Transcripts
Oscar Health, Inc.'s management answers for the business every quarter. These are the exchanges that explain it best — verbatim, from the call transcripts preserved in Sources. Each link opens the full transcript at that page in a new tab.
Q1 2026 Earnings Call — Q1 FY2026
The first quarter after the subsidy cliff, and the clearest current account of how risk adjustment, churn and the new marketplace business work. · Open the full transcript →
Why a seasonally light claims quarter mechanically inflates the risk adjustment accrual — the offset that drives Oscar's MLR.
Scott Blackley (Chief Financial Officer): I want to spend a moment on risk adjustment. Medical claims were seasonally low in the first quarter, and as a result, we recorded a higher risk adjustment accrual. It is early in the year, but we are encouraged by the data we are seeing on overall market contraction and market morbidity. Our claims experience, coupled with third-party data on both new and renewing members, points to market morbidity tracking in line to favorable to our pricing expectations. We continue to expect risk adjustment as a percentage of direct premiums to be approximately 20% in 2026 as new members engage with their benefits and members meet their annual deductibles.
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The 200,000 members lost between February and April were mostly never-payers, so they brought almost no claims with them.
Jessica Tassan (Piper Sandler); Scott Blackley (Chief Financial Officer): I guess my first one is just can you describe the first quarter behavior of the 200,000 or so members who fell off between 1Q and April 1? I'm curious if they were pulling utilization forward into the base period or if they just kind of didn't utilize—were they not aware they had coverage? And then can you just describe the accounting for any expenses incurred by that population in your first quarter results? […] So I would say that for members who churned off, there was nothing unusual about any of the utilization patterns that we experienced in the first quarter. And those members, in general, the biggest portion of the drop-off really are people that never made a payment. And so we would not expect to see a significant amount of utilization for people that aren't paying. And once that person goes into a delinquent status, we no longer pay claims—you have to pay in advance in order to be covered. And so once you go into delinquency, we wouldn't expect to cover any claims that might be incurred. So really, everything that we saw in terms of member transition going from 3.4 million to 3.2 million and then starting the second quarter with 3 million members proceeded exactly as we expected.
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Operating leverage is real — but 9% to 10% of premium is a fixed toll for being in the market at all.
John Ransom (Raymond James); Scott Blackley (Chief Financial Officer); Mark Bertolini (Chief Executive Officer): Just wanted to ask a question about SG&A. So your revenue was suppressed by almost 400 basis points by your risk adjustment versus the 20% guide, but your SG&A was 15.2%. Why would SG&A go up if presumably you're going to get a revenue lift for the rest of the year with a lower risk adjustment hit to revenue? […] I appreciate the question. We saw obviously strong revenue growth—revenue growing at 53% based on the headline numbers, higher than that if you normalize for the risk adjustment. SG&A grew at 46% in terms of SG&A dollars. So we are clearly seeing leverage coming through. I would say the first quarter SG&A ratio is likely to be the lowest for us during the course of the year. There's a little bit of a dynamic as we grow membership and have some open positions at the beginning of the year. There's a natural flow as we normalize the busines for the higher membership. So we'll see that kind of growth throughout the quarter. I woul think that from here, we'll probably see the SG&A ratio moving sideways to slightly up. The fourth quarter tends to be a little bit higher as we start to pick up expenses associated with open enrollment efforts. So I continue to think that there's a lot of opportunity to continue to drive performance and improvements in SG&A even at the low levels that we achieved in Q1. […] And I'd add, John, that taxes and fees are pretty much fixed for us based on the level of membership. It's 9% to 10%. So we're looking at the variable piece that we can manage versus that fixed piece, which is essentially a tax for being in the game.
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A rare walk through the reserving judgement behind one quarter of prior-period development, adverse states included.
