Hook & thesis
Oscar Health is a classic asymmetric opportunity. The stock sits near $13.73 after a punitive 2025 characterized by rising medical costs and underpriced plans. Management has guided for a sharp turnaround in 2026 - $18.7-19.0B in revenue and $250-450M in operating earnings - while membership tops 2.04 million. If Oscar can execute on the pricing reset and hold membership gains, the company should re-rate sharply from a sub-$4B market cap into classic price-discovery territory as investors revisit profitability prospects.
I recommend a long trade sized for risk: enter at $13.50, stop at $11.20 (the 52-week low) and target $25.00 over a long-term (180 trading days) horizon. This is a high-risk, high-reward directional idea predicated on 2026 execution - not a buy-and-forget pick.
What Oscar does and why it matters
Oscar Health is a technology-first managed health care company offering individual & family, small group, and Medicare Advantage products. Its value proposition is two-fold: (1) scale in the Affordable Care Act (ACA) market with member growth and (2) technology-driven cost control (telehealth, AI tools) to improve margins. The market should care because Oscar couples a membership platform with aggressive pricing power in the ACA market - membership growth and realized pricing can quickly move the company from loss-making to operating profit, producing a large multiple expansion if members and margins move as guided.
Numbers that matter - recent results and balance-sheet context
| Metric | Value |
|---|---|
| Share price (current) | $13.73 |
| Market cap | $3.66B (snapshot) |
| Q4 2025 revenue | $2.81B |
| Q4 2025 EPS (GAAP) | $(1.24) per share |
| Membership | 2.04 million members |
| 2026 guidance | $18.7-19.0B revenue; $250-450M operating earnings |
| Credit facility | $475M secured |
| Free cash flow (trailing) | $735.6M |
| 52-week range | $11.20 - $23.80 |
Q4 2025 told a story of execution headwinds: revenue of $2.81B missed consensus of about $3.12B, and EPS came in at a loss of $1.24 versus an expected $0.89 loss. The negatives are real - medical cost inflation and morbidity pressures meaningfully compressed margins in 2025. But management is not passive: Oscar is planning a ~28% price increase for 2026 and has stated a clear operating earnings target range for the year. The firm also secured a $475M credit facility to bolster liquidity and is operating at a market cap that implies modest expectations: price-to-sales around 0.37 and enterprise value of roughly $2.62B.
Valuation framing
At roughly $13.73 and a market cap in the $3.6-4.1B area, Oscar's price-to-sales sits below 0.5 and price-to-free-cash-flow is in single digits based on recent metrics. Those multiples are low relative to a profitable managed-care peer set when growth and operating margins normalize. The yardstick here is execution: if Oscar delivers on the 2026 operating earnings band ($250-450M), the company would trade from loss-making to a basic mid-single-digit operating margin on near-$19B revenue - a transition that normally supports a multiple expansion. Conversely, the market is already discounting downside; the 52-week low of $11.20 shows how quickly optimism can reverse.
Catalysts to watch (near-term to medium-term)
- Execution against 2026 guidance - quarterly updates showing membership retention, realized pricing, and medical-cost trends.
- ACA subsidy policy developments - any extension or clarity on subsidies materially affects enrollment economics.
- Evidence of AI/telehealth cost savings - early Oswell chatbot or utilization management improvements that move the medical cost ratio.
- Investor sentiment shifts as operating earnings approach - broker upgrades (some already bullish) can accelerate multiple expansion.
Trade plan - entry, stop, target and timeframe
Trade: Long OSCR
- Entry: $13.50 - just below the current level to reduce immediate slippage risk and capture a pullback.
- Stop loss: $11.20 - the 52-week low; break below this level invalidates the thesis that 2026 guidance and pricing reset can re-rate the business.
- Target: $25.00 - reflects a re-rating toward $25+ on credible 2026 execution and improved margin visibility (this is consistent with street upside scenarios).
- Horizon: long term (180 trading days) - allow the company multiple quarters of 2026 execution to prove the margin story and for investors to re-evaluate valuation.
Rationale for timeline: Oscar's thesis is fundamentally about a multi-quarter pricing and morbidity normalization. That will take time to show up in medical-cost ratios and operating earnings. A 180-trading-day hold gives the market time to digest at least two to three quarterly data points from 2026 and to price in changed profitability expectations.
Risk profile and sizing guidance
This is a high-risk trade. Use position sizing that limits your portfolio downside to an amount you can tolerate if the stop is hit. The stock has meaningful short interest and institutional flows can be lumpy; volatility is the norm. Expect big intraday moves around earnings, regulatory updates, or ACA subsidy news.
Risks and counterarguments
- Risk - Medical-cost trends remain worse-than-expected in 2026: If morbidity and unit costs persist above management’s assumptions, the operating earnings target will be missed and the stock could retest prior lows. Counterargument - management is proactively raising prices and tightening underwriting, and the credit facility provides a buffer while adjustments take hold.
- Risk - ACA subsidy uncertainty: A reduction or non-extension of ACA subsidies would pressure enrollments and mix. Counterargument - Oscar's management has navigated ACA cycles and the company is scaling membership; price increases aim to offset subsidy tailwinds that may ebb.
- Risk - Execution risk on technology cost saves: AI/telehealth improvements may take longer or deliver smaller savings than hoped. Counterargument - even modest percentage improvements in medical cost ratios on a $19B revenue base produce material operating-dollar improvements.
- Risk - Sentiment and momentum remain negative: short interest and momentum metrics suggest the stock can stay depressed independent of fundamentals. Counterargument - momentum can reverse quickly if Oscar posts credible sequential margin improvement and the street upgrades estimates.
- Risk - Liquidity and macro risk: market-wide risk-off or a credit squeeze could compress multiples for all mid-cap insurers. Counterargument - Oscar's free cash flow and a $475M credit facility reduce bankruptcy risk and give runway for the pricing reset to work.
What would change my mind
I would abandon this trade if Oscar reports sequential deterioration in membership or a materially wider-than-expected loss ratio in the first two quarters of 2026 that contradicts management's pricing assumptions. Conversely, sustained sequential improvement in medical-cost trends and operating earnings that track toward the $250-450M guide would strengthen the bull case and justify a larger position.
Conclusion and stance
Oscar Health is a binary-but-reasonable play on a 2026 recovery: the market has already punished the stock for 2025 execution issues, and management has given explicit guidance for a recovery in 2026. That combination creates an opportunity for defined-risk investing: enter at $13.50 with a tight stop at $11.20 and a $25.00 target over 180 trading days. This is not a passive long; active monitoring of quarterly results, enrollment metrics, and ACA policy developments is required. If the company proves it can convert the pricing reset into margin dollars, the stock has room to re-rate; if it fails, limit losses to the plan’s stop.