• After years of volatility, insurtech companies have shifted from disruption to disciplined growth, and the market is rewarding signs of real execution.
• Firms called Oscar, Lemonade and Root have all rallied sharply but for very different reasons:.
• Oscar is now profitable, Lemonade is scaling with high burn and Root is showing early earnings traction but trades like a high-growth tech name.
• For investors, the key is selectivity. Oscar offers the clearest path to sustained performance, while Lemonade and Root may still deliver but carry higher expectations and thinner safety nets.

Insurtech — which refers to using technology to automate the insurance business — is staging a comeback in the markets after years of hype, hope and hard resets. Shares in Oscar Health (OSCR) are up 50% year-to-date, while Lemonade (LMND) and Root (ROOT) have surged 160% and 150%, respectively, over the past 12 months. Combined, the three companies now command nearly $10 billion in market value, signaling a renewed appetite for digital-first insurance models that once seemed too risky.

For investors eyeing the next chapter in this $7 trillion sector, the question isn’t who’s grown the fastest. It’s a matter of who’s best-positioned to keep delivering from here. Today, we help answer that question. 

Oscar Health: From disruptor to disciplined cash generator

Oscar Health was born out of a bold proposition — that technology and design could reinvent health insurance for the modern era. A decade later, the mission hasn’t changed, but the company has. After years of growing pains and structural losses, Oscar is poised to deliver its first full year of GAAP profitability in 2025. Membership now tops 2 million, split mainly between ACA plans and a growing Medicare Advantage presence. The company, once a speculative upstart, is turning into a legitimate operator in digital health.

The numbers reinforce Oscar’s successful pivot from growth story to operating machine. In Q1, revenue jumped 42% year-over-year to $3.0 billion, net income reached $275 million and earnings from operations climbed to $297 million. Cost discipline stood out: The SG&A, (selling, general and administrative expenses) ratio fell to a record-low 16%, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose to $329 million. While the medical loss ratio ticked up to 75%, management reaffirmed full-year guidance and pointed to a $4.9 billion cash and investment cushion — ample to navigate regulatory changes, compressed enrollment windows and looming shifts in ACA subsidies.

Valuation reveals a story that’s more compelling than it first appears. Oscar trades at 42x trailing earnings, which looks rich next to legacy insurers. But its 0.5x price-to-sales ratio is deeply discounted relative to peers, reflecting the company’s outsized revenue base for its market cap. The company’s 3.6x price-to-book ratio is elevated, but increasingly justified by expanding margins, improving capital efficiency and a growing track record of disciplined execution.

Analyst sentiment remains cautious. Only four of nine rate the stock a “buy” or “overweight,” and the $17.50 average price target trails the current $20.50 level. But that conservatism may be lagging behind the latest developments. With shares up 50% year-to-date (and only 16% over the past 12 months) a more durable re-rating could be just now taking shape. 

Oscar now checks the two boxes investors once questioned — profitability and scale — while still delivering strong top-line growth. The stock may not screen as cheap on a price-to-earnings (P/E) basis, but its broader valuation remains reasonable given the company’s accelerating margins, disciplined cost structure and rock-solid balance sheet. For investors looking for exposure to tech-enabled healthcare with real earnings power and room to run, Oscar stands out as a rare blend of growth, execution and near-term potential. 

Lemonade: High-beta growth, but profitability is elusive

Lemonade still sells the dream of an AI-powered insurance platform that grows faster than traditional carriers while operating with far less overhead. And in Q1, that dream showed more traction. In-force premium topped $1 billion, revenue climbed 27% to $151 million and the customer base grew to 2.5 million. The company’s tech stack — front-end bot “Maya” and claims engine “Jim” — is designed to turn every policy and payout into structured data, improving pricing over time. And with $979 million in cash, Lemonade has the breathing room to keep scaling without raising additional capital. 

Still, the gap between growth and profitability remains wide. The company paid out 78 cents in claims for every dollar of premium it collected, partly because of wildfire-related losses. Adjusted EBITDA was a negative $47 million, and the net loss for the quarter totaled $62 million, or -$0.86 per share. Management continues to project that the company won’t reach breakeven until 2026, with no profitability expected in 2025. That said, there are early signs of operating leverage: Core operating expenses (excluding growth marketing) were flat from the previous quarter, and adjusted gross margins held steady at 30%. On top of that, management raised its full-year revenue guidance and reiterated its 2026 profitability target.

Valuation remains a major sticking point. Lemonade trades at 5.3x sales and 5.5x book value — far above the sector medians of 3.0x and 1.2x. Those are steep multiples for a company still posting losses and without a meaningful P/E ratio. Investors are effectively wagering on the long-term promise of its AI-powered, data-centric model. But the conviction isn’t universal: only one of 10 analysts rate the stock a “buy,” while half advise selling or underweighting Lemonade shares. The average price target is just $28 per share, well below the current level of $43, signaling that for now optimism is running ahead of fundamentals.

