Oscar Health Announces Results for Second Quarter 2022

·15 min read
  • 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, August 11, 2022--(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

)

...