Oscar Health Announces Results for Second Quarter 2022

Rhea-AI Summary

Oscar Health reported significant growth in Q2 2022, with Direct and Assumed Policy Premiums rising to $1.7 billion, a 101% increase year-over-year. Premiums earned also grew by 88% to $995 million. Membership surged to 1,036,720, an 84% increase YoY. Despite these gains, the company posted a net loss of $112 million, up 39 million YoY, alongside an Adjusted EBITDA loss of $76 million. Key ratios improved, with Medical Loss Ratio at 82.2% and Administrative Expense Ratio at 19.5%. Oscar reaffirms its 2022 outlook for continued growth and improved profitability.

Positive

• Direct and Assumed Policy Premiums increased by 101% YoY to $1.7 billion.
• Membership grew by 84% YoY, reaching 1,036,720 members.
• Premiums earned rose by 88% YoY to $995 million.
• Improvement in the InsuranceCo Combined Ratio to 101.7%, a 50 bps drop YoY.
• Medical Loss Ratio decreased to 82.2%, down 20 bps YoY.
• Administrative Expense Ratio improved to 19.5%, a reduction of 30 bps YoY.

Negative

• Net loss increased to $112 million, up $39 million YoY.
• Adjusted EBITDA loss widened to $76 million, an increase of $25 million YoY.

• Membership as of June 30, 2022 of 1,036,720, an 84% increase YoY
• For the quarter ended June 30, 2022:
  • Direct and assumed policy premiums of $1.7 billion, a 101% increase YoY
  • Premiums earned of $995 million, a 88% increase YoY
  • Medical Loss Ratio of 82.2%, decreased 20 bps YoY
  • InsuranceCo Administrative Expense Ratio of 19.5%, decreased 30 bps YoY
  • InsuranceCo Combined Ratio of 101.7%, decreased 50 bps YoY
  • Adjusted Administrative Expense Ratio of 23.7%, decreased 140 bps YoY
  • Net loss of $112 million, an increase of $39 million YoY; Adjusted EBITDA loss of $76 million, an increase of $25 million YoY

NEW YORK--(BUSINESS WIRE)-- Health insurtech company Oscar Health, Inc. (NYSE: OSCR) today announced its financial results for the second quarter ended June 30, 2022.

“Oscar’s first half results reflect our continued momentum and demonstrate our technology platform’s differentiated ability to support our increasing scale.” said Mario Schlosser, CEO and Co-Founder of Oscar. “We remain laser-focused on the execution of our strategic plan to reach our profitability target for the Insurance product in 2023, laying the foundation that we will continue to build upon.”

Total Direct and Assumed Policy Premiums were $1.7 billion in the quarter, up 101% year-over-year (“YoY”), driven primarily by higher membership, rate increases and mix shift to higher premium Silver plans. Premiums earned in the quarter were up 88% YoY, driven by the same factors that drove the increase in Direct and Assumed Policy Premiums, as well as lower ceded reinsurance premiums YoY as a percentage of premiums before ceded reinsurance due to new reinsurance contracts accounted for under deposit accounting.

Oscar’s InsuranceCo Combined Ratio, which is the sum of its Medical Loss Ratio (“MLR”) and the InsuranceCo Administrative Expense Ratio, improved 50 bps YoY to 101.7%, driven by a YoY improvement in both the InsuranceCo Administrative Expense Ratio and in the MLR. The InsuranceCo Administrative Expense Ratio decreased 30 bps YoY to 19.5%, driven by operating expense leverage associated with growth in premiums, and the MLR decreased 20 bps YoY to 82.2%, driven by pricing, lower net COVID-19 impact and mix shifts in the member population, partially offset by lower net favorable developments.

The Adjusted Administrative Expense Ratio decreased 140 bps YoY to 23.7%, primarily due to operating expense leverage associated with growth in premiums. Net loss of $112 million increased by $39 million YoY, but improved as a percentage of premiums before ceded reinsurance. The Adjusted EBITDA loss of $76 million increased by $25 million YoY, but improved as a percentage of premiums before ceded reinsurance.

