Oscar Health Q1 2025 Earnings Report

Oscar Health EPS Results

• Actual EPS: $0.92
• Consensus EPS: $0.83
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: $0.62

Oscar Health Revenue Results

• Actual Revenue: $3.00 billion
• Expected Revenue: $2.87 billion
• Beat/Miss: Beat by +$130.45 million
• YoY Revenue Growth: +42.20%

Oscar Health Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 8:00AM ET

Oscar Health (NYSE:OSCR) operates as a health insurance in the United States. The company offers health plans in individual and small group markets, as well as +Oscar, a technology driven platform that help providers and payors directly enable their shift to value-based care. It also provides reinsurance products. The company was formerly known as Mulberry Health Inc. and changed its name to Oscar Health, Inc. in January 2021. Oscar Health, Inc. was incorporated in 2012 and is headquartered in New York, New York.

Oscar Health Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning, everyone. My name is Ellie, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Oscar Health's First Quarter twenty twenty five Earnings Conference Call. Thank you. I will now like to turn the call over to Chris Potochar, Vice President of Treasury and Investor Relations.

[Chris Potochar, Vice President - Investor Relations at Oscar Health]

Good morning, everyone. Thank you for joining us for our first quarter twenty twenty five earnings call. Mark Berlini, Oscar Health's Chief Executive Officer and Scott Blackley, Oscar's Chief Financial Officer, will host this morning's call. This call can also be accessed through our Investor Relations website at ir.hiosker.com. Full details of our results and additional management commentary are available in our earnings release, which can be found on our Investor Relations website at ir.hioskir.com.

[Chris Potochar, Vice President - Investor Relations at Oscar Health]

Any remarks that Oscar makes about the future constitute forward looking statements within the meaning of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward looking statements as a result of various important factors, including those discussed in our annual report on Form 10 ks for the period ended 12/31/2024 filed with the SEC and other filings with the SEC, including our quarterly report on Form 10 Q for the quarterly period ended 03/31/2025 to be filed with the SEC. Such forward looking statements are based on current expectations as of today. Oster anticipates that subsequent events and developments may cause estimates to change. While the company may elect to update these forward looking statements at some point in the future, we specifically disclaim any obligation to do so.

[Chris Potochar, Vice President - Investor Relations at Oscar Health]

The call will also refer to certain non GAAP measures. A reconciliation of these measures to the most directly comparable GAAP measures can be found in the first quarter earnings press release available on the company's Investor Relations website at ir.hioskr.com. We have not provided a quantitative reconciliation of estimated full year 2025 adjusted EBITDA as described on the call to GAAP net income because Oscar is unable without making unreasonable efforts to calculate certain reconciling items with confidence. With that, I would like to turn the call over to our CEO, Mark Bertolini.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Good morning. Thank you, Chris, and thank you all for joining us. Today, Oscar reported strong first quarter results. Our positive results were driven by continued top line growth, bottom line performance and year over year improvements across nearly all core metrics. Oscar reported total revenue of $3,000,000,000 in the quarter, a 42% increase year over year.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

We also generated net income of approximately $275,000,000 a significant improvement of $98,000,000 over the prior year period. Earnings from operations grew by $112,000,000 to $297,000,000 and we improved our operating margin by 110 basis points year over year to 9.8%. MLR increased 120 basis points year over year to 75.4%, primarily due to our risk adjustment true up for 2024. We also drove greater efficiency in the business and reported the lowest SG and A ratio in the company's history at 15.8%, a two sixty basis point improvement year over year. Our first quarter performance demonstrates the strength of our strategic plan and we expect meaningful margin expansion this year.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Scott will review our first quarter results in a few moments. First, I will cover key business highlights. Oscar's first quarter results put us on a solid path for 2025. We closed the quarter with approximately 2,000,000 effectuated members, a 41% increase year over year. Our solid retention and new membership growth reflect the value of Oscar's innovative plan designs and superior member experience.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Our condition focused plans are strong performers in the book. We are also seeing high levels of digital engagement across our IFP and ICRA membership, allowing us to more effectively manage member care. Oscar is deepening our market presence with new partnerships that give members more value added services. In the quarter, we launched Oscar Community Resources with Find Help, a social care network. The program connects members with local food, housing, transportation and other services beyond medical care that impact health.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

