In less than two years since its inception, Oscar Health, a New York City-based health insurance company has already grown to 40,000 members with its member-friendly plans and tech-driven approach. Now the startup company has attracted the backing of Goldman Sachs and Li Ka-shing’s Horizon Ventures in a new financing round that puts it in the exclusive club of private companies that are valued more than $1 billion.
While $1 billion-plus valuations are commonplace in the tech world these days, Oscar is one of the few startups that truly deserves it. Founded in 2013, Oscar took one of the company’s most entrenched markets, health insurance and blended it with technology and user-friendly design. Currently, the company is generating a revenue of more than $200 million only in its existing market of New York and New Jersey, says the CEO and co-founder Mario Schlosser.
Oscar has set a high bar for the other health insurance companies by offering its members a package of perks that includes free televisits, free fitness trackers, free checkups and cash incentives for getting a flu shot. Now other companies in the field are trying to adopt Oscar’s strategy which means the challenge ahead for the Oscar team will have to expand and grow faster than their competitors before they can overtake them. In an industry like health insurance where the whole scenario changes from state to state, it cannot take place overnight.
The latest fundraising of $145 million values the startup at $1.5 billion according to the people known to the deal. The funding round was led by Thiel’s Founder Fund and the other investors include hedge fund pioneer Stanley Druckenmiller, mutual fund manager Wellington and Thrive Capital, the venture capital group of Joshua Kushner, Oscar’s co-founder and chairman which has previously backed Instagram and Warby Parker.
After couple of rounds of annual customer enrolment through the New York health insurance exchange set up under Obamacare, Oscar drew in almost 40,000 customers. Founded by Joshua Kushner with Mario Schlosser, the startup’s implified plans and easy customer interfaces are designed to stand out on the state-run exchanges, where individuals without employer-based coverage go to pick their insurance.
Behind the scenes, there is a single patient tracking system designed to yield more customer data that can be applied to enhance customer service and efficiency. The new money from the fund will be used to integrate the system with health providers such as hospitals. The company is soon looking forward to launch in California and Texas.
Oscar’s CEO Schlosser said, “We are still in the infant stages as a tech and insurance company. We have a smaller tech team than anybody else in healthcare and we have grander ambitions in the technology we want to build to rewire the healthcare systems.”