Oscar is also reaffirming its 2022 outlook across all metrics.

Financial Results Summary
	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
	(in thousands)
Premiums before ceded reinsurance	$	1,368,477			$	723,927			$	2,683,541			$	1,334,026
Reinsurance premiums ceded		(373,882	)			(195,768	)			(733,545	)			(437,330	)
Premiums earned	$	994,595			$	528,159			$	1,949,996			$	896,696
Total revenue	$	1,017,319			$	529,281			$	1,990,084			$	898,669
Total operating expenses	$	1,123,806			$	601,787			$	2,165,100			$	1,035,216
Net loss	$	(112,125	)		$	(73,323	)		$	(189,445	)		$	(162,204	)

Key Metrics and Non-GAAP Financial Metrics
	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Direct and Assumed Policy Premiums (in thousands)	$	1,694,927			$	841,260			$	3,376,138			$	1,664,485
Medical Loss Ratio		82.2	%			82.4	%			79.9	%			78.7	%
InsuranceCo Administrative Expense Ratio		19.5	%			19.8	%			19.7	%			19.8	%
InsuranceCo Combined Ratio		101.7	%			102.2	%			99.6	%			98.5	%
Adjusted Administrative Expense Ratio		23.7	%			25.1	%			23.7	%			25.5	%
Adjusted EBITDA(1) (in thousands)	$	(75,805	)		$	(50,646	)		$	(112,845	)		$	(78,414	)

(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
		June 30, 2022		June 30, 2021
Individual and Small Group		986,017		554,748
Medicare Advantage		4,658		3,749
Cigna + Oscar(1)		46,045		4,617
Total Members		1,036,720		563,114

(1)

Represents total membership for Oscar’s co-branded partnership with Cigna.

Full Year 2022 Outlook
		Low				High
Direct and Assumed Policy 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, August 11, 2022, at 5:00 p.m. (ET). A live audio webcast and a supplemental presentation 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 the 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.

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, administrative expense ratio and other financial performance, 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: 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 and scale our operations; our ability to maintain or enter into new partnerships, service arrangements 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, and as a result of changing regulatory requirements; changes or developments in the health insurance markets in the United States, including the passage and implementation of a law to create a single-payer or government-run health insurance program; our ability to comply with applicable privacy, security, and data laws, regulations, and standards; our ability to maintain key in-network providers and good relations with the physicians, hospitals, and other providers within and outside our provider networks, or to arrange for the delivery of quality care; unfavorable or otherwise costly outcomes of lawsuits, regulatory investigations and audits and claims that arise from the extensive laws and regulations to which we are subject; unanticipated results of risk adjustment programs; delays in our receipt of premiums; disruptions or challenges to our relationship with the Oscar Medical Group; cyber-security breaches of our and our partners’ information and technology systems; unanticipated changes in population morbidity and large-scale changes in health care utilization; and the other factors set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, 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 June 30, 2022, 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 health care 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 one million members as of June 30, 2022. We offer Individual & Family, Small Group and Medicare Advantage plans, and +Oscar, our full stack technology platform, to others within the provider and payor space. Our vision is to refactor health care 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. Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Revenue
Premiums before ceded reinsurance	$	1,368,477			$	723,927			$	2,683,541			$	1,334,026
Reinsurance premiums ceded		(373,882	)			(195,768	)			(733,545	)			(437,330	)
Premiums earned		994,595				528,159				1,949,996				896,696
Administrative services revenue		20,452				353				38,945				694
Investment income and other revenue		2,272				769				1,143				1,279
Total revenue		1,017,319				529,281				1,990,084				898,669
Operating Expenses
Claims incurred, net		808,639				419,879				1,543,205				687,927
Other insurance costs		170,200				94,790				335,602				174,627
General and administrative expenses		80,754				51,166				155,418				115,738
Federal and state assessments		68,749				36,873				138,616				67,388
Premium deficiency reserve release		(4,536	)			(921	)			(7,741	)			(10,464	)
Total operating expenses		1,123,806				601,787				2,165,100				1,035,216
Loss from operations		(106,487	)			(72,506	)			(175,016	)			(136,547	)
Interest expense		6,141				228				10,362				3,925
Other expenses (income)		(793	)			—				2,260				—
Loss on extinguishment of debt		—				—				—				20,178
Loss before income taxes		(111,835	)			(72,734	)			(187,638	)			(160,650	)
Income tax provision		290				589				1,807				1,554
Net loss		(112,125	)			(73,323	)			(189,445	)			(162,204	)
Less: Net income (loss) attributable to noncontrolling interests		39				—				(2,129	)			—
Net loss attributable to Oscar Health, Inc.	$	(112,164	)		$	(73,323	)		$	(187,316	)		$	(162,204	)
Earnings (Loss) per Share
Net loss per share attributable to Oscar Health, Inc., basic and diluted	$	(0.53	)		$	(0.35	)		$	(0.89	)		$	(1.09	)
Weighted average common shares outstanding, basic and diluted		211,311,494				207,478,268				210,930,686				148,505,273