These resources will ultimately support our clinical intervention and case management programs to lower spend and improve clinical outcomes. Our technology is also further optimizing our operations and improving the member experience. The team recently launched a free live chat feature for OSCAR Virtual Urgent Care, which collects patient symptoms and severity before provider engagement. Use of the new capability decreased member response times by 90% and drove a 28% boost in provider efficiency. Similarly, our new AI tool for care guides is more quickly addressing member needs.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

We continue to build a scalable and efficient technology infrastructure that positions us to grow and differentiate the Oscar experience. Before I close, I want to talk about the current policy environment and attention on the individual market. CMS' proposed program integrity initiatives targeting fraud, waste and abuse are positive for the long term sustainability of the market. However, rules such as the shortened enrollment window will constrain American's ability to shop amid many enrollment changes for 2026. Many individuals are already facing meaningful premium increases if the enhanced premium tax credits expire.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

They deserve adequate time to shop for plans that meet their needs. Oscar advocates for constructive solutions that strengthen the individual market. We are engaged with federal and state policymakers on both sides of the aisle. The individual market is a cornerstone of American healthcare, driving a record low uninsured rate and a cost trend below CPI for the last several years. Policymakers recognize the market's role in our economy and the gap it fills for their hardworking constituents.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Oscar has been in this business since the ACA's inception, and we look forward to building an even larger individual market for individuals, families and the business community. In summary, Oscar is off to a solid start in 2025. Our disciplined execution, strong top line growth and margin expansion position us to achieve our 2025 targets. Oscar has the talent, technology and products to continue scaling a profitable business. Oscar is one of the fastest growing players in the individual insurance market.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

We are creating a marketplace that meets consumer and employer expectations for choice, quality and affordability. Our team's ability to stay responsive to stakeholder needs and consistently execute in dynamic markets will continue to unlock new pathways for growth. Before I hand the call over to Scott, I want to thank the Oscar team for their dedication and commitment to our members and partners. We look forward to delivering strong results in 2025. Scott?

[Scott Blackley, CFO at Oscar Health]

Thank you, Mark, and good morning, everyone. We delivered strong financial results in the first quarter, in line with our expectations. We continue to demonstrate consistent strong execution and reported approximately $275,000,000 of net income in the first quarter or $0.92 per diluted share. Total revenue increased 42% year over year to $3,000,000,000 in the first quarter driven by higher membership. We ended the quarter with more than 2,000,000 effectuated members, an increase of 41% year over year and 22% sequentially.

[Scott Blackley, CFO at Oscar Health]

Membership growth was driven by strong retention, above market growth during open enrollment and SEP member additions. We had approximately 1,900,000 paid members at the end of the first quarter. As expected, we experienced minimal churn from members who failed to file and reconcile. The first quarter medical loss ratio was 75.4%, an increase of 120 basis points year over year. The first quarter MLR was impacted by $31,000,000 of unfavorable prior period development as an increase to our 2024 risk adjustment payable was partially offset by favorable claims run out from the prior year and the CSR recovery.

[Scott Blackley, CFO at Oscar Health]

On a year over year basis, the impact was approximately 60 basis points. Turning to utilization. In the first quarter, we saw higher inpatient utilization that was partially offset by favorable pharmacy. Outpatient and professional were largely in line with our expectations. Switching to administrative costs, we continue to deliver meaningful improvement in the expense ratio.

[Scott Blackley, CFO at Oscar Health]

The first quarter SG and A expense ratio improved by two sixty basis points year over year to 15.8%, the lowest quarterly SG and A expense ratio in the company's history. The year over year improvement was driven by fixed cost leverage, lower exchange fee rates and variable cost efficiencies.

[Scott Blackley, CFO at Oscar Health]

Our strong first quarter results position us to deliver meaningful margin expansion this year. Earnings from operations was $297,000,000 a significant $112,000,000 increase year over year. Operating margin was 9.8%, one hundred and ten basis point increase year over year.

