Oscar Health, Inc. Q4 FY2025 earnings call

• Total revenue grew 28% year-over-year to $11.7 billion in 2025.
• SG&A expense ratio improved by 160 basis points to 17.5% due to efficiency gains through growth, disciplined expense management, and AI/technology advancements.
• MLR increased to 87.4% in 2025, primarily due to higher market morbidity leading to higher risk adjustment payable.
• 2026 outlook includes expected significant improvement in earnings from operations by nearly $750 million.
• 2025 was a reset year for the industry with market morbidity changes; Oscar positioned for growth in 2026 with disciplined pricing, distribution, and product strategy.
• 2026 open enrollment was record-breaking with 3.4 million members as of February 1, 2026, and expected 3 million paid members by second quarter.
• Product innovation included lifestyle offerings like Hello Menno, Salud, and Hive Health.
• AI investments improved efficiency, with Agentic AI bot reducing response times and Oswell health agent improving accuracy in member interactions.

Total revenue for the fourth quarter and full year 2025 was $11.7 billion, a 28% year-over-year increase. SG&A expense ratio was 17.5%, improving by approximately 160 basis points year-over-year. MLR increased 570 basis points year-over-year to 87.4%. 2025 loss from operations was $396 million, primarily due to higher market morbidity. For 2026, total revenues are expected to be in the range of $18.7 billion to $19 billion, a 61% year-over-year increase at the midpoint. Medical loss ratio is expected to be in the range of 82.4% to 83.4%, representing 450 basis points of year-over-year improvement at the midpoint. SG&A expense ratio is expected to be in the range of 15.8% to 16.3%, an approximately 140 basis point year-over-year improvement at the midpoint. Earnings from operations are expected to be in the range of $250 million to $450 million, a significant improvement year-over-year.

• Total revenues for 2026 are expected to be in the range of $18.7 billion to $19 billion, a 61% year-over-year increase at the midpoint.
• Medical loss ratio is expected to be in the range of 82.4% to 83.4%, representing 450 basis points of year-over-year improvement at the midpoint.
• SG&A expense ratio is expected to be in the range of 15.8% to 16.3%, an approximately 140 basis point year-over-year improvement at the midpoint.
• Earnings from operations are expected to be in the range of $250 million to $450 million, a significant improvement year-over-year.
• Adjusted EBITDA is expected to be approximately $115 million higher than earnings from operations.

• Uncertainty regarding market morbidity changes and their impact on financial performance.
• Potential for passive-enrolled members to exit the market due to higher premiums, leading to uncertainty in final paid membership and market contraction.
• Delayed clarity from CMS on final enrollment data affecting ability to accurately project membership and financials.
• Risk of members dropping coverage due to inability to afford out-of-pocket costs associated with plans.

Q: How do you get comfort on new membership coming in for 2026 and why MLRs will be down so much?

A: We bifurcate membership into renewing members with known behaviors and new members. We leverage third-party data for new members to get clinical information and better insights. On MLR, utilization was modestly higher than expected in Q4, but risk adjustment true-up and other factors are considered. For 2026, we have built in expectations and used historical experience and data triangulation.

Q: Can you elaborate on the fourth quarter utilization pull forward?

A: Utilization was modestly higher than expected in the quarter. Members losing subsidies likely sought care, driving increases in outpatient and professional utilization. Substance abuse disorders, mental health benefits, and labs also ticked up, but these activities don't give major concern for carryforward impact.

Q: Talk about the mix of metal tiers. How is bronze performing and how are you thinking about this time around?

A: There has been a significant transition from silver to other metal mixes. Bronze has historically been a high-performing product, and we are comfortable with the growth in bronze. Our general philosophy is that plans need to have margins in a tight band, and we expect all metals to generate strong contribution. Bronze may have higher churn due to higher deductibles, but we are comfortable with the transition.