Oscar Health Insurance, a privately held company that aims to shake up the industry with technology-driven services for individual consumers, on Monday said it had secured $145 million in new funding led by technology investor Peter Thiel.
The cash infusion comes as Oscar, with 40,000 members, prepares to expand its operation beyond New York and New Jersey.
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"It's openly known that we are going through the licensing process in California and Texas," Chief Executive Mario Schlosser said in an interview.
Oscar faces fierce competition from established insurers that also sell health insurance on exchanges set up under the national healthcare reform law, often called Obamacare. UnitedHealth Group Inc, Aetna Inc and Anthem Inc each have tens of millions of corporate members and hundreds of thousands of individual customers through the exchanges.
The new funding round was led by Thiel, one of Silicon Valley's best-known technology investors, and his partner Brian Singerman of the Founders Fund. The fund made initial investments in Oscar in late 2013.
Thiel was co-founder of online payment system PayPal, now owned by eBay Inc, and the first venture capital investor in Facebook Inc. He is attempting a comeback after losing much of his multibillion-dollar fortune during the recent global recession.
"They came in re-equipped with a much bigger check," Schlosser said, referring to the new investment from Thiel and his fund. "What he likes about us is that we are not like large insurance companies that all pitch business to large corporations. Instead, we're trying to build a product for individuals."
Schlosser predicted almost all Americans in coming decades will buy insurance through exchanges that have been set up either under Obamacare or by corporate benefits companies and insurance companies.
Oscar's tech-based programs include a computer application that enables members to confer with a doctor within 10 minutes and a wrist device that records footsteps and can lead to gift card rewards for staying in shape.
Some 35 percent of the company's new members were referred by friends, a metric Schlosser said appealed to new investors.
Other participants in the latest funding round include Wellington Management Company and Goldman Sachs, which are making initial investments. Li Ka-shing of Horizon Ventures also invested.
Schlosser said the new investments bring Oscar's total funding to $320 million and will help the company expand its operations and develop new products. (Reporting by Ransdell Pierson; Editing by Alden Bentley and Ted Botha)