What Oscar Health (OSCR) Said on Its Q3 Earnings Call

Key Points

• Oscar Health reported a profitable third quarter, with revenue up about 70% year over year to $5.1 billion and net income of $167 million. Higher membership and premiums, disciplined pricing, and a $250 million benefit from updated risk-adjustment data contributed to results.
• The company raised its 2026 operating earnings forecast for the third time, to $850 million–$950 million, and increased its revenue outlook to $19 billion–$19.3 billion. Its medical loss ratio improved to 84%, while membership grew 27% year over year to about 2.7 million.
• For 2027, Oscar plans to expand its marketplace footprint and pursue market-share gains, with an average rate increase of about 14%. It expects marketplace membership overall to remain stable and reiterated its target of at least $4 in earnings per share by 2029.

Oscar Health NYSE: OSCR raised its full-year operating earnings outlook for the third time after reporting a profitable third quarter, as higher membership and premium rates helped drive revenue growth and updated risk-adjustment data provided a $250 million benefit.

The health insurer reported third-quarter revenue of $5.1 billion, up approximately 70% from a year earlier. Net income was $167 million, an improvement of $305 million, while earnings from operations rose $307 million to $178 million. Adjusted EBITDA increased $308 million to $207 million.

For the first nine months of 2026, Oscar reported approximately $1.3 billion in operating earnings and $1.2 billion in net income, or $3.59 per diluted share. Chief Executive Officer Mark Bertolini called 2026 the strongest year in the company’s history and said Oscar expects to meet several commitments from its 2024 investor day a year ahead of plan.

Risk adjustment and utilization support results

Chief Financial Officer Scott Blackley said updated data showed a significant improvement in Oscar’s risk relative to the market, while market morbidity was modestly favorable to the company’s expectations. Together, those factors drove the $250 million third-quarter revenue benefit.

Blackley cautioned that not all of the risk-adjustment benefit flows to the bottom line, because it is accompanied by claims costs associated with the risk in Oscar’s membership. He said the company continues to take a cautious approach to its risk-adjustment reserves.

The company’s medical loss ratio, a measure of premiums spent on medical care, improved 4.5 percentage points from a year earlier to 84%. Blackley attributed the improvement primarily to disciplined pricing. Year-to-date utilization was moderately favorable to expectations, he said, with inpatient, professional and pharmacy utilization favorable and outpatient utilization elevated.

Blackley said some of the outpatient increase appeared to reflect a shift away from inpatient care, partly driven by affordability initiatives. He expects a normal seasonal increase in the medical loss ratio in the fourth quarter.

Oscar’s selling, general and administrative expense ratio fell approximately 3.5 percentage points year over year to a company-low 14%. Management attributed the improvement to factors including fixed-cost leverage, expense discipline and technology and artificial intelligence initiatives. Blackley said the ratio will rise in the fourth quarter as the company spends on open enrollment, risk-adjustment activities and investments for 2027 growth.

Full-year outlook raised

Oscar now expects 2026 earnings from operations of $850 million to $950 million. The midpoint is $200 million above its prior outlook and $550 million above its original guidance. The company raised its revenue forecast by $300 million to a range of $19 billion to $19.3 billion.

The revised outlook also calls for:

• A full-year medical loss ratio of 80.5% to 81.5%.
• An SG&A expense ratio of 15.1% to 15.6%.
• Risk adjustment as a percentage of premiums of 17% to 18%, compared with a prior expectation of 20%.
• Adjusted EBITDA roughly $110 million higher than earnings from operations.

Oscar ended the quarter with approximately 2.7 million members, up 27% year over year. Membership declined sequentially, primarily because of disenrollments following an industry-wide eligibility review by the Centers for Medicare and Medicaid Services, Blackley said. Oscar expects to end the year with approximately 2.5 million members, including the effect of additional disenrollments from a second, smaller review.

The company ended September with approximately $9 billion in cash and investments, including $360 million at the parent company. Its insurance subsidiaries had approximately $2.3 billion in capital and surplus, including $1.4 billion of excess capital, according to Blackley.

Pricing and expansion plans for 2027

Oscar expects overall Affordable Care Act marketplace membership to remain stable in 2027 compared with year-end 2026 and believes it can gain market share. Its weighted average rate increase for 2027 is approximately 14%. Blackley said high-single-digit medical cost trend was the largest component, followed by higher market morbidity and a smaller allowance for margin expansion.

Bertolini said Oscar is entering open enrollment with a 24% larger footprint spanning 713 counties, including an expansion into South Carolina. He also cited new products and competitor exits as opportunities for growth, saying approximately 850,000 people would be coming to market because of those exits.

Oscar has launched RetireEase in select markets for early retirees, and hundreds of its plans now include dental and vision coverage. Its Hy-Vee Health with Oscar product is expanding from Iowa into Nebraska, Missouri and Kansas. The company also expects its Lucie platform, which helps consumers shop for plans and assists brokers with eligibility, to sell approximately 800,000 new policies in 2027.

On eligibility checks, Bertolini said new enrollment systems could slow brokers initially, although Oscar has provided training and tools to help them navigate the changes. Blackley said some 2026 members may be unable to continue coverage in 2027 because of enhanced checks, but new marketplace entrants are expected to offset those departures.

Oscar plans to provide formal 2027 guidance on its fourth-quarter earnings call. Management reiterated its longer-term target of at least $4 in earnings per share by 2029.

About Oscar Health (NYSE:OSCR)

Oscar Health, Inc is a technology-focused health insurance company that provides health plans and related services in the United States. The company primarily serves individuals and families purchasing coverage through the Affordable Care Act's health insurance marketplace, as well as small businesses and their employees.

Oscar combines health insurance products with digital tools designed to help members manage their care. Its services include online enrollment, virtual care, provider search and appointment support, care navigation, claims and benefits information, and member engagement through web and mobile applications.

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