Oscar Health, Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts) (unaudited)
	June 30, 2022				December 31, 2021
Assets:
Current Assets:
Cash and cash equivalents	$	2,362,632			$	1,103,995
Short-term investments		909,006				587,086
Premiums and accounts receivable		174,249				138,414
Risk adjustment transfer receivable		54,518				40,659
Reinsurance recoverable		740,204				431,990
Other current assets		19,541				3,782
Total current assets		4,260,150				2,305,926
Property, equipment, and capitalized software, net		50,934				46,611
Long-term investments		314,836				844,476
Restricted deposits		27,179				28,085
Other assets		98,068				96,552
Total assets	$	4,751,167			$	3,321,650
Liabilities and Stockholders' Equity
Current Liabilities:
Benefits payable	$	880,527			$	513,582
Risk adjustment transfer payable		1,498,332				794,398
Premium deficiency reserve		21,505				29,246
Unearned premiums		72,691				75,044
Accounts payable and other liabilities		226,274				234,788
Reinsurance payable		430,919				205,231
Total current liabilities		3,130,248				1,852,289
Long-term debt		297,610				—
Other liabilities		74,906				76,839
Total liabilities		3,502,764				1,929,128
Commitments and contingencies
Stockholders' Equity
Preferred stock, $0.00001 par value; 82,500,000 shares authorized, none issued or outstanding as of June 30, 2022 and December 31, 2021		—				—
Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 177,036,132 shares issued and outstanding as of June 30, 2022 and 175,212,223 shares issued and outstanding as of December 31, 2021		2				2
Class B common stock, $0.00001 par value; 82,500,000 shares authorized, 35,115,807 shares issued and outstanding as of June 30, 2022 and December 31, 2021		—				—
Treasury stock (314,600 shares as of June 30, 2022 and December 31, 2021)		(2,923	)			(2,923	)
Additional paid-in capital		3,450,409				3,393,533
Accumulated deficit		(2,187,028	)			(1,999,712	)
Accumulated other comprehensive income (loss)		(15,221	)			(3,671	)
Total Oscar Health, Inc. stockholders' equity		1,245,239				1,387,229
Noncontrolling interests		3,164				5,293
Total stockholders' equity		1,248,403				1,392,522
Total liabilities and stockholders' equity	$	4,751,167			$	3,321,650

