Oscar Health Announces Results for Fourth Quarter and Full Year 2021
Oscar Health reported robust growth in its financial results for the year ending December 31, 2021. Membership surged to 598,169, marking a 49% year-over-year increase. Direct and assumed premiums reached $3.44 billion, a 50% rise, while earned premiums skyrocketed by 302% to $1.83 billion. Despite a net loss of $571 million, an increase of $165 million YoY, the company reaffirmed its 2022 outlook, projecting premiums between $6.1 and $6.4 billion, reflecting an over 80% increase. The company's focus on efficiency and improvement in administrative costs indicates a strategic approach to profitability by 2023.
- Membership increased by 49% YoY to 598,169.
- Direct and assumed premiums for 2021 reached $3.44 billion, up 50% YoY.
- Premiums earned surged 302% YoY to $1.83 billion.
- InsuranceCo Administrative Expense Ratio improved to 21.8%, down 430 bps YoY.
- Company reaffirmed 2022 premium outlook of $6.1 billion to $6.4 billion, reflecting over 80% YoY growth.
- Net loss of $571 million, up $165 million YoY.
- Adjusted EBITDA loss increased to $430 million, up $27 million YoY.
- MLR increased by 420 bps YoY due to higher COVID-driven costs.
-
Membership as of
December 31, 2021 of 598,169, a49% increase YoY -
For the year ended
December 31, 2021 :-
Direct and assumed premiums of
$3,437 million 50% increase YoY -
Premiums earned of
$1,831 million 302% increase YoY -
Net loss of
$571 million $165 million $430 million $27 million
-
Direct and assumed premiums of
-
Reaffirming 2022 outlook, including direct and assumed policy premiums of
$6.1 $6.4 billion 80% YoY increase, at the midpoint
“We had a strong performance in Q421 and are pleased to have met or exceeded all of our expectations across key metrics, including Medical Loss Ratio and EBITDA” said
Direct and assumed policy premiums for 2021 were
Oscar’s InsuranceCo Combined Ratio for 2021, which is the sum of its Medical Loss Ratio (“MLR”) and the InsuranceCo Administrative Expense Ratio, was roughly flat YoY, largely reflecting an improvement in the InsuranceCo Administrative Expense Ratio that was offset by higher COVID-driven medical costs. Specifically, the InsuranceCo Administrative Expense Ratio for 2021 decreased 430 bps YoY to
Oscar is reaffirming its 2022 outlook across all metrics, including direct and assumed policy premiums of
Financial Results Summary |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended |
|
Year Ended |
|||||||||||||
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(in thousands) |
|||||||||||||||
Premiums before ceded reinsurance |
$ |
705,502 |
|
|
$ |
439,846 |
|
|
$ |
2,712,988 |
|
|
$ |
1,672,339 |
|
|
Reinsurance premiums ceded |
|
(212,921 |
) |
|
|
(282,931 |
) |
|
|
(881,968 |
) |
|
|
(1,217,304 |
) |
|
Premiums earned |
$ |
492,581 |
|
|
$ |
156,915 |
|
|
$ |
1,831,020 |
|
|
$ |
455,035 |
|
|
Total revenue |
$ |
496,067 |
|
|
$ |
157,673 |
|
|
$ |
1,838,715 |
|
|
$ |
462,801 |
|
|
Total operating expenses |
$ |
692,322 |
|
|
$ |
344,510 |
|
|
$ |
2,383,196 |
|
|
$ |
865,067 |
|
|
Net loss |
$ |
(197,742 |
) |
|
$ |
(189,870 |
) |
|
$ |
(571,426 |
) |
|
$ |
(406,825 |
) |
|
Key Metrics and Non-GAAP Financial Metrics |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Direct and assumed premiums (in thousands) |
|
$ |
872,904 |
|
|
$ |
550,351 |
|
|
$ |
3,436,626 |
|
|
$ |
2,287,618 |
|
Medical Loss Ratio |
|
|
97.9 |
% |
|
|
107.9 |
% |
|
|
88.9 |
% |
|
|
84.7 |
% |
InsuranceCo Administrative Expense Ratio |
|
|
24.5 |
% |
|
|
36.3 |
% |
|
|
21.8 |
% |
|
|
26.1 |
% |
InsuranceCo Combined Ratio |
|
|
122.4 |
% |
|
|
144.2 |
% |
|
|
110.7 |
% |
|
|
110.8 |
% |
Adjusted Administrative Expense Ratio |
|
|
34.4 |
% |
|
|
48.8 |
% |
|
|
28.9 |
% |
|
|
34.3 |
% |
Adjusted EBITDA (1) (in thousands) |
|
$ |
(164,017 |
) |
|
$ |
(216,483 |
) |
|
$ |
(429,826 |
) |
|
$ |
(402,447 |
) |
(1) |
Adjusted EBITDA is a non-GAAP measure. See “Key Operating and Non-GAAP 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. |
|
|
|
|
|
Membership by Offering |
|
As of |
||
|
|
|
|
|
|
|
577,799 |
|
400,120 |
