Alphabet buys increasingly large stake in Oscar Health

Alphabet, Google’s parent company, has just invested an additional $375 million in the online insurer Oscar Health, the company founded by cofounded by Mario Schlosser and Joshua Kushner, brother of White House advisor Jared Kushner. The investment means Alphabet now has about a 10% stake in the company. Oscar Health reports that it will use the investment to launch new insurance products including products for the lucrative Medicare Advantage market. Here is a look at Oscar’s funding and valuation history, according to PitchBook:

July 2013: $51.5M round | $121M valuation

Jan. 2014: $30M | $340M

May 2014: $80M | $800M

April 2015: $145M | $1.5B

Sept. 2015: $32.5M | $1.8B

Feb. 2016: $400M | $2.7B

March 2018: $165M | $3.2B

Those are huge investments for a company that has yet to turn a profit. Oscar claims to use technology and data science to lower the price of care. But bending the cost curve has never been accomplished with back office efficiencies alone. Oscar is an insurer and network. It owns no providers and so will continue to have limited control over those who really influence the spend: providers and hospitals.

But Oscar and its investors appear undaunted. The bet that Alphabet and the other investors are making is that healthcare is a mega market, and relationships and influence still flow through insurers. Large investments must be made to acquire the customer relationships and build the platform to experient, learn, and eventually find a path to change the cost of care.

- Sanders DiPiero

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