Oscar Health, Inc. Consolidated Statements of Cash Flows (in thousands) (unaudited)
	Six Months Ended June 30,
		2022				2021
Cash flows from operating activities:
Net loss		(189,445	)		$	(162,204	)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred taxes		4				26
Net realized gain (loss) on sale of financial instruments		508				(248	)
Loss on fair value of warrant liabilities		—				12,856
Depreciation and amortization expense		7,490				6,990
Amortization of debt issuance costs		324				329
Stock-based compensation expense		54,681				37,388
Investment amortization, net of accretion		3,141				3,029
Debt extinguishment loss		—				20,178
Changes in assets and liabilities:
(Increase) / decrease in:
Premiums and accounts receivable		(35,835	)			(20,307	)
Risk adjustment transfer receivable		(13,859	)			(8,759	)
Reinsurance recoverable		(308,214	)			179,219
Other assets		(16,826	)			(7,680	)
Increase / (decrease) in:
Benefits payable		366,945				95,408
Unearned premiums		(2,353	)			(8,022	)
Premium deficiency reserve		(7,741	)			(10,464	)
Accounts payable and other liabilities		(11,125	)			2,967
Reinsurance payable		225,687				(95,171	)
Risk adjustment transfer payable		703,934				327,493
Net cash provided by operating activities		777,316				373,028
Cash flows from investing activities:
Purchase of investments		(312,104	)			(1,198,325	)
Sale of investments		243,400				287,440
Maturity of investments		261,334				181,102
Purchase of property, equipment and capitalized software		(12,265	)			(12,531	)
Change in restricted deposits		1,023				—
Net cash provided by (used in) investing activities		181,388				(742,314	)
Cash flows from financing activities:
Proceeds from long-term debt		305,000				—
Payments of debt issuance costs		(7,035	)			—
Proceeds from joint venture contribution		1,271				—
Debt prepayment		—				(153,173	)
Debt extinguishment costs		—				(12,994	)
Proceeds from IPO, net of underwriting discounts		—				1,348,321
Offering costs from IPO		—				(9,447	)
Proceeds from exercise of warrants and call options		—				9,191
Proceeds from exercise of stock options		924				32,640
Net cash provided by financing activities		300,160				1,214,538
Increase in cash, cash equivalents and restricted cash equivalents		1,258,864				845,252
Cash, cash equivalents, restricted cash and cash equivalents—beginning of period		1,125,557				843,105
Cash, cash equivalents, restricted cash and cash equivalents—end of period	$	2,384,421			$	1,688,357
Cash and cash equivalents		2,362,632				1,671,540
Restricted cash and cash equivalents included in restricted deposits		21,789				16,817
Total cash, cash equivalents and restricted cash and cash equivalents	$	2,384,421			$	1,688,357
Supplemental Disclosures:
Interest payments	$	9,550			$	3,742
Income tax payments	$	1,105			$	814
Non-cash investing and financing activities:
Conversion of redeemable convertible preferred stock to common stock upon initial public offering	$	—			$	1,744,914
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 believe Direct and Assumed Policy Premiums is an important metric to assess the growth of our individual and small group plan offerings going forward. Management also views Direct and Assumed Policy Premiums as a key operating metric because each of our MLR, InsuranceCo Administrative Expense Ratio, InsuranceCo Combined Ratio and Adjusted Administrative Expense Ratio are calculated on the basis of Direct and Assumed Policy Premiums.

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								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
	(in thousands)
Direct claims incurred before ceded reinsurance (1)	$	1,092,416			$	598,904			$	2,102,451			$	1,056,123
Assumed reinsurance claims		32,555				2,308				56,797				4,085
Excess of loss ceded claims (2)		1,509				(4,837	)			(9,924	)			(9,573	)
State reinsurance (3)		(6,946	)			(2,826	)			(18,275	)			(5,169	)
Net claims before ceded quota share reinsurance (A)	$	1,119,534			$	593,549			$	2,131,049			$	1,045,466
Premiums before ceded reinsurance	$	1,368,477			$	723,927			$	2,683,541			$	1,334,026
Excess of loss reinsurance premiums (4)		(6,638	)			(3,277	)			(14,766	)			(6,212	)
Net premiums before ceded quota share reinsurance (B)	$	1,361,839			$	720,650			$	2,668,775			$	1,327,814
Medical Loss Ratio (A divided by B)		82.2	%			82.4	%			79.9	%			78.7	%

(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.