[Scott Blackley, CFO at Oscar Health]

Net income was approximately $275,000,000 a significant $98,000,000 increase year over year. Adjusted EBITDA was $329,000,000 in the quarter, also substantially improved by approximately $110,000,000 year over year. Shifting to the balance sheet. Our capital position remains very strong. We ended the first quarter with approximately $4,900,000,000 of cash and investments, including $150,000,000 of cash and investments at the parent.

[Scott Blackley, CFO at Oscar Health]

As of March 30 approximately $1,500,000,000 of capital and surplus, including nine zero seven million dollars of excess capital, which was driven by our strong operating performance. Turning now to 2025 full year guidance. Based on first quarter results, we are reaffirming all of our full year guidance metrics. We continue to expect total revenue in the range of 11,200,000,000 to $11,300,000,000 in 2025. While membership at quarter end exceeded our expectations, our outlook now contemplates the end of the monthly SEP for those at or below 150% of FPL.

[Scott Blackley, CFO at Oscar Health]

Collectively, these updates resulted in no change to our full year revenue outlook. Turning to medical loss ratio, we continue to expect the MLR in the range of 80.7% to 81.7%. On administrative expenses, we also continue to expect an SG and A expense ratio in the range of 17.6% to 18.1%. We continue to expect earnings from operations in the range of $225,000,000 to $275,000,000 As a reminder, we would expect adjusted EBITDA to be roughly $140,000,000 higher than earnings from operations. In closing, we had a strong start to the year.

[Scott Blackley, CFO at Oscar Health]

We continue to execute against our strategic plan and we are well positioned to achieve net income profitability and margin expansion again this year. With that, I will turn the call over to the operator for the Q and A portion of our call.

[Operator]

Thank you. We are now opening the floor for question and answer session. Your first question comes from the line of John Ransom of Raymond James.

[Michael Ha, Senior Research Analyst at Robert W. Baird & Co]

I've applied

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

that course for it. Isn't that great?

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

Yes, that's fantastic. See you later.

[Scott Blackley, CFO at Oscar Health]

John.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

Hello?

[Scott Blackley, CFO at Oscar Health]

John, do you, John, do you have a question?

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

Oh, sorry. I didn't think I was in the queue. They told me I wasn't in the queue. Yeah. Just, cleaning up a little bit the numbers.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

What the 2,000,000 membership you ended the quarter with, how should we think about that number for the second quarter and for the rest of the year?

[Scott Blackley, CFO at Oscar Health]

Yes. Good morning. Membership in the first quarter had a couple of dynamics. So first of all, we saw really strong payment rates, which was great. That exceeded our expectation.

[Scott Blackley, CFO at Oscar Health]

And then SEP, in general, was quite strong as well. So we ended the quarter with more members than what we had anticipated. Looking forward, I would expect that our we'll see membership trend up in the first half of the year. We're now expecting that with the proposal to end the continuous SEP for individuals that are at or below 150% of the federal poverty level that we would see membership then trend down, in the back half of the year. And so net net, I end up kind of in the same place as, what we were expecting, when we gave our guidance at the beginning of the year.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

So in other words, point million dollars by the end of the year, but trending up and then trending back down?

[Scott Blackley, CFO at Oscar Health]

Yes. I think that's, about, where we would expect to finish the year.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

Okay. Thank

[Operator]

Your next question comes from the line of Stephen Baxter of Wells Fargo. Your line is now open.

[Stephen Baxter, Senior Equity Research Analyst at Wells Fargo]

Hey, good morning. Thanks for the question. Just wanted to ask first on, the grace period membership. I think it would be really helpful to potentially get some context around as we try to think about what percentage of your membership that represented during the quarter and what that might look like for maybe what we'd consider maybe a a more recent period kind of normalized number. Just we could think about how much larger that is.

[Stephen Baxter, Senior Equity Research Analyst at Wells Fargo]

And then, obviously, to the extent that, you know, that's a a more contribution positive part of your book, maybe you could help us just think about how that kind of works its way into the MLR seasonality for the year. And then secondarily, just wanted to get an update on risk adjustment. I think you provided a net impact in the press release in terms of the 2024 true up. Maybe you could also provide us just the risk adjustment item in isolation, and then just remind us how that's informing how you're thinking about 2025 risk adjustment. Thank you.

