Oscar Health Announces Results for First Quarter 2024

Rhea-AI Summary

Oscar Health, Inc. announced its financial results for the first quarter of 2024, reporting total revenue of $2.1 billion, a 46% increase year-over-year. The company achieved positive net income of $177.4 million, with diluted earnings per share of $0.62. Key metrics like Medical Loss Ratio and SG&A Expense Ratio showed significant improvements. Adjusted EBITDA improved by $168.2 million year-over-year. The company reaffirmed its full-year 2024 outlook across all metrics.

Positive

• Total revenue of $2.1 billion, a 46% increase year-over-year

• Positive net income of $177.4 million with diluted earnings per share of $0.62

• Improvement in key metrics like Medical Loss Ratio and SG&A Expense Ratio

• Significant improvement in Adjusted EBITDA by $168.2 million year-over-year

• Reaffirmation of full-year 2024 outlook across all metrics

Negative

• None.

Insights

Financial Analyst

Oscar Health's recent report indicating a 46% increase in Total Revenue coupled with significant improvements in Medical Loss Ratio (MLR) and SG&A Expense Ratio are indicators of efficient cost management and strong operational performance. The 210 basis points improvement in MLR, which stands at 74.2%, suggests that Oscar has effectively managed healthcare claims and costs relative to premiums earned. Additionally, the 870 basis points improvement in SG&A Expense Ratio to 18.4% reflects stringent expense control and suggests a scalable business model as the company grows. The reported Net Income of $177.4 million, an improvement by $217.1 million YoY and an Adjusted EBITDA of $219.3 million, up by $168.2 million YoY, are particularly promising, showcasing not only a turnaround from the previous year's loss but also setting a precedent for potential profitability in the full year 2024. The anticipated details on the long-term strategic plan during the upcoming Investor Day in June may further catalyze interest from the investment community.

Healthcare Industry Analyst

The membership growth to 1.4 million, a substantial increase from the previous year's 1 million, suggests Oscar Health's successful market penetration. This growth is significant considering the competitive landscape of the healthcare insurance sector. However, investors should monitor how Oscar retains and manages this growing membership base, ensuring that the quality of service and satisfaction does not decline, potentially affecting the MLR negatively. It is also essential to keep an eye on the Medicare Advantage segment, which currently reports no members versus last year, to understand how this will impact future revenue streams and cost structures.

Market Research Analyst

The financial report from Oscar Health demonstrates a strong start to 2024, which may have positive implications for investor sentiment. The reaffirmation of the company's full-year outlook suggests confidence in their business model and strategic initiatives. However, as investor attention often shifts rapidly, it's vital to consider whether Oscar can maintain this trajectory amidst regulatory changes, market volatility and competitive pressures. Furthermore, the emphasis on their upcoming Investor Day suggests that Oscar may reveal additional plans that could shape the company's direction and investor perspectives. Watching peer company responses and broader market trends will be key in contextualizing Oscar's performance within the sector.

• For the quarter ended March 31, 2024:
  • Total Revenue of $2.1 billion, a 46% increase YoY
  • Medical Loss Ratio of 74.2%, a 210 bps improvement YoY
  • SG&A Expense Ratio of 18.4%, an 870 bps improvement YoY
  • Net Income attributable to Oscar of $177.4 million, or $0.62 of diluted earnings per share, a $217.1 million improvement YoY
  • Adjusted EBITDA of $219.3 million, a $168.2 million improvement YoY

NEW YORK--(BUSINESS WIRE)-- Oscar Health, Inc. (“Oscar” or the “Company”) (NYSE: OSCR), a leading healthcare technology company, today announced its financial results for the first quarter ended March 31, 2024.

“Oscar reported strong first quarter results, showing year-over-year improvement across all core metrics and achieving positive net income,” said Mark Bertolini, CEO of Oscar Health. “Our performance lays a solid foundation for 2024, and gives us a clear line of sight into Total Company Adjusted EBITDA profitability this year. We remain on a path to sustainable growth and look forward to sharing details on our long-term strategic plan at our Investor Day in June.”

Total Revenue was $2.1 billion in the quarter, up 46% year-over-year (“YoY”), driven primarily by higher membership, rate increases, and lower risk adjustment as a percentage of premiums.

The Medical Loss Ratio improved 210 bps YoY to 74.2%, due to our disciplined pricing strategy and total cost of care initiatives. The SG&A Expense Ratio significantly improved 870 bps YoY to 18.4%, driven by lower SG&A expenses, as well as variable cost efficiencies, improved fixed cost leverage, and lower risk adjustment as a percentage of premiums.