Jonathan Young (UBS); Scott Blackley (Chief Financial Officer): Just going back to the risk adjustment again. Would you say the risk adjustment was more a function of the claims data that you're seeing so far? And to be sure, there's no sweep or cleanup related to 2025 accruals within that? And then alongside that, did the Wakely data influence how you came to the 24% figure? […] Take those two things separately. The 24% risk adjustment level is explicitly being driven by our claims experience. Our risk adjustment reserves are still based on the market morbidity assumptions that we went into pricing with and that we set our guidance with. We have not made any adjustments for some of the favorability that we see in the Wakely market morbidity report, so again, that could be a tailwind, but we're waiting to see more signals before we lean into that. On prior period development (PPD), in the last weekly report we received for 2025, we did see a couple of states that had adverse development totaling about $85 million. We reflected that in the quarter. We did have some other states with positive developments, which we chose not to recognize and instead wait for the final report. So we feel like we balanced the risk in that area. We also had favorable claims run out to a significant degree of $150 million. Net-net, our prior period development was favorable $68 million in the quarter. When I look at the combination of those factors, favorable prior period development is helpful, and we used those risk levels and reserve levels in building our pricing for 2026. We think those tailwinds will transition beneficially over the year.
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The economics of the new Lucie marketplace: higher margin per dollar than an insured member, and no risk capital behind it.
Olivia Miles (Baird); Mark Bertolini (Chief Executive Officer); Scott Blackley (Chief Financial Officer): I'll give some headlines now and go into more depth at Investor Day in September. As we talk to employers around the country, including increasingly larger employers interested in ICHRA solutions, they care a lot about networks. While an individual shopper wants to select their network, we're inviting competitors to the platform because an individual can select among different plans. That matters because you're converting an entire employer. On the economics, converting to an employer solution means you have to meet other benefit solutions. We have companies like Allstate Health and Aflac and Guardian joining our platform to provide ancillary products. More importantly, the margin from a dollar standpoint for these employer relationships is higher than an insured ACA member and it's unregulated in that it doesn't require risk capital. It's another margin opportunity to grow both top and bottom line over time. We're excited about the model and are assembling it, and having many partners on the platform allows us to share networks and offer narrow network rates that are very competitive given combined purchasing power. We'll provide more detail in September. […] Any of the costs to stand up that business are included in our guidance. For this year, we would expect a modest effect, but we're excited about the prospects of building a fast growing, high-margin business.
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How Oscar took share in the 2026 enrollment: brokers pre-loaded with member lists and mapped replacement plans.
Raj Kumar (Stephens); Mark Bertolini (Chief Executive Officer): I'd explain that by distribution. It's hard to know exactly where all new members came from, but we did pick up some auto-assigned members from a competitor that left the marketplace. When we did our Investor Day two years ago, we assumed there would be no enhanced subsidy extension and built our plan accordingly. That allowed us to prepare products that would mitigate cost increases for members, and we built tools that allow brokers to set aside what they needed to retain members. For brokers, it's about maximizing capacity to sell and retain. We gave them products and lists of members and product recommendations. Many competitors were stuck between expectation of enhanced subsidies or not and didn't make the plays we made on product. Brokers, seeing our solutions, brought members to us. Our enrollment growth was almost a straight line up over the first three to four weeks when enrollment opened because our brokers were ready, had already talked to clients using our technology, and were able to get them signed up efficiently.
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Metal mix is not what drives risk transfer — the formula adjusts for it. Total utilization is what matters.
Craig Jones (Bank of America); Scott Blackley (Chief Financial Officer): So I think your member mix, when you think about the Bronze members, I think it went from a little below average in 2025 to now a little above average in 2026 versus the market. With that mix shift toward Bronze versus average, how does that impact your risk adjustment payable year-over-year? […] Our book is relatively balanced: Bronze is our largest category, Silver close second, Gold a significant portion as well. The risk adjustment formula is intended to be neutral across metal levels: coefficients in the formula adjust for the expected claims and condition values of different metal tiers. So risk adjustment isn't driven entirely by metal mix. What's more important is overall utilization across metals. We tend to attract relatively healthier members given the products and markets we're in—urban areas that skew healthier on average. We do think you see healthier members in Bronze than in Silver, for example, but across all metals we expect strong margin performance and view risk adjustment as more driven by overall utilization than any one metal.
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Q4 and Full Year 2025 Earnings Call — Q4 FY2025
The reset-year post-mortem and the 2026 rebuild: how the book was repriced, what growth costs in capital, and what management still could not predict. · Open the full transcript →
The 2026 rebuild in one passage — price to the high end of expected contraction, refile rates across 99% of the book.
