitable insurer and make hundreds of millions of dollars if he can. No huge red flags there from what I found.

[Ryan Henderson]

Yeah, that seems like pretty good incentives across the board. You've got the person that led the, the tech side of things and the platform and the usability and kind of created this advantage to begin with. Still with, I assume, a sizable stake in the business. I'm talking about Schlosser here. So he still has all the incentive in the world for the technology to maintain its advantage. And then on the flip side, you've brought Bertolini in and given him the proper incentives as well to get the company towards profitability. And having those different share targets to hit his compensation makes sense. I mean, with an insurance company, I think you need, in the modern day, with an insurance company, I think you need both. You need, obviously, obviously there's very few people that can be a great insurance CEO and have the technical expertise to be a software CEO.

[Brett Shafer]

Right. There's probably no one, there's probably no one out there.

[Ryan Henderson]

Very different backgrounds and very different experiences needed for those roles. So separating those two roles, I think, is probably the right idea. Let's go through the market opportunity here. Obviously, Oscar held 7% market share across their target market.

[Brett Shafer]

Yeah.

[Ryan Henderson]

Who are some of the competitors? What sort of market share do you think Oscar Health could potentially get to? All right folks, if you are a regular listener to Chitchat stocks, then you know that we use Fiscal AI formerly known as Finat Daily. Fiscal AI is our complete stock research terminal. It's where we have our investment dashboards, it's where we create financial charts. It's where I read all the transcripts for conference calls, sell side events, shareholder meetings. And it has Morningstar's high quality reports on more than 1700 companies.

[Brett Shafer]

It has.

[Ryan Henderson]

It really is the complete research platform for stock focused investors. If you use our link Fiscal AI chitchat, you will automatically get two weeks of Fiscal Pro for free. And if you find that it's worth upgrading, which I think you will, you'll get 15% off any paid plans with our link. Again, that is Fiscal AI slash chit chat. The link will be in the show notes.

[Brett Shafer]

