Oscar Health Raises 2026 Operating Income Guidance to $600 Million-$800 Million and Sets $4+ EPS Target for 2029, While Pitching Lucie as a Payer-Agnostic Marketplace Not Included in the Numbers
Investor Day, September 16, 2026: Guidance raised, 2029 framework introduced
A guidance raise and a long-range plan that excludes the optionality
Oscar Health used its 2026 Investor Day to raise full-year operating earnings guidance by $100 million to a range of $600 million to $800 million, double the original outlook. Management also improved its medical loss ratio guidance by 50 basis points to 81% to 82%, citing utilization that has tracked favorably through August. Revenue guidance of $18.7 billion to $19 billion and the SG&A ratio range were unchanged. CFO Scott Blackley said the improvement reflects two additional months of data since the second quarter call: "That extra couple of months since our call really allowed us to say, let's go ahead and lean in and bring that favorability into our guidance."
The more consequential disclosure was the 2029 framework. Oscar is targeting a revenue CAGR of more than 20%, an operating margin of 5% to 7%, and EPS above $4 per share, assuming a mid-20s tax rate and 2% to 3% annual growth in diluted shares. For 2027, management now expects to broadly exceed prior targets, with an operating margin above 5%, EPS above $2.25 and an effective tax rate in the mid-single digits. Formal 2027 guidance is expected in February. The 5% to 7% margin range sits well above the 3% to 5% historical range Blackley cited for the business.
Critically, management stressed that the $4 target does not depend on its new marketplace business, Lucie. Blackley said the plan "assumes a modest contribution from Lucie" and added that "if that business is not successful, we still believe we're going to be able to deliver more than $4 of EPS in 2029." CEO Mark Bertolini was blunter about why the optionality was left out: "We don't have Lucie in the numbers because if we would have put them in there, we would have scared the hell out of all of you, including us." Investors should note that the plan still embeds meaningful spending to build Lucie, which management said it would only increase if it sees more opportunity.
Lucie: a payer-agnostic marketplace with attractive but unproven economics
The strategic centerpiece of the day was Lucie, which Oscar positions as a marketplace where competing carriers, brokers, employers and consumers transact, with Oscar collecting fees. The company says more than 70 carriers are already on the platform, along with supplemental players including Aflac, Allstate and Cigna. Bertolini framed the logic around the 2025 acquisition of a business that included an enhanced direct enrollment platform, a brokerage and the lead generator Healthinsurance.org. That platform became ICHRAx, which management says has been adopted by competitors at cost-plus pricing of under $1 per member per month, compared with roughly $4 on other platforms. Bertolini said the acquisition drew internal skepticism: "Some of our board members had the same question, why do you need that?"
Management sized the opportunity at a $650 billion total addressable market, comprising $30 billion in ACA supplemental products, $125 billion in CHOICE enablement services (the administration's term for ICHRA, which Bertolini called "a terrible name") and $500 billion in consumer health products. Per 100,000 members, the available revenue pool is $60 million for ACA supplements, $60 million for CHOICE enablement and $30 million for consumer health, with margins of 35%, 35% and 80%, respectively. Blackley said the at-scale margins are 5 to 6 times those of the core insurance business, and that the business is capital-light. He also cautioned that Oscar does not expect to capture all of those fees.
The economics remain largely unproven. Asked how much is contracted, Bertolini said the supplemental commissions are known today, but that "the parts that we're pricing out as we speak is the rents on the actual marketplace itself," being negotiated carrier by carrier. Management gave no timeline for tipping points and said it will not provide significant Lucie-specific disclosure until it becomes a larger part of the business. Targets for 2029 include 2.6 million ACA and specialty products sold and 28,000 active brokers, and Oscar noted that 800,000 supplemental policies are already coming through for 2027 open enrollment. Bertolini also said he believes Lucie will become "the more dominant part of our capital structure and our market cap in the future," an aspiration investors should weigh against the absence of any financial commitment.
CHOICE adoption: early growth, with real barriers
Oscar expects CHOICE lives to grow from 0.5 million in 2026 to 2.5 million in 2029, and says its own CHOICE membership has already doubled this year, with quote activity doubling as well. The company is targeting 3x its CHOICE market share by 2029 and 20% share in priority markets, defined by favorable state tax credits, a large gap between exchange and employer premiums, and a mix of small and large multistate employers. Management cited survey data indicating that 62% of large employers are exploring or planning a shift.