Medicare Advantage |
|
3,864 |
|
1,924 |
Cigna + Oscar (1) |
|
16,506 |
|
— |
Total Members |
|
598,169 |
|
402,044 |
(1) |
Represents total membership for Oscar’s co-branded partnership with Cigna. |
Full Year 2022 Outlook |
||||||||
|
|
Low |
|
High |
||||
Direct and assumed premiums (in thousands) |
|
$ |
6,100,000 |
|
|
$ |
6,400,000 |
|
Medical Loss Ratio |
|
|
84 |
% |
|
|
86 |
% |
InsuranceCo Administrative Expense Ratio |
|
|
19.5 |
% |
|
|
20.5 |
% |
InsuranceCo Combined Ratio |
|
|
104 |
% |
|
|
106 |
% |
Adjusted Administrative Expense Ratio |
|
|
24 |
% |
|
|
26 |
% |
Adjusted EBITDA (1) (in thousands) |
|
$ |
(480,000 |
) |
|
$ |
(380,000 |
) |
(1) |
Oscar has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net loss within this press release because Oscar is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include, but are not limited to, stock-based compensation expense. These items, which could materially affect the computation of forecasted GAAP net loss, are inherently uncertain and depend on various factors, some of which are outside of Oscar’s control. As such, any associated estimate and its impact on GAAP net loss could vary materially. For more information regarding Adjusted EBITDA, please see “Key Operating and Non-GAAP Metrics” below. |
The foregoing statements represent management's current estimates as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Regarding Forward-Looking Statements included in this release. Management does not assume any obligation to update these estimates.
Quarterly Conference Call Details
Oscar will host a conference call to discuss the financial results today,
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
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 direct and assumed policy premiums, medical loss ratio, InsureCo administrative expense ratio, adjusted administrative expense ratio, adjusted EBITDA and other financial performance, and the related underlying assumptions, our business and financial prospects, general and healthcare industry market conditions and trends, 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: the impact of COVID-19 on global markets, economic conditions, the healthcare industry and our results of operations, and the response by governments and other third parties; our ability to retain and expand our member base; our ability to execute our growth strategy; our ability to maintain or enter into new partnerships or collaborations with healthcare industry participants; negative publicity, unfavorable shifts in perception of our digital platform or other member service channels; our ability to achieve and/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 accurately estimate our incurred claims expenses or effectively manage our claims costs or related administrative costs, including as a result of fluctuations in medical utilization rates due to the impact of COVID-19; our ability to comply with ongoing regulatory requirements and applicable performance standards, including as a result of our participation in government-sponsored programs, such as Medicare; changes or developments in the health insurance markets in
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
Consolidated Statements of Operations (in thousands, except share and per share amounts) |
|||||||||||||||
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
|
||||||||
Revenue |
|
|
|
|
|
|
|
||||||||
Premiums before ceded reinsurance |
$ |
705,502 |
|
|
$ |
439,846 |
|
|
$ |
2,712,988 |
|
|
$ |
1,672,339 |
|
Reinsurance premiums ceded |
|
(212,921 |
) |
|
|
(282,931 |
) |
|
|
(881,968 |
) |
|
|
(1,217,304 |
) |
Premiums earned |
|
492,581 |
|
|
|
156,915 |
|
|
|
1,831,020 |
|
|
|
455,035 |
|
Investment income and other revenue |
|
3,486 |
|
|
|
758 |
|
|
|
7,695 |
|
|
|
7,766 |
|
Total revenue |
|
496,067 |
|
|
|
157,673 |
|
|
|
1,838,715 |
|
|
|
462,801 |
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses |
|
|
|
|
|
|
|
||||||||
Claims incurred, net |
|
482,492 |
|
|
|
84,233 |
|
|
|
1,623,995 |
|
|
|
309,353 |
|
Other insurance costs |
|
124,434 |
|
|
|
97,312 |
|
|
|
410,363 |
