Over the past six months, Oscar Health’s stock price fell to $13.96. Shareholders have lost 15.6% of their capital, which is disappointing considering the S&P 500 has climbed by 16.3%. This might have investors contemplating their next move.
Given the weaker price action, is now a good time to buy OSCR? Find out in our full research report, it’s free for active Edge members.
Why Is Oscar Health a Good Business?
Founded in 2012 to simplify the notoriously complex American healthcare system, Oscar Health (NYSE: OSCR) is a technology-focused health insurance company that offers individual and small group health plans through its cloud-native platform.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Oscar Health grew its sales at an incredible 96.4% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers.
2. EPS Improving Significantly
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Although Oscar Health’s full-year earnings are still negative, it reduced its losses and improved its EPS by 30.3% annually over the last four years. The next few quarters will be critical for assessing its long-term profitability. An inflection point could be coming soon.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Oscar Health’s margin expanded by 16.5 percentage points over the last five years. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality. Oscar Health’s free cash flow margin for the trailing 12 months was 6.5%.
Final Judgment
These are just a few reasons why we're bullish on Oscar Health. With the recent decline, the stock trades at $13.96 per share (or a forward price-to-sales ratio of 0.3×). Is now a good time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
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