Scott Blackley (Chief Financial Officer): Our disciplined pricing assumed and expected market contraction at the high end of our previously communicated 20% to 30% range driven by the expiration of enhanced premium tax credits and CMS program integrity initiatives. We also refiled rates in states covering approximately 99% of our membership to reflect the higher market morbidity in 2025. Together, these actions position us to profitably drive share growth. For 2026, we expect total revenues to be in the range of $18.7 billion to $19 billion, an increase of 61% year-over-year at the midpoint, driven by another year of above market growth during open enrollment, solid retention, and rate increases. While our weighted average rate increase for 2026 was approximately 28%, the increase on a per member per month basis is lower, reflecting shifts in member age and metal mix.
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The rule of thumb that governs how fast Oscar can grow: roughly $50 million of capital per $1 billion of premium.
Scott Blackley (Chief Financial Officer): To help frame our capital position in the context of our growth outlook, I want to spend a moment on regulatory capital requirements. While individual states vary, a useful rule of thumb is that for every $1 billion of premiums, we are required to hold approximately $50 million of capital, which reflects roughly 55% quota share reinsurance ceding percentage for 2026.
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The hardest question on the call — who pays a first premium and then quits? — answered with candid uncertainty.
John Ransom (Raymond James); Mark Bertolini (Chief Executive Officer); Scott Blackley (Chief Financial Officer): I have a basic question that might not reflect well on my intelligence. I understand passive enrollment, but you need to pay the first premium to be covered. So, what type of member gets passively renewed, pays the first premium, and then chooses to drop off? […] That is the key question this year in comparison to previous years. Typically, once customers begin paying a premium, they remain with us unless an event occurs that makes them no longer need our coverage. However, in the current situation, as they assess the out-of-pocket expenses related to their plans, they may realize that it's too costly and unaffordable. An important change is that most Americans now view healthcare as the largest expense in their household budgets, even more significant than their mortgages. This has led many customers to fear losing their homes or facing bankruptcy without coverage. The pivotal question is what happens if they cannot afford the deductible and how we will address that issue. We're examining whether this situation will drive enrollment or if people will remain enrolled out of fear of losing their homes or facing financial hardship. We're uncertain, so we are cautious about predicting the degree of disenrollment that may happen as a result. […] John, just to add one more dimension there. When you look at our expectation and what we'r seeing on payment rates, if you're going from having an out-of-pocket premium that you wer paying in 2025 to having an out-of-pocket premium that you're paying to '26. And you have actively enrolled and even passively enrolled. We're seeing relatively strong payment rates in those categories. It's really the population where you're going from a $0 plan to something that you've got to pay out of pocket. So you've either lost your subsidy or you've transitioned from one plan to another. That's where we expect to see really high nonpayment rates. And the way the whole process works, you may not make your first payment in January, but you don't ultimately churn off until the end of the quarter because you are in a grace period until then.
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The metal shift quantified — silver roughly halved, gold up several-fold — and why premium per member lags the headline rate increase.
Stephen Baxter (Wells Fargo); Mark Bertolini (Chief Executive Officer); Scott Blackley (Chief Financial Officer): Sure. For Bronze, the percentages for the past two years were around 25% and 26%, and now they are at 39%. Silver has remained steady at 71% over the last two years, and this year it’s at 36%. Gold, which was in the low single digits at 3% or 4% for the last two years, has now risen to 25%. There are fairly significant changes. The bronze and gold plans we offered were $0 with benefits that are not very rich. […] Stephen, the other thing I would just mention is that the characteristics of the membership are important to modeling your revenue. So the fact that we're seeing a year younger membership has an impact on PMPM revenue. So you need to factor that in. That's one of the reasons why I discussed that in the call is to help with your ability to project revenue with that information.
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The CFO names risk adjustment the hardest estimate he makes each quarter, because no single carrier can see the market.
Olivia Miles (Baird); Scott Blackley (Chief Financial Officer): Because exchange marketplace risk adjustment is net neutral, creating a reliance on other plans in our markets, the lack of visibility any one plan has into the rest of the market makes risk adjustment mechanics difficult in our view. Looking to 2026 and beyond, you mentioned the potential Wakely industry report in 1Q, whether it's through this potential Wakely report or other efforts, can you share how you're getting more insight into the rest of the market as well as your thoughts on what can be done to make risk adjustment more transparent and less volatile in the future? Is there any potential reform you think could be done to improve risk adjustment? […] Thank you for the question, Olivia. Estimating risk adjustment is indeed the most challenging task we face each quarter, as it involves projecting our own performance as well as market trends. While we are confident in our ability to forecast our own book's performance, we often encounter surprises due to unexpected market movements. I am hopeful that by collaborating with Wakeley, which many of us in the industry are using as a key service provider, we can gain more timely insights into the market. This is crucial for improving our projections. We are making progress in this area, and while we may not achieve complete clarity in the first report, I believe that with support from various industry players, we can enhance visibility on these estimates over time.