|
|
|
216,534 |
|
General and administrative expenses |
|
89,338 |
|
|
|
62,276 |
|
|
|
265,078 |
|
|
|
166,655 |
|
Federal and state assessments |
|
36,244 |
|
|
|
19,734 |
|
|
|
139,085 |
|
|
|
81,458 |
|
Health insurance industry fee |
|
— |
|
|
|
4,813 |
|
|
|
— |
|
|
|
19,251 |
|
Premium deficiency reserve release |
|
(40,186 |
) |
|
|
76,142 |
|
|
|
(55,325 |
) |
|
|
71,816 |
|
Total operating expenses |
|
692,322 |
|
|
|
344,510 |
|
|
|
2,383,196 |
|
|
|
865,067 |
|
Loss from operations |
|
(196,255 |
) |
|
|
(186,837 |
) |
|
|
(544,481 |
) |
|
|
(402,266 |
) |
Interest expense |
|
397 |
|
|
|
3,514 |
|
|
|
4,720 |
|
|
|
3,514 |
|
Other expense |
|
1,201 |
|
|
|
— |
|
|
|
1,201 |
|
|
|
— |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
20,178 |
|
|
|
— |
|
Loss before income taxes |
|
(197,853 |
) |
|
|
(190,351 |
) |
|
|
(570,580 |
) |
|
|
(405,780 |
) |
Income tax (benefit) provision |
|
(111 |
) |
|
|
(481 |
) |
|
|
846 |
|
|
|
1,045 |
|
Net loss |
|
(197,742 |
) |
|
|
(189,870 |
) |
|
|
(571,426 |
) |
|
|
(406,825 |
) |
Less: Net income attributable to noncontrolling interests |
|
1,180 |
|
|
|
— |
|
|
|
1,180 |
|
|
|
— |
|
Net loss attributable to |
$ |
(198,922 |
) |
|
$ |
(189,870 |
) |
|
$ |
(572,606 |
) |
|
$ |
(406,825 |
) |
|
|
|
|
|
|
|
|
||||||||
Earnings (Loss) per Share |
|
|
|
|
|
|
|
||||||||
Net loss per share attributable to |
$ |
(0.95 |
) |
|
$ |
(6.28 |
) |
|
$ |
(3.20 |
) |
|
$ |
(14.16 |
) |
Weighted average common shares outstanding, basic and diluted |
|
209,775,333 |
|
|
|
30,223,000 |
|
|
|
178,967,056 |
|
|
|
29,263,424 |
|
Consolidated Balance Sheets (in thousands, except share and per share amounts) |
|||||||
|
|
|
|
||||
|
(unaudited) |
|
|
||||
Assets: |
|
|
|
||||
Current Assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
1,103,995 |
|
|
$ |
826,326 |
|
Short-term investments |
|
587,086 |
|
|
|
366,387 |
|
Premium and other receivables |
|
138,414 |
|
|
|
65,322 |
|
Risk adjustment transfer receivable |
|
40,659 |
|
|
|
31,157 |
|
Accrued investment income |
|
3,782 |
|
|
|
1,862 |
|
Balances due from reinsurance programs |
|
431,990 |
|
|
|
579,393 |
|
Total current assets |
|
2,305,926 |
|
|
|
1,870,447 |
|
Property, equipment, and capitalized software, net |
|
46,611 |
|
|
|
35,812 |
|
Long-term investments |
|
844,476 |
|
|
|
325,740 |
|
Restricted deposits |
|
28,085 |
|
|
|
26,478 |
|
Other assets |
|
95,957 |
|
|
|
13,136 |
|
Net deferred tax asset |
|
595 |
|
|
|
493 |
|
Total Assets |
$ |
3,321,650 |
|
|
$ |
2,272,106 |
|
|
|
|
|
||||
Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit) |
|
|
|
||||
Current Liabilities: |
|
|
|
||||
Benefits payable |
$ |
513,582 |
|
|
$ |
311,914 |
|
Risk adjustment transfer payable |
|
794,398 |
|
|
|
716,370 |
|
Premium deficiency reserve |
|
29,246 |
|
|
|
84,571 |
|
Unearned premiums |
|
75,044 |
|
|
|
71,904 |
|
Accounts payable and accrued liabilities |
|
234,788 |
|
|
|
137,524 |
|
Reinsurance payable |
|
205,231 |
|
|
|
343,313 |
|
Total current liabilities |
|
1,852,289 |
|
|
|
1,665,596 |
|
Long-term debt |
|
— |
|
|
|
142,487 |
|
Warrant liabilities |
|
— |
|
|
|
15,005 |
|
Other liabilities |
|
76,839 |
|
|
|
— |
|
Total liabilities |
|
1,929,128 |
|
|
|
1,823,088 |
|
Commitments and contingencies |
|
|
|
||||
Convertible Preferred Stock, |
|
— |
|
|
|
1,744,911 |
|
Stockholders' Equity (Deficit) |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Class A common stock, |
|
2 |
|
|
|
— |
|
Class B common stock, |
|
— |
|
|
|
— |
|
Series A common stock, |
|
— |
|
|
|
2 |
|
|
|
(2,923 |
) |
|
|
(2,923 |
) |
Additional paid-in capital |
|
3,393,533 |
|
|
|
133,255 |
|
Accumulated deficit |
|
(1,999,712 |
) |
|
|
(1,427,106 |
) |
Accumulated other comprehensive income (loss) |
|
(3,671 |
) |
|
|
879 |
|
|
|
1,387,229 |
|
|
|
(1,295,893 |
) |
Noncontrolling interests |
|
5,293 |
|
|
|
— |
|
Total stockholders’ equity (deficit) |
|
1,392,522 |
|
|
|
(1,295,893 |
) |
Total Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit) |
$ |
3,321,650 |
|
|
$ |
2,272,106 |
|
Consolidated Statements of Cash Flows (in thousands) |
|||||||
|
Year Ended |
||||||
