(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.) By Robert Cyran NEW YORK, March 3 (Reuters Breakingviews) - Oscar Health’s $8 billion initial public offering is a triumph of hope over scale. Technology and fast growth give it a shot at disrupting the U.S. healthcare system. But bigger medical insurers can offer more choice in care, negotiate better prices, and keep more of the risk and reward for themselves. Customer growth alone doesn’t make Oscar’s revenue worth over 10 times its rival’s sales. The relative upstart, co-founded by Joshua Kushner, brother of Jared, former President Donald Trump's son-in-law, priced its IPO at $39 late on Tuesday night, higher than previously planned. When the company's shares start trading on Wednesday, bullish investors could easily send them higher. Yet even at that price, the company's enterprise value clocks in at some 13 times last year's revenue of $463 million, according to Breakingviews calculations. Traditional, far bigger insurers like Cigna CI.N and Humana HUM.N trade at or below 1 times sales. Growth is, of course, one big difference. Oscar claims 529,000 members, six times as many as it had four years ago. It says the insurance markets it competes in represent $450 billion of annual premiums. Related opportunities like telehealth are worth another $123 billion. It’s the size of the opportunity that attracted Kushner, whose stake is now worth over $1 billion. Yet Oscar doesn’t have critical mass. Rival Anthem ANTM.N has over 40 million Americans in its plans. Oscar, founded in 2012, has never made money and has accumulated losses of $1.4 billion since founding. Revenue in 2020 was $463 million, a decrease of 5% from the previous year. While premiums paid by Oscar customers rose over 60%, the amount ceded to reinsurers more than doubled. The company's net loss increased 56% to $407 million last year. Oscar just might pull it off if rapid growth brings improving margins, the resources to retain more premiums, and the ability to raise prices for online services such as telehealth. But the difficulty level is high, partly because low prices are one key to the company’s user growth. Rolling out the IPO red carpet is premature. On Twitter https://twitter.com/rob_cyran CONTEXT NEWS - Oscar Health said on March 3 that it priced its initial public offering at $39 a share, above the already increased $36-$38 range proposed on March 2. The technology-driven health insurer said it sold 36.4 million shares with existing investors selling another 649,080. The underwriters have the option to buy up to 5.6 million more shares. - Oscar has 529,000 patients in 18 states, up sixfold over the past four years. In 2020, premiums were up 61% to $1.7 billion. Revenue net of reinsurance premiums ceded was $463 million, a decrease of 5% from the previous year. The company lost $407 million, compared to a loss of $261 million in 2019. - For previous columns by the author, Reuters customers can click on CYRAN/ - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Alphabet-backed Oscar Health raises $1.2 billion in IPO urn:newsml:reuters.com:*:nL2N2L02WQ Oscar announcement https://www.hioscar.com/press/oscar-health-inc-announces-pricing-of-initial-public-offering Draft prospectus https://www.sec.gov/Archives/edgar/data/1568651/000119312521064668/d28906ds1a.htm BREAKINGVIEWS-Health insurers put Google market power to shame urn:newsml:reuters.com:*:nL1N2HI26N ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Richard Beales and Amanda Gomez) ((robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))