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 the impact of 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. The impact of the Company’s quota share arrangements is excluded from the numerator and denominator in the calculation below. Below is a calculation of our InsuranceCo Administrative Expense Ratio for the periods indicated.

	Three Months Ended								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
	(in thousands)
Other insurance costs	$	170,200			$	94,790			$	335,602			$	174,627
Impact of quota share reinsurance (1)		39,189				20,466				75,668				39,772
Stock-based compensation expense		(12,411	)			(9,171	)			(25,489	)			(18,866	)
Federal and state assessment of health insurance subsidiaries		68,561				36,616				138,772				67,214
Health insurance subsidiary adjusted administrative expenses(A)	$	265,539			$	142,701			$	524,553			$	262,747
Premiums before ceded reinsurance	$	1,368,477			$	723,927			$	2,683,541			$	1,334,026
Excess of loss reinsurance premiums		(6,638	)			(3,277	)			(14,766	)			(6,212	)
Net premiums before ceded quota share reinsurance(B)	$	1,361,839			$	720,650			$	2,668,775			$	1,327,814
Insurance Co Administrative Expense Ratio(A divided by B)		19.5	%			19.8	%			19.7	%			19.8	%

(1)

Includes ceding commissions received from reinsurers, net of the impact of deposit accounting of $(1,827) for the three months ended June 30, 2022 and $(3,659) for the six months ended June 30, 2022.

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 (“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 (“Adjusted Total Revenue”). Total Administrative Expenses are calculated as Total Operating Expenses, excluding non-administrative insurance-based expenses and the impact of quota share reinsurance. Adjusted Administrative Expenses are Total Administrative Expenses, net of non-cash and non-recurring expense items. Adjusted Administrative Expenses exclude 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								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
	(in thousands)
Total Operating Expenses	$	1,123,806			$	601,786			$	2,165,100			$	1,035,216
Claims incurred, net		(808,639	)			(419,879	)			(1,543,205	)			(687,927	)
Premium deficiency reserve release		4,536				921				7,741				10,464
Impact of quota share reinsurance (1)		39,189				20,466				75,668				39,772
Total Administrative Expenses	$	358,892			$	203,294			$	705,304			$	397,525
Stock-based compensation expense/warrant expense		(26,991	)			(18,273	)			(54,681	)			(50,245	)
Depreciation and amortization		(3,691	)			(3,587	)			(7,490	)			(6,990	)
Other non-recurring items (2)		—				—				—				(898	)
Adjusted Administrative Expenses (A)	$	328,210			$	181,434			$	643,133			$	339,392
Total Revenue	$	1,017,319			$	529,281			$	1,990,084			$	898,669
Reinsurance premiums ceded		373,882				195,768				733,545				437,330
Excess of loss reinsurance premiums		(6,638	)			(3,277	)			(14,766	)			(6,212	)
Adjusted Total Revenue (B)	$	1,384,563			$	721,772			$	2,708,863			$	1,329,787
Adjusted Administrative Expense Ratio (A divided by B)		23.7	%			25.1	%			23.7	%			25.5	%

(1)		Includes ceding commissions received from reinsurers, net of the impact of deposit accounting of $(1,827) for the three months ended June 30, 2022 and $(3,659) for the six months ended June 30, 2022.
(2)		Represents approximately $0.9 million of non-recurring expenses incurred in connection with the Company’s initial public offering (“IPO”) during the six months ended June 30, 2021.