|
|
2021 |
|
|
2020 |
|
|
|
(unaudited) |
|
|||||
Cash flows from operating activities: |
|
|
|||||
Net loss |
$ |
(571,426 |
) |
$ |
(406,825 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|||||
Deferred taxes |
|
(101 |
) |
|
(67 |
) |
|
Net realized gain on sale of financial instruments |
|
(209 |
) |
|
(1,246 |
) |
|
Loss on fair value of warrant liabilities |
|
12,856 |
|
|
5,101 |
|
|
Depreciation and amortization expense |
|
14,605 |
|
|
11,285 |
|
|
Amortization of debt issuance costs |
|
329 |
|
|
327 |
|
|
Stock-based compensation expense |
|
86,296 |
|
|
35,869 |
|
|
Investment amortization, net of accretion |
|
8,031 |
|
|
2,588 |
|
|
Debt extinguishment loss |
|
20,178 |
|
|
— |
|
|
Changes in assets and liabilities: |
|
|
|||||
(Increase) / decrease in: |
|
|
|||||
Premium and other receivables |
|
(66,953 |
) |
|
(35,254 |
) |
|
Risk adjustment transfer receivable |
|
(9,502 |
) |
|
(6,035 |
) |
|
Accrued investment income |
|
(1,920 |
) |
|
(417 |
) |
|
Balances due from reinsurance programs |
|
147,403 |
|
|
(63,329 |
) |
|
Other assets |
|
(9,379 |
) |
|
2,627 |
|
|
Increase / (decrease) in: |
|
|
|||||
Benefits payable |
|
201,667 |
|
|
155,357 |
|
|
Unearned premiums |
|
3,140 |
|
|
46,596 |
|
|
Premium deficiency reserve |
|
(55,325 |
) |
|
71,816 |
|
|
Accounts payable and accrued liabilities |
|
98,619 |
|
|
75,800 |
|
|
Reinsurance payable |
|
(138,082 |
) |
|
(89,197 |
) |
|
Risk adjustment transfer payable |
|
78,028 |
|
|
417,736 |
|
|
Net cash (used in) provided by operating activities |
|
(181,745 |
) |
|
222,732 |
|
|
Cash flows from investing activities: |
|
|
|||||
Purchase of investments |
|
(1,810,076 |
) |
|
(1,001,038 |
) |
|
Sale of investments |
|
624,077 |
|
|
489,528 |
|
|
Maturity of investments |
|
430,694 |
|
|
182,060 |
|
|
Purchase of property, equipment and capitalized software |
|
(25,885 |
) |
|
(14,021 |
) |
|
Change in restricted deposits |
|
6,675 |
|
|
(1,243 |
) |
|
Net cash (used in) provided by investing activities |
|
(774,515 |
) |
|
(344,714 |
) |
|
Cash flows from financing activities: |
|
|
|||||
Debt prepayment |
|
(153,173 |
) |
|
147,000 |
|
|
Debt extinguishment costs |
|
(12,994 |
) |
|
— |
|
|
Payments of debt issuance costs |
|
— |
|
|
(4,840 |
) |
|
Proceeds from IPO, net of underwriting discounts |
|
1,348,321 |
|
|
— |
|
|
Offering costs from IPO |
|
(9,447 |
) |
|
— |
|
|
Convertible preferred stock and call option issuances |
|
— |
|
|
375,671 |
|
|
Proceeds from exercise of warrants and call options |
|
9,191 |
|
|
74,581 |
|
|
Proceeds from partial sale of subsidiary to noncontrolling interest |
|
7,230 |
|
|
— |
|
|
Proceeds from exercise of stock options |
|
49,584 |
|
|
19,295 |
|
|
Net cash (used in) provided by financing activities |
|
1,238,712 |
|
|
611,707 |
|
|
Increase (decrease) in cash, cash equivalents and restricted cash equivalents |
|
282,452 |
|
|
|
489,725 |
|
Cash, cash equivalents, restricted cash and cash equivalents—beginning of period |
|
843,105 |
|
|
|
353,380 |
|
Cash, cash equivalents, restricted cash and cash equivalents—end of period |
$ |
1,125,557 |
|
|
$ |
843,105 |
|
Cash and cash equivalents |
|
1,103,995 |
|
|
|
826,326 |
|
Restricted cash and cash equivalents included in restricted deposits |
|
21,562 |
|
|
|
16,779 |
|
Total cash, cash equivalents and restricted cash and cash equivalents |
$ |
1,125,557 |
|
|
$ |
843,105 |
|
|
|
|
|||||
Supplemental Disclosures: |
|
|
|||||
Interest payments |
$ |
4,256 |
|
|
$ |
— |
|
Income tax payments |
$ |
697 |
|
|
$ |
1,525 |
|
|
|
|
|||||
Non-cash investing and financing activities: |
|
|
|||||
Conversion of redeemable convertible preferred stock to common stock upon initial public offering |
$ |
1,744,911 |
|
|
$ |
— |
|
Net exercise of preferred stock warrants to preferred stock upon initial public offering |
$ |
28,248 |
|
|
$ |
— |
|
Adjustment to fair value of preferred stock warrant liability upon initial public offering |
$ |
13,243 |
|
|
$ |
— |
|
Key Operating and Non-GAAP Financial Metrics
We regularly review a number of metrics, including 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.
