Oscar Health concealed COVID-19 financial woes before IPO, investor lawsuit claims

An Oscar Health stockholder filed a proposed class action May 12 in the Southern District Court of New York, alleging the insurtech company misled investors about financial issues caused by COVID-19 ahead of its initial public offering in March 2021.

The plaintiff, Lorin Carpenter, alleges the company's registration statement was "negligently prepared" and "contained untrue statements of material facts or omitted to state other facts" because it failed to say that Oscar was experiencing growing COVID-19 testing and treatment costs, growing net COVID costs, could be negatively affected by a prior-year risk adjustment data validation result, was on track for a negative impact from special enrollment period membership growth, and overall positive statements about the company's operations were not reasonable.

The lawsuit claims the company's executives and the banks that underwrote its IPO violated the Securities Act of 1933. 

In the IPO, Oscar sold over 36 million shares at $39 each and received net proceeds of approximately $1.3 billion.

The plaintiff believes "there are at least hundreds or thousands of members in the proposed class." He is seeking approval of the class action, a jury trial, compensatory damages and reasonable costs and expenses incurred through the lawsuit. 

Oscar investors have until July 11 to join the proposed class action.

Becker's has reached out to Oscar for comment and will update this article as more information becomes available.

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