Core Viewpoint - Oscar Health (OSCR) is experiencing a short-term reset that the market has misinterpreted as a long-term structural failure [1] Financial Performance - The company's Q2 earnings showed significant results at a surface level, indicating potential for recovery despite market misreadings [1] Leadership & Management Analysis - Oscar Health has a proven track record in scaling businesses, demonstrating smart capital allocation and insider ownership [1] - The company has shown consistent revenue growth and credible guidance, which are critical for investor confidence [1] Market Positioning - Oscar Health benefits from a strong technology moat and first-mover advantage, which positions it well in the competitive landscape [1] - The company is leveraging network effects that drive exponential growth and has achieved market penetration in high-growth industries [1] Financial Health - Oscar Health is characterized by sustainable revenue growth and efficient cash flow, contributing to its financial stability [1] - The company maintains a strong balance sheet and a long-term survival runway, which are essential for navigating market challenges [1] Investment Methodology - The investment strategy focuses on identifying high-conviction opportunities with a balanced portfolio construction, including core positions, growth bets, and speculative investments [1]

[Forward-Looking Statements](index=3&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This section outlines future-oriented statements and key risks related to strategy execution, membership, profitability, and regulatory compliance - Forward-looking statements cover future results, financial position, risk adjustment payments, industry trends, business strategy, membership growth, and operational objectives[11](index=11&type=chunk) - Key risks include the ability to execute strategy and manage growth, retain members, accurately estimate medical expenses, maintain profitability, manage risk adjustment programs, comply with regulations (ACA changes, APTCs), heightened competition, and data security breaches[12](index=12&type=chunk)[16](index=16&type=chunk) [Part I - Financial Information](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements of Oscar Health, Inc. for the periods ended June 30, 2025, and 2024, including statements of operations, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial line items [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements of Oscar Health, Inc. for the periods ended June 30, 2025, and 2024, including statements of operations, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial line items [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net income or loss over specific periods, highlighting changes in profitability Three Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------ | :------------------ | :----------- | | Premium Revenue | $2,803,444 | $2,164,116 | +29.5% | | Total Revenue | $2,863,945 | $2,219,341 | +29.0% | | Medical Expenses | $2,552,973 | $1,708,722 | +49.4% | | SG&A Expenses | $534,485 | $435,206 | +22.8% | | Earnings (loss) from operations | $(230,483) | $67,812 | From profit to loss | | Net income (loss) attributable to Oscar Health, Inc. | $(228,361) | $56,207 | From profit to loss | | Basic EPS | $(0.89) | $0.24 | From profit to loss | | Diluted EPS | $(0.89) | $0.20 | From profit to loss | Six Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------ | :------------------ | :----------- | | Premium Revenue | $5,799,265 | $4,257,798 | +36.2% | | Total Revenue | $5,910,208 | $4,361,646 | +35.5% | | Medical Expenses | $4,812,624 | $3,263,496 | +47.5% | | SG&A Expenses | $1,017,244 | $829,368 | +22.7% | | Earnings (loss) from operations | $66,640 | $253,370 | -73.7% | | Net income (loss) attributable to Oscar Health, Inc. | $46,910 | $233,575 | -79.9% | | Basic EPS | $0.19 | $0.99 | -80.8% | | Diluted EPS | $0.17 | $0.82 | -79.2% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income or loss alongside other comprehensive income items, such as unrealized gains or losses on investments Three Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net income (loss) | $(228,491) | $56,312 | | Net unrealized gains (loss) on securities available for sale | $4,119 | $(31) | | Comprehensive income (loss) attributable to Oscar Health, Inc. | $(224,242) | $56,176 | Six Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net income (loss) | $47,015 | $233,794 | | Net unrealized gains (loss) on securities available for sale | $15,547 | $(3,934) | | Comprehensive income (loss) attributable to Oscar Health, Inc. | $62,457 | $229,641 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific points in time As of June 30, 2025 vs. December 31, 2024 | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :------- | | Total Assets | $6,384,127 | $4,840,496 | +31.9% | | Cash and cash equivalents | $2,598,942 | $1,527,186 | +70.2% | | Short-term investments | $938,102 | $624,461 | +50.2% | | Long-term investments | $1,845,884 | $1,815,254 | +1.7% | | Total Liabilities | $5,222,777 | $3,824,071 | +36.6% | | Benefits payable | $1,551,632 | $1,356,730 | +14.4% | | Risk adjustment transfer payable | $2,647,187 | $1,558,341 | +69.9% | | Total Stockholders' Equity | $1,161,350 | $1,016,425 | +14.3% | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement tracks changes in the equity accounts, including accumulated deficit and other comprehensive income, over the reporting period - Total stockholders' equity increased from **$1.016 billion** as of December 31, 2024, to **$1.161 billion** as of June 30, 2025[23](index=23&type=chunk)[25](index=25&type=chunk) - Accumulated deficit decreased from **$(2.851) billion** at the beginning of the six-month period to **$(2.804) billion** at the end, reflecting net income for the period[25](index=25&type=chunk) - Accumulated other comprehensive income (loss) significantly improved from **$(1.8) million** to **$13.7 million**, primarily due to unrealized gains on investments[25](index=25&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities, showing the overall change in cash Six Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------ | :------------------ | :----------- | | Net cash provided by operating activities | $1,387,609 | $1,131,514 | +22.6% | | Net cash used in investing activities | $(342,435) | $(778,216) | -56.0% (less cash used) | | Net cash provided by financing activities | $27,006 | $46,011 | -41.3% | | Increase in cash, cash equivalents and restricted cash equivalents | $1,072,180 | $399,309 | +168.5% | | Cash, cash equivalents, restricted cash and cash equivalents—end of period | $2,623,298 | $2,291,280 | +14.5% | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1 - Organization](index=10&type=section&id=Note%201%20-%20Organization) This note describes the company's business, operations, market presence, and recent acquisitions - Oscar Health, Inc. is a leading healthcare technology company, traded on NYSE under "OSCR"[28](index=28&type=chunk) - Operates as one reportable segment, selling insurance through federal and state healthcare exchanges and leveraging its technology platform via +Oscar[29](index=29&type=chunk) - Acquired INSXCloud, IHC Specialty Benefits, and Healthinsurance.org in May 2025 to expand individual market presence[29](index=29&type=chunk) - Serves approximately **2.0 million** effectuated members as of June 30, 2025[30](index=30&type=chunk) - Recorded a **$14.9 million** adjustment in SG&A expenses in Q2 2025 related to prior periods (2023-2024), deemed immaterial[33](index=33&type=chunk) [Note 2 - Earnings Per Share](index=12&type=section&id=Note%202%20-%20Earnings%20Per%20Share) This note explains the calculation of basic and diluted earnings per share and the treatment of potentially dilutive securities - Basic EPS is calculated by dividing net income (loss) attributable to Oscar Health, Inc. by weighted-average common shares outstanding[38](index=38&type=chunk) - In net loss periods (e.g., Q2 2025), potentially dilutive securities are excluded, resulting in basic EPS