Well, the competitors are going to be people such as Centene, Elevance Health and United Healthcare that people know about. I would kind of group them all together as just the legacy providers. I know I talked about mine being from Centene. I will say the app is it's okay. But again, I think Oscar helps within their markets that they're in. Remember, they're only in 18 states right now. Not in California, but they are in New York, Florida and Texas. At least some parts of those states. Their market share gains I think show versus the competition that they do have a better product because given the restrictions, as Ryan mentioned, given the fact that you can't even differentiate on the health plan finder websites, the fact that they're able to do that shows how much better the product is. But to properly understand the health insurance market, we need to look or at least the ACI opportunity, we need to talk about the ACA enhanced subsidies again. So this is a huge overhang on the stock, as I mentioned before. And part of the ACA originally was to provide more subsidies and more tax breaks for individual payers if they fit below annual income levels. For example, if you're at a percentage of the poverty line, which I think is $15,000 or something like that in the United States. So it's a pretty, pretty low annual income. You pay zero or a minimal monthly premium for your health insurance in order to get you in the network and help with your healthcare costs that you otherwise couldn't afford. The COVID 19 stimulus package and follow on IRA act gave out enhanced subsidies for health insurance Premiums bought through the ACA marketplaces so more people could afford health insurance. You got a huge tax break or subsidies, however it works that weren't there before. So more people bought them through the marketplace and more people got better plants. Now this, along with the rise of contracting gig workers, is why from 2020 to today, the number of ACA members has doubled. Now, as of this recording, next year these subsidies are set to expire unless the government tries to extend them again. I will mention that a lot of the new gains in members are from conservative states. So we could see an incentive from the controlling government now in the United States to do that. There could be some people that want that to happen, but I'm just going to assume they're going to expire and this is going to increase premiums for a lot of people if they stay on the existing plans, which could lead them to churn or go down to lower priced plans or decide to forego insurance altogether. If your premium goes from $100 to $200 a month, that could become a much tougher financial decision for you to make, especially if you're one that's closer to the poverty line. Now, this is a looming headwind for Oscar, one that they are well aware of. I've seen some people that are bearish on the stock think that they somehow aren't factoring this into the equation. But it is a headwind nonetheless, and it's going to reduce the total addressable market in the ACA for multiple years. Now, as we go through the valuation work and some of their estimates, it's clear that this risk is hurting the stock. But here's how I look at it. You have higher costs in the ACA marketplace. It's going to make customers more eager to find a better solution, which I think could lead to more people that stick around switching to Oscar Health. If you have a longer time horizon than 18 months, I think this is less of a concern and something that just needs to be priced into your valuation work. That 51% growth from 2019 is not going to continue because the market is going to shrink. Their members are going to shrink in 2026. Oscar Health also has tailwinds still at its back. That includes state expansions and continuing to steal market share from other players. And I also think looking at the stock specifically uncertainty in the short run such as this can provide a potential opportunity for those with a long term time horizon. I see so many people go, I'm not sure what the next few quarters are going to look like. I'm going to wait on the sidelines. That is where if you're patient enough. Now I'm not saying go out and buy Oscar Health, but that's where an opportunity could be there. Now, subsidy eliminations I don't think are going to kill Oscar's business, but it's going to present a speed bump. Now, a potential accelerant is the growth of individual coverage health reimbursement arrangements. I know another acronym, otherwise known as ichra. So context here. The majority of health insurance in the United States is paid for by employers. Health insurers like UnitedHealth will sign deals with big businesses such as, I'm just thinking of big, you know, the big tech companies, something like that, Alphabet, Amazon, what have you. Now they can give employees options for health insurance plans once they sign these large deals, but you can only go through that one health insurance company. Now inherently there's nothing wrong with this. However, I think the incentives can and have gotten misaligned. Employees now don't care about costs. Insurance providers lock in these large corporations, raise prices, only give people a few options on their plans and allow people to potentially overutilize insurance benefits. Ichra plans break this model. With these plans, employers give employees a cash benefits or just, you know, part of their income in a specific bank account that they can use to buy insurance on the open market, similar to individual plans purchased through the aca. So allows basically the individualization of the health insurance marketplace to be have an option for employees. Now this would be if these grow and if these take hold in which there has been some momentum in this area, especially because it can be much cheaper for employers to do. And that's something that Oscar Health pitches to people. But if this happens, there would be a huge benefit to Oscar Health, which is why they are pushing so heavily to grow these plans. They believe it would unlock an estimated 75 million new potential payers and potentially hundreds of billions of dollars annual premiums. As the modern cloud based player with more customizable, affordable plans. When I mean customizable, I mean something like, okay, you have diabetes, we're going to do a diabetes focused plan specifically for you. Where we can't, and as we talked about before, we can't deny you coverage because you have diabetes, but if you have diabetes, we can say, all right, look, we have, you're paying this extra premium, but your insulin shots are all provided for the tech debt all the way that these existing health insurance companies are run, they don't really have the chance to offer that. And when you make this individual instead of someone going, all right, I have this option, this option, this option. I have three options now. You can let them basically get a cash payout. They pay for this insurance themselves, and they have all the options on the ACA marketplace. It's better for competition. It's better for diversifying risks across the entire marketplace. It just seems better, at least to me, for everyone within the value chain, except for maybe the legacy insurers. I think if these plans gain momentum, which of course, the company is talking their book when they. When they mention this, Oscar Health could have a huge growth in their total addressable market. If we're looking at the existing ACA marketplace, maybe Oscar Health has the chance to grow from, you know, 2 million today to 10 years from now. 4 or 5 million payers. If ICRAS and this new way of just basically paying employees and then they pay for their own insurance, if that growth rose, we could see an addressable market grow to 10 million people or more. For Oscar Health, we have a good chart from their investor that, that we included in the newsletter. So anything on that? Ryan, what are your thoughts? Do you. Would you be interested in this type of product?