Direct and Assumed Policy Premiums
Direct Policy Premiums are defined as the premiums collected from our members or from the federal government during the period indicated, before risk adjustment and reinsurance. These premiums include APTC, or premium subsidies, which are available to individuals and families with certain annual incomes.
Assumed Policy Premiums are premiums we receive primarily as part of our reinsurance arrangements under our Cigna+Oscar small group plan offering.
We previously presented Direct Policy Premiums as a key operating metric for the year ended
|
|
Three Months Ended |
|
Year Ended |
||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
(in thousands) |
||||||||||
Direct policy premiums |
|
$ |
866,032 |
|
$ |
550,052 |
|
$ |
3,420,328 |
|
$ |
2,287,319 |
Assumed premiums |
|
|
6,872 |
|
|
299 |
|
|
16,298 |
|
|
299 |
Direct and assumed premiums |
|
$ |
872,904 |
|
$ |
550,351 |
|
$ |
3,436,626 |
|
$ |
2,287,618 |
Medical Loss Ratio
Medical loss ratio is calculated as set forth in the table below. Medical claims are total medical 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 risk sharing arrangements with certain of our providers. 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 health care of our members to the premiums before ceded reinsurance. MLRs in our existing products are subject to various federal and state minimum requirements. Below is a calculation of our MLR for the periods indicated.
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(in thousands) |
||||||||||||||
Direct claims incurred before ceded reinsurance (1) |
|
$ |
678,019 |
|
|
$ |
402,486 |
|
|
$ |
2,403,108 |
|
|
$ |
1,364,432 |
|
Assumed reinsurance claims |
|
|
12,067 |
|
|
|
294 |
|
|
|
21,656 |
|
|
|
292 |
|
Excess of loss ceded claims (2) |
|
|
505 |
|
|
|
(4,962 |
) |
|
|
(12,500 |
) |
|
|
(13,633 |
) |
State reinsurance (3) |
|
|
(4,786 |
) |
|
|
(2,606 |
) |
|
|
(14,655 |
) |
|
|
(10,026 |
) |
Net claims before ceded quota share reinsurance (A) |
|
$ |
685,805 |
|
|
$ |
395,212 |
|
|
$ |
2,397,609 |
|
|
$ |
1,341,065 |
|
|
|
|
|
|
|
|
|
|
||||||||
Premiums before ceded reinsurance |
|
$ |
705,502 |
|
|
$ |
439,846 |
|
|
$ |
2,712,988 |
|
|
$ |
1,672,339 |
|
Excess of loss reinsurance premiums (4) |
|
|
(4,971 |
) |
|
|
(8,899 |
) |
|
|
(16,266 |
) |
|
|
(24,066 |
) |
Other non-recurring items (5) |
|
|
— |
|
|
|
(64,538 |
) |
|
|
— |
|
|
|
(64,538 |
) |
Net premiums before ceded quota share reinsurance (B) |
|
$ |
700,531 |
|
|
$ |
366,409 |
|
|
$ |
2,696,722 |
|
|
$ |
1,583,735 |
|
Medical Loss Ratio (A divided by B) |
|
|
97.9 |
% |
|
|
107.9 |
% |
|
|
88.9 |
% |
|
|
84.7 |
% |
(1) |
See the Appendix to this release for a reconciliation of direct claims incurred to claims incurred, net appearing on the face of our statement of operations. |
|
(2) |
Represents claims ceded to reinsurers pursuant to an excess of loss treaty, for which such reinsurers are financially liable. We use excess of loss reinsurance to limit the losses on individual claims of our members. |
|
(3) |
Represents payments made by certain state-run reinsurance programs established subject to CMS approval under Section 1332 of the ACA. |
|
(4) |
Represents excess of loss insurance premiums paid. |
|
(5) |
Represents adjustments for litigation settlements recognized during the year ended |
InsuranceCo Administrative Expense Ratio
InsuranceCo Administrative Expense Ratio is calculated as set forth in the table below. The ratio reflects the costs associated with running our combined insurance companies. We believe InsuranceCo Administrative Expense Ratio is useful to evaluate our ability to manage our expenses as a percentage of premiums before ceded quota share reinsurance. Expenses necessary to run the insurance company are included in other insurance costs and federal and state assessments. These expenses include variable expenses paid to vendors and distribution partners, premium taxes and healthcare exchange fees, employee-related compensation, benefits, marketing costs, and other administrative expenses. Below is a calculation of our InsuranceCo Administrative Expense Ratio for the periods indicated.
