Oscar Health has raised $400 million from the mutual fund giant Fidelity, bringing the insurance startup's valuation to $2.7 billion. Also participating in the round were previous investors Google Capital, General Catalyst, Founders Fund, Lakestar, Khosla Ventures and Thrive Capital.
"We are going after one of the largest markets in the U.S., one that is 20% of GDP," Oscar founder Josh Kushner told Forbes. "We have the capital, the brand, the technology to have tremendous impact on the industry."
Oscar has tripled customer base from 40,000 to 145,000, and is reportedly making an average of $5,000 per customer annually.Over the last year, Oscar has grown from its New York base to California, New Jersey and Texas. Meanwhile, it has also tripled customer base from 40,000 to 145,000, and is reportedly making an average of $5,000 per customer annually. This in turn brings around $750 million per year to the company, but it has yet to reach the tipping point.
In 2015, Oscar lost $120 million, half of which came from New York medical losses and another half from expansion activities. "We expect to go into three or four new states per year and each will cost us about $20 million to start up," says Oscar CEO Mario Schlosser.
However, costs are expected to fall as the company expands. Also, investors seem to be happy with Oscar's strategy and burn rate.
"The Oscar team has had amazing execution in a business that is highly complex, regulated, and competitive and capital intensive," says Founders Fund's Brian Singerman. "This isn't a 'move fast and break things business,' people's lives are at stake."