[Ryan Henderson]

Well, it doesn't really apply to me.

[Brett Shafer]

Right. I guess. Well, I guess everyone is interested in that if they pay for their own, because then their employer paying for it. So.

[Ryan Henderson]

But to put some numbers on it today, the estimated addressable market for the ACA Marketplace in the United states is about 25 million people.

[Brett Shafer]

And it's going to shrink this year.

[Ryan Henderson]

With icra, assuming that it's fully rolled out and it sort of maximizes its addressable market, you could expand that basically 4x5x almost to 100 million people in total, which, if you just assumed that Oscar maintains its market share of that 25 million people. So you said it's roughly 7% of the markets that they're in that they have market share of, right?

[Brett Shafer]

Yes. Yeah, yeah. So if you. Sorry, sorry. That's actually 7% of the total ACA marketplace, but they're only in 18 states, so within their markets, they're at about 50 on average, they could get up to like 15% or so.

[Ryan Henderson]

Okay, so assuming no expansion in terms of the markets, if they were able to maintain that 7% market share and Ichra was fully adopted and there was a hundred million people that could potentially be going to the marketplace to buy, you'd be looking at nearly a triple in their members, actually. A little more than a triple, I believe, which would be obviously massive for them in Terms of premiums growth.

[Brett Shafer]

Yeah. And think about, well, people don't like thinking about this, but think about healthcare cost inflation. The premium growth would be much higher over a decade compared to that 3x. It would probably be closer to 4x or 5x. And they're not even talking about large corporations. This addressable market is for employers, small and medium sized businesses with employees, with a thousand people or less, which would be where you don't. It can just be so difficult to run that employer sponsored health care plan as opposed to a large corporation that can have an entire team of, you know, 10 people doing that.

[Ryan Henderson]

Yeah, that makes sense. And the important part here is because you can probably fall into the trap, if you're a skeptic here, that okay, well the economics are already kind of slated out. Right. The most they can have is that 20% or they have to have 80% medical loss ratio. The so. So you're maybe thinking, well, how much does it really matter if they keep growing members? I mean, yeah, it's great, but like it's not like there's a whole bunch of added profitability, but you have to think a large chunk at the moment is fixed expenses. Investing in the business, investing in the technology, the platform developers, all that, that starts to shrink as a percentage of your expense pool once you've got more and more members. So not only do you get the added profits from those members, assuming that you're underwriting profitably, but you also start to see some operating leverage there as well.

[Brett Shafer]