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(in thousands) |
||||||||||||||
Other insurance costs |
|
$ |
124,434 |
|
|
$ |
97,312 |
|
|
$ |
410,363 |
|
|
$ |
216,534 |
|
Ceding commissions |
|
|
24,260 |
|
|
|
29,956 |
|
|
|
82,246 |
|
|
|
126,840 |
|
Stock-based compensation expense |
|
|
(13,307 |
) |
|
|
(7,155 |
) |
|
|
(42,295 |
) |
|
|
(18,299 |
) |
Health insurance industry fee |
|
|
— |
|
|
|
4,813 |
|
|
|
— |
|
|
|
19,251 |
|
Federal and state assessment of health insurance subsidiaries |
|
|
36,043 |
|
|
|
20,294 |
|
|
|
138,369 |
|
|
|
81,199 |
|
Other non-recurring items (1) |
|
|
— |
|
|
|
(12,102 |
) |
|
|
— |
|
|
|
(12,102 |
) |
Health insurance subsidiary adjusted administrative expenses (A) |
|
$ |
171,430 |
|
|
$ |
133,118 |
|
|
$ |
588,683 |
|
|
$ |
413,423 |
|
|
|
|
|
|
|
|
|
|
||||||||
Premiums before ceded reinsurance |
|
$ |
705,502 |
|
|
$ |
439,846 |
|
|
$ |
2,712,988 |
|
|
$ |
1,672,339 |
|
Excess of loss reinsurance premiums |
|
|
(4,971 |
) |
|
|
(8,899 |
) |
|
|
(16,266 |
) |
|
|
(24,066 |
) |
Other non-recurring items (1) |
|
|
— |
|
|
|
(64,538 |
) |
|
|
— |
|
|
|
(64,538 |
) |
Net premiums before ceded quota share reinsurance (B) |
|
$ |
700,531 |
|
|
$ |
366,409 |
|
|
$ |
2,696,722 |
|
|
$ |
1,583,735 |
|
InsuranceCo Administrative Expense Ratio (A divided by B) |
|
|
24.5 |
% |
|
|
36.3 |
% |
|
|
21.8 |
% |
|
|
26.1 |
% |
(1) |
Represents adjustments for litigation settlements recognized during the year ended |
InsuranceCo Combined Ratio
InsuranceCo Combined Ratio is defined as the sum of MLR and InsuranceCo Administrative Expense Ratio. We believe this ratio best represents the current overall performance of our insurance business for activities that can be compared to peers.
Adjusted Administrative Expense Ratio
The Adjusted Administrative Expense Ratio is an operating ratio that reflects the Company’s total administrative expenses (or “Total Administrative Expenses”), net of non-cash and non-recurring items (as adjusted, “Adjusted Administrative Expenses”), as a percentage of total revenue, including quota share reinsurance premiums ceded and excluding excess of loss reinsurance premiums ceded and non-recurring items (or “Adjusted Total Revenue”). Total Administrative Expenses are calculated as Total Operating Expenses, excluding non-administrative insurance-based expenses and ceding commissions. Adjusted Administrative Expenses are Total Administrative Expenses, net of non-cash and non-recurring expense items. The Company believes Adjusted Administrative Expenses is a useful measure of its administrative expenses, as it excludes insurance-based expenses, non-cash expenses and non-recurring expenses. The Company believes Adjusted Administrative Expense Ratio is useful to evaluate the Company’s ability to manage its overall administrative expense base. This ratio also provides further clarity into the Company’s overall path to profitability. Below is a calculation of our Adjusted Administrative Expense Ratio for the periods indicated.