equaling diluted EPS[38](index=38&type=chunk)[39](index=39&type=chunk) Earnings Per Share (EPS) | Period | Basic EPS | Diluted EPS | | :-------------------------------- | :-------- | :---------- | | Three Months Ended June 30, 2025 | $(0.89) | $(0.89) | | Three Months Ended June 30, 2024 | $0.24 | $0.20 | | Six Months Ended June 30, 2025 | $0.19 | $0.17 | | Six Months Ended June 30, 2024 | $0.99 | $0.82 | - As of June 30, 2025, **70.2 million** potential common shares were excluded from diluted EPS calculation due to their anti-dilutive effect[39](index=39&type=chunk) [Note 3 - Revenue Recognition](index=13&type=section&id=Note%203%20-%20Revenue%20Recognition) This note details the components of premium revenue and other revenues, including risk adjustment transfers and direct policy premiums - Premium revenue includes direct policy premiums, assumed policy premiums, and risk adjustment transfers, net of ceded reinsurance premiums[40](index=40&type=chunk) Direct Policy Premiums from CMS (in thousands) | Period | 2025 | 2024 | | :-------------------------------- | :--------- | :--------- | | Three Months Ended June 30, | $3,244,700 | $2,350,000 | | Six Months Ended June 30, | $6,387,100 | $4,463,800 | Risk Adjustment Transfers (in thousands) | Period | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Three Months Ended June 30, | $(692,245) | $(432,895) | | Six Months Ended June 30, | $(1,065,994) | $(702,293) | - Other revenues include services from the +Oscar platform, virtual credit card rebates, revenue from three companies acquired in May 2025, and sublease revenue[42](index=42&type=chunk) [Note 4 - Investments](index=13&type=section&id=Note%204%20-%20Investments) This note provides information on net investment income, fair value of available-for-sale securities, and their contractual maturities Net Investment Income (in thousands) | Period | 2025 | 2024 | | :-------------------------------- | :--------- | :--------- | | Three Months Ended June 30, | $54,004 | $49,994 | | Six Months Ended June 30, | $100,116 | $92,983 | - The increase in investment income is primarily due to a larger asset base, partially offset by lower yield[132](index=132&type=chunk) Fair Value of Available-for-Sale Securities (June 30, 2025, in thousands) | Security Type | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | | :-------------------------- | :------------- | :--------------- | :---------------- | :--------- | | U.S. treasury and agency securities | $2,139,743 | $14,703 | $(2,410) | $2,152,036 | | Corporate notes | $591,655 | $2,134 | $(286) | $593,503 | | Asset-backed securities | $35,987 | $71 | $(20) | $36,038 | | Total | $2,769,794 | $16,908 | $(2,716) | $2,783,986 | Contractual Maturity of Fixed Maturity Securities (June 30, 2025, in thousands) | Maturity Period | Amortized Cost | Fair Value | | :-------------------------- | :------------- | :--------- | | Due in one year or less | $936,157 | $938,102 | | Due after one year through five years | $1,725,382 | $1,736,500 | | Due after five years through ten years | $105,846 | $106,975 | | Total | $2,767,385 | $2,781,577 | [Note 5 - Fair Value Measurements](index=15&type=section&id=Note%205%20-%20Fair%20Value%20Measurements) This note categorizes assets measured at fair value into Level 1, Level 2, and Level 3 based on input observability - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[50](index=50&type=chunk)[52](index=52&type=chunk) Assets Measured at Fair Value (June 30, 2025, in thousands) | Asset Type | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :-------- | :---------- | :-------- | :---------- | | Cash equivalents | $104,475 | $— | $— | $104,475 | | U.S. treasury and agency securities | $— | $2,152,036 | $— | $2,152,036 | | Corporate notes | $— | $593,503 | $— | $593,503 | | Asset-backed securities | $— | $36,038 | $— | $36,038 | | Restricted investments (U.S. treasury securities) | $— | $6,730 | $— | $6,730 | | Total assets | $104,475 | $2,788,307 | $— | $2,892,782 | - No assets were measured using Level 3 inputs as of June 30, 2025[51](index=51&type=chunk) [Note 6 - Restricted Cash and Restricted Deposits](index=16&type=section&id=Note%206%20-%20Restricted%20Cash%20and%20Restricted%20Deposits) This note details the amounts and purposes of restricted cash, cash equivalents, and investments - Restricted cash and cash equivalents totaled **$24.4 million** as of June 30, 2025, up from **$23.9 million** at December 31, 2024[55](index=55&type=chunk) - Restricted investments totaled **$6.7 million** as of June 30, 2025, down from **$6.9 million** at December 31, 2024[55](index=55&type=chunk) Restricted Deposits (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Restricted cash and cash equivalents | $24,356 | $23,932 | | Restricted investments | $6,730 | $6,946 | | Total Restricted deposits | $31,086 | $30,878 | - These deposits are pledged to state agencies for insurance licensure or property leases[54](index=54&type=chunk) [Note 7 - Benefits Payable](index=17&type=section&id=Note%207%20-%20Benefits%20Payable) This note explains the changes in benefits payable, including claims incurred and prior period development - Benefits payable, net, increased from **$1.298 billion** at the beginning of the six-month period to **$1.532 billion** at June 30, 2025[57](index=57&type=chunk) - Claims incurred and CAE for the current year totaled **$5.017 billion** for the six months ended June 30, 2025[57](index=57&type=chunk) - Favorable prior period development of **$(163.6) million** was recognized for the six months ended June 30, 2025, primarily from lower than expected paid claims for 2024[57](index=57&type=chunk) [Note 8 - Debt](index=18&type=section&id=Note%208%20-%20Debt) This note describes the company's convertible senior notes and revolving credit facility, including their terms and carrying amounts - The 2031 Notes have an aggregate principal amount of **$305.0 million**, bear **7.25%** interest, and mature on December 31, 2031[58](index=58&type=chunk) - The Class A common stock sales price condition was satisfied in Q2 2025, making the 2031 Notes convertible at the option of the holder during Q3 2025[61](index=61&type=chunk) - As of June 30, 2025, the net carrying amount of the 2031 Notes was **$299.9 million**, with an estimated fair value of **$807.5 million** (Level 3 measurement)[62](index=62&type=chunk) - The company has a **$115.0 million** Revolving Credit Facility, available until December 28, 2025, with no outstanding borrowings as of June 30, 2025[64](index=64&type=chunk)[66](index=66&type=chunk) [Note 9 - Reinsurance](index=19&type=section&id=Note%209%20-%20Reinsurance) This note outlines the company's reinsurance strategies, ceded premiums, and medical expenses reconciliation - The company uses quota share and XOL reinsurance to limit risk and capital requirements[67](index=67&type=chunk) - For the six months ended June 30, 2025, **49%** of premium was ceded under reinsurance contracts accounted for under deposit accounting (**55%** in 2024)[70](index=70&type=chunk) Medical Expenses Reconciliation (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------- | :--------- | :--------- | | Direct claims incurred | $4,830,401 | $3,203,712 | | Ceded reinsurance claims | $(53,215) | $(49,652) | | Assumed reinsurance claims | $35,438 | $109,436 | | Medical expenses | $4,812,624 | $3,263,496 | Reinsurance Recoverable Balance (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Reinsurance premium and claim recoverables | $190,938 | $288,878 | | Reinsurance ceding commissions | $7,002 | $6,996 | | Experience refunds on reinsurance agreements | $(5,242) | $(4,338) | | Total Reinsurance recoverable | $192,698 | $291,537 | - Reinsurers have financial strength ratings of A+ or higher[73](index=73&type=chunk) [Note 10 - Business Arrangements](index=22&type=section&id=Note%2010%20-%20Business%20Arrangements) This note discusses the consolidation of Variable Interest Entities (VIEs) and their collective assets and liabilities - The company consolidates financial results of Variable Interest Entities (VIEs), which