Yep. And that leads perfectly into the next section here, which is the uncertainty around profitability for the entire sector and their competitors over the next 18 months. So during, for context, for during COVID 19, the health insurance companies hit record levels of profitability because people underutilized healthcare benefits as the hospitals and stuff are crowded out for Covid needs. Now this is normalizing and increasing costs. Plus you have rising drug expenses. You know, you have the weight loss drugs that are a huge growth driver for, you know, just spending on that. And that's something that the health insurance companies have to factor in. You also have a steadily aging population. These are all factors that will impact Oscar's pricing and profitability. Remember, huge changes in the health insurance market or just the healthcare marketplace in general are very tough for these health insurance companies in the ACA marketplace or just in general to price in because you have to make basically this year in November, they have to say, all right, this is what our premiums are going to be for 2026. And then if there's a huge change in healthcare benefit utilization that can totally throw their profits out of whack, which as we'll get into here has happened to them. They are not immune to these headwinds. You know, there's other companies though that I think are facing even more headwinds and potential legal liabilities. You have major changes to Medicare Advantage that are hurting insurers like UnitedHealth. Hosker Health is not going to be much impacted by that at all. Second, there's increased scrutiny around costs and claims practices. Just while this was yesterday, but just this week or last week when people are listening to this, UnitedHealth confirmed that the Department of Justice is looking into its Medicare practices to bolster payments on diagnosis for. You know, I forget the exact details, but they're bogged down by that. They're not focused solely on the ACA marketplace like Oscar Health. And Oscar Health is not going to be immune to this. I mean, they just revised their 2025 guide for an operating loss of $230 million due to updated actuarial assessments on paid claim submissions. That is compared to, and I didn't write it down, but I remember they were guiding for, I believe about a $200 million in positive operating income or even slightly higher. So we saw Almost a few $500 million shift in EBIT just from one change in the actuarial assessment. The company plans to quote, take appropriate pricing actions for 2026 to get back in the black. But again that shows that, well, we're going to be unprofitable for a year, but then we can change this. I guess it's better than writing a bad life insurance policy or something along those lines where you're stuck with something for 10, 20 or 30 years. But in this regard you can be stuck for a whole year. You mentioned medical loss ratios. They originally guided for around I think 81% for 2025. So right close to their target market, they're now guiding for 86 to 87% when if you're going to be profitable on a bottom line basis, you need to be closer to 80%. 2025 is not going to look great for them financially, even though revenue is going to soar. Again, that's why revenue is something to look at with this company, but it's not the end. You got to look at medical loss ratios first, I'd say, but I don't. Along with the entire rest of the ACA market. I don't see why they can't just reprice with the normalization of the market next year. We've seen a bullwhip coming out of COVID 19 and they're gonna price plans 20%, 30% higher and they're gonna be profitable because you have again the 80% ceiling. And then you have to try to just clear that. And that's what they're gonna do. That's what they're mandated legally to be able to do. Now this is where the Bertolini hire looks so promising to me. My confidence in the company's navigation of this pricing volatility would be much lower if we just had the technology founder still running. Now, on the whole, I still think this gives them solid counter positioning versus competitors today. I see no reason why they can't keep gaining market share even if the market shrinks. In 2026, you have all these other companies bogged down by Medicare, the employee sponsored plans, the DOJ investigations, and importantly, they still have the major technology debt. The counter positioning innovators dilemma will still be there in 2026 and 2027. And this will go through with the balance sheet unless things get extremely bad. They had the capital to weather a bad year.

[Ryan Henderson]

Okay, before we get to the valuation, let's talk about their moonshot in Oscar plus, although it's really plus Oscar. It's Plus Oscar. Terrible name, but put the plus on the end.

[Brett Shafer]

Right?

[Ryan Henderson]

What is this and what do you think of it?

[Brett Shafer]

Okay, well, it's not going to impact the financials anytime soon. At least if it does, that'll be quite the cherry on top of any investment. But they do talk about it with their regular insurance Ichra and plus Oscar as kind of their threefold Venn diagram thing they put in this investor day, which I think whoever the intern that made this should be proud of. It's a nice looking chart. It is essentially as you may assume, is taking their software and technology and outsourcing it to third parties. Currently this does not include other health insurance companies because you don't want to give them your bread and butter. But it does include doctor's offices, hospitals, essentially what you call your network providers, what your customers may be utilizing through your health insurance application using. Well, I forgot to finish my thoughts there. But essentially you're going to have unified data integration for the patient, the medical providers. So for example, your doctor, your dermatologist, your eye doctor, you're going to have basically a chance to connect everything together. And I know this is very corporate speak, but on one unified platform and having that as the backend can help them in two ways. First, it can be a source of revenue. I think they talk about in their investor day a $25 million it spends from these network providers. Again, doctor's offices, hospitals, stuff like that. Now this is an obvious addressable market for them to go after. What is not obvious is how it can help them further differentiate Oscar Health from the other health insurance competition. If more healthcare providers are using +oscr, they are more likely to work with Oscar Health insurance. More providers means a better value proposition for users which will work seamlessly with Oscar software, making it a better customer experience. So you have all, I hate to use the term flywheel, but it's not, it's not a flywheel, it's not a network effect. But essentially if you get more insurance payers, your customers using Oscar Health and then you have more of these providers also using the software through + Oscar, you're going to have a more holistic and unified customer experience throughout the value chain. I call it a moonshot because no one's really using it today, but they're going to try to push it. And if they gain momentum, this is a chance to build, I think, a distinct advantage versus other health insurance providers.