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Where ICHRA is meant to lead: a second revenue line from converting employers to defined contribution, without risk capital.
Mark Bertolini (Chief Executive Officer): From a micro perspective, we are focusing not only on products to capture membership within the insurance company, but we've also developed the front end of the business to engage with employers and convert them. There are significant revenue opportunities, particularly in higher-margin areas that do not require risk capital, by assisting employers to transition employees into defined contribution plans. Once employees are in defined contribution, we can collaborate with brokers to direct them to suitable plans, whether they are Oscar plans or not. Over time, you will see us reporting two types of revenue: one from the conversion of employers to defined contribution and the associated brokerage work, and the other from membership within our health plan. The ICRA opportunity is much broader than just membership, though our membership doubled this year. Due to recent events in the individual market regarding rates, some employers have been hesitant to participate at this time. We need to demonstrate that we can stabilize the marketplace and attract more members. This outlines the current situation regarding ICRA.
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Q3 2025 Earnings Call — Q3 FY2025
The pricing-cycle call: a 28% weighted average rate increase, where it left Oscar competitively, and the plainest statement of what it actually underwrites. · Open the full transcript →
Who the individual-market customer is, and what the enhanced subsidy is worth to them in dollars per month.
Mark Bertolini (Chief Executive Officer): The individual market is the only source of affordable health coverage for 22 million Americans who power our economy. The majority of members are from the small businesses, service, and farming sectors, which together generate nearly half of U.S. GDP. These hardworking people do not have access to employer coverage and rely on enhanced premium tax credits to fill the gap. For example, the average farmer making $60,000 a year now pays $75 a month for health insurance compared to $300 a month before the enhanced premium tax credits. That $225 is the difference between paying for health care or paying the bills. Limiting access to affordable coverage in the individual market undermines Main Street and rural America.
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How the 2026 price was stacked, and the claim that underlying MLR ex-morbidity was still near the original guide.
Jessica Tassan (Piper Sandler); Mark Bertolini (Chief Executive Officer); Scott Blackley (Chief Financial Officer): Got it. And then just maybe do you have any early thoughts on how Oscar's morbidity in 2026 might evolve relative to the market? Or maybe just anything in your pricing or product design or commercial strategy that you'd call out that would give you maybe more control over your morbidity relative to the market? […] Well, on the first point, we have priced as if premium tax credits are gone. The '25 impact of morbidity, '26 potential impacts on morbidity given the shrinkage of the market, which we think is anywhere between 20% and 30%. 20% is the lower end without a number of these things, 30% being the highest, but that has an impact on our morbidity and program integrity efforts as if they were implemented. And we stack those in our pricing. We did not look for any duplication. And so we believe we're well-covered depending on whatever happens next year relative to the morbidity in the market. Anything to add on that, Scott? […] No. And I think it's too early to say much about '26 morbidity. I think that when I look at the core performance of the company this year and I strip out kind of what happened with the impacts of market morbidity shifting higher this year, we're really pleased with the underlying trends, right? We're seeing an MLR when I strip out kind of the impact of what was happening with market morbidity, the underlying MLR is pretty consistent with the guidance that we gave at the beginning of the year in the low 81% range. And so when I step back from that and look at the dynamics in the company, our ability to influence what's going on with our medical expenses, we feel like we're really well positioned to continue to navigate this marketplace. And as Mark talked about, we feel like our pricing captures the risk. We feel like the company is getting ever better at delivering our services. So we feel really well positioned for '26.
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Competitive position made concrete: lowest or second-lowest silver in 15% of markets in 2025, 30% in 2026.