include integrated health systems and medical professional corporations[76](index=76&type=chunk) Collective Assets and Liabilities of VIEs (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Assets | $104,253 | $102,550 | | Liabilities | $67,295 | $63,114 | [Note 11 - Related Party Transactions](index=22&type=section&id=Note%2011%20-%20Related%20Party%20Transactions) This note discloses transactions with related parties, specifically regarding convertible notes and registration rights - The 2031 Notes were issued to funds affiliated with Thrive Capital, which are related parties[78](index=78&type=chunk) - Notes and Class A common stock issued upon conversion are subject to registration rights under the Investors' Rights Agreement[78](index=78&type=chunk) [Note 12 - Commitments and Contingencies](index=22&type=section&id=Note%2012%20-%20Commitments%20and%20Contingencies) This note details the company's exposure to legal proceedings, regulatory reviews, and other contingent liabilities - Subject to reviews by state insurance and healthcare regulatory authorities, which may result in fines or practice changes[79](index=79&type=chunk) - Involved in legal proceedings, including class actions, related to claims payment, contracts, employment, and intellectual property[80](index=80&type=chunk) - A securities class action lawsuit (Carpenter v. Oscar Health, Inc., et al.) was dismissed with prejudice on April 22, 2025[81](index=81&type=chunk) - Received an estimated net recovery of **$24.1 million** in Q1 2025 from a settlement related to halted ACA CSR subsidy payments[84](index=84&type=chunk) - Estimates of losses from legal and regulatory matters are inherently difficult to predict[82](index=82&type=chunk) [Note 13 - Segment Information](index=24&type=section&id=Note%2013%20-%20Segment%20Information) This note confirms the company operates as a single reportable segment and provides consolidated financial metrics - The company operates and reports as a single reportable segment[86](index=86&type=chunk) - The CODM reviews consolidated Net income (loss) attributable to Oscar Health, Inc. and Earnings from operations[86](index=86&type=chunk) Segment Financials (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :--------- | :--------- | | Total revenue | $5,910,208 | $4,361,646 | | Medical expenses | $4,812,624 | $3,263,496 | | Selling, general, and administrative expenses | $1,017,244 | $829,368 | | Earnings (loss) from operations | $66,640 | $253,370 | | Net income (loss) attributable to Oscar Health, Inc. | $46,910 | $233,575 | - The majority of total revenue comes from health insurance policy premiums, primarily from CMS subsidies (Advanced Premium Tax Credit program)[90](index=90&type=chunk) [Note 14 - Risk Adjustment](index=25&type=section&id=Note%2014%20-%20Risk%20Adjustment) This note explains the risk adjustment program, its impact on revenue, and the variability of related estimates - Risk adjustment programs mitigate adverse selection and stabilize health insurers by adjusting plan revenue based on member risk scores[91](index=91&type=chunk) Net Risk Adjustment Balance (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Beginning balance | $1,493,562 | $1,005,016 | | Change in accrual, net | $1,066,008 | $701,887 | | Ending balance | $2,559,570 | $1,706,903 | - The company significantly increased its estimate of the net risk adjustment payable for the 2025 policy year due to new third-party reports indicating a meaningful market-wide increase in morbidity[94](index=94&type=chunk) - Risk adjustment estimates are subject to high variability and uncertainty, influenced by market data, legislation, and competitor actions[91](index=91&type=chunk)[113](index=113&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, discussing key performance indicators, recent developments, regulatory trends, and critical accounting policies. It analyzes revenue, expenses, and profitability metrics for the reported periods [Overview](index=26&type=section&id=Overview) This section provides a high-level introduction to the company's business model, recent strategic actions, and key performance indicators - Oscar is a healthcare technology company focused on member experience, serving individuals, families, and employees through the ACA and offering health technology solutions via +Oscar[97](index=97&type=chunk) - Acquired INSXCloud, IHC Specialty Benefits, and Healthinsurance.org in May 2025 to strengthen its individual market presence[97](index=97&type=chunk) - Serves approximately **2.0 million** effectuated members as of June 30, 2025[97](index=97&type=chunk) - Key metrics reviewed include Total Revenue, Medical Loss Ratio (MLR), Selling, General, and Administrative Expense Ratio (SG&A Expense Ratio), Earnings from Operations, and Net Income (loss) attributable to Oscar Health Inc[98](index=98&type=chunk) [Recent Developments, Trends and Other Key Factors Impacting Performance](index=27&type=section&id=Recent%20Developments,%20Trends%20and%20Other%20Key%20Factors%20Impacting%20Performance) This section discusses external and internal factors, including regulatory changes and market dynamics, influencing the company's performance [Regulatory Developments and Trends](index=27&type=section&id=Regulatory%20Developments%20and%20Trends) This subsection analyzes the impact of government policies, such as APTCs and CMS rules, on the healthcare marketplace and company operations - Enhanced APTCs under ARPA are set to expire at the end of 2025, potentially making insurance unaffordable for some individuals if not renewed[105](index=105&type=chunk) - CMS enacted new measures in H2 2024 to improve marketplace integrity, potentially making valid enrollments and APTC acquisition more difficult[106](index=106&type=chunk) - CMS issued Program Integrity Rules (effective Aug 25, 2025) creating new eligibility verification processes, shortening open enrollment, and requiring APTC reconciliation[106](index=106&type=chunk) - The One Big Beautiful Bill Act (OBBBA) limits APTC eligibility for certain populations and requires additional verification[106](index=106&type=chunk) - Medicaid redeterminations (began April 1, 2023) contributed to ACA membership increases, but future impact is expected to be less significant, while also increasing market morbidity[108](index=108&type=chunk) - Proposed tariffs on pharmaceutical products and medical devices could increase costs and impact medical expenses[109](index=109&type=chunk) [SEP Market Dynamics Developments and Trends](index=29&type=section&id=SEP%20Market%20Dynamics%20Developments%20and%20Trends) This subsection examines how Special Enrollment Periods and other market dynamics affect premiums, claims, and risk adjustment transfers - Special Enrollment Period (SEP) and other market dynamics can impact per member premiums, claims, and risk adjustment transfers[110](index=110&type=chunk) - Higher SEP growth in 2024 may have contributed to an increase in the risk transfer payable for 2024 and H1 2025[110](index=110&type=chunk) [Members](index=30&type=section&id=Members) This subsection discusses factors influencing membership changes, including pricing, market expansion, and regulatory actions - Membership changes are influenced by pricing, benefits, market expansion/exit, disenrollments, SEP, Medicaid redeterminations, and regulatory actions (e.g., CMS integrity initiatives, OBBBA)[111](index=111&type=chunk) [Risk Adjustment](index=30&type=section&id=Risk%20Adjustment) This subsection elaborates on the risk adjustment program's role in mitigating adverse selection and the uncertainties in its estimates - Risk adjustment programs mitigate adverse selection by adjusting plan revenue based on member risk scores[112](index=112&type=chunk) - The company significantly increased its risk adjustment transfer estimate as of June 30, 2025, due to new third-party reports indicating a market-wide increase in morbidity[112](index=112&type=chunk) - Estimates are subject to high variability and uncertainty from factors like legislation, market morbidity, and competitor