But Lemonade remains a work in progress. The growth narrative is intact, the technology is credible and early signs of cost discipline are emerging. But the current stock price already bakes in a fair amount of optimism, and without clear progress toward profitability, that optimism remains fragile. For now, it’s a high-risk, high-reward play that could deliver over time. Still, for investors seeking proven execution and more stable footing, it may be worth waiting for a better entry, especially given the heightened volatility across financial markets.

Root: Strong momentum, steep valuation

Root isn’t just rebounding. It’s emerging as one of the more disciplined players in digital insurance. After years of heavy losses and shifting strategies, the company is gaining ground with a focused, telematics-driven auto model and a growing base of embedded distribution partners. Underwriting performance is improving, strategic partnerships are expanding and Root’s ability to rapidly adjust pricing in response to market pressures — like tariffs and rising repair costs — gives it agility that many traditional insurers can’t match.

And in terms of the bottom line, Root’s model is starting to deliver. In Q1, the company posted $18 million in net income, marking a sharp turnaround from a $6 million loss a year ago. Gross premiums written climbed 24% to $411 million, while the combined ratio improved to 95.6%, reflecting more disciplined underwriting. Adjusted EBITDA came in at $32 million, and operating income reached $24 million, both pointing to meaningful operating leverage. While management noted seasonal factors like tax refunds boosted results, they also emphasized core improvements: The accident-period loss ratio fell to 58%, and partnerships now account for about one-third of new policies.

Root’s rebound is starting to look more structural than cyclical. The company is expanding its geographic reach, now operating in 35 states with additional filings underway in Michigan and New Jersey. Strategic partnerships with Hyundai Capital and Experian are powering the growth of its embedded insurance model, enabling customers to secure coverage directly at the point of financing. That integration offers a competitive edge in a saturated auto insurance market. With $347 million in unencumbered capital, Root now has the flexibility to scale without turning to dilutive equity raises, a meaningful shift for a company that once faced serious financial pressure.

That momentum hasn’t gone unnoticed by the market: Root’s shares have rallied 150% over the past year. But today’s price already bakes in aggressive assumptions. The stock trades at 39x trailing earnings, a figure buoyed by the company’s first profitable quarter and far above the single-digit P/Es typical of legacy auto carriers. Its 1.5x price-to-sales ratio looks reasonable beside other insurtechs, yet an 8.0x price-to-book multiple signals investors are counting on sustained, venture-style book-value growth and future capital returns. 

Those lofty expectations leave little room for execution hiccups or multiple compression. Reflecting that tension, just two of six analysts rate the stock a “buy,” and their $134 consensus target suggests only modest upside from here. In short, while Root’s operational turnaround is tangible, much of the good news already appears priced in.

But Root has earned a second look. The company is generating real profits, growing premiums and leveraging a tech-first, partnership-driven model to scale efficiently. But the stock already reflects much of that progress. With storm season looming and tariffs threatening to push claims costs higher, the path forward will require near-flawless execution. For investors bullish on telematics and embedded insurance, Root remains a compelling play—but one that now carries a slimmer margin for error.

Investment takeaways

The insurtech narrative is evolving from bold disruption to disciplined execution, and Oscar Health is at the forefront of that shift. Now serving over 2 million members, the company is delivering strong revenue growth and closing in on its first full year of GAAP profitability. Oscar is no longer just a high-potential upstart — it’s starting to operate like a high-efficiency insurer. While the stock trades at a premium P/E, its low price-to-sales ratio and rising margins suggest the re-rating may not be over, especially if profitability proves durable.

Lemonade and Root offer distinctly different value propositions. Both are posting strong growth and demonstrating better cost control, but only Root has achieved profitability. Lemonade’s AI-driven platform continues to gain momentum with consumers, yet continuing cash burn and a valuation north of 5x sales make it sensitive to any execution missteps. Root, on the other hand, is now delivering positive earnings and improved underwriting performance, but after a 150% rally over the past year, much of the turnaround appears already priced in.

For investors who want both solid execution and room to grow, Oscar Health still looks like the most dependable way into insurtech. Lemonade and Root retain appeal for those comfortable skating farther out on the risk curve, but each must still prove rapid expansion can bring durable profits. Traders, however, may find a nearer-term setup in Root: After a 150% run-up, the shares have retreated toward the lower end of their $120–$160 band, creating a potential swing-trade window for anyone betting on renewed enthusiasm in insurtech or on a broader market rebound.

Andrew Prochnow, Luckbox analyst-at-large, has traded the global financial markets for more than 15 years, including 10 years as a professional options trader.

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