Adjusted EBITDA of $219.3 million significantly improved by $168.2 million YoY, and Net income attributable to Oscar of $177.4 million also significantly improved by $217.1 million YoY.

Oscar is reaffirming its full year 2024 outlook across all metrics as provided in its financial results press release dated February 7, 2024.

Financial Results Summary
	Three Months Ended March 31,
(in thousands)	2024			2023
Premium	$	2,093,682		$	1,428,626
Total revenue	$	2,142,305		$	1,469,685
Total operating expenses	$	1,956,747		$	1,495,050
Net income (loss) attributable to Oscar Health, Inc.	$	177,368		$	(39,772	)

Key Metrics and Non-GAAP Financial Metrics
	Three Months Ended March 31,
(in thousands, except percentages)	2024				2023
Total revenue	$	2,142,305			$	1,469,685
Medical Loss Ratio (MLR)		74.2	%			76.3	%
SG&A Expense Ratio		18.4	%			27.1	%
Adjusted EBITDA(1)	$	219,314			$	51,068

(1)

Adjusted EBITDA is a non-GAAP measure. See “Key Operating and Non-GAAP Financial Metrics - Adjusted EBITDA” in this release for a reconciliation to net loss, the most directly comparable GAAP measure, and for information regarding Oscar’s use of Adjusted EBITDA.

	As of March 31,
Membership by Offering	2024		2023
Individual and Small Group	1,386,980		948,431
Medicare Advantage	—		1,793
Cigna + Oscar (1)	61,428		67,108
Total Members (2)	1,448,408		1,017,332

(1)		Represents total membership for Oscar’s co-branded partnership with Cigna.
(2)		A member covered under more than one of our health plans counts as a single member for the purposes of this metric.

Quarterly Conference Call Details

Oscar will host a conference call to discuss the financial results today, May 7, 2024, at 8:00 a.m. (ET). A live audio webcast will be available via the Investor Relations page of Oscar’s website at ir.hioscar.com. A replay of the webcast will be available for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

Non-GAAP Financial Information

This release presents Adjusted EBITDA, a non-GAAP financial metric, which is provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A reconciliation of historical non-GAAP financial information to the most directly comparable GAAP financial measure is provided in the accompanying tables found at the end of this release. For more information regarding Adjusted EBITDA, please see “Key Operating and Non-GAAP Financial Metrics” below.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained herein are forward-looking statements. These statements include, but are not limited to, statements about our financial outlook and estimates, including Total revenue, Medical Loss Ratio, SG&A Expense Ratio and Adjusted EBITDA and other financial performance metrics, and the related underlying assumptions, our business and financial prospects, and our management’s plans and objectives for future operations, expectations and business strategy. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict and generally beyond our control.

Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: our ability to execute our strategy and manage our growth effectively; our ability to retain and expand our member base; heightened competition in the markets in which we participate; our ability to accurately estimate our incurred medical expenses or effectively manage our medical costs or related administrative costs; our ability to achieve or maintain profitability in the future; changes in federal or state laws or regulations, including changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”) and any regulations enacted thereunder; our ability to comply with ongoing regulatory requirements, including capital reserve and surplus requirements and applicable performance standards; changes or developments in the health insurance markets in the United States, including passage and implementation of a law to create a single-payer or government-run health insurance program; our, or any of our vendors’, ability to comply with laws, regulations, and standards related to the handling of information about individuals or applicable consumer protection laws; our ability to arrange for the delivery of quality care and maintain good relations with the physicians, hospitals, and other providers within and outside our provider networks; unanticipated results of, or changes to, risk adjustment programs; our ability to utilize quota share reinsurance to meet our capital and surplus requirements and protect against downside risk on medical claims; unfavorable or otherwise costly outcomes of lawsuits, audits, investigations, and claims that arise from the extensive laws and regulations to which we are subject; incurrence of data security breaches of our and our partners’ information and technology systems; our ability to detect and prevent material weaknesses or significant control deficiencies in our internal controls over financial reporting or other failure to maintain an effective system of internal controls; adverse publicity or other adverse consequences related to our dual class structure or “controlled company” status; and the other factors set forth under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”), and our other filings with the SEC, including our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, to be filed with the SEC.

You are cautioned not to place undue reliance on any forward-looking statements made in this press release. Any forward-looking statement speaks only as of the date as of which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise.

