Insurer Oscar Health has raised $165 million from investors, including Google parent Alphabet's investment arm Capital G and life sciences arm Verily.
CNBC reported that the company is now valued at more than $3 billion.
Oscar said profitability is “around the corner" after years of losing money.
After launching in 2012, New York City-based Oscar Health focused its early years on the Affordable Care Act (ACA) exchanges, but has since spread to other markets, including small business and Medicare Advantage.
Oscar, along with other startups like Clover Health, have been trying to break out of healthcare boundaries over the past few years. Oscar is also partnering with Cleveland Clinic and Humana to offer co-branded health plans and said it has found success with telehealth. The company recently announced one-fourth of its members used telehealth services in 2017, which was an increase from 17% in 2016.
“Oscar now has a proven, replicable growth playbook: secure competitive prices with new health systems, acquire and engage membership in significant volumes, build market share for our provider partners and begin to drive healthcare costs down,” the co-founders wrote. They added that the company hopes to expand by four or five cities every year in individual, small group and other market segments.
After posting a $57.6 million loss in the first six months of 2017 and losing nearly $205 million in 2016, Oscar said it enjoyed an underwriting profit last year and the company projects more than $1 billion in gross premium revenue this year. That would be quite a turnaround and success story, especially for a payer that's focused on the ACA market, which has not been hugely profitable for payers.
A recent report found that individual Blues made money on the exchanges last year. However, unlike Oscar Health, the Blues have been around for decades and have more experience with the individual market. Plus, a recent Robert Wood Johnson Foundation report warned that the exchanges still face an uncertain future over the next two years and beyond, especially with the end of the individual mandate penalty in 2019 and the Trump administration wanting to expand short-term plans and association health plans.
That said, the company is optimistic, especially given the new investments, which feature Brian Singerman and Founders Fund and include 8VC, Verily Life Sciences, Fidelity, General Catalyst, Capital G, Khosla Ventures and Thrive Capital.