[Ryan Henderson]

Do you know who they're competing with here? Is this like a alternative to EPIC systems?

[Brett Shafer]

It'd be something like that. I don't think it's necessarily an alternative for them because, well, in some ways it would be, but they're not selling to other insurance providers. So I guess it would be for, for example, if you're going to your primary care doctor, they might use this system instead of that. I will say there's a lot to be determined because they don't give out that much information. Their homepage is even hard to find for plus Oscar. Again, that's why I call it a moonshot. But they want to take the technology and software systems they built, you know, automated claims processes, AI, customer support, all the things they're building for Oscar Health insurance and they want to sell it to network providers. And again, I think that can hopefully convince more people, importantly more doctors, more hospitals, more dermatologists, whatever, to join Oscar Health Insurance and make you know, that's an important part. You need to get network, network providers onto your, onto your insurance plans.

[Ryan Henderson]

Okay, let's walk through the valuation here there. I have seen a lot of misleading valuation work done on social platforms about looking at this almost like a technology company. And even though they have a technology component and advantage, you got to value this like an insurance business. So how do you look at it? How do you Value them.

[Brett Shafer]

Yeah. Now seeing high revenue growth I guess is great. Maybe you would rather have that than not. But if you have a lot of premiums coming in and you're underwriting bad insurance, that can also not even be a good thing. I've seen a lot of charts out there, people tossing around EV to revenue figures, revenue growth rates. I don't think this is the proper way to value an insurance provider. Really does not matter how fast revenue is growing. What matters first is underwriting profitable insurance. Oscar House has struggled with this and it's going to struggle in 2025 again, most likely given the recent guy. We also when looking at the balance sheet cannot subtract out at least too much of their cash balance. They have to keep stuff on hand for claims. They also have to keep cash on hand at statewide subsidiaries for claims paid out there. So they technically what they talk about is if they're ever going to return capital to their Oscar Health shareholders that they have to quote unquote, dividend up money to the parent company which they can then use to pay a dividend or buy back stock for your outside shareholders. Now when we look at the balance sheet though, I think it looks solid. You have $3 million in cash and short term investments, $1.9 billion in long term investments. So say combine just under $5 billion in somewhat liquid assets, you have 1.5. And if we go to the liability side, you have 1.5 billion in benefits payable, $1.95 billion in risk adjustment transfer payable. Just think of that as other liabilities within the healthcare east coast. I was honestly trying to read the disclosure on that one. I think it's just essentially how the industry, either through reinsurance and any industry expert could correct me on this through either reinsurance or working with the other health insurers to diversify risk across the system. So that's one liability that could be there. They also have $3 million, $300 million in long term debt. But how I looked at it is okay, they, they have enough cash there. I think even if they have a bad year like 2025, they, they're not going to need to raise money. They didn't raise money. Along with this reduced guidance, if they're going to want to expand into new markets, they're going to start out unprofitably and they have the capital to do that as well. Now like other insurers, they're going to see earnings from this excess cash from interest income, which was $189 million over the last 12 months, I would say that's not bad compared to a market cap of just $4 billion. So the way do we look at it, how do we value Oscar Health? Well, there is much higher uncertainty here compared to a typical business, especially with the ACA subsidies going out. The. Some people are saying this, the. The whole industry is going to blow up. Other people say that it's not that big of a deal. You know, it's not every day you go from, hey, just yesterday, we're guiding for $200 million in positive operating income to $230 million operating loss just one quarter later. However, from their 2024 investor day through 2027, Oscar Health expects to grow its revenue at a 20% annual rate and reach a 5% operating margin. And this is assuming the enhanced ACA subsidies end. So if they don't end, they could grow even more. At the time of the investor day, revenue was $6.5 billion. It's grown at a much faster rate than 20% in 2025. I think we're at $10 billion plus right now. But it's going to fall in 2026 and maybe 2027 compared to 2025 due to these subsidies ending. Now, if we assume 20% revenue growth three and a half years, they should be doing about 12 to $13 billion in revenue in 2026, subject to change if inflation in healthcare is much higher, which it could be, given what they're kind of saying for these repricings. I've seen people and articles out there saying that there's going to be a 20% plus repricing for the ACA marketplace and a 5% operating margin on that. Well, $13 billion times 5%, that's $650 million in operating income. Now, I'll ask you, Ryan, because I'm talking a lot. I want to take a break. How confident are you in that $650 million number?

