Oscar's Investor Day highlights a solid ACA plan searching for its second act

Oscar’s Investor Day yesterday presented an interesting narrative of a company seeking to win an increasingly important individual market over the next three years.

Its track record of executing in a tumultuous ACA market over the past three years should give investors confidence that it can hit its financial targets, which are based on seemingly reasonable growth in the ACA markets. Oscar’s technology prowess in the plan seems to be paying off, as it has provided some good examples of how it is managing medical expenses by leveraging its platform. The personalized products it is offering seem to be performing quite well. It is impressive what Oscar has built as a standalone ACA business over the past decade.

All that said, Oscar seems to be doing everything it can to avoid being known as just an ACA plan. But its efforts to build a broader healthcare platform, from +Oscar commercialization, to white-labeled MA plans, to now Lucie, have consistently failed to take hold. Just two years ago, Bertolini described Oscar’s opportunity to enter the Medicare Advantage market as akin to “a pirate ship with cannons amidst Spanish galleons filled with gold.” That Medicare Advantage strategy wasn’t referenced once yesterday as far as I can tell. This is notable, as Bertolini has discussed the strategic challenges of being an insurance business in a single line of business — given the ebbs and flows of profitability in insurance markets, your business performance can be dictated by broader market issues in a market like the ACA. There’s a reason why scale/breadth wins in a low-margin business like insurance.

Enter Lucie as the latest potential solution to this challenge for Oscar. Lucie is certainly an interesting evolution for the business, with Oscar attempting to build a marketplace for the ACA, expand into ICHRA, and then into a broader consumer platform. The conceptual opportunity for a platform like that is straightforward, so are the practical challenges of simultaneously being a carrier and a marketplace for carriers. Oscar will need to demonstrate from here that it can execute on this concept in a way that is practically relevant for public company financials, but as it repeatedly noted during the session, it is not committing to or expecting Lucie to contribute meaningfully to its $4.00 per share EPS target in 2029.

In so many ways, that seems like the conundrum for Oscar — at some point, if Oscar is going to be a platform with two operating divisions, i.e. Oscar Insurance and Lucie, Lucie needs to be contributing to EPS to be relevant to the financials of a public company. The fact that Oscar is unwilling to commit to that could be interpreted either optimistically or pessimistically. The optimistic take would be that this is all upside for a core business already performing well. The pessimistic take is that they’re not yet confident enough in the business ramp for Lucie, which is telling for a company that now has a history of this.

Bertolini closed the investor day with this light-hearted aside:

It seems like a good summary of the current sentiment around the business. I’d agree Oscar has built a leading business in the ACA. I’d also agree with him that betting the farm on Lucie scares the hell out of me.

A quick summary of key financials shared by Oscar during the session, which highlighted Oscar’s momentum in 2026, and a relatively straightforward financial path to its 2029 numbers:

2029 revenue bridge

2029 operating margin bridge

The ACA is clearly on a new trajectory from what it was back in 2024. At that time, Oscar projected that the ACA market (with subsidies still in place) would reach 31 million lives in 2027. Even without subsidies (which Oscar argued was unlikely), it still expected the ACA to recover 24 million lives in 2027. Clearly that has changed, seemingly in part due to the program integrity efforts in addition to the subsidies expiring.

Today, Oscar reports the ACA is at 19 million lives, expects it to lose another 2 million lives due to program integrity efforts, but expects it to grow 6 million members to hit 23 million lives in 2029, reflecting a ~6.5% average growth rate over the period. Oscar notes the tailwinds driving growth for the ACA during this period are workforce shifts (note the “AI-driven workforce shifts” language on the slide) at large employers, gig workers, new immigration, and CHOICE adoption. Perhaps its just me, but given all the program integrity efforts in the ACA the past few years, I’m not sure I find those tailwinds all that compelling, perhaps outside of CHOICE.

It seems relatively easy to leave the session relatively bearish on the overall prospects for the ACA market over the coming years, excluding the CHOICE opportunity. As we’ll get into below, Oscar expects CHOICE to have 2.5 million members by 2029, up from ~500,000 today, which would imply that CHOICE accounts for only 1/3 of the overall expected ACA market growth over the next few years. Will be worth keeping an eye on the other 2/3rds, or if CHOICE accelerates faster.

In order to drive the topline growth that Oscar is expecting in an ACA market that is growing only 6% - 7% a year over the next three years, it’s going to need to take share in the market, as it has demonstrated itself capable of over the previous few years. By 2029, Oscar expects to reach 18%+ market share in the ACA nationally, growing the number of mature markets (where it has 30% - 35% market share), growing into new markets (where it has 5% - 7% market share), and accelerating growth in CHOICE.

It’s worth digging into each of these levers quite a bit, but one thing that seems quite interesting is that Oscar how in its existing markets since 2024. If you look at the slide below from Oscar back in 2024, it highlighted market penetration in three of its mature markets as case studies:

At that time, Oscar noted that Miami was approaching 33% penetration; Atlanta was also at 33%, while Iowa was at 18%. It seems that Oscar views this 30% - 35% number as the ceiling in mature markets, meaning that, aside from market growth, it’ll be looking for growth moving forward outside of key ACA geographies including Miami. This seems to place more pressure on its ability to grow in new markets.

Note: As readers may know, CMS rebranded ICHRA into CHOICE only a week or so ago

The growth of the CHOICE market is one of the key narratives in Oscar’s individual market story, as it spoke to the fact that it is rapidly increasing the quoting volume it is doing, and that it expects large employers to begin to shift into ICHRA plans in the coming years as a key unlock for that market. Right now, the market is roughly 12,000 employers, implying an average employer size of 42 employees on ICHRA today (500,000 enrollees / 12,000 employers).