Stephen Baxter (Wells Fargo); Scott Blackley (Chief Financial Officer): I guess the first question would just be trying to dive into the competitive dynamics a little bit more for next year. It seems like maybe some of your large peers have rate increases that are at or maybe above your 28%, but then maybe some of the not-for-profits could be a little bit lower. Just to kind of boil it down, like is there any kind of metric you have where you kind of have an analysis of what percentage of your markets you're going to be in a low-cost position, either just in the silver market or maybe across all your markets and how that compares to 2025? […] Steve, so when we think about competitive position relative to last year, first of all, all these increases in prices, you've got to start with last year's price position where last year, we were only, I think, in 15% of our markets, we were the lowest or second lowest silver price plan. This year, that's moving up to 30%. We still think that, that's less than some of the other large competitors that we see in the marketplace. So while we're competitive, we're not as competitive as some others. When I think about that relative price position, we think we can grab share in several of these markets. We think that the average price increase nationally is around 26% based on research by the Kaiser Family Foundation. So we think that we've done a nice job of putting our pricing into the market in a way which is competitive, allows us to grow margin, but also is disciplined and allows us to protect ourselves as well.
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Asked why grabbing share into a shock is right, Bertolini explains Oscar underwrites the network, not the member.
Andrew Mok (Barclays); Mark Bertolini (Chief Executive Officer); Scott Blackley (Chief Financial Officer): You mentioned that your competitive pricing was in line with expectations and that you expect to take market share next year. Can you help us understand that strategy a bit more? Why is taking market share the right strategy in 2026? And do you think that is more likely or less likely to hurt from an adverse selection standpoint? […] Taking market share involves capitalizing on competitors who have priced themselves out of the market. There is an important distinction between the group market and the individual market that I hope is clear. Due to the risk adjustment system and its mechanics, underwriting members in the network is nearly impossible or simply not worth the effort. Our focus is on the provider network itself and how we underwrite that network. Some of our competitors, who have set much higher prices or exited the market, are relying on commercial networks at those elevated prices, while we have consistently utilized narrower networks. In the individual buying process, consumers have the freedom to choose a network and plan design that best suits their needs, instead of receiving a costly broad network plan from their employer that may not adequately meet anyone's specific requirements. Consequently, we see a chance to capture market share from those pricing themselves 30% to 40% higher than us, integrating those consumers into our networks and underwriting strategies to enhance our effectiveness. Our pricing strategy reflects the actual costs of the network, as we benefit from the risk adjustment aspect. […] I want to reinforce what Mark mentioned earlier. We see clear indications of a very rational marketplace. We don't believe anyone has attempted a land grab by significantly lowering prices. We think we're positioned appropriately within the market. Therefore, from an adverse selection standpoint, that isn't a major concern for us.
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On the marketplace-fraud debate: Oscar's own dual-eligible exposure came in at low double-digit thousands, not millions.
Mark Bertolini (Chief Executive Officer): And one more thing I'll add is that we are very supportive of the program integrity efforts and the things that happened this year in program integrity had less and less impact on us as an organization than others because we spend a lot of time validating as much as we can the membership that comes into our plan. And if we see what we see as potential fraud, we sideline those brokers and those members and evaluate whether or not it's appropriate to bring them on board. So given that, when we received our dual eligible information, it was low double-digit thousands, very low double-digit thousands versus the headline report put out by certain people in the press of 2.4 million people. And so the obvious impact to us was a lot less than we thought it was going to be because we had done the homework upfront. We think this is a key part of making sure risk adjustment works well is that everybody uses these same tools to make sure that the people we're bringing on board belong on board, not because somebody else was able to get commission.
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Q2 2025 Earnings Call — Q2 FY2025
The quarter the thesis was tested: a $316 million risk adjustment true-up, a swing to a full-year loss, and the first defence of the balance sheet. · Open the full transcript →
The diagnosis of the shock: sicker entrants from Medicaid redeterminations, healthy low-utilizers leaving on program integrity.
Mark Bertolini (Chief Executive Officer): Let's start with recent market dynamics. The latest risk adjustment data from Wakeley, which includes claims data through April 30, indicates a meaningful market-wide increase in morbidity in 2025. This morbidity shift is impacting all carriers, increasing by mid- to high single digits across Oscar's markets. We attribute market morbidity increases to consumers entering the individual market for Medicaid redeterminations and healthier, low-utilizing consumers leaving the market in part due to program integrity efforts.
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Where the marketplace strategy starts: a brokerage, a CMS-approved enrollment platform and the first branded ICHRA plan.
