Membership as of September 30, 2022 of 1,075,445, an 81% increase YoY
For the quarter ended September 30, 2022:
Direct and assumed policy premiums of $1.7 billion, an 87% increase YoY
Premiums earned of $954 million, a 116% increase YoY
Medical Loss Ratio of 89.9%, decreased 980 bps YoY
InsuranceCo Administrative Expense Ratio of 20.7%, decreased 240 bps YoY
InsuranceCo Combined Ratio of 110.6%, decreased 1,220 bps YoY
Adjusted Administrative Expense Ratio of 24.8%, decreased 510 bps YoY
Net loss of $194 million, an improvement of $18 million YoY; Adjusted EBITDA loss of $160 million, an improvement of $28 million YoY
NEW YORK–(BUSINESS WIRE)–Health insurtech company Oscar Health, Inc. (NYSE: OSCR) today announced its financial results for the third quarter ended September 30, 2022.
“As we look to 2023, we believe we are well positioned to achieve our profitability target for the InsureCo and we are focused on driving continued margin expansion across the business,” said Mario Schlosser, CEO and Co-Founder of Oscar. “With the positive leverage we see in our business, we are now targeting Total Company profitability in 2024, a year earlier than previously expected.”
Total Direct and Assumed Policy Premiums were $1.7 billion in the quarter, up 87% year-over-year (“YoY”), driven primarily by higher membership, rate increases and mix shifts to higher premium Silver plans. Premiums earned in the quarter were up 116% YoY, driven by largely the same factors that drove the increase in Direct and Assumed Policy Premiums, as well as lower ceded reinsurance premiums YoY.
Oscar’s InsuranceCo Combined Ratio, which is the sum of its Medical Loss Ratio (“MLR”) and the InsuranceCo Administrative Expense Ratio, improved 1,220 bps YoY to 110.6%, driven by both an improved MLR and administrative cost efficiencies. Specifically, the MLR improved 980 bps YoY to 89.9%, primarily due to lower net COVID-19 related costs, lower impact of unfavorable prior period, and pricing actions coupled with mix shifts in the population. The InsuranceCo Administrative Expense Ratio improved 240 bps YoY to 20.7%, driven by operating expense leverage, partially offset by higher distribution expenses.
The Adjusted Administrative Expense Ratio decreased 510 bps YoY to 24.8%, primarily due to operating expense leverage, partially offset by distribution expenses and additional expenses related to the cost of addressing operational challenges related to scale and implementing and performing under +Oscar arrangements. Net loss of $194 million improved by $18 million YoY and improved as a percentage of premiums before ceded reinsurance by 16 points YoY. The Adjusted EBITDA loss of $160 million improved by $28 million YoY, and also improved as a percentage of premiums before ceded reinsurance by 16 points as compared to the prior period.
Oscar is updating its FY22 outlook to reflect the impact of higher membership. The Company now expects Direct and Assumed Policy Premiums will be $6.7 billion to $6.9 billion and Adjusted EBITDA loss will be modestly above the ($480 million) high-end of the prior range of ($380 million) to ($480 million).
Effective December 1, Oscar’s current Chief Financial Officer (“CFO”), R. Scott Blackley, will transition to the new role of Chief Transformation Officer and the Company’s former CFO and current Board Member, Sid Sankaran, will return as Interim CFO. As part of his new role, Mr. Blackley will focus on aligning the overall revenues with costs to drive both Insurance company and Total company profitability. He will specifically oversee the Company’s operations, +Oscar business, and corporate strategy. Mr. Sankaran will oversee treasury, actuarial, financial reporting, capital management and investor relations functions.