About Oscar Health

Oscar Health, Inc. (“Oscar”) is the first health insurance company built around a full stack technology platform and a relentless focus on serving its members. At Oscar, our mission is to make a healthier life accessible and affordable for all. Headquartered in New York City, Oscar has been challenging the healthcare system's status quo since our founding in 2012. The company’s member-first philosophy and innovative approach to care has earned us the trust of over 1.4 million members, as of March 31, 2024. We offer Individual & Family and Small Group plans, and +Oscar, our full stack technology platform, to others within the provider and payor space. Our vision is to refactor healthcare to make good care cost less. Refactor is a term used in software engineering that means to improve the design, structure, and implementation of the software, while preserving its functionality. At Oscar, we take this definition a step further. We improve our members’ experience by building trust through deep engagement, personalized guidance, and rapid iteration.

Oscar Health, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
	Three Months Ended March 31,
(in thousands, except per share amounts)	2024			2023
Revenue
Premium	$	2,093,682		$	1,428,626
Investment income		42,989			36,056
Services and other		5,634			5,003
Total revenue		2,142,305			1,469,685
Operating Expenses
Medical		1,554,774			1,091,592
Selling, general, and administrative		394,162			398,519
Depreciation and amortization		7,811			4,939
Total operating expenses		1,956,747			1,495,050
Earnings (loss) from operations		185,558			(25,365	)
Interest expense		5,902			6,136
Other expenses		1,178			6,106
Earnings (loss) before income taxes		178,478			(37,607	)
Income tax expense		996			2,021
Net income (loss)		177,482			(39,628	)
Less: Net income attributable to noncontrolling interests		114			144
Net income (loss) attributable to Oscar Health, Inc.	$	177,368		$	(39,772	)
Earnings (Loss) per Share
Basic	$	0.77		$	(0.18	)
Diluted	$	0.62		$	(0.18	)
Weighted Average Common Shares Outstanding
Basic		231,443			216,913
Diluted		293,796			216,913

Oscar Health, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except share amounts)	March 31, 2024				December 31, 2023
Assets
Current Assets:
Cash and cash equivalents	$	2,230,799			$	1,870,315
Short-term investments		616,134				689,833
Premiums and accounts receivable (net of allowance for credit losses of $30,600 and $31,600)		342,904				201,269
Risk adjustment transfer receivable		62,037				51,925
Reinsurance recoverable		242,935				241,194
Other current assets		8,983				6,564
Total current assets		3,503,792				3,061,100
Property, equipment, and capitalized software, net		61,406				61,930
Long-term investments		736,624				365,309
Restricted deposits		29,814				29,870
Other assets		87,217				83,271
Total assets	$	4,418,853			$	3,601,480
Liabilities and Stockholders' Equity
Current Liabilities:
Benefits payable	$	1,248,347			$	965,986
Risk adjustment transfer payable		1,336,022				1,056,941
Premium deficiency reserve		4,332				5,776
Unearned premiums		65,541				65,918
Accounts payable and other liabilities		303,245				273,367
Reinsurance payable		61,938				61,024
Total current liabilities		3,019,425				2,429,012
Long-term debt		298,972				298,777
Other liabilities		66,169				67,574
Total liabilities		3,384,566				2,795,363
Commitments and contingencies
Stockholders' Equity
Class A common stock ($0.00001 par value; 825,000 thousand shares authorized, 200,497 thousand and 193,875 thousand shares outstanding as of March 31, 2024 and December 31, 2023, respectively)		2				2
Class B common stock ($0.00001 par value; 82,500 thousand shares authorized, 35,514 thousand and 35,514 thousand shares outstanding as of March 31, 2024 and December 31, 2023, respectively)		—				—
Treasury stock (315 thousand shares as of March 31, 2024 and December 31, 2023)		(2,923	)			(2,923	)
Additional paid-in capital		3,736,885				3,682,294
Accumulated deficit		(2,699,347	)			(2,876,715	)
Accumulated other comprehensive income (loss)		(2,594	)			1,309
Total Oscar Health, Inc. stockholders' equity		1,032,023				803,967
Noncontrolling interests		2,264				2,150
Total stockholders' equity		1,034,287				806,117
Total liabilities and stockholders' equity	$	4,418,853			$	3,601,480