actions[113](index=113&type=chunk) [Claims Incurred](index=30&type=section&id=Claims%20Incurred) This subsection analyzes the drivers of medical expenses, including unit costs, utilization, and seasonal effects - Medical expenses are impacted by unit costs, utilization, and seasonal effects (e.g., deductibles, out-of-pocket maximums shifting costs to H2, holidays)[114](index=114&type=chunk) - Medical and pharmacy costs can also show seasonality based on selection effects or changes in membership risk profile[114](index=114&type=chunk) [Seasonality](index=30&type=section&id=Seasonality) This subsection describes the seasonal patterns affecting member enrollment, medical expenses, and product mix - Business is affected by seasonal patterns in member enrollment, medical expenses, and health plan mix shift/product design[115](index=115&type=chunk) [Reinsurance](index=31&type=section&id=Reinsurance) This subsection explains the use of reinsurance for risk management and capital efficiency, noting changes in agreements - Reinsurance agreements (quota share and XOL) are used for risk management and capital efficiency[116](index=116&type=chunk) - The Cigna+Oscar Small Group arrangement was not renewed after December 31, 2024, but transition and run-off services continue[68](index=68&type=chunk)[118](index=118&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms the consistency of critical accounting estimates with the prior annual report - No significant changes to critical accounting estimates from the Annual Report on Form 10-K for the year ended December 31, 2024[117](index=117&type=chunk) [Components of our Results of Operations](index=31&type=section&id=Components%20of%20our%20Results%20of%20Operations) This section defines and explains the key revenue and expense categories contributing to the company's financial performance - **Premium:** Direct policy premiums (from members and federal government), assumed policy premiums (from former Cigna+Oscar Small Group plan), net of risk adjustment transfers and ceded premiums[118](index=118&type=chunk) - **Investment Income:** Primarily investment income, interest earned, and gains/losses on the investment portfolio[119](index=119&type=chunk) - **Other Revenues:** Services via +Oscar platform, virtual credit card rebates, revenue from acquired companies (May 2025), and sublease revenue[120](index=120&type=chunk) - **Medical:** Paid and unpaid medical expenses for services/products, including fee-for-service claims, pharmacy benefits, capitation, and disputed claims, net of ceded reinsurance claims[122](index=122&type=chunk) - **Selling, General, and Administrative Expenses:** Distribution and servicing costs, premium taxes, exchange fees, employee-related expenses, software/hardware costs, stock-based compensation, and impact of quota share reinsurance[123](index=123&type=chunk) - **Other Expenses (Income):** Miscellaneous non-core expenses/income, including profit sharing and fair value changes of financial instruments[124](index=124&type=chunk) - **Income Tax Expense (Benefit):** Changes to current and deferred federal and state tax assets and liabilities[125](index=125&type=chunk) - **Net income (loss) attributable to noncontrolling interests:** Share of earnings allocated to joint venture partner[126](index=126&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, including revenue, expenses, and profitability metrics [Premium](index=34&type=section&id=Premium) This subsection analyzes changes in premium revenue, attributing them to membership growth and other factors - Premium revenue increased by **$639.3 million** (**+30%**) for Q2 2025 YoY and **$1.542 billion** (**+36%**) for YTD 2025 YoY[129](index=129&type=chunk) - Membership increased by **0.4 million** (**+28%**) to **2,027,148** as of June 30, 2025, primarily due to above-market growth during the 2025 Open Enrollment period[129](index=129&type=chunk)[130](index=130&type=chunk) - Cigna+Oscar membership decreased from **58,293** in 2024 to **10,090** in 2025[130](index=130&type=chunk) [Investment Income](index=34&type=section&id=Investment%20Income) This subsection discusses the drivers of investment income, including asset base and yield - Investment income increased by **$4.0 million** (**+8%**) for Q2 2025 YoY and **$7.1 million** (**+8%**) for YTD 2025 YoY[132](index=132&type=chunk) - This increase was primarily due to a larger asset base, partially offset by lower yield[132](index=132&type=chunk) [Medical Expenses and MLR](index=34&type=section&id=Medical%20Expenses%20and%20MLR) This subsection examines the trends in medical expenses and the Medical Loss Ratio, explaining the underlying causes - Medical expenses increased by **$844.3 million** (**+49%**) for Q2 2025 YoY and **$1.549 billion** (**+47%**) for YTD 2025 YoY[133](index=133&type=chunk) - The increase was primarily due to increased membership and medical cost trend[133](index=133&type=chunk) Medical Loss Ratio (MLR) | Period | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Three Months Ended June 30, | 91.1 % | 79.0 % | | Six Months Ended June 30, | 83.0 % | 76.7 % | - The MLR increase was primarily driven by an increase in average market morbidity, leading to a higher net risk adjustment transfer accrual[134](index=134&type=chunk) [Selling, General, and Administrative Expenses and SG&A Expense Ratio](index=35&type=section&id=Selling,%20General,%20and%20Administrative%20Expenses%20and%20SG%26A%20Expense%20Ratio) This subsection analyzes changes in SG&A expenses and the SG&A Expense Ratio, identifying key drivers - SG&A expenses increased by **$99.3 million** (**+23%**) for Q2 2025 YoY and **$187.9 million** (**+23%**) for YTD 2025 YoY, primarily due to higher membership[136](index=136&type=chunk) SG&A Expense Ratio | Period | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Three Months Ended June 30, | 18.7 % | 19.6 % | | Six Months Ended June 30, | 17.2 % | 19.0 % | - The SG&A Expense Ratio improvement was mainly due to lower exchange fee rates and greater fixed cost leverage, partially offset by higher risk adjustment as a percentage of premium[137](index=137&type=chunk) [Income Tax Expense (Benefit)](index=35&type=section&id=Income%20Tax%20Expense%20(Benefit)) This subsection presents the effective tax rate and its components for the reporting periods Effective Tax Rate | Period | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Three Months Ended June 30, | 2.2 % | 7.6 % | | Six Months Ended June 30, | 14.0 % | 2.4 % | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations and manage its capital [Overview](index=35&type=section&id=Overview_Liquidity) This subsection provides a high-level view of the company's liquidity structure, capital levels, and regulatory compliance - Liquidity is maintained at two levels: health insurance subsidiaries and the holding company[139](index=139&type=chunk) Cash and Investments (in millions) | Entity | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Holding Company | $205.1 | $189.8 | | Health Insurance Subsidiaries | $5,208.9 | $3,808.0 | - Combined statutory capital and surplus of health insurance subsidiaries was estimated at **$1.2 billion** for June 30, 2025, exceeding minimum requirements[142](index=142&type=chunk) - Health insurance subsidiaries had approximately **$579 million** of excess capital as of June 30, 2025[142](index=142&type=chunk) - Parent made **$19.3 million** in capital contributions to health insurance subsidiaries for YTD 2025[144](index=144&type=chunk) - Quota share reinsurance reduced required capital by an estimated **$655.0 million** as of June 30, 2025[144](index=144&type=chunk) [Short-Term Cash Requirements](index=36&type=section&id=Short-Term%20Cash%20Requirements) This subsection identifies immediate cash needs and the expected sources of funding - Short-term cash requirements include benefits payable, risk adjustment transfer payables, current lease liabilities, interest payable, and other current liabilities[145](index=145&type=chunk) - Expected to be funded by available cash, operating cash flows, and current asset