For the year ended December 31, 2023:
Direct and Assumed Policy Premiums of $6.6 billion, a 3% decrease YoY
Premiums earned of $5.7 billion, a 47% increase YoY
Medical Loss Ratio of 81.6%, a 370 bps improvement YoY
InsuranceCo Administrative Expense Ratio of 17.9%, a 270 bps improvement YoY
InsuranceCo Combined Ratio of 99.5%, a 640 bps improvement YoY
Adjusted Administrative Expense Ratio of 21.0%, a 350 bps improvement YoY
Net loss of $271 million, an improvement of $339 million YoY
Adjusted EBITDA loss of $45 million, an improvement of $417 million YoY
NEW YORK–(BUSINESS WIRE)–Oscar Health, Inc. (“Oscar” or the “Company”) (NYSE: OSCR), a leading healthcare technology company, today announced its financial results for the fourth quarter and full year ended December 31, 2023.
“Oscar reported strong 2023 results with most core metrics exceeding our expectations for the full year. We delivered on our commitment for Insurance Company Adjusted EBITDA profitability and have a clear line of sight into consolidated Adjusted EBITDA profitability in 2024,” said Mark Bertolini, CEO of Oscar. “We are pleased to serve more than 1.3 million members this year and remain focused on driving long-term sustainable margin expansion.”
Total Direct and Assumed Policy Premiums for 2023 were $6.6 billion, down 3% year-over-year (“YoY”), driven primarily by lower membership, partially offset by rate increases. Premiums earned of $5.7 billion for the year increased 47% YoY, driven primarily by the impact of deposit accounting for quota share reinsurance agreements, and lower risk transfer per member as a percent of premiums.
Oscar’s InsuranceCo Combined Ratio, which is the sum of its Medical Loss Ratio (“MLR”) and the InsuranceCo Administrative Expense Ratio, improved 640 bps YoY to 99.5% for 2023, driven by both an improved MLR and administrative cost efficiencies. Specifically, the MLR improved 370 bps YoY to 81.6%, due to targeted rate increases and a disciplined pricing strategy and total cost of care initiatives. The InsuranceCo Administrative Expense Ratio improved 270 bps YoY to 17.9%, due to lower distribution expenses and higher net premiums as a result of lower risk transfer per member as a percent of premiums.
The Adjusted Administrative Expense Ratio for 2023 improved 350 bps YoY to 21.0%, due to lower distribution expenses, higher net premiums as a result of lower risk transfer per member as a percent of premiums, and higher net investment income. The Adjusted EBITDA loss of $45 million improved by $417 million YoY, and decreased as a percentage of premiums before ceded reinsurance by 8 points as compared to the prior year. Net loss of $271 million improved by $339 million YoY and decreased as a percentage of premiums before ceded reinsurance by 7 points compared to the prior year.
The Company is introducing its outlook for 2024 including two new metrics, Total Revenue and SG&A Expense Ratio. The Company anticipates Total Revenue of $8.3 billion to $8.4 billion, a Medical Loss Ratio of 80.2% to 81.2%, a SG&A Expense Ratio of 20.5% to 21.0%, and Total Company Adjusted EBITDA of $125 million to $175 million. For more information on these metrics, see the “2024 Outlook and Supplemental Information” on page 3 in this release.
Financial Results Summary
Three Months Ended December 31,
Year Ended December 31,
(in thousands)
2023
2022
2023
2022
Premiums before ceded reinsurance
$
1,391,193
$
1,332,931
$
5,696,978
$
5,334,520
Reinsurance premiums ceded
(798
)
(365,474
)
(10,909
)
(1,463,403
)
Premiums earned
$
1,390,395
$
967,457
$
5,686,069
$
3,871,117
Total revenue
$
1,431,658
$
995,127
$
5,862,869
$
3,963,638
Total operating expenses
$
1,577,135
$
1,217,606
$
6,098,484
$
4,553,505
Net loss
$
(149,838
)
$
(226,560
)
$
(270,594
)
$
(609,552
)
Key Metrics and Non-GAAP Financial Metrics
Three Months Ended December 31,
Year Ended December 31,
(in thousands, except percentages)
2023
2022
2023
2022
Direct and Assumed Policy Premiums
$
1,676,673
$
1,784,012
$
6,647,658
$
6,842,439
Medical Loss Ratio
86.4
%
91.6
%
81.6
%
85.3
%
InsuranceCo Administrative Expense Ratio
18.8
%
22.3
%
17.9
%
20.6
%
InsuranceCo Combined Ratio
105.2
%
113.9
%
99.5
%
105.8
%
Adjusted Administrative Expense Ratio
22.7
%
26.0
%
21.0
%
24.6
%
Adjusted EBITDA (1)
$
(111,593
)
$
(189,656
)
$
(45,238
)
$
(462,255
)
(1)
Adjusted EBITDA is a non-GAAP measure. See “Key Operating and Non-GAAP Financial Metrics – Adjusted EBITDA” in this release for a reconciliation to net loss, the most directly comparable GAAP measure, and for information regarding Oscar’s use of Adjusted EBITDA.