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								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
	(in thousands)
Net loss	$	(112,125	)		$	(73,323	)		$	(189,445	)		$	(162,204	)
Interest expense		6,141				228				10,362				3,925
Other expenses		(793	)			—				2,260				—
Income tax expense		290				589				1,807				1,554
Depreciation and amortization		3,691				3,587				7,490				6,990
Stock-based compensation/warrant expense (1)		26,991				18,273				54,681				50,245
Other non-recurring items (2)		—				—				—				21,076
Adjusted EBITDA	$	(75,805	)		$	(50,646	)		$	(112,845	)		$	(78,414	)

(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 $20.2 million incurred on the prepayment of the Company's $150.0 million first lien term loan and approximately $0.9 million of non-recurring expenses incurred in connection with our IPO during the six months ended June 30, 2021.

Appendix

Reinsurance Impact

	Three Months Ended								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
	(in thousands)
Quota share ceded premiums	$	(383,337	)		$	(235,852	)		$	(743,265	)		$	(497,728	)
Quota share ceded claims		310,897				173,670				587,845				357,539
Ceding commission, net of deposit accounting impact (1)		39,189				20,466				75,668				39,772
Experience refund		16,093				43,485				24,486				66,710
Net quota share impact	$	(17,158	)		$	1,769			$	(55,266	)		$	(33,707	)

(1)

Includes ceding commissions received from reinsurers, net of the impact of deposit accounting of $(1,827) for the three months ended June 30, 2022 and $(3,659) for the six months ended June 30, 2022

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								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
	(in thousands)
Reinsurance premiums ceded, gross	$	(393,857	)		$	(239,253	)		$	(760,968	)		$	(504,040	)
Experience refunds		19,975				43,485				27,423				66,710
Reinsurance premiums ceded		(373,882	)			(195,768	)			(733,545	)			(437,330	)
Reinsurance premiums assumed		34,095				3,185				58,885				5,596
Total reinsurance premiums (ceded) and assumed	$	(339,787	)		$	(192,583	)		$	(674,660	)		$	(431,734	)

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								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
	(in thousands)
Direct claims incurred	$	1,092,416			$	598,904			$	2,102,451			$	1,056,123
Ceded reinsurance claims		(316,332	)			(181,333	)			(616,043	)			(372,281	)
Assumed reinsurance claims		32,555				2,308				56,797				4,085
Total claims incurred, net	$	808,639			$	419,879			$	1,543,205			$	687,927

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								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
	(in thousands)
Other insurance costs, gross	$	211,216			$	115,256			$	414,929			$	214,399
Reinsurance ceding commissions		(41,016	)			(20,466	)			(79,327	)			(39,772	)
Other insurance costs, net	$	170,200			$	94,790			$	335,602			$	174,627

The Company records reinsurance recoverables within current assets on its consolidated balance sheets. The composition of the reinsurance recoverable balance is as follows:

		June 30, 2022			December 31, 2021
		(in thousands)
Ceded reinsurance claim recoverables		$	647,299		$	406,017
Reinsurance ceding commissions			46,742			23,517
Experience refunds on reinsurance agreements			46,163			2,456
Reinsurance recoverable		$	740,204		$	431,990

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220811005701/en/

Investor Contact:

Cornelia Miller

VP of Investor Relations

ir@hioscar.com

917-397-0251



Media Contact:

Jackie Kahn

SVP of Communications

comms@hioscar.com

202-538-0128

Source: Oscar Health, Inc.

FAQ

What were Oscar Health's policy premiums for Q2 2022?

Oscar Health reported Direct and Assumed Policy Premiums of $1.7 billion for Q2 2022, a 101% increase YoY.

How did Oscar Health's membership change by June 30, 2022?

By June 30, 2022, Oscar Health's membership rose to 1,036,720, marking an 84% increase from the previous year.

What was Oscar Health's net loss for Q2 2022?

Oscar Health recorded a net loss of $112 million for the second quarter of 2022, which is an increase of $39 million YoY.

What is the Medical Loss Ratio for Oscar Health in Q2 2022?

Oscar Health's Medical Loss Ratio for Q2 2022 was 82.2%, down 20 basis points from the previous year.

What is Oscar Health's outlook for 2022?

Oscar Health reaffirms its outlook for 2022 across all metrics, expecting continued growth and improvement in profitability.