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(in thousands) |
||||||||||||||
Total Operating Expenses |
|
$ |
692,322 |
|
|
$ |
344,510 |
|
|
$ |
2,383,196 |
|
|
$ |
865,067 |
|
Claims incurred, net |
|
|
(482,492 |
) |
|
|
(84,233 |
) |
|
|
(1,623,995 |
) |
|
|
(309,353 |
) |
Premium deficiency reserve release |
|
|
40,186 |
|
|
|
(76,142 |
) |
|
|
55,325 |
|
|
|
(71,816 |
) |
Ceding commissions |
|
|
24,260 |
|
|
|
29,956 |
|
|
|
82,246 |
|
|
|
126,840 |
|
Total Administrative Expenses |
|
$ |
274,276 |
|
|
$ |
214,091 |
|
|
$ |
896,772 |
|
|
$ |
610,738 |
|
Stock-based compensation expense/warrant expense |
|
|
(28,268 |
) |
|
|
(19,495 |
) |
|
|
(99,152 |
) |
|
|
(40,970 |
) |
Depreciation and amortization |
|
|
(3,970 |
) |
|
|
(3,295 |
) |
|
|
(14,605 |
) |
|
|
(11,285 |
) |
Other non-recurring items (1)(2) |
|
|
— |
|
|
|
(12,102 |
) |
|
|
(898 |
) |
|
|
(12,102 |
) |
Adjusted Administrative Expenses (A) |
|
$ |
242,038 |
|
|
$ |
179,199 |
|
|
$ |
782,117 |
|
|
$ |
546,381 |
|
Total Revenue |
|
$ |
496,067 |
|
|
$ |
157,673 |
|
|
$ |
1,838,715 |
|
|
$ |
462,801 |
|
Reinsurance premiums ceded |
|
|
212,921 |
|
|
|
282,931 |
|
|
|
881,968 |
|
|
|
1,217,304 |
|
Excess of loss reinsurance premiums |
|
|
(4,971 |
) |
|
|
(8,899 |
) |
|
|
(16,266 |
) |
|
|
(24,066 |
) |
Other non-recurring items (2) |
|
|
— |
|
|
|
(64,538 |
) |
|
|
— |
|
|
|
(64,538 |
) |
Adjusted Total Revenue (B) |
|
$ |
704,017 |
|
|
$ |
367,167 |
|
|
$ |
2,704,417 |
|
|
$ |
1,591,501 |
|
Adjusted Administrative Expense Ratio (A divided by B) |
|
|
34.4 |
% |
|
|
48.8 |
% |
|
|
28.9 |
% |
|
|
34.3 |
% |
(1) |
Represents debt extinguishment costs of |
|
(2) |
Represents adjustments for litigation settlements recognized during the year ended |
Adjusted EBITDA
Adjusted EBITDA is defined as net loss for the Company and its consolidated subsidiaries before interest expense, income tax (benefit) expense, depreciation and amortization as further adjusted for stock-based compensation, warrant contract expense, changes in the fair value of warrant liabilities, and other non-recurring items as described below. 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.
Management uses Adjusted EBITDA:
- as a measurement of operating performance because it assists us in comparing the operating performance of our business on a consistent basis, as it removes the impact of items not directly resulting from our core operations;
- for planning purposes, including the preparation of our internal annual operating budget and financial projections;
- to evaluate the performance and effectiveness of our operational strategies; and
- to evaluate our capacity to expand our business.
By providing this non-GAAP financial measure, together with a reconciliation to the most comparable GAAP measure, 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 loss or other financial statement data presented in our consolidated financial statements as indicators of financial performance.
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(in thousands) |
||||||||||||||
Net loss |
|
$ |
(197,742 |
) |
|
$ |
(189,870 |
) |
|
$ |
(571,426 |
) |
|
$ |
(406,825 |
) |
Interest expense |
|
|
397 |
|
|
|
3,514 |
|
|
|
4,720 |
|
|
|
3,514 |
|
Other expense |
|
|
1,201 |
|
|
|
— |
|
|
|
1,201 |
|
|
|
— |
|
Income tax (benefit) expense |
|
|
(111 |
) |
|
|
(481 |
) |
|
|
846 |
|
|
|
1,045 |
|
Depreciation and amortization |
|
|
3,970 |
|
|
|
3,295 |
|
|
|
14,605 |
|
|
|
11,285 |
|
Stock-based compensation/warrant expense (1) |
|
|
28,268 |
|
|
|
19,495 |
|
|
|
99,152 |
|
|
|
40,970 |
|
Other non-recurring items(2)(3) |
|
|
— |
|
|
|
(52,436 |
) |
|
|
21,076 |
|
|
|
(52,436 |
) |
Adjusted EBITDA |
|
$ |
(164,017 |
) |
|
$ |
(216,483 |
) |
|
$ |
(429,826 |
) |
|
$ |
(402,447 |
) |
(1) |
Represents (i) 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, (ii) warrant contract expense, and (iii) changes in the fair value of warrant liabilities. |