[Ryan Henderson]

It seems pretty uncertain to me. Yeah, it feels like 5% was kind of a hopeful figure and 5% operating margin was kind of a. Let's put it out there. It's far enough away that we can make some, hopefully make some operational tweaks that'll get us to that 5%. But I would be surprised if there's a fully fleshed out plan that gets them to 5% operating margin from today.

[Brett Shafer]

Inherent uncertainty. Yeah, there's inherent uncertainty around the health, the benefits, utilization. This year they thought they were going to be profitable. Now is this year probably more extreme than others? Yes. Is the Subsidy stuff an overhang? Yes. Now do I think that Bertolini and his team that he's brought in, can they reprice better and make it more consistently profitable once they get to a higher scale? Sure. Now, $650 million would give you a six times earnings multiple compared to the current market cap of $4 billion. Is that enough to make up for that risk? Maybe. But clearly Mr. Market does not believe that Oscar Health will reach their goals. Is the upside though, is it good enough to warrant taking on these health insurance market risks at today's price? I kind of believe we are. They have a track record of gaining market share. They have a clear path to keep gaining market share of the ACA payers market in the next few years. There's major long term upside if they can execute on these ICRA plans. And plus Oscar scale is very important to diversify risk in the health insurance market. I see no reason why Oscar Health will not be able to gain operating leverage on its overhead once it gets a little larger than today. They already had that happen in 2023 and 2024 and I bet they would be able to beat traditional insurers on total overhead costs given that they're a modern system not built in the 70s, 80s and 90s. Is that I don't like. Okay, is there inherent uncertainty under the 5%? It's not like a Netflix or a software company that can just say look, we have our subscription revenue and then we can kind of fill in our costs and we'll get to that figure. It could have some volatility there. But is 5% reasonable in a normalized environment? I think so. I think 5% is a reasonable figure. Now historically UnitedHealth has traded a PE of between 20 and 30. Today it's PE is down to I think a record low of 11. Because of its huge issues that we talked about briefly above is if Oscar Health hits its targets and it trades at a PE of 20, that the stock is probably a four bagger from here. Especially the net interest income that we don't even talk about and that's just a few years from now. And then maybe it could be a 10 bagger farther out if market share gains continue. There's a lot of upside to make here and you have to balance that with the risks of subsidies, ending the uncertainty of health insurance profitability. The fact that there could be another quote unquote black swan that hits the market sometime in the future. Are they large enough? Do they have a good enough balance sheet? Are they pricing well? Enough. That's the major uncertainty with a company and nothing's guaranteed. There's just more uncertainty here than the average stock that we look at.

[Ryan Henderson]

Yeah, definitely. Let's talk about whether or not there's a moat here. Something that we really like to target, both you and I, in potential investments is emerging moats. Companies that. It isn't quite there yet. In terms of investors assessing the moat like it isn't obvious. Obviously Visa has a network effect. Obviously Costco has a logistics advantage. Those moats are known. We want to find companies that have moats that are emerging moats that are going to be wider in five years. Would you say Oscar Health has an emerging moat?

