Understanding Risk Like an Owner $HIMS $OSCR

In every deep investment relationship, there comes a moment where you stop asking what could go right and start asking what could go wrong. That moment matters. It reveals if you’re serious. It shows whether you’re investing or simply cheering.

This report is that moment. After building a high-conviction, ultra-concentrated portfolio around Hims & Hers and Oscar Health, I am now stepping back—not to question the thesis itself, but to challenge my own thinking, the depth of my conviction, and the realism of my expectations.

Some of you have given feedback that my work sometimes leans too bullish. That I might spend too much time on the upside and not enough on the cracks that could break the story. I hear that. I value that. And I agree.

At FJ Research, the mission is not to win Twitter likes. It is not to grow a vanity list of 10,000 subscribers. I am not here to produce flavor-of-the-month content or repackage what is already known. I am here to build a research platform rooted in clarity, depth, and asymmetry. I believe in fewer positions, more research, and maximum alignment. That means talking about risk—not because it’s trendy, but because it’s real.

Let’s look at both Hims & Hers and Oscar Health with a sharper lens. Let’s examine what could break. And then, let’s decide whether the opportunity still outweighs the risk.

Part 1: The Risks of Hims & Hers

1. The Brand Trap

Hims has built an iconic consumer brand in a space that has historically lacked any branding at all. That is a major achievement. But it is also a risk.

Great brands can become fragile when their appeal is linked to trends rather than utility. If consumer tastes shift or if cultural narratives around masculinity, wellness, or telehealth evolve in a way that undermines the Hims message, growth could stall. A brand can become stale. A brand can be mocked. And in a market where growth is driven by digital word of mouth, public perception matters.

If Hims fails to keep evolving its message, it risks being remembered as a moment, not a movement.

2. Customer Acquisition Costs and Margin Pressure

Hims depends on marketing. Customer acquisition is its lifeblood. While the company has improved its unit economics dramatically, there’s always the risk that channels become saturated, costs rise, and lifetime value shrinks.

If paid acquisition becomes less efficient, or if competitors start offering similar pricing with deeper pockets, the company will face margin pressure. That could force Hims to either increase pricing—which risks losing customers—or cut marketing, which would slow growth.

Scaling a consumer-facing healthcare business without losing efficiency is an execution game. And Hims is still early in that game.

3. Regulatory and Compliance Risk

Telehealth exists in a gray zone of modern medicine. While the rules are becoming clearer, they are not yet fully settled.

Changes in healthcare regulations at the state or federal level could limit what Hims is allowed to prescribe, how it operates across states, or how doctors are allowed to issue online consultations. One unfavorable ruling could force Hims to alter its model.

The risk is not just financial. It’s structural. Hims does not own its provider network. It partners with affiliated medical groups. If legal frameworks shift, that setup could be challenged.

4. Overreliance on Sexual Health and Hair Loss

Although Hims is expanding into mental health, weight loss, and primary care, a large part of its current revenue still comes from ED and hair loss products. These categories are profitable but have limited pricing power and high competition.

If Hims cannot successfully transition its customer base into more complex, higher-margin categories, the story risks flattening. The growth narrative is tied to expansion into real healthcare, not just vanity wellness. That transition is not guaranteed.

5. Key Person Risk

Andrew Dudum is central to the Hims story. His clarity of vision and execution discipline have brought the company this far. But in startups where the founder is the brand, leadership transitions can become existential events.

If Dudum were to step down or lose influence, the market would likely penalize the company. That is the cost of founder-led strength. When the founder is the story, their absence becomes the risk.

Part 2: The Risks of Oscar Health

1. The Economics of Insurance Are Brutal

Oscar Health operates in a business known for low margins, regulatory complexity, and unforgiving capital cycles. It is hard enough to run a profitable insurance company in a stable market. Doing so while trying to innovate is even harder.

Even with improving medical loss ratios, Oscar is still walking a tightrope. A few bad underwriting years, policy shifts, or cost overruns could derail the path to sustained profitability. And in insurance, trust builds slowly but breaks fast.