Oscar Health, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
	Three Months Ended March 31,
(in thousands)	2024				2023
Cash Flows from Operating Activities:
Net income (loss)	$	177,482			$	(39,628	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred taxes		(79	)			(183	)
Net realized loss on sale of financial instruments		—				43
Depreciation and amortization expense		7,811				4,939
Amortization of debt issuance costs		194				194
Stock-based compensation expense		25,945				71,494
Net accretion of investments		(6,226	)			(7,322	)
Change in provision for credit losses		(1,000	)			8,491
Changes in assets and liabilities:
(Increase) / decrease in:
Premiums and accounts receivable		(140,635	)			21,949
Risk adjustment transfer receivable		(10,112	)			1,740
Reinsurance recoverable		(1,741	)			440,652
Other assets		(6,285	)			(4,526	)
Increase / (decrease) in:
Benefits payable		282,361				16,349
Unearned premiums		(376	)			(5,648	)
Premium deficiency reserve		(1,444	)			(14	)
Accounts payable and other liabilities		28,473				714
Reinsurance payable		914				(387,191	)
Risk adjustment transfer payable		279,081				292,662
Net cash provided by operating activities		634,363				414,715
Cash Flows from Investing Activities:
Purchase of investments		(556,693	)			(202,650	)
Sale of investments		—				15,052
Maturity of investments		261,428				330,486
Purchase of property, equipment and capitalized software		(5,950	)			(7,379	)
Change in restricted deposits		626				—
Net cash (used in) provided by investing activities		(300,589	)			135,509
Cash Flows from Financing Activities:
Proceeds from joint venture contribution		—				471
Proceeds from exercise of stock options		27,309				35
Net cash provided by financing activities		27,309				506
Increase in cash, cash equivalents and restricted cash equivalents		361,083				550,730
Cash, cash equivalents, restricted cash and cash equivalents—beginning of period		1,891,971				1,580,497
Cash, cash equivalents, restricted cash and cash equivalents—end of period		2,253,054				2,131,227
Cash and cash equivalents		2,230,799				2,109,571
Restricted cash and cash equivalents included in restricted deposits		22,255				21,656
Total cash, cash equivalents and restricted cash and cash equivalents	$	2,253,054			$	2,131,227
Supplemental Disclosures:
Interest payments	$	11,118			$	11,319

Key Operating and Non-GAAP Financial Metrics

We regularly review the following key operating and Non-GAAP financial metrics to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions. We believe these operational and financial measures are useful in evaluating our performance, in addition to our financial results prepared in accordance with GAAP.

Members

Members are defined as any individual covered by a health plan that we offer directly or through a co-branded arrangement. We view the number of members enrolled in our health plans as an important metric to help evaluate and estimate revenue and market share. Additionally, the more members we enroll, the more data we have, which allows us to improve the functionality of our platform.

Medical Loss Ratio

Medical Loss Ratio is a metric used to calculate medical expenses as a percentage of net premiums before ceded quota share reinsurance. Medical expenses are the total expenses incurred by members in order to utilize health care services less any member cost sharing. These services include inpatient, outpatient, pharmacy, and physician costs. Medical claims also include fee-for-service claims, pharmacy benefits, capitation payments to providers, provider disputed claims, risk sharing arrangements with certain of our providers, and various other medical-related costs. The impact of the federal risk adjustment program is included in the denominator of our MLR. We believe MLR is an important metric to demonstrate the ratio of our costs to pay for healthcare of our members to the net premium before ceded reinsurance. MLR in our existing products are subject to various federal and state minimum requirements.

	Three Months Ended March 31,
(in thousands, except percentages)	2024				2023
Medical	$	1,554,774			$	1,091,592
Less: Ceded quota share reinsurance claims (1)		(1,055	)			6,435
Net claims before ceded quota share reinsurance (A)	$	1,555,829			$	1,085,157
Premium	$	2,093,682			$	1,428,626
Less: Ceded quota share reinsurance premiums (2)		(2,016	)			6,655
Net premiums before ceded quota share reinsurance (B)	$	2,095,698			$	1,421,971
Medical Loss Ratio (A divided by B)		74.2	%			76.3	%

(1)		Represents prior period development for claims ceded to reinsurers pursuant to quota share treaties, which are accounted for under reinsurance accounting and are in runoff.
(2)		Represents prior period development for premiums ceded to reinsurers pursuant to quota share treaties, which are accounted for under reinsurance accounting and are in runoff.

SG&A Expense Ratio

The SG&A Expense Ratio reflects the Company’s selling, general and administrative ("SG&A") expenses, as a percentage of Total revenue. Selling, general and administrative expenses primarily include wages, benefits, costs of software and hardware, and administrative costs for our corporate and technology functions, the impact of quota share reinsurance, and stock-based compensation. We believe the SG&A Expense Ratio is useful to evaluate our ability to manage our overall selling, general, and administrative cost base.

Adjusted EBITDA

Adjusted EBITDA is defined as Net income (loss) for the Company and its consolidated subsidiaries before interest expense, income tax expense (benefit), and depreciation and amortization, as further adjusted for stock-based compensation, and other items that are considered unusual or not representative of underlying trends of our business, where applicable for the period presented. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA is a non-GAAP measure. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations.

