Oscar Health: Old World Economics meets New World Tech

**TL;DR:** Oscar Health has grown revenue at 96% CAGR since 2020, and yet is still largely unprofitable. The company faces a massive $1.77B risk adjustment liability for 2025, weak insider incentives, and the loss of ACA subsidies. Despite looking undervalued on a DCF basis ($20/share fair value), the lack of a durable moat and negative ROE makes it an easy pass. \-- Oscar is a "pure play" on the ACA individual exchange market, deriving \~95% of its premium revenue from this segment.This concentration is their growth engine but also a massive point of failure. Management is guiding for a Medical Loss Ratio (MLR) of 86.0% - 87.0% for 2025. This blowout is largely due to a "risk adjustment transfer payable" that ballooned to **$1.77 billion**. Essentially, Oscar’s members are "healthier" (or coded that way) than the market average, forcing Oscar to pay a massive tax into the risk pool, wiping out their profit margins. No moat, no insider buying, no value creation (positive ROE). Oscar is an insurance company dressed up in tech clothing. While the growth is impressive, growth without quality is just a faster way to lose capital. There is a full write up here, with a meaty business section that is paywall free: [https://thepursuitofcompounding.substack.com/p/oscar-health-oscr-sleek-tech-meets](https://thepursuitofcompounding.substack.com/p/oscar-health-oscr-sleek-tech-meets) **What do you think? Is the 2025 MLR blowout a one-time blip or a sign that their algos can't price risk?**