realization[145](index=145&type=chunk) - Company believes current cash, cash equivalents, and investments (excluding restricted cash) are sufficient to fund operating requirements for at least the next twelve months[145](index=145&type=chunk) [Long-Term Cash Requirements](index=36&type=section&id=Long-Term%20Cash%20Requirements) This subsection outlines future cash obligations and their anticipated funding sources - Long-term cash requirements primarily relate to operating leases[146](index=146&type=chunk) - Expected to be funded by future cash flows from operations[146](index=146&type=chunk) [Convertible Senior Notes](index=36&type=section&id=Convertible%20Senior%20Notes) This subsection details the terms and convertibility status of the company's senior notes - The **$305.0 million** convertible senior notes due 2031 became convertible at the option of holders during Q2 2025 due to a Class A common stock sale price condition[147](index=147&type=chunk)[149](index=149&type=chunk) - Settlement upon conversion can be in Class A common stock, cash, or a combination, unless an Initial Purchaser elects solely stock[149](index=149&type=chunk) - No conversions have occurred as of the report date[149](index=149&type=chunk) [Revolving Credit Facility](index=37&type=section&id=Revolving%20Credit%20Facility) This subsection describes the available credit facility and its current utilization - A **$115.0 million** revolving credit facility is available until December 28, 2025, subject to compliance with financial covenants[151](index=151&type=chunk)[152](index=152&type=chunk) - No outstanding borrowings under the facility as of June 30, 2025[152](index=152&type=chunk) [Investments](index=37&type=section&id=Investments_Liquidity) This subsection outlines the company's investment strategy, portfolio composition, and income generated - Invests cash in U.S. Treasury instruments, federal/state agency securities, investment grade corporate bonds, and asset-backed securities[154](index=154&type=chunk) - Investment policies prioritize liquidity, capital preservation, and total return, adhering to credit agreement and state regulations[155](index=155&type=chunk) - Net investment income was **$54.0 million** for Q2 2025 and **$100.1 million** for YTD 2025[156](index=156&type=chunk) [Summary of Cash Flows](index=38&type=section&id=Summary%20of%20Cash%20Flows) This subsection summarizes the cash flow changes from operating, investing, and financing activities - Net cash provided by operating activities increased to **$1.388 billion** for YTD 2025 (from **$1.132 billion** in YTD 2024), driven by higher premium receipts and reinsurance recoverables[160](index=160&type=chunk) - Net cash used in investing activities decreased to **$342.4 million** for YTD 2025 (from **$778.2 million** in YTD 2024), due to reduced security purchases[161](index=161&type=chunk) - Net cash provided by financing activities decreased to **$27.0 million** for YTD 2025 (from **$46.0 million** in YTD 2024), primarily due to lower proceeds from stock option exercises[162](index=162&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate risk, and how these risks could impact its financial position and investment income - Primary market risk exposure is interest rate risk, impacting investment portfolio fair value and investment income[163](index=163&type=chunk)[164](index=164&type=chunk) - A hypothetical immediate **1%** increase in interest rates at June 30, 2025, would decrease the fair value of investments by approximately **$47.1 million**[164](index=164&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures, concluding their effectiveness, and reports no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[165](index=165&type=chunk)[166](index=166&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[167](index=167&type=chunk) [Part II - Other Information](index=40&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section refers to the detailed disclosures on legal proceedings and commitments and contingencies provided in Note 12 to the financial statements, emphasizing the inherent uncertainties and potential material adverse effects on the company's business, results of operations, financial condition, or cash flows [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the detailed disclosures on legal proceedings and commitments and contingencies provided in Note 12 to the financial statements, emphasizing the inherent uncertainties and potential material adverse effects on the company's business, results of operations, financial condition, or cash flows - Information on legal proceedings is set forth in "Note 12 - Commitments and Contingencies"[169](index=169&type=chunk) - Uncertainty of proceedings means no assurance that they will not have a material adverse effect on the business[169](index=169&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section updates and reiterates key risks, including challenges in retaining and expanding the member base due to competition, regulatory changes (e.g., APTCs, Program Integrity Rules, OBBBA), and market dynamics. It also highlights risks associated with accurately estimating and managing medical and administrative costs, and the significant uncertainties and potential financial impacts of risk adjustment programs, including the need for additional capital [Member Base Retention and Expansion Risks](index=40&type=section&id=Our%20success%20and%20ability%20to%20grow%20our%20business%20depend%20in%20part%20on%20retaining%20and%20expanding%20our%20member%20base.%20If%20we%20fail%20to%20add%20new%20members%20or%20retain%20current%20members,%20or%20manage%20our%20membership%20growth%20appropriately%20to%20meet%20our%20business%20objectives,%20our%20business,%20revenue,%20operating%20results,%20and%20financial%20condition%20could%20be%20harmed.) This section highlights risks to business growth from failing to retain or expand the member base due to competition, regulatory changes, or market dynamics - Success depends on retaining and expanding the member base, which is influenced by competitive pricing, provider networks, broker relationships, and regulatory changes[171](index=171&type=chunk)[172](index=172&type=chunk)[178](index=178&type=chunk) - Expiration or reduction of enhanced APTCs after 2025 could make insurance unaffordable and reduce membership[172](index=172&type=chunk) - CMS Program Integrity Rules (effective Aug 25, 2025) and the OBBBA will create stricter eligibility verification, shorten open enrollment, and limit APTCs, likely reducing Health Insurance Marketplace participation and impacting membership[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - Competition from other health insurers with greater resources and broader product offerings poses a risk to member attraction and retention[178](index=178&type=chunk) [Medical Expense and Administrative Cost Management Risks](index=42&type=section&id=Failure%20to%20accurately%20estimate%20our%20incurred%20medical%20expenses%20or%20ef%20ectively%20manage%20our%20medical%20costs%20or%20related%20administrative%20costs%20could%20negatively%20af%20ect%20our%20financial%20position,%20results%20of%20operations,%20and%20cash%20flows.) This section addresses the financial risks associated with inaccurate estimation and ineffective management of medical and administrative costs - Profitability depends on accurately estimating and effectively managing medical and administrative costs, which are impacted by numerous factors beyond control[179](index=179&type=chunk)[180](index=180&type=chunk) - Factors include changes in healthcare regulations, impact of regulatory actions (Program Integrity Rules, OBBBA, APTCs, Medicaid redeterminations) on member morbidity, increases in healthcare facility/service costs, pharmaceutical prices (e.g., tariffs), and broker fees[180](index=180&type=chunk) - Medicaid redeterminations have increased overall market morbidity, and future ACA enrollment patterns and their impact on underwriting margin and MLR are uncertain[181](index=181&type=chunk) - Inability to accurately estimate claims