[Scott Blackley, CFO at Oscar Health]

Okay. Why don't, I'll start with the membership. And, look, I think that what we've seen is, you know, on Grace, you know, as you start the year, you have a a portion of that membership, which, you know, is getting, auto renewed, and we would expect to see those people, you know, end their grace period as of April 1, which is why we kind of shared the difference between effectuated and paid membership. We've seen paids really perform well. And I would expect that, in the second quarter, we would see the gap between, paids and effectuate between effectuate and paids to be a normalized level.

[Scott Blackley, CFO at Oscar Health]

And frankly it was closing in on that as we ended the first quarter. With respect to what happens on a go forward basis, I think we would expect to see normal patterns in terms of the percentage of our members that are in Grace. Shifting towards the what happened with prior period development. So PPD was $30,000,000 net unfavorable in the quarter. The increase to the risk adjustment was 92,000,000 which was offset by favorable claims run out with the other factors mostly offsetting.

[Scott Blackley, CFO at Oscar Health]

And that was about 60 basis points of the increase in the year over year MLR. The rest of the, increase in the year over year MLR was mix related. So those are the drivers, Steve.

[Operator]

Your next question comes from the line of John Young of UBS. Your line is now open.

[Jonathan Yong, Analyst at UBS Group]

Hi. Thanks for the question here. Just on new versus retired members, is there anything of note between the utilization patterns between the two? And on inpatient, I'm assuming that may have been flu driven in your comments there. But anything to parse out there and comment on?

[Jonathan Yong, Analyst at UBS Group]

And then on the better than expected pharmacy, that's a little different than kind of, I think, just generally and broadly, the comments you've heard across the space. Anything of note there? Thanks.

[Scott Blackley, CFO at Oscar Health]

Yes. I would say that on utilization, we're seeing a continuation of some of the trends that we saw at the end of last year, which is higher inpatient utilization with favorable pharmacy. Overall utilization was above our expectations. And we didn't see any specific driver of conditions that really was driving inpatient. We had some flu, but nothing that would be outsized.

[Scott Blackley, CFO at Oscar Health]

Overall, at this point in the year, we're at about fifteen percent of claims completion, so it's pretty early for us to draw any conclusions about utilization. I would say that we are expecting that the elevated utilization is going to mostly be offset by risk adjustment. The other thing I would say is that we always start the year with a list of actionable initiatives that we would expect to be able to pull to decrease medical costs, and we don't include those levers in our guidance. And we're actioning on those initiatives at this point, to offset any potential headwinds from the increased utilization that we've seen.

[Jonathan Yong, Analyst at UBS Group]

Great. If I may ask, just one of your comparisons exiting the exchanges in '26. Kinda how are you thinking about the opportunities and risk around that around this and what it may mean for you? Thanks.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Hi. Mark here. We view this as both sad and as an opportunity. We hate when competition's lessened 's lessened in the marketplace. We believe that's appropriate.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

The more people we have in, the more opportunities for people to find the product that works for them. However, in this circumstance, we have fairly significant overlap with this competitor, and we view that as an opportunity come 01/01/1926 to help people maintain their coverage at a level of pricing that we find disciplined and competitive in the market.

[Operator]

Our next question comes from the line of Joanna Dajuk of Bank of America. Your line is now open.

[Joanna Gajuk, Equity Research Analyst at Bank of America]

Hey, good morning. Thanks so much for taking the question. So a couple of, I guess, those high level questions on the regulatory environment. So first, you alluded to this proposal that came out in early March, I did would include couple of these different items in there. So any any kind of thoughts, you know, which of these provisions would be finalized?

[Joanna Gajuk, Equity Research Analyst at Bank of America]

Sounds like you don't agree with with most of them. And I guess because all in all these items together, CMS had estimated would have reduced enrollment on exchanges by three to and percent. So it could be, you know, somewhat material. Right? And then related topic to that, any updated thoughts on people in Congress then on extending the enhanced subsidies on exchanges?

