Oscar Health, Inc. Q1 FY2025 earnings call

• Top line growth: Total revenue up 42% to $3B, net income up $98M to $275M.
• Margin improvements: Operating margin at 9.8%, SG&A ratio at 15.8% (lowest ever).
• Membership: ~2 million effectuated members, 41% YOY growth.
• Innovations: Launched Oscar Community Resources, Virtual Urgent Care, and an AI tool for care guides.
• Market presence: Deepening market presence via new partnerships.

Oscar reported total revenue of $3 billion in the first quarter, a 42% year-over-year increase. Net income was approximately $275 million, a $98 million improvement from the prior year. Earnings from operations grew to $297 million, an $112 million increase year-over-year. Operating margin improved to 9.8%, up 110 basis points year-over-year. MLR increased to 75.4%, primarily due to the 2024 risk adjustment true up. SG&A ratio was 15.8%, the lowest in the company's history, a 260 basis point improvement year-over-year. The quarter ended with approximately 2 million effectuated members, a 41% year-over-year increase.

• Reaffirmed 2025 full year guidance: Total revenue $11.2B-$11.3B, MLR 80.7%-81.7%, SG&A ratio 17.6%-18.1%, earnings from operations $225M-$275M.
• Membership outlook adjusted for end of monthly SEP for those below 150% FPL, but no change to revenue guidance.

• Regulatory changes: Shortened enrollment periods limit shopping, potential impact on enrollment.
• Fraud/integrity: CMS proposals on integrity may affect market stability and enrollment.
• Pricing and mix: Uncertainty around risk adjustment, CSR refunds, and their impact on margins.

Q: Membership trend for second quarter and year-end?

A: Membership to trend up in first half, then down in back half, expected to end year around 1.8 million.

Q: Grace period membership and risk adjustment?

A: Grace period membership expected to normalize, PPD of $30M unfavorable, risk adjustment impact on MLR discussed.

Q: Competitor exits and risk adjustment?

A: Competitor exits seen as opportunity, risk adjustment levels play field for all.

Q: Regulatory environment and enrollment?

A: Support CMS integrity efforts but oppose shortened enrollment periods, need for extended enrollment.

Q: Risk adjustment and SG&A seasonality?

A: Risk adjustment impact on MLR seasonality, SG&A expense ratio expected to increase gradually.

Q: G&A drivers and 2026 margin?

A: G&A improvement from fixed cost leverage, variable cost efficiencies; focused on disciplined pricing for 2026 margins.

Q: Fraudulent members and regulatory impact?

A: Monitoring regulatory impacts, not sizing government estimates yet.

Q: CSR refunds and pricing structure?

A: Oppose CSR refunds for 2026 due to significant undertaking for implementation.