[Brett Shafer]

That's a great tagline there, Ryan. I think we need to start using that little tease, wink, wink for the newsletter sometime in the future. I will first answer it by saying some investors argue that Oscar has a tech competitive advantage. I don't believe this is a long term competitive advantage, but it does give them great counter positioning versus the traditional health insurers as well as a bit of help helpfulness in the innovator's dilemma. After reading about the health insurance market, I think the competitive advantage at the end of the day is just scale. You need scale to diversify claims and risk across various demographics. You need scale in your network providers to provide a suitable value proposition. Think about it, Ryan. If you said I could choose whatever your, I don't know what your existing one is. Let's say it's UnitedHealth. If you said I could use UnitedHealth in the ACA marketplace and they have all these providers in the Austin area, or I could go to Oscar Health. Oh wait, they have one person 15 miles away from me. Do they even have my dermatologist? Wait, that's in. The closest one is in San Antonio. You need enough providers on your network and that takes time and you need the scale there. You also need scale to get a profit over your large fixed cost investments. Especially when you have that max MLR medical loss ratio and you're going to eke out, you know, that 5% once you're large enough. I think Oscar Health is on its way to reaching enough scale. Is that 3 million members, 4 million members? I don't know. But it's definitely in a better position than any other upstart trying to disrupt the industry. I mean, think of Ryan. We were going to start a health insurer today. There's a lot of barriers to entry now. They got the VC funding, they got the bubble funding in 2020 and 2021 and they made it through to the other side. And that also gives them the counter positioning innovators dilemma help that I've harped on time and time again that can help them compete with traditional payers. So I think they're in a good spot. Kind of like in Sofi, kind of like some of these other neo banks that I think can keep gaining market share in their, you know, in financial services. I think Oscar Health can do the same in health insurance and that they have, I would say definitely an emerging moat.

[Ryan Henderson]

Are you buying Oscar Health?

[Brett Shafer]

Oh, that is the harder question. That is the harder question. I think I will maybe tease to read the newsletter. I haven't decided yet. Maybe I will decide in the newsletter. But as of now, oh man, the.

[Ryan Henderson]

Next 12 to 18 months look rough. I will say that I do.

[Brett Shafer]

Part of me thinks it's priced in. Part of me thinks it's. It may not be just because of the, as we talked about, just all the uncertainty with the industry in general. I want to own this. I'm not sure if it's better than my worst idea in my existing portfolio, but I do think it's, I do think it's a great risk reward at these prices. It could be a 10 bagger. Is the downside there? Yeah, there's plenty of downside potential, but I think that is given the commoditization of the market, the government stuff, how it's all regulated and how everyone's gonna essentially win on MLR if they price correctly. I think the downside risk is being overstated by a lot of people today. And even though there's the. I know the value investors don't like the people tossing out revenue charts and just saying, hey, revenue is growing quickly. It's a buy. The stock looks cheap if they get their underwriting profits in check. Yeah.

[Ryan Henderson]

All right, I think that's going to do it. As a quick reminder to all the listeners, if you want these in written format, we also publish our notes, our research reports on the chit chat stocks substack. It's totally free at the moment so you can go there and check out some of the charts that go along with this report. And if you enjoy these episodes, please, please, please give us a review. It helps the show grow and that's. It would be a big thank you from us if you were able to do that. That's going to do it. Thank you to Brett for bringing this bit of a homework project and having to rip through the healthcare industry and understand all of the ACA Marketplace and the other acronyms as well as but that is going to do it. Thank you all for tuning in. We want to remind listeners that Brett and I are not financial advisors. Anything we say or discuss here on the podcast is not formal advice or recommendation. We may buy, sell or hold any of the securities discussed on the show. So please do your own work. Thank you again for tuning in and we'll see you next time. Sat.