[Joanna Gajuk, Equity Research Analyst at Bank of America]

And can you remind us the percentage of your exchange book that is fully subsidized? Thank you.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Thanks, Joanna. I'll talk first to the, the enrollment, changes that were made. I wanna remind everybody that a number of these programs were on integrity were put in midway through 2024. So we've seen some of the effect of that already. As we reviewed and commented on the, on the terms of of of the, proposed regulation, we believe it's really important that we support CMS' effort to strengthen the integrity of the ACA and foster stable risk pool.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

So we want a market we can trust, where enrollments, are real, and that we're taking care of real people. So we're fine with all of that. The one issue that I mentioned during my comments is that the shortened enrollment period does not allow for enough shopping for individuals and brokers who will have to both comply with these regulations. And then in the term of this last question, we're on a competitor, find a new place to get coverage. And so we think they should really seriously consider, extending those enrollment periods.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Scott, any comments on the risk?

[Scott Blackley, CFO at Oscar Health]

You know, I think that with respect to which of these things we expect to to go forward, we as I mentioned, in my prepared remarks in one of the questions, we do expect that they will limit the continuous SEP enrollment in 2025. That's what we're planning for in terms of impact this year. You know, looking at the remainder of the impacts, I think that there's a lot of overlap between what may happen with the the new rule and what may happen with subsidies. So, you know, those are all kind of blended together. So we're not gonna, at this point, make any comments about, how 2026 may run forward.

[Scott Blackley, CFO at Oscar Health]

And then your question with respect to what portion of our book is fully subsidized, I would say that Oscar has always had a significant portion of our membership that receives some or full subsidized, amounts of premiums.

[Joanna Gajuk, Equity Research Analyst at Bank of America]

Great. Thank you.

[Operator]

Your next question comes from the line of Josh Raskin of Nephron Research. Your line is now

[Joshua Raskin, Partner - Managed Care & Providers at Nephron Research LLC]

Hi, thanks. Good morning. I wanted to just follow-up on the competitor exits. I'm just curious when you see this historically. Are those generally good members to attract, meaning medical management versus risk adjustment?

[Joshua Raskin, Partner - Managed Care & Providers at Nephron Research LLC]

And then how do those large exits impact your estimates of risk adjustment? And then my bigger picture question is just I'd be curious to get any progress on the ICRA market to sort of in general just sort of environmental progress? And are you talking to large employers even about 2026? And maybe where are we in that cycle?

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Great. Thanks, Josh. First and foremost, let me talk a little bit about ICRA. On the ICRA front, we believe, that there is increased momentum. We're starting to see larger groups in the middle market space starting to get interested and talk to us about the opportunity.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

We have introduced through our house ways and means committee testimony, the idea of this tax credit issue that needs to make the level playing field for employers, and we believe that that has some opportunity to get pushed through on this next bill. So we believe once those kind of conditions are in place that the momentum will continue to build. We have talked to large employers. I was I was in a room with large employers earlier this week, where there's a lot of interest, expressed. I was invited to speak about my comments on CNBC about, you know, the best way to solve health care problems is to eliminate the employer sponsored health insurance market, and I gave the reasoning behind all of that, which, you we've shared with you before, Josh, and and we believe that that's an opportunity.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

It'll be slower, because there's always resistance in these staffs, but we think that's that's it continues to be, a very important market. And then on your first question, I lost your point. If you could just sort of remind me quickly.

[Joshua Raskin, Partner - Managed Care & Providers at Nephron Research LLC]

Our competitor exits or, you know, when you get members from other plans that have exited markets, is that is that good news and risk adjustment and yeah.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Well, the good thing is is that risk adjustment levels are playing field for everybody at the end of the year. So it's how you go into the market priced. And, again, we don't underwrite these markets. So as long as we believe we have disciplined pricing in the marketplace and the risk adjustment continues to work effectively the way it has, that we'll be fine in those markets and growing the membership. The reason that this competitor is is is exiting, more importantly, is that they got behind on their margin and behind on their pricing.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

It's really hard to catch up unless you price way up, which other competitors have done in prior years. But in in this instance, they tried to move up slowly, didn't get all the way there, and as a result, they need to exit the market. And we think that's their pricing problem, not ours. Again, with risk adjustment, we think we're fine. And, generally, if people are you know, it it'll be a mix that is consistent with the marketplace Right.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Each market individually. Right.