liability or control administrative expenses (e.g., distribution, scaling, personnel) could materially affect financial results[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) [Risk Adjustment Program Impact Risks](index=43&type=section&id=The%20result%20of%20risk%20adjustment%20programs%20may%20impact%20our%20revenue,%20add%20operational%20complexity,%20and%20introduce%20additional%20uncertainties%20that%20have%20a%20material%20adverse%20ef%20ect%20on%20our%20results%20of%20operations,%20financial%20condition,%20and%20cash%20flows.) This section discusses the significant financial and operational uncertainties and potential adverse effects stemming from risk adjustment programs - Risk adjustment programs significantly impact revenue, and estimates are subject to high variability and uncertainty due to program mechanics, risk scores, market-level factors, and reliance on third-party data[185](index=185&type=chunk)[186](index=186&type=chunk) - A material adjustment to risk adjustment transfer estimates (e.g., due to increased market morbidity in 2025) could negatively impact results and require additional capital contributions to insurance subsidiaries[186](index=186&type=chunk) - CMS audits of risk adjustment data could lead to refunds, penalties, or underpayment for care, materially affecting financial condition[187](index=187&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section states that there were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the reported period [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports that there were no defaults upon senior securities during the period [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[190](index=190&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) This section reports no other material information, specifically noting no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[192](index=192&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - Includes Amended and Restated Certificate of Incorporation and Bylaws[193](index=193&type=chunk) - Certifications of CEO, CFO (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350)[193](index=193&type=chunk) - Inline XBRL Instance Document and Taxonomy Extension Documents[193](index=193&type=chunk) [Signatures](index=46&type=section&id=SIGNATURES) This section provides the official signatures of the company's key executives, certifying the report's contents - Signed by Mark T. Bertolini (CEO), R. Scott Blackley (CFO), and Victoria Baltrus (CAO) on August 7, 2025[199](index=199&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was reported at $2,900,000,000, representing a 29% increase year over year [7][18] - The medical loss ratio (MLR) increased by 12 points year over year to 91.1%, primarily due to an overall increase in average market morbidity [7][19] - The SG&A ratio improved by 90 basis points year over year to 18.7% [8][21] - The loss from operations was $230,000,000, a decrease of $298,000,000 year over year, while the adjusted EBITDA loss was $199,000,000 [8][22] - The company reaffirmed its 2025 guidance, projecting total revenue between $12,000,000,000 and $12,200,000,000 [8][24] Business Line Data and Key Metrics Changes - Membership grew to over 2,000,000, an increase of 28% year over year, driven by solid retention and above-market growth during open enrollment [19] - The second quarter MLR was impacted by a $316,000,000 increase in risk adjustment payable for 2025 due to higher ACA marketplace morbidity [19] Market Data and Key Metrics Changes - The latest risk adjustment data indicates a meaningful market-wide increase in morbidity in 2025, affecting all carriers with increases in mid to high single digits [9] - The company anticipates double-digit rate increases in the market for 2026 to address current morbidity pressures [10] Company Strategy and Development Direction - The company is focused on the individual market, believing it will stabilize in 2026 and is taking actions to mitigate current industry headwinds [8][12] - Oscar Health is acquiring early-stage assets to build a consumer marketplace, including a brokerage and a direct enrollment technology platform [13][14] - The company is launching a new ICRA product in partnership with Hy Vee Inc., targeting employers and employees in Des Moines, Iowa [15] Management's Comments on Operating Environment and Future Outlook - Management believes the individual market has significant long-term growth potential and is taking corrective actions to return to profitability in 2026 [16][27] - The company is confident in its capital position and expects to absorb the majority of forecasted losses through its excess capital [32][90] Other Important Information - The company is reducing its workforce in the second half of 2025, expecting to save approximately $60,000,000 in administrative costs for 2026 [12][27] - The company has a strong capital position with approximately $5,400,000,000 in cash and investments [22][90] Q&A Session Summary Question: Guidance on 2025 free cash flow and risk adjustment payable - Management confirmed a strong capital position and indicated that the majority of expected losses would be absorbed by excess capital [31] Question: Long-term targets for 2027 - Management reaffirmed the 5% margin target and stated that no changes to long-term forecasts are being made at this time [34] Question: Multiyear earnings levers - Management indicated that there are still opportunities to improve medical costs and administrative efficiencies [41] Question: Potential risk pool deterioration - Management expressed confidence that the risk pool would not deteriorate further and that they have factored risks into their pricing for 2026 [48] Question: Market stabilization assumptions for 2026 - Management stated that conservative assumptions have been built into the 2026 guidance, considering market morbidity shifts and program integrity impacts [52] Question: Membership shifts and retention - Management noted that improved membership retention and lower lapse rates contributed to membership growth, with no adverse selection observed [105]

Financial Data and Key Metrics Changes - Total revenue for the second quarter of 2025 was reported at $2,900,000,000, representing a 29% year-over-year increase [5][18] - The medical loss ratio (MLR) increased by 12 points year-over-year to 91.1%, primarily due to an overall increase in average market morbidity [5][19] - The SG&A ratio improved by 90 basis points year-over-year to 18.7% [6][21] - The loss from operations was $230,000,000, a decrease of $298,000,000 year-over-year, while the adjusted EBITDA loss was $199,000,000, a decrease of $34,000,000 year-over-year [6][22] - The company reaffirmed its updated 2025 guidance, projecting total revenues between $12,000,000,000 and $12,200,000,000 and a loss from operations between $200,000,000 and $300,000,000 [6][24] Business Line Data and Key Metrics Changes - Membership grew to over 2,000,000, an increase of 28% year-over-year, driven by solid retention and above-market growth during open enrollment [19] - The second quarter MLR was impacted by a $316,000,000 increase in risk adjustment payable for 2025 due to higher ACA marketplace morbidity [19] Market Data and Key Metrics Changes - The latest risk adjustment data indicated a meaningful market-wide increase in morbidity in 2025, affecting all carriers with increases in mid to high single digits [7] - The company expects double-digit rate increases in the market for 2026 to address current morbidity pressures [9] Company Strategy and Development Direction - The company is focused on managing expenses and optimizing operations through technology and AI-driven efficiencies, aiming to eliminate approximately $60,000,000 in administrative costs for 2026 [10][11] - Strategic acquisitions include an individual market brokerage and a direct enrollment technology platform to enhance capabilities in the consumer marketplace [12][13] - The company is launching a new ICRA product in partnership with Hy Vee Inc., targeting employers and employees