Oscar(OSCR) - 2024 Q2 - Quarterly Results

Financial Highlights and Outlook Oscar Health reported strong Q2 2024 results with significant revenue growth and improved profitability, leading to raised full-year guidance Q2 2024 Financial Highlights (YoY) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2.2 billion | $1.5 billion | +46% | | Medical Loss Ratio | 79.0% | 79.9% | -90 bps | | SG&A Expense Ratio | 19.6% | 22.2% | -260 bps | | Net Income (attributable to Oscar) | $56.2 million | ($15.5 million) | +$71.7 million | | Adjusted EBITDA | $104.1 million | $35.6 million | +$68.6 million | Updated Full Year 2024 Outlook | Metric | New FY2024 Guidance | Prior FY2024 Guidance | | :--- | :--- | :--- | | Total Revenue | $9.0B - $9.1B | $8.3B - $8.4B | | Adjusted EBITDA | $160M - $210M | $125M - $175M | | Medical Loss Ratio | 80.5% - 81.5% | Modestly Higher (Implied) | | SG&A Expense Ratio | 19.75% - 20.25% | Lower (Implied) | - Revenue growth was primarily driven by higher membership and rate increases, with Medical Loss Ratio improvement attributed to favorable prior period development and SG&A Expense Ratio improvement from better fixed cost leverage and variable cost efficiencies[2] Key Operating Metrics Total membership significantly increased to approximately 1.6 million, primarily driven by growth in the Individual and Small Group segment Membership by Offering | Offering | As of June 30, 2024 | As of June 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Individual and Small Group | 1,522,432 | 900,228 | +69.1% | | Medicare Advantage | — | 1,843 | -100% | | Cigna+Oscar | 58,293 | 68,472 | -14.9% | | Total Members | 1,580,725 | 970,543 | +62.9% | Consolidated Financial Statements The company transitioned from a net loss to significant net income, with substantial growth in total assets and stockholders' equity Condensed Consolidated Statements of Operations Oscar Health reported a significant turnaround in Q2 2024, achieving $56.2 million net income and $0.20 diluted EPS, compared to a net loss in the prior year Statement of Operations Highlights (in thousands) | Line Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $2,219,341 | $1,521,535 | $4,361,646 | $2,991,220 | | Total operating expenses | $2,145,605 | $1,528,064 | $4,108,276 | $3,023,114 | | Earnings (loss) from operations | $73,736 | ($6,529) | $253,370 | ($31,894) | | Net income (loss) attributable to Oscar | $56,209 | ($15,528) | $233,575 | ($55,300) | | Diluted EPS | $0.20 | ($0.07) | $0.82 | ($0.25) | Condensed Consolidated Balance Sheets Total assets increased to $5.0 billion, with liabilities rising to $3.9 billion, and stockholders' equity strengthening to $1.14 billion as of June 30, 2024 Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,268,154 | $1,870,315 | | Total assets | $5,006,149 | $3,601,480 | | Benefits payable | $1,252,228 | $965,986 | | Risk adjustment transfer payable | $1,779,039 | $1,056,941 | | Total liabilities | $3,865,581 | $2,795,363 | | Total stockholders' equity | $1,140,568 | $806,117 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly increased to $1.13 billion for the first six months of 2024, contributing to a $399 million increase in cash and cash equivalents Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,131,514 | $580,239 | | Net cash (used in) provided by investing activities | ($778,216) | $179,407 | | Net cash provided by financing activities | $46,011 | $3,057 | | Increase in cash and cash equivalents | $399,309 | $762,703 | Key Operating and Non-GAAP Financial Metrics This section defines key operating metrics and provides a reconciliation of GAAP Net Income to Adjusted EBITDA, a crucial non-GAAP performance measure Definitions of Key Metrics Key metrics include Members, Medical Loss Ratio (MLR), and SG&A Expense Ratio, used to evaluate revenue, healthcare cost efficiency, and administrative cost management - Members: The number of individuals covered by a health plan, viewed as an important metric to evaluate revenue, market share, and data acquisition for platform improvement[21] - Medical Loss Ratio (MLR): Calculated as medical expenses as a percentage of net premiums (before ceded reinsurance), it demonstrates the ratio of costs to pay for member healthcare[22] - SG&A Expense Ratio: Selling, general and administrative expenses as a percentage of Total Revenue, used to evaluate the ability to manage the overall administrative cost base[24] Adjusted EBITDA Reconciliation Adjusted EBITDA, a non-GAAP measure, significantly increased to $104.1 million in Q2 2024, reconciled from GAAP Net Income with standard adjustments Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $56,312 | ($15,425) | $233,794 | ($55,053) | | Adjustments | $47,814 | $50,997 | $89,646 | $141,693 | | Adjusted EBITDA | $104,126 | $35,572 | $323,440 | $86,640 | Appendix The appendix provides supplementary financial details, including tables reconciling gross and net figures for premiums, claims, and SG&A expenses, highlighting reinsurance impact Net Quota Share Reinsurance Impact (in thousands) | Period | Net Impact | | :--- | :--- | | Three Months Ended June 30, 2024 | ($12,315) | | Three Months Ended June 30, 2023 | ($11,518) | | Six Months Ended June 30, 2024 | ($25,447) | | Six Months Ended June 30, 2023 | ($20,593) | - The appendix provides detailed reconciliations for premiums, medical expenses, and SG&A expenses, showing the gross amounts, the impact of ceded and assumed reinsurance, and the final net figures reported in the consolidated statements[31][32][34] Other Information This section provides standard corporate information, including company details, forward-looking statement disclaimers, and earnings call logistics About Oscar Health Oscar Health, founded in 2012, is a technology-driven health insurance company aiming to make healthcare accessible and affordable, serving approximately 1.6 million members - Oscar is a health insurance company founded in 2012 with a mission to make healthcare accessible and affordable via a full-stack technology platform[11] - As of June 30, 2024, the company serves approximately 1.6 million members[11] Forward-Looking Statements This section contains forward-looking statements regarding financial outlook and business strategy, subject to risks and uncertainties that may cause actual results to differ materially - The press release includes forward-looking statements concerning financial outlook, business prospects, and strategy[8] - Readers are cautioned that these statements are subject to significant risks and uncertainties, and actual results may differ materially, with key risk factors detailed in the company's SEC filings[9] Quarterly Conference Call Details Oscar Health scheduled a conference call for August 7, 2024, at 8:00 a.m. ET to discuss Q2 financial results, with webcast and replay available - A conference call to discuss financial results was scheduled for August 7, 2024, at 8:00 a.m. (ET)[6]