Oscar Health, Inc. (OSCR) stock intrinsic value fair value estimate & owner earnings analysis

Oscar Health sells individual and family health insurance plans on the Affordable Care Act marketplaces. At year-end 2025 it covered 2,042,449 members in 18 states (up from 1,676,970), with Florida alone about 1.18 million, and it expanded to 20 states for 2026. About 93% of premiums are paid directly by the federal government as premium tax credits, so the company's fortunes depend heavily on federal subsidy policy, on how sick its members turn out to be, and on annual risk-adjustment transfers between insurers. What the numbers show. Revenue grew from $3.96 billion in 2022 to $11.70 billion in 2025, but the business has not yet produced dependable owner earnings. We measure owner earnings as operating cash flow less working-capital swings, less stock compensation, less maintenance capital spending. That last step matters here: an insurer's operating cash flow is inflated by money it holds but owes, such as the risk-adjustment payable (which rose by about $1.03 billion in 2025 alone) and unpaid claims. Cash flow from operations was $1.09 billion in 2025 even though the company lost $443 million; stripping out those timing balances, owner earnings per share were about -$1.83 in 2025, +$0.05 in 2024, -$1.17 in 2023, -$2.88 in 2022 and -$3.00 in 2021. Over the last three years the middle value is a loss of about $1.17 per share, so the record does not establish positive earning power. The main recent change is the first half of 2026: net income of about $1.04 billion on $9.5 billion of revenue, versus $47 million on $5.9 billion in the same period of 2025. That is real, but we do not treat it as the new normal. In 2025 the company earned a first-half profit and then lost roughly $490 million over the second half, so half-year profits have reversed before. The enhanced federal subsidies expired at the end of 2025, which the company itself lists as a risk to membership and to the health of the members who stay. Bear case: $0 per share. Repeat of 2025: losses of the size seen in 2025 continue, and nothing in the record supports a positive value. The company has $410 million of convertible notes due 2030 and $35 million due 2031, and insurance regulators can require capital when losses mount. Shareholder losses are limited, so we floor this case at zero rather than below. Base case: about $0.75 per share. We credit only what the company has already done: in 2024, at about $9 billion of revenue, owner earnings were roughly breakeven at about $0.05 per share (about $13 million). We assume that level continues with no growth, and value it at 6%, on roughly 290 million shares (the 2025 weighted count of 262 million plus about 30 million shares issued when convertible notes were exchanged in late 2025). In the reconciliation, owner earnings fell from +$0.05 in 2024 to -$1.83 in 2025, so year one of the base case starts at the 2024 breakeven level only because the second-half 2026 results are not yet in; that reversal is not yet proven. We do not credit membership growth, margin expansion or a subsidy renewal. Bull case: about $3.70 per share. The 2026 first-half profit holds through the second half at roughly breakeven, giving 2026 owner earnings near $930 million (about $3.20 per share after stock compensation and capital spending), then earnings return to the 2024 breakeven level. The 2026 pricing already in force is the named driver. What would make this wrong: a full 2026 year of strongly positive earnings with stable membership would move value well above the base case, while another second-half loss would confirm the bear case. The current 10-Q text was not available to us, so the 2026 figures come from the company's reported quarterly data only, and we could not reconcile the reasons behind the swing from the filing itself. The margin-of-safety price is set at a large discount to the base case, and applies only after a full year of positive owner earnings.