in Des Moines, Iowa [14] Management's Comments on Operating Environment and Future Outlook - Management believes the individual market will stabilize in 2026 and expects to return to profitability in that year [15][26] - The company is taking corrective actions to ensure a strong position for profitability next year, despite current market challenges [18][26] Other Important Information - The company has a strong capital position with approximately $5,400,000,000 in cash and investments, including $579,000,000 in excess capital [22][90] - The company is reducing its workforce in the second half of 2025 to solidify its profitability position for 2026 [26][85] Q&A Session Summary Question: Guidance on 2025 free cash flow and risk adjustment payable - Management indicated a strong capital position and that the majority of expected losses would be absorbed by excess capital [30] Question: Long-term targets for 2027 - Management reaffirmed the 5% margin target but stated that adjustments may be made after assessing the pricing season [32] Question: Multiyear earnings levers - Management highlighted ongoing opportunities to improve medical costs and administrative efficiencies [38] Question: Potential risk pool deterioration - Management expressed confidence in their current position and noted that they have factored risks into their pricing for 2026 [47] Question: Market stabilization assumptions for 2026 - Management built conservative assumptions into their guidance, expecting to improve margins and return to profitability [51] Question: Membership shifts and retention - Management noted that improved membership retention and lower lapse rates contributed to membership growth [105]

Group 1: Company Performance - Oscar Health reported a second-quarter loss of $228 million, or 89 cents per share, marking a $285 million swing from a profit of $56.2 million, or 20 cents per share, in the same quarter last year [5] - Total membership increased by 28% to over 2 million, contributing to a 29% rise in total revenue, which reached nearly $2.9 billion in the second quarter [4] - The medical loss ratio surged to 91.1% in the second quarter, up from 79% in the previous year, indicating higher costs associated with a sicker patient pool [7] Group 2: Industry Context - The health insurance industry is facing challenges due to an influx of sicker-than-expected patients, leading to increased costs and lowered profit forecasts [5][6] - Rising costs in the health insurance sector are attributed to pent-up demand for healthcare following the COVID-19 pandemic, with many patients delaying treatment [6] - Health insurers, particularly those providing government-subsidized coverage, are planning to increase rates next year to manage the costs associated with a sicker patient demographic [5] Group 3: Future Outlook - Oscar's CEO, Mark Bertolini, remains optimistic about the individual health insurance market, believing it has long-term growth potential [8][9] - The company anticipates a market stabilization in 2026 and expects to return to profitability by that year [9] - Oscar is focused on building the individual market into a comprehensive healthcare marketplace for consumers and businesses [9]

[Preliminary Q2 2025 Financial Results and Revised 2025 Guidance](index=1&type=section&id=Preliminary%20Q2%202025%20Financial%20Results%20and%20Revised%202025%20Guidance) Oscar Health announced preliminary Q2 2025 financial results, revising full-year guidance due to higher ACA Marketplace risk scores and projected significant losses [Preliminary Q2 2025 Financial Highlights](index=1&type=section&id=Preliminary%20Q2%202025%20Financial%20Highlights) Oscar Health announced preliminary Q2 2025 financial results, expecting significant losses from operations and net loss, primarily due to an independent actuarial review of 2025 Marketplace data indicating higher-than-anticipated risk scores Preliminary Q2 2025 Financials | Metric | Amount (USD) | | :--- | :--- | | Loss from Operations | ~$230 million | | Net Loss | ~$228 million | - The preannouncement is driven by a review of 2025 Marketplace data ("2Q Risk Adjustment Reports") from Wakely, an independent actuarial firm, analyzing paid claims submissions through April 30, 2025[1](index=1&type=chunk) [Drivers for Revised Guidance and Market Commentary](index=1&type=section&id=Drivers%20for%20Revised%20Guidance%20and%20Market%20Commentary) The revision is driven by increased ACA Marketplace risk scores, indicating higher average morbidity. Oscar plans pricing actions for 2026 and will resubmit rate filings to reflect these higher market risk scores, while noting 2024 risk adjustment results were favorable - Overall ACA Marketplace risk scores have increased by more than the Company's prior estimates, based on the analysis of 2Q Risk Adjustment Reports covering nearly 100% of Oscar's geographic footprint[2](index=2&type=chunk) - The Company now expects a Medical Loss Ratio (MLR) of **86.0% to 87.0%** for full year 2025[2](index=2&type=chunk) - Oscar expects to resubmit rate filings for 2026 in states covering approximately **98% of current membership** to reflect the higher market risk scores in the ACA Marketplace[2](index=2&type=chunk) - The 2024 risk adjustment results were approximately **$23 million favorable** to the Company's accruals as of the first quarter of 2025[3](index=3&type=chunk) [Revised Full Year 2025 Financial Outlook](index=1&type=section&id=Revised%20Full%20Year%202025%20Financial%20Outlook) Oscar Health has revised its full year 2025 financial outlook, anticipating lower total revenue and higher loss from operations, alongside specific ranges for Medical Loss Ratio and SG&A Expense Ratio Revised Full Year 2025 Outlook | Metric | Low (USD) | High (USD) | | :--- | :--- | :--- | | Total Revenue | $12.0 billion | $12.2 billion | | Medical Loss Ratio | 86.0% | 87.0% | | SG&A Expense Ratio | 17.1% | 17.6% | | Loss from Operations | ($300 million) | ($200 million) | | Adjusted EBITDA Loss | ~$120 million less than Loss from Operations | [Upcoming Q2 2025 Earnings Release](index=1&type=section&id=Upcoming%20Q2%202025%20Earnings%20Release) The company expects to release its full second quarter 2025 financial results and host a conference call on August 6, 2025 - Q2 2025 financial results are expected to be released before the market opens on Wednesday, August 6, 2025[5](index=5&type=chunk) - A conference call to review results will be hosted beginning at 8:00 AM (ET) on August 6, 2025[5](index=5&type=chunk) [2025 Financial Guidance Summary](index=2&type=section&id=2025%20Financial%20Guidance%20Summary) This section outlines Oscar Health's revised full year 2025 financial outlook and defines key performance metrics [Full Year 2025 Outlook Table](index=2&type=section&id=Full%20Year%202025%20Outlook%20Table) This section provides a detailed table of Oscar Health's revised full year 2025 financial outlook, including ranges for Total Revenue, Medical Loss Ratio, SG&A Expense Ratio, and Loss from Operations Full Year 2025 Outlook | Metric | Low (USD) | High (USD) | | :--- | :--- | :--- | | Total Revenue | $12.0 billion | $12.2 billion | | Medical Loss Ratio | 86.0% | 87.0% | | SG&A Expense Ratio | 17.1% | 17.6% | | Loss from Operations | ($300 million) | ($200 million) | [Key Financial Metric Definitions](index=2&type=section&id=Key%20Financial%20Metric%20Definitions) This section defines the key financial metrics used in the guidance, including Total Revenue, Medical Loss Ratio (MLR), SG&A Expense Ratio, and Loss from Operations, explaining their significance for assessing business performance - **Total Revenue:** Includes Premium revenue, Investment income, and Services and other revenue; important for assessing business growth and investment portfolio earnings potential[7](index=7&type=chunk) - **Medical Loss Ratio (MLR):** Calculated as medical expenses as a percentage of net premiums before ceded quota share reinsurance; demonstrates the ratio of costs to pay for healthcare of members to net premiums[8](index=8&type=chunk) - **SG&A Expense