Oscar’s CHOICE math here is interesting to track. In the slide above, it notes that it expects the overall CHOICE market to be roughly 2.5 million lives. Elsewhere (see slide 55 above) it notes that Oscar’s addressable market opportunity is 1.3 million lives, which is roughly 52% of the overall market. Oscar further notes that it expects a 10% to 15% CHOICE share of its footprint in 2029, meaning that it is anticipating that it will have roughly 130k-200k lives in CHOICE in 2029.

Back in 2024, I attempted to model out Oscar’s projected growth in ICHRA (CHOICE), coming up with the following estimates:

It would seem Oscar is essentially a year behind, so would make sense that they’re currently somewhere in the ballpark of 30,000 CHOICE members today.

Oscar also noted that it expects to reach 20% share in “high priority” CHOICE markets. In the Q&A, there was some discussion of these favorable CHOICE markets, outlining three characteristics that make it likely for them to enter:

It’s a logical list of characteristics. It’s also worth noting that Bertolini called out two key factors that are limiting growth of CHOICE (note the ICHRA language here) today:

The tipping point will come when employer cost inflation is too much, and that overrides the objections above.

Oscar called out how its plan designs are winning in a variety of different ways. The HelloMeno product success metric stands out, noting that 2.5x the average number of members are enrolling directly. That seems like a huge benefit to Oscar, particularly in the employer market, and potentially a mitigating factor for the broker issues discussed above.

Oscar also noted during Q&A that these plan designs represent roughly 10% of membership, and that they perform quite nicely from a profitability perspective; they are not loss leaders for the broader book. Will be worth keeping an eye on whether Oscar can grow these plan designs more as a way to drive margin growth.

I must admit, I am not fully tracking the Lucie narrative yet. Sure, I can understand the words on the page about the value of becoming Americas #1 consumer marketplace. But what does that actually mean for the Oscar business? Oscar lays out the profit pools it appears to be going after on this slide:

This is where I get confused. Oscar knows enough that it can say its going to have 2.6 million ACA and specialty policies via Lucie in 2026, and that the total spend on those enrollments is $60 million per 100k enrollments (so $600 per enrollment). And that the margin target is 35%.

If I did the math on those numbers, and assumed Oscar were somehow capturing the full $600 per enrollment that it indicates on this slide, that business would be $1.56 billion in revenue in 2029, with $546 million in operating margin.

Obviously, Oscar is not going to capture all $600 per enrollment, and so those numbers aren’t going to materialize. But it’s a bit confusing to me that Oscar is not providing an estimate here of how much it will capture off this platform by 2029, given the opportunity it sees in front of it.

This is going to be something we’re surely going to be keeping an eye on future earnings calls. This afternoon, Adweek published an article describing this as a “rebrand” for Oscar to Lucie. That seems like a massive stretch to me. It is interesting to note that Oscar shared with Adweek that Oscar is now the parent brand of three entities:

Searching Oscar’s transcript from the session, Trove comes up exactly zero times in the conversation. I am not sure what to make of this.

This LinkedIn post from a broker last month seems indicative of the blowback Oscar risks as it moves to a marketplace model, raising critical questions about the incentives Lucie offers brokers considering moving their book to Lucie for enrollments.

Surely Oscar is able to address these concerns and has thought them through. But the approach here will inevitably invite this sort of criticism, and it underscores the challenge of both building an insurance product and a marketplace for insurance products at the same time. The competition is fierce in these markets, and its unclear that Oscar will be able to execute both plays at once.

It seems notable in all of this that while Oscar lauds the benefits of building a platform entirely in-house from an AI perspective, that in-house platform is no longer the growth focus — instead it’s a small acquisition Oscar made a year ago to enable enrollments in the ACA. In 2025, it quietly acquired a company called INSXCloud, which is now the infrastructure behind Lucie. It seems indicative of the challenges here that despite all the investment Oscar has made in technology over the last decade plus, its latest growth strategy is now a small platform it acquired last year.

When thinking about Oscar’s current narrative, I think it’s important to revisit statements around Oscar’s last two investor days about its platform ambitions. In 2022, it was primarily contemplating +Oscar selling its tech to third parties as a SaaS offering, highlighting the advantages of its Campaign Builder offering. In 2024, it was becoming a play to power white-labeled Medicare Advantage plans from health systems.

Neither one of those played a meaningful role in this session today, instead replaced by the Lucie narrative.

Recall that at the 2024 JP Morgan Healthcare conference, Bertolini was rather colorfully talking about the massive opportunity in the Medicare Advantage market for Oscar to help health systems launch MA plans:

I don’t believe this opportunity in the Medicare Advantage market was discussed at all in yesterday's session. Clearly, it indicates that the market hasn’t materialized as expected, as Oscar is now letting that opportunity pass and is instead focused on the individual market. It’s a logical move given the state of Medicare Advantage and the tailwinds in the broader consumer market at the moment.

Yet at the same time, as the saying goes, history may not repeat itself, but it does rhyme.

Oscar has now twice attempted to make the case that it has a broader platform play under the hood outside of its core ACA business, and twice it has spent a few years trying to build that play before ultimately winding down efforts. With that backdrop, it’s worth noting that Oscar never was confident enough to commit to any financial contribution externally for the platform concept.

I always find that to be a good tell of a company’s confidence in a strategy — why articulate to investors a key new business offering that you’re excited about, but decline to offer the contribution of that business? It sends a signal that it is still very early. Back in 2024, Bertolini had this to share at Oscar’s Investor Day about its +Oscar commercialization strategy, as it related to Campaign Builder specifically: