Oscar(US:OSCR)2025-11-06 21:35Membership and Growth - As of September 30, 2025, Oscar Health, Inc. has approximately 2.1 million effectuated members actively enrolled in its plans[104] - The company experienced increased membership due to Medicaid redeterminations, although future growth from this source is expected to be less significant[116] - Membership increased by 0.5 million or 28% as of September 2025 compared to September 2024, primarily due to above-market growth during the 2025 Open Enrollment period[136] Financial Performance - Total revenue includes premium revenue, investment income, and other revenues, which are critical for assessing business growth and investment potential[106] - Premium revenue increased by $555.7 million or 23% for the three months ended September 30, 2025, and by $2,097.2 million or 32% for the nine months ended September 30, 2025, compared to the same periods in 2024, driven by higher membership[136] - Medical expenses rose by $582.4 million or 29% for the three months ended September 30, 2025, and by $2,131.5 million or 40% for the nine months ended September 30, 2025, compared to the same periods in 2024, attributed to increased membership and medical cost trends[140] - Net income attributable to Oscar Health, Inc. was a loss of $137,450 thousand for the three months ended September 30, 2025, compared to a loss of $54,596 thousand for the same period in 2024[134] Medical Loss Ratio and Expenses - The medical loss ratio (MLR) is a key metric, reflecting medical expenses as a percentage of net premiums, and is subject to federal and state minimum requirements[107] - Medical loss ratio (MLR) increased to 88.5% for the three months ended September 30, 2025, compared to 84.6% for the same period in 2024, and to 84.8% for the nine months ended September 30, 2025, compared to 79.5% for the same period in 2024[134] - Selling, general, and administrative expenses increased by $61.2 million or 13% for the three months ended September 30, 2025, and by $249.1 million or 19% for the nine months ended September 30, 2025, compared to the same periods in 2024[143] - The SG&A expense ratio decreased by 153 basis points to 17.5% for the three months ended September 30, 2025, and by 170 basis points to 17.3% for the nine months ended September 30, 2025, compared to the same periods in 2024[144] Cash and Investments - Total cash and cash equivalents and investments held by the holding company were $540.9 million as of September 30, 2025, compared to $189.8 million as of December 31, 2024[146] - Total cash and cash equivalents and investments held by health insurance subsidiaries were $4.3 billion as of September 30, 2025, compared to $3.8 billion as of December 31, 2024[147] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $423.0 million, a decrease from $631.4 million in the same period of 2024[174] - Net cash used in investing activities for the nine months ended September 30, 2025, was $192.4 million, significantly lower than $1,356.0 million for the same period in 2024[175] - Net cash provided by financing activities for the nine months ended September 30, 2025, was $391.0 million, compared to $64.6 million for the same period in 2024, due to proceeds from newly issued convertible notes[176] Regulatory and Market Factors - Regulatory changes, including the implementation of the Program Integrity Rules and the One Big Beautiful Bill Act, may impact enrollment processes and APTC eligibility[115] - Seasonal patterns affect medical expenses and claims incurred, with higher costs typically observed in the second half of the policy year[121] - SEP enrollment volumes across the ACA market in 2025 have returned to historical baselines, impacting MLR risks[123] Risk Management - The risk adjustment transfer estimates were significantly increased based on updated market risk scores, indicating higher expected medical costs[119] - The company is subject to interest rate risk related to its investment portfolio, which includes U.S. Treasury and agency securities, corporate notes, and certificates of deposit[178] - A hypothetical 1% increase in interest rates would lead to a decrease in the fair value of investments by approximately $43.6 million[178] - The primary market risk exposure is driven by changes to Federal fund effective rates[178] - Interest rate risk is influenced by U.S. monetary and tax policies, as well as international economic factors[178] - Declines in interest rates over time would reduce the company's investment income[178] Capital and Contributions - The combined statutory capital and surplus of the health insurance subsidiaries was approximately $1.3 billion as of September 30, 2025, exceeding minimum capital requirements[148] - Health insurance subsidiaries exceeded the minimum statutory RBC requirement by approximately $734 million as of December 31, 2024, and are estimated to have approximately $564.1 million of excess capital as of September 30, 2025[148] - During the nine months ended September 30, 2025, health insurance subsidiaries made loan repayments of $15.0 million, compared to $133.0 million in dividends and loan repayments in the same period of 2024[149] - Parent made capital contributions of $65.8 million and $99.8 million to health insurance subsidiaries for the nine months ended September 30, 2025, and 2024, respectively[150] Investment Income - Investment income increased by $2.9 million or 6% for the three months ended September 30, 2025, and by $10.0 million or 7% for the nine months ended September 30, 2025, compared to the same periods in 2024[139] - Net investment income for the three months ended September 30, 2025, was $53.2 million, compared to $50.3 million for the same period in 2024[170] Debt Issuance - The company issued $305.0 million in convertible senior notes due 2031, with an interest rate of 7.25% per annum[153][154] - The company issued $410.0 million in convertible senior subordinated notes due 2030, with an interest rate of 2.25% per annum[161][162]