We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate Adjusted EBITDA in the same manner.

By providing this non-GAAP financial measure, together with a reconciliation to the most comparable U.S. GAAP measure, Net income (loss), we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for Net income (loss) or other financial statement data presented in our Condensed Consolidated Financial Statements as indicators of financial performance.

	Three Months Ended March 31,
(in thousands)	2024			2023
Net income (loss)	$	177,482		$	(39,628	)
Interest expense		5,902			6,136
Other expenses		1,178			6,106
Income tax expense		996			2,021
Depreciation and amortization		7,811			4,939
Stock-based compensation(1)		25,945			71,494
Adjusted EBITDA	$	219,314		$	51,068

(1)

Represents non-cash expenses related to equity-based compensation programs, which vary from period to period depending on various factors including the timing, number, and the valuation of awards. The three months ended March 31, 2023 includes a non-recurring charge of $46.3 million related to accelerated stock-based compensation expense recognized as a result of the cancellation of the Founders Awards previously granted to Mario Schlosser and Joshua Kushner.

Appendix

Reinsurance Impact

	Three Months Ended March 31,
(in thousands)	2024				2023
Quota share ceded premiums	$	(4,994	)		$	12,360
Quota share ceded claims		1,055				(6,435	)
Ceding commission, net of deposit accounting impact (1)		(12,172	)			(9,295	)
Experience refund		2,979				(5,705	)
Net quota share impact	$	(13,132	)		$	(9,075	)

(1)

Includes ceding commissions received from reinsurers, net of the impact of deposit accounting of $(12,706) and $(7,759) for the three months ended March 31, 2024 and 2023, respectively.

The Company records Premium revenue net of reinsurance. The following table reconciles total reinsurance premiums ceded and reinsurance premiums assumed, which are included as components of total Premium revenue in the condensed consolidated statement of operations.

	Three Months Ended March 31,
(in thousands)	2024				2023
Direct policy premiums	$	2,310,100			$	1,663,474
Assumed premiums		57,612				55,935
Risk adjustment		(269,398	)			(293,147	)
Premiums before ceded reinsurance		2,098,314				1,426,262
Reinsurance premiums ceded		(4,632	)			2,364
Premium	$	2,093,682			$	1,428,626

The Company records Medical expenses net of reinsurance recoveries. The following table reconciles total Medical expenses to the amount presented in the condensed consolidated statement of operations:

	Three Months Ended March 31,
(in thousands)	2024				2023
Direct claims incurred	$	1,523,646			$	1,048,058
Ceded reinsurance claims		(19,698	)			(3,624	)
Assumed reinsurance claims		50,826				47,158
Medical expenses	$	1,554,774			$	1,091,592

The Company records Selling, general and administrative ("SG&A") expenses net of reinsurance ceding commissions and assumed SG&A expenses. The following table reconciles total Selling, general and administrative expenses to the amount presented in the condensed consolidated statement of operations:

	Three Months Ended March 31,
(in thousands)	2024				2023
Selling, general and administrative expenses, gross	$	394,696			$	396,984
Reinsurance ceding commissions		(534	)			1,535
Selling, general and administrative expenses	$	394,162			$	398,519

The Company classifies Reinsurance recoverable within current assets on its condensed consolidated balance sheets. The composition of the Reinsurance recoverable balance is as follows:

(in thousands)	March 31, 2024			December 31, 2023
Reinsurance premium and claim recoverables	$	235,216		$	224,837
Reinsurance ceding commissions		7,613			7,054
Experience refunds on reinsurance agreements		106			9,303
Reinsurance recoverable	$	242,935		$	241,194

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240507831197/en/

Investor Contact:

Chris Potochar

VP of Investor Relations

ir@hioscar.com

Media Contact:

Kristen Prestano

VP of Communications

press@hioscar.com

Source: Oscar Health, Inc.

FAQ

What was Oscar Health's total revenue for the first quarter of 2024?

Oscar Health reported total revenue of $2.1 billion for the first quarter of 2024.

What was the Medical Loss Ratio for Oscar Health in the first quarter of 2024?

Oscar Health's Medical Loss Ratio for the first quarter of 2024 was 74.2%.

What was the improvement in Adjusted EBITDA for Oscar Health year-over-year?

Oscar Health's Adjusted EBITDA significantly improved by $168.2 million year-over-year.

When will Oscar Health host a conference call to discuss the financial results?

Oscar Health will host a conference call on May 7, 2024, at 8:00 a.m. (ET) to discuss the financial results.

What is the stock symbol for Oscar Health?

Oscar Health's stock symbol is OSCR.