Membership by Offering
As of December 31,
2023
2022
Individual and Small Group
967,002
1,084,404
Medicare Advantage
1,781
4,452
Cigna + Oscar (1)
67,500
62,627
Total Members
1,036,283
1,151,483
(1)
Represents total membership for Oscar’s co-branded partnership with Cigna.
2024 Outlook and Supplemental Information
We regularly review a number of metrics to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions. Beginning in 2024, the Company intends to provide guidance on four metrics: Total Revenue, Medical Loss Ratio, SG&A Expense Ratio and Adjusted EBITDA. The following table presents the Company’s 2024 financial outlook, along with full year 2023 results for such measures, calculated in accordance with the Company’s intended reporting approach for future periods.
The information included in this table represents 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. The historical financial information included in this table is unaudited and has no impact on the Company’s audited financial statements and results of operations to be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Oscar Health, Inc.
2024 Financial Guidance Summary
Full Year 2024 Outlook
(in thousands, except percentages)
Full Year 2023 Actual
Low
High
Total Revenue (1)
$
5,862,869
$
8,300,000
$
8,400,000
Medical Loss Ratio (2)
81.6
%
80.2
%
81.2
%
SG&A Expense Ratio (3)
24.3
%
20.5
%
21.0
%
Adjusted EBITDA (4) (5)
$
(45,238
)
$
125,000
$
175,000
(1)
Total Revenue includes Net Premiums, Service revenue generated from our +Oscar business, and Investment (and other) income. We believe Revenue is an important metric to assess the growth of our insurance business and our +Oscar business, as well as the earnings potential of our investment portfolio.
(2)
Medical loss ratio (MLR) is total medical expenses incurred less any member cost sharing as a percentage of premiums before ceded reinsurance. We believe MLR is an important metric to demonstrate the ratio of our costs to pay for healthcare of our members to the premiums before ceded reinsurance.
(3)
The Selling, General, and Administrative (SG&A) Expense ratio is calculated as selling, general and administrative expenses as a percentage of Total Revenue. We believe the SG&A Expense ratio is useful to evaluate our ability to manage our overall selling, general, and administrative cost base.
(4)
Adjusted EBITDA, a non-GAAP measure, is defined as Net Income (Loss) for the Company and its consolidated subsidiaries before interest expense, income tax expense (benefit), depreciation and amortization, as further adjusted for stock-based compensation, and other items that are considered unusual or not representative of underlying trends of our business, where applicable for the period presented. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry.
(5)
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.
Quarterly Conference Call Details
Oscar will host a conference call to discuss the financial results today, February 7, 2024, at 5:00 p.m. (ET). A live audio webcast will be available via the Investor Relations page of Oscar’s website at ir.hioscar.com. A replay of the webcast will be available for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.
Non-GAAP Financial Information
This release presents Adjusted EBITDA and InsuranceCo Adjusted EBITDA, non-GAAP financial metrics, which are provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A reconciliation of historical non-GAAP financial information to the most directly comparable GAAP financial measure is provided in the accompanying tables found at the end of this release. For more information regarding Adjusted EBITDA, please see “Key Operating and Non-GAAP Financial Metrics” below.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained herein are forward-looking statements. These statements include, but are not limited to, statements about our financial outlook and estimates, including Total Revenue, Medical Loss Ratio, SG&A Expense Ratio and Adjusted EBITDA and other financial performance metrics, and the related underlying assumptions, our business and financial prospects, and our management’s plans and objectives for future operations, expectations and business strategy. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict and generally beyond our control.
Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: our ability to execute our strategy and manage our growth effectively; our ability to retain and expand our member base; heightened competition in the markets in which we participate; our ability to accurately estimate our incurred medical expenses or effectively manage our medical costs or related administrative costs; our ability to achieve or maintain profitability in the future; changes in federal or state laws or regulations, including changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”) and any regulations enacted thereunder; our ability to comply with ongoing regulatory requirements, including capital reserve and surplus requirements and applicable performance standards; changes or developments in the health insurance markets in the United States, including passage and implementation of a law to create a single-payer or government-run health insurance program; our, or any of our vendor’s, ability to comply with laws, regulations, and standards related to the handling of information about individuals or applicable consumer protection laws, including as a result of our participation in government-sponsored programs, such as Medicare; our ability to arrange for the delivery of quality care and maintain good relations with the physicians, hospitals, and other providers within and outside our provider networks; unanticipated results of, or changes to, risk adjustment programs; our ability to utilize quota share reinsurance to reduce our capital and surplus requirements and protect against downside risk on medical claims; unfavorable or otherwise costly outcomes of lawsuits and claims that arise from the extensive laws and regulations to which we are subject; our ability to attract and retain qualified personnel; incurrence of data security breaches of our and our partners’ information and technology systems; our ability to detect and prevent material weaknesses or significant control deficiencies in our internal controls over financial reporting or other failure to maintain an effective system of internal controls; adverse publicity or other adverse consequences related to our dual class structure or “controlled company” status; and the other factors set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, filed with the Securities and Exchange Commission (“SEC”), and our other filings with the SEC, including our Annual Report on Form 10-K for the annual period ended December 31, 2023, to be filed with the SEC.
You are cautioned not to place undue reliance on any forward-looking statements made in this press release. Any forward-looking statement speaks only as of the date as of which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise.
About Oscar Health
Oscar Health, Inc. (“Oscar”) is the first health insurance company built around a full stack technology platform and a relentless focus on serving its members. At Oscar, our mission is to make a healthier life accessible and affordable for all. Headquartered in New York City, Oscar has been challenging the healthcare system’s status quo since our founding in 2012. The company’s member-first philosophy and innovative approach to care has earned us the trust of one million members, as of December 31, 2023. We offer Individual & Family and Small Group plans, and +Oscar, our full stack technology platform, to others within the provider and payor space. Our vision is to refactor healthcare to make good care cost less. Refactor is a term used in software engineering that means to improve the design, structure, and implementation of the software, while preserving its functionality. At Oscar, we take this definition a step further. We improve our members’ experience by building trust through deep engagement, personalized guidance, and rapid iteration.
Oscar Health, Inc.
Consolidated Statements of Operations
Three Months Ended December 31,
Year Ended December 31,
(in thousands, except share and per share amounts)
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
Revenue
Premiums before ceded reinsurance
$
1,391,193
$
1,332,931
$
5,696,978
$
5,334,520
Reinsurance premiums ceded
(798
)
$
(365,474
)
(10,909
)
(1,463,403
)
Premiums earned
1,390,395
967,457
5,686,069
3,871,117
Administrative services revenue
3,830
2,681
15,442
61,047
Investment income and other revenue
37,433
24,989
161,358
31,474
Total revenue
1,431,658
995,127
5,862,869
3,963,638
Operating Expenses
Claims incurred, net
1,205,239
884,904
4,642,024
3,280,798
Other insurance costs
206,379
195,859
824,457
706,439
General and administrative expenses
85,610
75,808
339,716
309,783
Federal and state assessments
74,311
71,788
290,725
281,518
Premium deficiency reserve (release)
5,596
(10,753
)
1,562
(25,033
)
Total operating expenses
1,577,135
1,217,606
6,098,484
4,553,505
Loss from operations
(145,477
)
(222,479
)
(235,615
)
(589,867
)
Interest expense
6,217
6,135
24,603
22,623
Other expenses (income)
(1,050
)
(1,339
)
7,082
(2,415
)
Loss before income taxes
(150,644
)
(227,275
)
(267,300
)
(610,075
)
Income tax expense (benefit)
(806
)
(715
)
3,294
(523
)
Net loss
(149,838
)
(226,560
)
(270,594
)
(609,552
)
Less: Net income (loss) attributable to noncontrolling interests
$
192
$
(514
)
$
134
$
(3,277
)
Net loss attributable to Oscar Health, Inc.