Financial Results Summary
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
(in thousands)
Premiums before ceded reinsurance
$
1,318,048
$
673,460
$
4,001,589
$
2,007,486
Reinsurance premiums ceded
(364,384
)
(231,717
)
(1,097,929
)
(669,047
)
Premiums earned
$
953,664
$
441,743
$
2,903,660
$
1,338,439
Total revenue
$
978,427
$
443,979
$
2,968,511
$
1,342,648
Total operating expenses
$
1,170,799
$
655,659
$
3,335,899
$
1,690,875
Net loss
$
(193,547
)
$
(211,481
)
$
(382,992
)
$
(373,685
)
Key Metrics and Non-GAAP Financial Metrics
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Direct and Assumed Policy Premiums (in thousands)
$
1,682,289
$
899,237
$
5,058,427
$
2,563,722
Medical Loss Ratio
89.9
%
99.7
%
83.2
%
85.8
%
InsuranceCo Administrative Expense Ratio
20.7
%
23.1
%
20.0
%
20.9
%
InsuranceCo Combined Ratio
110.6
%
122.8
%
103.2
%
106.7
%
Adjusted Administrative Expense Ratio
24.8
%
29.9
%
24.1
%
27.0
%
Adjusted EBITDA(1) (in thousands)
$
(159,754
)
$
(187,395
)
$
(272,599
)
$
(265,810
)
(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
September 30,
2022
September 30,
2021
Individual and Small Group
1,017,544
582,236
Medicare Advantage
4,577
3,881
Cigna + Oscar(1)
53,324
8,167
Total Members
1,075,445
594,284
(1) Represents total membership for Oscar’s co-branded partnership with Cigna.
Full Year 2022 Outlook
Direct and Assumed Policy premiums (in thousands) of $6,700,000 – $6,900,000
Medical Loss Ratio near the midpoint of the 84% – 86% range
InsuranceCo Administrative Expense Ratio at the high-end of the 19.5% – 20.5% range
InsuranceCo Combined Ratio towards the high-end of the 104% – 106% range
Adjusted Administrative Expense Ratio near the midpoint of the 24% – 26% range
Adjusted EBITDA(1) loss (in thousands) modestly above the ($480,000) high-end of the ($480,000) – ($380,000) range
(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, November 8, 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 metrics, and the related underlying assumptions, our business and financial prospects, and our management’s plans and objectives for future operations, expectations and business strategy. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict and generally beyond our control.
Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: 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 meet increased capital requirements as a result of expanding membership; 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 June 30, 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 September 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 September 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 September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Revenue
Premiums before ceded reinsurance
$
1,318,048
$
673,460
$
4,001,589
$
2,007,486
Reinsurance premiums ceded
(364,384
)
(231,717
)
(1,097,929
)
(669,047
)
Premiums earned
953,664
441,743
2,903,660
1,338,439
Administrative services revenue
19,421
1,548
58,366
2,242
Investment income and other revenue
5,342
688
6,485
1,967
Total revenue
978,427
443,979
2,968,511
1,342,648
Operating Expenses
Claims incurred, net
852,689
453,576
2,395,894
1,141,503
Other insurance costs
174,978
111,302
510,580
285,929
General and administrative expenses
78,557
60,003
233,975
175,741
Federal and state assessments
71,114
35,453
209,730
102,841
Premium deficiency reserve release
(6,539
)
(4,675
)
(14,280
)
(15,139
)
Total operating expenses
1,170,799
655,659
3,335,899
1,690,875
Loss from operations
(192,372
)
(211,680
)
(367,388
)
(348,227
)
Interest expense
6,126
398
16,488
4,323
Other expenses (income)
(3,336
)
—
(1,076
)
—
Loss on extinguishment of debt
—
—
—
20,178
Loss before income taxes
(195,162
)
(212,078
)
(382,800
)
(372,728
)
Income tax expense (benefit)
(1,615
)
(597
)
192
957
Net loss
(193,547
)
(211,481
)
(382,992
)
(373,685
)
Less: Net income (loss) attributable to noncontrolling interests
(634
)
—
(2,763
)
—
Net loss attributable to Oscar Health, Inc.