Management was candid that adoption faces friction. Bertolini said employers worry about network access and about stabilizing risk under defined contribution, while brokers have historically disliked ICHRA because it eliminates group commissions. He expects consultants to resist: "I think it's extraordinarily expensive for consultants to convert an employer. It's up to $80 per employee per month... that will be hand-to-hand combat." President of Oscar Insurance Janet Liang compared the potential shift to the move from pensions to 401(k) plans, arguing that inflation will eventually force employers to switch. Bertolini described the employee economics as a gain of up to 26% in savings relative to employer contributions, which he said arises from narrow networks being cheaper than employer networks. He also floated an hour-banking wallet for multi-employer workers and early discussions with state governors on Medicaid demonstration products, though he stated that operational details are "not anywhere near" settled and would require federal waivers.
Core ACA outlook: stabilization, a path to 18% share and a rising TAM
Management expects the overall ACA market to end 2026 at about 17 million lives and remain around that level through 2027, before growing to roughly 23 million by 2029. Blackley said CMS has completed its review of 1 million members, that Oscar has processed the resulting terminations, which will show up in third-quarter results, and that all of it was consistent with expectations. A second, smaller CMS program covering roughly 500,000 lives is expected later this year, and both are reflected in guidance. Oscar said it priced for a market contraction of about 30%, and that the market has performed better than that.
Oscar's own addressable market is 9.6 million lives today, which it expects to grow 65% to 16 million by 2029, with national share rising to 18%. Liang outlined three drivers: maturing share in existing footprints from 30% to 35% (adding 2 million lives), expanding into 400 to 600 new counties (3 million lives) and CHOICE (1.3 million lives). Blackley said existing-footprint growth contributes 17% to 19% annual growth, with new markets typically entered at 5% to 7% share. For 2027, Oscar is taking low-teens rate increases, which Liang specified at about 14% against competitor averages near 15%. Management said pricing is rational and that Oscar is competitive in Florida, its targeted growth market. Metal mix is expected to be stable after this year's shift toward Bronze.
Operating leverage and the AI claim
Oscar claims revenue has grown 7x since its IPO while the MLR has fallen and SG&A has been roughly halved. The fixed cost base has dropped from 30% in 2024 to about 25% this year. Management said the company has generated more than $3 billion in medical cost savings over two years and a 33% improvement in operating leverage from 2024 to 2026. The company targets an MLR approaching 80% and an SG&A ratio below 15% by 2029. Blackley said roughly 10% of SG&A is structural to the ACA, including taxes, exchange fees and distribution, so that "at our absolute best day, we will have nickels of costs on top of those structural costs." He also said MLR improvement is expected even if pricing only matches trend of 5% to 7%, driven by monthly-refreshed affordability initiatives.
Co-founder Mario Schlosser presented the most detailed technical case. He argued that Oscar's single platform, in which claims, clinical workflows and member experience share one codebase, lets AI agents act across the entire business without crossing vendor boundaries. He said AI-written code rose from about 16% of production code at the start of the year to almost two-thirds, delivering 2 to 3 times faster time to market. A claims operator built a provider-dispute tool over a weekend, which engineering then hardened in about two months, a project Schlosser estimated would previously have taken six months and 10 engineers. An agent reviewing pharmacy claims flagged about $28 million of drug costs that probably should not be paid. Prior authorization approvals are fully automated for hundreds of procedure codes, with approval rates in the high 90s on the highest-volume codes, and denials are never automated. The Oswell assistant resolves 30% to 40% of member messages directly, and nurse preparation time for outreach fell from about 20 minutes to under 5.
Schlosser was also notably open about limits. Models struggle with sparse data and with fraud, waste and abuse, where deterministic rules outperform. Brokers testing Lucie preferred simple drop-down search fields over black-box AI recommendations. Bertolini added that provider disputes had a backlog of nearly $300 million when he joined in 2023, and that AI also improves risk adjustment submissions and reinsurance recoveries, so the SG&A improvement understates the revenue-side benefit. Management conceded that separating technology-driven gains from ordinary execution is "basically impossible."
Capital generation and the product pipeline
Oscar ended the second quarter with $460 million of parent cash, more than $10 billion in total cash and investments, and almost $1 billion of excess capital in its insurance subsidiaries. The plan is expected to generate $4 billion to $4.5 billion of capital through 2029, with about 60% retained in the insurance companies and 40% upstreamed to the parent for opportunistic M&A and offsetting share dilution. Management expects to use quota share reinsurance to a lesser extent over time. Net investment income is expected to grow 10% to 15% annually.
On product, lifestyle plans now represent just under 10% of membership and are the fastest-growing segment, with a Net Promoter Score of 71 versus an industry average of 12 as cited by Liang. Management said these plans are priced for margin and retain better than standard plans. New offerings include HelloMeno, a menopause-focused plan that drove a 2.5x increase in direct enrollment, a Hy-Vee Health CHOICE product with zero-cost primary care, and a 2027 bundle with Allstate that gives Oscar access to about 30,000 brokers it has not previously worked with.