Ratio:** Calculated as selling, general, and administrative expenses as a percentage of Total Revenue; valuable for evaluating the ability to manage the overall cost base[9](index=9&type=chunk) - **Loss from Operations:** The Company's Total revenue less Total operating expenses; a metric for assessing operating performance[9](index=9&type=chunk) [Non-GAAP Financial Information](index=2&type=section&id=Non-GAAP%20Financial%20Information) This section defines and explains the application of Adjusted EBITDA as a non-GAAP financial measure for performance evaluation [Adjusted EBITDA Definition and Use](index=2&type=section&id=Adjusted%20EBITDA%20Definition%20and%20Use) The company presents Adjusted EBITDA as a non-GAAP metric, defined as Net income (loss) adjusted for interest, taxes, depreciation, amortization, stock-based compensation, and other unusual items. It is used by analysts and management to evaluate performance, though comparability with other companies may vary - **Adjusted EBITDA Definition:** Net income (loss) before interest expense, income tax expense (benefit), and depreciation and amortization, further adjusted for stock-based compensation and other items considered unusual or not representative of underlying business trends[10](index=10&type=chunk) - Management believes Adjusted EBITDA enhances investors' understanding of performance and provides a reasonable basis for comparing ongoing results of operations[10](index=10&type=chunk) - Oscar has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net income (loss) due to the inability to calculate certain reconciling items (e.g., stock-based compensation) without unreasonable efforts[10](index=10&type=chunk) [Cautionary Statements](index=2&type=section&id=Cautionary%20Statements) This section outlines disclaimers for forward-looking statements and the preliminary nature of financial disclosures [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section warns that the press release contains forward-looking statements regarding future performance, financial outlook, and business strategy, which are subject to significant risks, assumptions, and uncertainties beyond the company's control - Statements regarding preliminary Q2 2025 results, financial outlook, estimates, underlying assumptions, planned rate filings, business prospects, market dynamics, and management plans are considered forward-looking statements[11](index=11&type=chunk) - Future performance is not guaranteed and is subject to risks, assumptions, and uncertainties, including the ability to execute strategy, manage growth, retain members, accurately estimate medical expenses, maintain profitability, and adapt to regulatory changes[11](index=11&type=chunk)[12](index=12&type=chunk) - Readers are cautioned not to place undue reliance on any forward-looking statements, and the company does not undertake any obligation to publicly update or review them, except as required by law[13](index=13&type=chunk) [Financial Disclosure Advisory](index=3&type=section&id=Financial%20Disclosure%20Advisory) All financial data presented in the release is preliminary and subject to change as quarter-end accounting procedures are not yet complete, meaning actual results may differ - All financial data in this press release is preliminary and represents the most current information available, as financial closing procedures for the quarter ended June 30, 2025, are not yet complete[14](index=14&type=chunk) - Actual results may differ from these estimates due to the completion of normal quarter-end accounting procedures and adjustments, as well as the preparation and review of financial statements[14](index=14&type=chunk) [About Oscar Health](index=4&type=section&id=About%20Oscar%20Health) This section provides an overview of Oscar Health, a healthcare technology company focused on accessible and affordable solutions [Company Overview](index=4&type=section&id=Company%20Overview) Oscar Health is a leading healthcare technology company founded in 2012, focused on making healthcare accessible and affordable through its full-stack technology platform. It offers Individual & Family plans and health technology solutions, serving approximately 2.0 million members as of March 31, 2025 - Oscar Health, Inc. is a leading healthcare technology company built around a full stack technology platform[15](index=15&type=chunk) - The company is dedicated to making a healthier life accessible and affordable for all, offering Individual & Family plans and health technology solutions through +Oscar[15](index=15&type=chunk) - Oscar served approximately **2.0 million members** as of March 31, 2025[15](index=15&type=chunk) [Contacts](index=4&type=section&id=Contacts) This section provides contact information for Oscar Health's investor and media relations departments [Investor and Media Relations](index=4&type=section&id=Investor%20and%20Media%20Relations) This section provides contact information for Oscar Health's Investor Relations and Media Relations departments - Investor Contact: Chris Potochar, VP of Investor Relations, ir@hioscar.com[16](index=16&type=chunk) - Media Contact: Kristen Prestano, VP of Communications, press@hioscar.com[16](index=16&type=chunk)

Company Overview - Oscar Health (NYSE: OSCR) is a technology-driven health insurance company focused on individual and family health plans under the Affordable Care Act (ACA) [1] Business Model - Oscar Health operates differently from traditional insurance companies, leveraging artificial intelligence to enhance its services [1] Market Position - The company is positioned within the ACA landscape, indicating a focus on providing health insurance solutions that comply with regulatory requirements [1]

Group 1 - Oscar Health (NYSE: OSCR) is gaining attention as a rising health insurer, with upcoming Q2 results expected to reveal its plans following the One Big Beautiful Bill and the uncertain environment [1] - The analysis focuses on value investing, emphasizing an owner's mindset and a long-term horizon, indicating a strategic approach to investment rather than short-term speculation [1] Group 2 - There are no disclosed positions in Oscar Health or related derivatives, and no plans to initiate any positions in the near future, suggesting a neutral stance on immediate investment opportunities [2] - The article expresses personal opinions and does not provide compensation for the analysis, indicating an independent viewpoint [2]

Core Insights - Oscar Health's stock has decreased by 40% from its recent highs, but investors are advised not to panic [1] Company Summary - The video discusses the current stock performance of Oscar Health (OSCR), emphasizing that the significant drop should not cause alarm among investors [1]

Group 1 - Oscar Health, Inc. (OSCR) stock closed at $15.53, down 3.42% from the previous day, underperforming the S&P 500's gain of 0.28% [1] - The stock has increased by 13.64% over the past month, outperforming the Finance sector's gain of 2.79% and the S&P 500's gain of 4.37% [1] Group 2 - Oscar Health, Inc. is expected to report an EPS of $0.34, reflecting a 70% increase from the same quarter last year, with revenue forecasted at $2.86 billion, indicating a 28.96% growth [2] - For the fiscal year, earnings are projected at $0.61 per share and revenue at $11.21 billion, representing increases of 510% and 22.12% respectively from the prior year [3] Group 3 - Recent analyst estimate revisions for Oscar Health, Inc. indicate positive sentiment regarding the company's business operations and profit generation capabilities [4] - The Zacks Rank system, which evaluates estimate changes, currently ranks Oscar Health, Inc. at 3 (Hold), with the consensus EPS projection remaining unchanged over the past 30 days [6] Group 4 - Oscar Health, Inc. has a Forward P/E ratio of 26.22, significantly higher than the industry average of 10.14, suggesting the company is trading at a premium [7] - The Insurance - Multi line industry, part of the Finance sector, holds a Zacks Industry Rank of 65, placing it in the top 27% of over 250 industries [7]