$
(192,913
)
$
(211,481
)
$
(380,229
)
$
(373,685
)
Earnings (Loss) per Share
Net loss per share attributable to Oscar Health, Inc., basic and diluted
$
(0.91
)
$
(1.02
)
$
(1.80
)
$
(2.22
)
Weighted average common shares outstanding, basic and diluted
212,822,733
208,159,343
211,560,332
168,585,157
Oscar Health, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
September 30, 2022
December 31, 2021
Assets:
Current Assets:
Cash and cash equivalents
$
2,112,930
$
1,103,995
Short-term investments
718,228
587,086
Premiums and accounts receivable
215,471
138,414
Risk adjustment transfer receivable
44,256
40,659
Reinsurance recoverable
824,478
431,990
Other current assets
15,811
3,782
Total current assets
3,931,174
2,305,926
Property, equipment, and capitalized software, net
56,492
46,611
Long-term investments
196,454
844,476
Restricted deposits
27,459
28,085
Other assets
97,130
96,552
Total assets
$
4,308,709
$
3,321,650
Liabilities and Stockholders’ Equity
Current Liabilities:
Benefits payable
$
995,760
$
513,582
Risk adjustment transfer payable
1,078,694
794,398
Premium deficiency reserve
14,966
29,246
Unearned premiums
75,134
75,044
Accounts payable and other liabilities
252,358
234,788
Reinsurance payable
435,632
205,231
Total current liabilities
2,852,544
1,852,289
Long-term debt
297,805
—
Other liabilities
73,791
76,839
Total liabilities
3,224,140
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 September 30, 2022 and December 31, 2021
—
—
Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 179,639,669 shares issued and outstanding as of September 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 September 30, 2022 and December 31, 2021
—
—
Treasury stock (314,600 shares as of September 30, 2022 and December 31, 2021)
(2,923
)
(2,923
)
Additional paid-in capital
3,479,392
3,393,533
Accumulated deficit
(2,379,941
)
(1,999,712
)
Accumulated other comprehensive income (loss)
(14,491
)
(3,671
)
Total Oscar Health, Inc. stockholders’ equity
1,082,039
1,387,229
Noncontrolling interests
2,530
5,293
Total stockholders’ equity
1,084,569
1,392,522
Total liabilities and stockholders’ equity
$
4,308,709
$
3,321,650
Oscar Health, Inc.
Consolidated Statements of Cash Flows
(in thousands) (unaudited)
Nine Months Ended September 30,
2022
2021
Cash flows from operating activities:
Net loss
(382,992
)
$
(373,685
)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred taxes
6
8
Net realized gain (loss) on sale of financial instruments
1,269
(268
)
Loss on fair value of warrant liabilities
—
12,856
Depreciation and amortization expense
11,548
10,635
Amortization of debt issuance costs
519
329
Stock-based compensation expense
83,241
58,028
Investment amortization, net of accretion
4,138
5,490
Debt extinguishment loss
—
20,178
Changes in assets and liabilities:
(Increase) / decrease in:
Premiums and accounts receivable
(77,057
)
(52,211
)
Risk adjustment transfer receivable
(3,597
)
(11,941
)
Reinsurance recoverable
(392,488
)
165,604
Other assets
(12,159
)
(6,434
)
Increase / (decrease) in:
Benefits payable
482,178
185,410
Unearned premiums
90
(15,729
)
Premium deficiency reserve
(14,280
)
(15,139
)
Accounts payable and other liabilities
13,842
25,788
Reinsurance payable
230,401
(122,003
)
Risk adjustment transfer payable
284,296
(103,140
)
Net cash provided by (used in) operating activities
228,955
(216,224
)
Cash flows from investing activities:
Purchase of investments
(343,178
)
(1,525,908
)
Sale of investments
360,449
422,030
Maturity of investments
483,224
364,254
Purchase of property, equipment and capitalized software
(21,882
)
(18,679
)
Change in restricted deposits
1,548
3,625
Net cash provided by (used in) investing activities
480,161
(754,678
)
Cash flows from financing activities:
Proceeds from long-term debt
305,000
—
Payments of debt issuance costs
(7,035
)
—
Proceeds from joint venture contribution
1,324
—
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
1,294
43,841
Net cash provided by financing activities
300,583
1,225,739
Increase in cash, cash equivalents and restricted cash equivalents
1,009,699
254,837
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
$
2,135,256
$
1,097,942
Cash and cash equivalents
2,112,930
1,076,699
Restricted cash and cash equivalents included in restricted deposits
22,326
21,243
Total cash, cash equivalents and restricted cash and cash equivalents
$
2,135,256
$
1,097,942
Supplemental Disclosures:
Interest payments
$
9,810
$
3,994
Income tax payments
$
1,660
$
936
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.
Contacts
Investor Contact:
Cornelia Miller
VP of Investor Relations
[email protected]
917-397-0251
Media Contact:
Jackie Kahn
SVP of Communications
[email protected]
202-538-0128