Mark Bertolini (Chief Executive Officer): We are announcing several strategic steps to power ICHRA and further diversify our business. We acquired important early-stage assets with capabilities to help us build the consumer marketplace of the future. These assets include an individual market brokerage, a direct enrollment technology platform, and a consumer education website, healthinsurance.org. We are also launching a new ICHRA product with a well-known consumer brand in the Midwest, Hy-Vee, Inc. Our new ICHRA assets will give us capabilities to meet and exceed the expectations of consumers and employers. The technology platform, INSXCloud, is a fundamental asset of the marketplace as it is one of only 11 CMS-approved solutions, creating a digital storefront for all health products. The brokerage, IHC Specialty Benefits, offers individual medical and supplemental health products across carriers in all 50 states. The brokerage will allow us to offer consumers the supplemental health products they typically buy with health insurance. While the acquisition will not have a meaningful impact on our near-term results, we believe these capabilities are important building blocks of our long-term strategy. Hy-Vee is one of the most trusted brands in the nation with 570 grocery and convenience stores and 270 retail pharmacies. Hy-Vee and Oscar are introducing a new Hy-Vee Health branded ICHRA plan. We are initially launching this product for employers and employees in Des Moines, Iowa, for plan year 2026, subject to state approval. The plan offers superior benefits, including concierge medicine at an affordable fixed price through Hy-Vee Health Exemplar Care clinics. Our partnership is an example of the innovation we intend to drive with other employers, provider systems, and consumer brands in the United States.
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Restating the first half on a consistent accrual shows how much of the damage was timing rather than claims.
Scott Blackley (Chief Financial Officer): The second quarter MLR was impacted by an incremental $316 million increase to our risk adjustment payable for 2025, driven by higher ACA marketplace morbidity that increased by more than our prior estimates. We recognized the year-to-date impact of the risk adjustment change in the second quarter. Applying the revised risk transfer accrual consistently across the first half would have resulted in an MLR of 80.7% in the first quarter and 85.1% MLR in the second quarter.
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Can the balance sheet absorb the loss? The answer separates subsidiary excess capital from parent cash.
Joshua Raskin (Nephron Research); Scott Blackley (Chief Financial Officer): Yes. Well, Josh, let me start with your question about cash. So as we talked about in the prepared remarks, we feel like we've got a very strong capital position at this point, $5.4 billion of total cash and investments, $579 million in excess capital and $205 million of cash at the parent. The vast majority of the cash and investments are in our insurance subsidiaries, which more than covers the risk adjustment payable as well as our required capital, and that's where you end up with the excess capital. We think that the bulk of the remaining losses that we're forecasting for this year are going to be absorbed by that excess capital position. And so you saw that our excess capital decreased by about $300 million from last quarter, and that was the subsidiaries absorbing the losses in the second quarter. And with respect to parent cash then, I do think that parent cash will decline in the back half of the year, largely due to us making some additional capital contribution to the insurance subsidiaries where we don't have as much excess capital. But we feel confident that parent cash is going to be at levels that remain more than sufficient to cover the cost of the holding company and the things that we need. So we feel really good about where our capital position was going into this change in market morbidity and are confident that we've got the access to funding that we need to continue to run this company.
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Pressed on the 2027 targets in the middle of the shock, Bertolini declines to withdraw them.
Joshua Raskin (Nephron Research); Mark Bertolini (Chief Executive Officer): How should we be thinking about your previous long-term targets for 2027, specifically the 5% margin and the $2.25 of EPS? […] Well, we're not changing our longer-term forecast at this moment, but 5% is still our target. We need to get through this pricing season, see how the membership is going to develop as we then look at '26, '27, and '28, we'll revise as necessary. But at this point in time, we're not changing our point of view.
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Q4 and Full Year 2024 Earnings Call — Q4 FY2024
The high-water mark: first profitable year, the 2027 margin target, and the definitions — effectuated versus paid, price versus trend — a reader needs to follow everything after. · Open the full transcript →
The first profitable year, and the long-term frame every quarter since has been measured against.
Mark Bertolini (Chief Executive Officer): This afternoon Oscar reported the strongest year of financial performance in our history. Our results were driven by record high membership, bottom line profitability, and continued product innovation. Oscar reached two significant milestones in 2024. First, we reported total company adjusted EBITDA profitability growing to $199 million, a $245 million year-over-year improvement. Second, we achieved net income profitability. Net income was $25 million, a $296 million increase over the prior year. Our improved bottom line was driven by strong performance in all parts of our business. We grew total revenue by 57% year-over-year to $9.2 billion. Our medical loss ratio was stable year-over-year increasing 10 basis points to 81.7%. We also drove greater efficiency in our business as our SG&A ratio improved more than 500 basis points year-over year to 19.1% through operating leverage and disciplined expense management. Our 2024 performance reflects the strength of our strategic plan and our ability to deliver long-term profitable growth. Overall, 2024 was an exceptional year for Oscar. Our results reflect our growing maturity as a company and we are committed to delivering at least 20% revenue CAGR and a 5% operating margin by 2027.
