Oscar Health, Inc. Q3 FY2025 earnings call

• The individual market is crucial as it provides affordable coverage to 22 million Americans. 2025 is a reset moment for the individual market with higher market morbidity due to Medicaid lives entering and program integrity efforts.
• 2026 pricing strategy is disciplined with a weighted average rate increase of approximately 28%, resubmitted rate filings in states covering close to 99% of current membership.
• Oscar ended the first nine months of 2025 with more than 2 million members, a 28% increase over the prior year. Entering 2026 enrollment period, available in 20 states including new states Alabama and Mississippi.
• Diversified product mix includes HelloMeno for women's menopause experience and Oswell, an AI agent powered by OpenAI to help members manage health.
• ICRA initiatives with Hy-Vee Health with Oscar product live in Des Moines, Iowa for plan year 2026.

Total revenue for the third quarter was approximately $3 billion, a 23% increase year-over-year. Membership ended the quarter with 2.1 million members, a 28% increase year-over-year. The medical loss ratio (MLR) was 88.5%, an increase of approximately 380 basis points year-over-year. The SG&A expense ratio was 17.5%, meaningfully improving by approximately 150 basis points year-over-year. The loss from operations was $129 million, adjusted EBITDA loss was $101 million, and net loss for the quarter was $137 million.

• Reaffirmed 2025 guidance: total revenue towards low end of $12 billion to $12.2 billion range due to higher market morbidity; MLR expected in range of 86.0% to 87.0%; SG&A expense ratio in range of 17.1% to 17.6%; loss from operations in range of $200 million to $300 million; adjusted EBITDA loss approximately $120 million less than loss from operations.
• 2026 pricing strategy balanced membership and profitability with a weighted average rate increase of approximately 28%, resubmitted rate filings in states covering close to 99% of current membership, and focus on capturing share profitably as other carriers retreat.

• Higher market morbidity due to Medicaid lives entering the market and program integrity efforts.
• Expiration of enhanced premium tax credits potentially leading to market contraction.
• Uncertainty around policymakers' actions regarding tax credits and their impact on affordability of coverage.

Q: Regarding the September weekly report, is there any indication how much market morbidity shifts might be from things like FTR rechecks and removal of duplicative members heading into fourth quarter?

A: Richard Blackley said the Wakely report had market morbidity increases, drivers are similar to prior quarter, 45% of CMS' list on FTR or dual enrollments have churned, and they don't see reason to change expectations market morbidity will stay consistent through end of year.

Q: G&A, any confidence on achieving longer-term G&A target for '27 even with expected member attrition?

A: Mark Bertolini said they believe they have more room in SG&A, AI models can streamline operating costs, and they can adapt variable costs to fit business size if market shrinks.

Q: Elaborate on underlying cost trends in the quarter and changes from first half, and early thoughts on fourth quarter utilization increase?

A: Richard Blackley said $84 million in prior period development, half related to risk adjustment rebates, remainder from favorable claims development; utilization continues to moderate, inpatient elevated but moderating, outpatient professional slightly elevated, and they believe shifts are due to total cost of care initiatives.

Q: If there's a compromise extending enhanced subsidies, what mechanisms help consumers with 2026 enrollment?

A: Mark Bertolini said they've been careful with plan design and broker education, and if enhanced tax credits are extended, they can quickly outreach to impacted members.

Q: Elaborate on enrollment in diabetes, asthma, COPD specific plans and 2026 morbidity evolution?

A: Richard Blackley said these plans help with member engagement and retention, high NPS; Mark Bertolini said they priced as if premium tax credits are gone, morbidity impact depends on market shrinkage and program integrity efforts, and they're well covered depending on next year's morbidity.