This is not a software business. This is a regulated utility that happens to use software.

2. ACA Risk and Government Dependency

Oscar’s business model is tightly coupled to the Affordable Care Act. If the ACA were repealed, scaled back, or altered in a way that affects risk pooling or subsidies, Oscar’s customer base could shrink dramatically.

That risk may seem low today, but policy regimes change. Political winds shift. A single election can redefine the entire healthcare map. Betting on Oscar is, in part, betting on regulatory stability.

That is not always a safe bet.

3. Brand Awareness and Market Share

Oscar remains a small player in a sea of giants. It has made inroads, yes, but the vast majority of Americans still get insurance from legacy players like UnitedHealthcare, Anthem, or their employers.

Changing that will take time, money, and flawless execution. If Oscar cannot scale its name recognition and trust fast enough, it risks being stuck in a niche. Niche healthcare insurers rarely scale well.

There is also the risk that customers view Oscar as “too tech,” and prefer the familiarity of traditional carriers, especially in older demographics.

4. Data Risk and AI Limitations

Oscar is positioning itself as a tech-native insurance company, with a heavy emphasis on data and AI. That creates potential upside—but also risk.

If data models are flawed, biased, or exploited, the consequences could be serious. The use of AI in healthcare is still in its infancy. Mistakes could invite lawsuits, regulatory scrutiny, or customer backlash.

Oscar must ensure that its tech-driven model enhances care, not just efficiency. If patients feel like algorithms are making care decisions, trust could erode quickly.

5. Liquidity and Capital Adequacy

Oscar has cleaned up its balance sheet, but insurance is capital-intensive. If growth accelerates, the company may need to raise more money to meet regulatory capital requirements or expansion goals.

Capital markets are not always friendly. A tough macro environment or poor stock performance could limit Oscar’s access to financing at acceptable terms. That would slow down the company’s ability to scale.

Being capital efficient matters. But in insurance, capital reserves are non-negotiable.

Part 3: Why I Still Hold Both

Now that we’ve walked through the risks, let’s come back to the core question. Do the rewards outweigh the risks?

For me, the answer is yes. And it is not just a yes of optimism. It is a yes of analysis, experience, and conviction.

I understand the vulnerabilities. I acknowledge the fragilities. But I also see the structure of opportunity. Both Hims & Hers and Oscar Health are attacking huge markets with outdated incumbents and customer experiences that range from annoying to broken.

They are not pitching new luxury goods. They are rebuilding essential systems—how people access care, how people get treated, how people protect themselves. These are universal, recurring needs. Not trends.

Both companies are founder-led. Both are operating in highly regulated industries with high barriers to entry. Both are building defensible brands. And both are showing operational progress with improving financials, not just buzzwords.

Most importantly, both offer the kind of asymmetric upside I built FJ Research to find.

Part 4: What FJ Research Stands For

I started FJ Research not to be loud, but to be clear. Not to be trendy, but to be useful. This is not a content farm. It is a research project. A living, breathing, thinking investment operation focused on ultra-concentrated, asymmetric opportunities.

I do not publish to fill space. I publish when something is worth saying. When I buy, I tell you. When I sell, I tell you. There is no theory without skin in the game.

FJ Research is built on one simple promise: increase value per dollar spent. That is what I believe Hims and Oscar are trying to do for their customers. And that is exactly what I am trying to do here.

We go deep when others go wide. We focus when others scatter. We invest with intent, not imitation.

This report is for everyone. But I hope that if you are a free subscriber, you see that what you are getting is not thin content. It is deep conviction. It is full transparency. And it is exactly the kind of analysis most investors never take the time to do.

Final Thought

Yes, both companies have risk. Yes, both are still in early stages. But when I zoom out and ask myself the core question—what are the odds this works, and how big could it get—I like the math.

In a world of overpriced stories and overhyped AI stocks, I believe Hims and Oscar are still undervalued in both price and imagination.

And that is exactly where I want to be.