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A year before the shock, a Q4 MLR miss is already attributed to market risk scores rather than utilization.
Josh Raskin (Nephron Research); Mark Bertolini (Chief Executive Officer); Scott Blackley (Chief Financial Officer): Just I’ll start with one point that I think is really important to understand. Our utilization came in as expected actually slightly better. So what you’re seeing in the change of the MLR is not worsening utilization, it’s the relative risk of our book versus others and the impact of risk adjustment settlements at the end of the year. […] So, I think that on the MLR, I’ll start there. So for MLR, as Mark just talked about, what we have seen is utilization actually came in slightly favorable to what we would have anticipated. And we saw risk or development proceeding as we would have anticipated based on the claims that we’ve had. And when we got the fourth quarter risk report from our friends at Wakely, we observed that in several markets there had been an increase in the risk scores of the market versus what we were expecting. So we took that information and updated our accruals for that. So that is really what drove the pressure in MLR. It also, as a result, when you increase your risk transfer, it also drove a shortfall in revenue. So it was the same thing driving both those effects. I would also point out that we had favorable prior period development in the fourth quarter, which offset some of the pressure from the risk adjustment true-up. And those same drivers had an effect on the full year MLR, but to a lesser degree.
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How margin is constructed: price the trend, then earn the spread with affordability initiatives.
Jessica Tassan (Piper Sandler); Scott Blackley (Chief Financial Officer): Yes. Well, I would say that, first off, we always take an approach to pricing, which is we want to have a disciplined pricing strategy that balances our desire to both grow the book and to create margin for us, so that's kind of thing one. When we think about the different pricing for each of the metal tiers, we do that primarily with the view of we want all of our book to perform in a way that creates margin for the business, so that's probably the most important lens. So, we build up what do we think the trend is going to be and then we create margin by basically having affordability initiatives that allow us to experience an MLR that is below the or experience an increase in medical costs that is below the trend, so that's kind of what we do there.
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What a $0-premium member is actually buying — catastrophic protection, not care.
Mark Bertolini (Chief Executive Officer): What we have found in a number of our zero premium plans, there are a large number of members that don't use care at all that significantly. And that's largely as an insurance policy for them in case there's an accident or someone gets ill; they don't lose the house. So it's a very different purchasing decision. They're buying a plan at zero premium that gives them some coverage for catastrophic events.
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More calls
Q1 2025 Earnings Call — Q1 FY2025 · 8 pages · The last clean quarter before the reset, and the one place management decomposes the record 15.8% SG&A ratio into fixed leverage, variable savings and exchange fees. · Open →
Q3 2024 Earnings Call — Q3 FY2024 · 8 pages · The 2025 pricing cycle in a calm market — roughly a 6% rate increase against a 7% market — the baseline against which the 28% increase for 2026 should be read. · Open →
Q2 2024 Earnings Call — Q2 FY2024 · 7 pages · The first quarter reported against the June 2024 Investor Day plan, including the SEP-membership economics that carried 2024 growth into 2025. · Open →
Q1 2024 Earnings Call — Q1 FY2024 · 7 pages · The pruning that made Oscar a pure individual-market bet: exits from Medicare Advantage and the Cigna+Oscar small-group venture, with ICHRA named as the replacement. · Open →
Q4 and Full Year 2023 Earnings Call — Q4 FY2023 · 9 pages · Bertolini's three-priority turnaround framework and the 2023 insurance-company EBITDA milestone — the starting point of the profitability story. · Open →
Q3 2023 Earnings Call — Q3 FY2023 · 7 pages · The path to 2024 total-company profitability set out mid-turnaround, plus the county-level expansion logic behind the 2024 growth. · Open →
Q2 2023 Earnings Call — Q2 FY2023 · 11 pages · Bertolini four months into the job, with Sid Sankaran still CFO, giving his first read on what he found inside the business. · Open →