$
(150,030
)
$
(226,046
)
$
(270,728
)
$
(606,275
)
Earnings (Loss) per Share
Net loss per share attributable to Oscar Health, Inc., basic and diluted
$
(0.66
)
$
(1.05
)
$
(1.22
)
$
(2.85
)
Weighted average common shares outstanding, basic and diluted
227,082,062
215,194,230
221,655,493
212,474,615
Oscar Health, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
December 31, 2023
December 31, 2022
(unaudited)
Assets:
Current Assets:
Cash and cash equivalents
1,870,315
1,558,595
Short-term investments
689,833
1,397,287
Premiums and accounts receivable (net of allowance for credit losses of $31,600 and $2,988)
201,269
216,475
Risk adjustment transfer receivable
51,925
49,861
Reinsurance recoverable
241,194
892,887
Other current assets
6,564
6,450
Total current assets
3,061,100
4,121,555
Property, equipment, and capitalized software, net
61,930
59,888
Long-term investments
365,309
222,919
Restricted deposits
29,870
27,483
Other assets
83,271
94,756
Total Assets
3,601,480
4,526,601
Liabilities and Stockholders’ Equity
Current Liabilities:
Benefits payable
965,986
937,727
Risk adjustment transfer payable
1,056,941
1,517,493
Premium deficiency reserve
5,776
4,214
Unearned premiums
65,918
78,998
Accounts payable and other liabilities
273,367
297,841
Reinsurance payable
61,024
427,649
Total current liabilities
2,429,012
3,263,922
Long-term debt
298,777
297,999
Other liabilities
67,574
72,280
Total liabilities
2,795,363
3,634,201
Commitments and contingencies
Stockholders’ Equity
Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 193,874,843 and 181,176,239 shares outstanding as of December 31, 2023 and 2022, respectively
2
2
Class B common stock, $0.00001 par value; 82,500,000 shares authorized, 35,514,201 and 35,115,807 shares outstanding as of December 31, 2023 and 2022, respectively
—
—
Treasury stock (314,600 shares as of December 31, 2023 and 2022)
(2,923
)
(2,923
)
Additional paid-in capital
3,682,294
3,509,007
Accumulated deficit
(2,876,715
)
(2,605,987
)
Accumulated other comprehensive income (loss)
1,309
(9,715
)
Total Oscar Health, Inc. stockholders’ equity
803,967
890,384
Noncontrolling interests
2,150
2,016
Total stockholders’ equity
806,117
892,400
Total Liabilities and Stockholders’ Equity
3,601,480
4,526,601
Oscar Health, Inc.
Consolidated Statements of Cash Flows
Year Ended December 31,
(in thousands)
2023
2022
(unaudited)
Cash flows from operating activities:
Net loss
(270,594
)
$
(609,552
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Deferred taxes
58
(165
)
Net realized loss (gain) on sale of financial instruments
70
1,274
Depreciation and amortization expense
30,694
15,283
Amortization of debt issuance costs
778
713
Stock-based compensation expense
159,683
112,329
Net amortization (accretion) of investments
(29,374
)
2,480
Provision for credit losses
28,612
2,988
Changes in assets and liabilities:
(Increase) / decrease in:
Premiums and accounts receivable
(13,405
)
(81,049
)
Risk adjustment transfer receivable
(2,063
)
(9,202
)
Reinsurance recoverable
651,693
(460,897
)
Other assets
11,307
(243
)
Increase / (decrease) in:
Benefits payable
28,258
424,146
Unearned premiums
(13,080
)
3,953
Premium deficiency reserve
1,562
(25,033
)
Accounts payable and other liabilities
(29,180
)
57,811
Reinsurance payable
(366,626
)
222,418
Risk adjustment transfer payable
(460,552
)
723,095
Net cash (used in) provided by operating activities
(272,159
)
380,349
Cash flows from investing activities:
Purchase of investments
(836,982
)
(1,192,706
)
Sale of investments
31,857
360,616
Maturity of investments
1,410,166
633,467
Purchase of property, equipment and capitalized software
(25,577
)
(29,012
)
Change in restricted deposits
(2,277
)
1,116
Net cash (used in) provided by investing activities
577,187
(226,519
)
Cash flows from financing activities:
Proceeds from long-term debt
—
305,000
Payments of debt issuance costs
—
(7,035
)
Proceeds from joint venture contribution
2,490
1,846
Proceeds from exercise of stock options
3,956
1,299
Net cash provided by financing activities
6,446
301,110
Increase in cash, cash equivalents and restricted cash equivalents
311,474
454,940
Cash, cash equivalents, restricted cash and cash equivalents—beginning of period
1,580,497
1,125,557
Cash, cash equivalents, restricted cash and cash equivalents—end of period
$
1,891,971
$
1,580,497
Cash and cash equivalents
1,870,315
1,558,595
Restricted cash and cash equivalents included in restricted deposits
21,656
21,902
Total cash, cash equivalents and restricted cash and cash equivalents
$
1,891,971
$
1,580,497
Year Ended December 31,
(in thousands)
2023
2022
Supplemental Disclosures:
Interest payments
$
23,156
$
10,079
Income tax payments
$
2,414
$
1,893
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.
Contacts
Investor Contact:
Chris Potochar
VP of Investor Relations
[email protected]
Media Contact:
Kristen Prestano
VP of Communications
[email protected]