[Operator]

Your next question comes from the line of Jessica Dawson of Piper Sandler. Your line is now open.

[Jessica Tassan, Senior Equity Research Analyst at Piper Sandler Companies]

Hi, thanks for taking the question. I just wanted to start with is your expectation for 2025 still that risk adjustment payable is a similar percent of premiums as it was in 2024? And if not, can you give us a sense of any updated expectations on the sort of risk adjustment as percent of premiums?

[Scott Blackley, CFO at Oscar Health]

Yeah. Thanks, Jess. Why don't I make a couple of comments about seasonality for a a couple different components of the book? So with respect to risk adjustment, no, you know, it's no significant adjustment at this point in time. Although, if we see elevated claims continue, that would tend to push down the risk adjustment as a percentage of revenue.

[Scott Blackley, CFO at Oscar Health]

So we'll have to see how that plays out. On MLR seasonality, I would expect that MLR seasonality will be a little bit flatter in the second, third and fourth quarter than what we've seen historically. A step up in the second quarter, with the fourth quarter being the highest. And then with respect to SG and A seasonality, we still expect to see gradual increases in the SG and A expense ratio, each quarter.

[Jessica Tassan, Senior Equity Research Analyst at Piper Sandler Companies]

Got it. That's helpful. And then just, I guess, thinking about next year and the several alternative options, can you give us a sense of the margin profile of Braun's plans, both MLR and then just interested in the SG and A as a percent of premiums there and whether you have an opportunity to kind of maintain flat margins despite the potential for downward mix shift? Thanks.

[Scott Blackley, CFO at Oscar Health]

Jess, I would say that, we're not yet going to be, given any information about 2026. I would say is we're working pricing. Our intent is to continue to grow margin for this company. And so we'll be looking at a pricing strategy that will have disciplined pricing that will allow us to continue to take share and improve margins. So that's what we're focused on for 'twenty six.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

And I would add that there's relatively high overlap between the enhanced premium tax credits and fraudulent and the integrity regulations that they put in place. So depending on how those both settle out and what the details of each of them are is going to largely depend on what the mix is going to do relative to pricing versus morbidity.

[Jessica Tassan, Senior Equity Research Analyst at Piper Sandler Companies]

Got it. Thank you.

[Operator]

Your next question comes from the line of Michael of Baird. Your line is now open.

[Michael Ha, Senior Research Analyst at Robert W. Baird & Co]

Hi. Thank you and congratulations on the quarter. Historically, G and A print achieving fifteen percent two years early before '27. With that said, I was wondering if you could elaborate more on the drivers of your G and A performance. How much of the beat would you attribute to fixed cost leverage versus the lower exchange fee rate versus the variable cost efficiencies?

[Michael Ha, Senior Research Analyst at Robert W. Baird & Co]

I think, Jess asked it, but in terms of the cadence and seasonality of G and A throughout the remainder of this year and just given how strong the print is, I'm just trying to understand how durable this level of G and A is going forward and, again, the source of the beat as well. Thank you.

[Scott Blackley, CFO at Oscar Health]

Yeah. I appreciate the question. And in terms of, you know, the the just kinda stepping back, SG and A improved, the ratio improved year over year by about 260 basis points. So, you know, a big step forward. And our cost trend, honestly, is just a great story.

[Scott Blackley, CFO at Oscar Health]

Our tech is playing a big part of driving the performance, and we've been, you know, very focused and disciplined about expense management, both on the fixed side and the variable side. And those are the primary drivers of the the the year over year improvement just to give you some specifics. Fixed cost leverage is about 40% of the improvement. Improvements in our variable cost structure is another, you know, let's call that 15%, and then the remainder is, you know, improvements in broker taxes and fees. We did see some lower fees, this year.

[Scott Blackley, CFO at Oscar Health]

And then, you know, the remainder is RA geography. So the the you know, a very significant portion of the year over year improvement is durable. And as I mentioned, on the last, question, we do expect to see, from this point that we would see some, you know, quarterly increases in SG and A going forward.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

And, Michael, as we said before, you know, when we put together our operating plan, we have a number of different levers we pull as we go through the year. So we're already reacting to '26 and setting the stage for '26 depending on how it all pans out. And we're making those moves ahead of time so that we're prepared to be competitive and to continue our move forward in enhancing margin for the business.