|
(2) |
Represents debt extinguishment costs of |
|
(3) |
Represents adjustments for litigation settlements recognized during the year ended |
Appendix
Reinsurance Impact
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(in thousands) |
||||||||||||||
Quota share ceded premiums |
|
$ |
(192,003 |
) |
|
$ |
(299,549 |
) |
|
$ |
(904,764 |
) |
|
$ |
(1,284,597 |
) |
Quota share ceded claims |
|
|
203,314 |
|
|
|
312,352 |
|
|
|
773,615 |
|
|
|
1,039,324 |
|
Ceding commissions |
|
|
24,260 |
|
|
|
29,956 |
|
|
|
82,246 |
|
|
|
126,840 |
|
Experience refunds |
|
|
(15,948 |
) |
|
|
25,518 |
|
|
|
39,062 |
|
|
|
91,360 |
|
Net quota share impact |
|
$ |
19,623 |
|
|
$ |
68,277 |
|
|
$ |
(9,841 |
) |
|
$ |
(27,073 |
) |
The composition of total reinsurance premiums ceded and reinsurance premiums assumed, which are included as components of total earned premiums in the consolidated statement of operations, is as follows:
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(in thousands) |
||||||||||||||
Reinsurance premiums ceded, gross |
|
$ |
(197,441 |
) |
|
$ |
(305,453 |
) |
|
$ |
(921,953 |
) |
|
$ |
(1,308,275 |
) |
Experience refunds |
|
|
(15,480 |
) |
|
|
22,522 |
|
|
|
39,985 |
|
|
|
90,971 |
|
Reinsurance premiums ceded |
|
|
(212,921 |
) |
|
|
(282,931 |
) |
|
|
(881,968 |
) |
|
|
(1,217,304 |
) |
Reinsurance premiums assumed |
|
|
6,872 |
|
|
|
299 |
|
|
|
16,298 |
|
|
|
299 |
|
Total reinsurance premiums (ceded) and assumed |
|
$ |
(206,049 |
) |
|
$ |
(282,632 |
) |
|
$ |
(865,670 |
) |
|
$ |
(1,217,005 |
) |
The Company records claims expense net of reinsurance recoveries. The following table reconciles the total claims expense to the net claims expense as presented in the consolidated statement of operations:
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(in thousands) |
||||||||||||||
Direct claims incurred |
|
$ |
678,019 |
|
|
$ |
402,486 |
|
|
$ |
2,403,108 |
|
|
$ |
1,364,432 |
|
Ceded reinsurance claims |
|
|
(207,594 |
) |
|
|
(318,547 |
) |
|
|
(800,769 |
) |
|
|
(1,055,371 |
) |
Assumed reinsurance claims |
|
|
12,067 |
|
|
|
294 |
|
|
|
21,656 |
|
|
|
292 |
|
Total claims incurred, net |
|
$ |
482,492 |
|
|
$ |
84,233 |
|
|
$ |
1,623,995 |
|
|
$ |
309,353 |
|
The Company records selling, general and administrative expenses net of ceding commissions. The following table reconciles total other insurance costs to the amount presented in the consolidated statement of operations:
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(in thousands) |
||||||||||||||
Other insurance costs, gross |
|
$ |
148,694 |
|
|
$ |
127,268 |
|
|
$ |
492,609 |
|
|
$ |
343,374 |
|
Ceding commissions |
|
|
(24,260 |
) |
|
|
(29,956 |
) |
|
|
(82,246 |
) |
|
|
(126,840 |
) |
Other insurance costs, net |
|
$ |
124,434 |
|
|
$ |
97,312 |
|
|
$ |
410,363 |
|
|
$ |
216,534 |
|
The Company records reinsurance recoverables as “balances due from reinsurance programs” within current assets on its consolidated balance sheets. The composition of the reinsurance recoverables balance is as follows:
|
|
|
|
|
||
|
|
(in thousands) |
||||
Ceded reinsurance claim recoverables |
|
$ |
406,017 |
|
$ |
435,331 |
Reinsurance ceding commissions |
|
|
23,517 |
|
|
41,586 |
Experience refunds on reinsurance agreements |
|
|
2,456 |
|
|
102,476 |
Balances due from reinsurance programs |
|
$ |
431,990 |
|
$ |
579,393 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220210005931/en/
Investor Contact:
VP of Investor Relations
ir@hioscar.com
917-397-0251
Media Contact:
SVP of Communications
comms@hioscar.com
202-538-0128
Source:
FAQ
What were Oscar Health's premiums earned for 2021?
What is the membership growth rate for Oscar Health as of December 31, 2021?
What is the projected premium outlook for Oscar Health in 2022?
What were the key financial results for Oscar Health in Q4 2021?
How did Oscar Health's Administrative Expense Ratio change in 2021?