[Michael Ha, Senior Research Analyst at Robert W. Baird & Co]

Great. Thank you. And my follow-up question. So if I take a step back and think about Oscar's valuation over the past few months, I think it's clear investors are pricing in the worst case scenario, you know, millions of fraudulent lives in the marketplace. But with all the evidence and proof just continuing to stack, number one being required attestations, helping to address the ghost member issue.

[Michael Ha, Senior Research Analyst at Robert W. Baird & Co]

Number two, like, the nonpayment of premiums now reflected in one q effectuated enrollment. Number three, CMS even gave us the two year FTR members at risk nationally. With all these new data points, could you refresh us on your latest thoughts here and, I guess, your level of conviction that what we're in is no longer a four, five million fraudulent member problem? And and, also, how do you view the catalyst path going forward in terms of what will it take to fully dispel, disprove this debate once and for all? Thank you.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

Yeah. We're not gonna size, the government's estimate. We're doing our own homework as we get ready for '26. We'll have a very clear view on it. But I can tell you, that we are not backing off on our long term targets.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

We continue to work as an organization to make those happen. We believe the market will continue to be competitive, and we believe the market will continue to be strong. We may have a pricing issue as we get into the 2026 market versus where we've been, which is below CPI, at or below CPI, largely because there's a high single digit impact of both fraudulent of of both integrity regulations and enhanced premium credits that will be the basis before we apply trend going forward. So that could be a major change. It would have an impact.

[Mark T. Bertolini, Chief Executive Officer at Oscar Health]

We believe that now that we sit at 8% uninsured that we could get back into double digits if that should happen. But we're watching all of that happen in front of us. And until the regs are really clear and specific, we're not gonna make any estimates against '26.

[Operator]

Our final question for today comes from the line of Dave Windley of Jefferies. Your line is now open.

[David Windley, Managing Director at Jefferies LLC]

Hi. Thanks for taking my question. Mark, you may have obviated my question with your last point, but I was gonna ask about the the proposal to refund CSRs and what your thoughts are around that. Is that, is that positive relative to integrity and and how much disruption to kind of the pricing structure of second lowest silver, etcetera, if the government kind of steps in and refund CSRs? Thanks.

[Scott Blackley, CFO at Oscar Health]

Dave, look, I would say that, you know, with respect to CSR and silver loading, I think, practically speaking, that's a big undertaking, for plans to try to put into place processes and infrastructure and the same for the government in terms of their side. So, you know, we're we're obviously not a fan of that going into place for '26 because we think it's gonna take, you know, a fair amount of, process to get that set up. And, you know, in theory, that neutral, you know, it we should all be neutral to that switch, and we'll just have to see how that plays out. But, again, we think it's a a fairly big undertaking. So, we will be recommending that the government not move forward with that in 2026.

[David Windley, Managing Director at Jefferies LLC]

Got it. And to your point, we're in May, so bids aren't that far away. A lot of undertaking for a couple of months worth of time, I guess, is the added point.

[Scott Blackley, CFO at Oscar Health]

Yes.

[David Windley, Managing Director at Jefferies LLC]

Thanks for taking my question.

[Operator]

And that concludes today's conference call. Thank you for your participation. You may now disconnect. Goodbye.

Participants

Executives

• Chris Potochar, Vice President - Investor Relations
• Mark T. Bertolini, Chief Executive Officer
• Scott Blackley, CFO

Analysts

• Michael Ha, Senior Research Analyst at Robert W. Baird & Co
• John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial
• Stephen Baxter, Senior Equity Research Analyst at Wells Fargo
• Jonathan Yong, Analyst at UBS Group
• Joanna Gajuk, Equity Research Analyst at Bank of America
• Joshua Raskin, Partner - Managed Care & Providers at Nephron Research LLC
• Jessica Tassan, Senior Equity Research Analyst at Piper Sandler Companies
• David Windley, Managing Director at Jefferies LLC