Oscar Health Announces Results for Fourth Quarter and Full Year 2022

• Membership as of December 31, 2022 of 1,151,483, a 93% increase YoY

• For the year ended December 31, 2022:

  • Direct and Assumed Policy Premiums of $6.8 billion, a 99% increase YoY

  • Premiums earned of $3.9 billion, a 111% increase YoY

  • Medical Loss Ratio of 85.3%, a 360 bps improvement YoY

  • InsuranceCo Administrative Expense Ratio of 20.6%, a 125 bps improvement YoY

  • InsuranceCo Combined Ratio of 105.8%, a 490 bps improvement YoY

  • Adjusted Administrative Expense Ratio of 24.6%, a 440 bps improvement YoY

  • Net loss of $610 million, an increase of $38 million YoY; Adjusted EBITDA loss of $462 million, an increase of $32 million YoY

NEW YORK, February 09, 2023--(BUSINESS WIRE)--Health tech company Oscar Health, Inc. (NYSE: OSCR) today announced its financial results for the fourth quarter and year ended December 31, 2022 including significant improvement in core operating margins, delivering ~5 points of Combined Ratio improvement YoY.

"We enter 2023 with strong positive momentum, having executed according to our plan in 2022 and making meaningful improvements in many of the key metrics for our business," said Mario Schlosser, CEO and Co-Founder of Oscar. "Our progress in bringing down our total cost of care and the work to achieve administrative cost savings positions us well vis a vis our profitability goals for 2023 and beyond."

Total Direct and Assumed Policy Premiums for 2022 were $6.8 billion, up 99% year-over-year ("YoY"), driven primarily by robust membership growth, rate increases, and mix shifts to higher premium plans. Premiums earned for the year were up 111% YoY, driven by the same factors that drove the increase in Direct and Assumed Policy Premiums, as well as a lower percentage of ceded premiums to reinsurance partners.

Oscar’s InsuranceCo Combined Ratio, which is the sum of its Medical Loss Ratio ("MLR") and the InsuranceCo Administrative Expense Ratio, improved 490 bps YoY to 105.8% for 2022, driven by both an improved MLR and lower administrative costs. Specifically, the MLR improved 360 bps YoY to 85.3%, primarily due to lower net COVID-19-related costs, pricing actions, mix shifts in member population, and medical management actions, partially offset by unfavorable prior period development. The InsuranceCo Administrative Expense Ratio improved 125 bps YoY to 20.6%, driven by operating expense leverage and scale efficiencies, partially offset by higher distribution expenses.

The 2022 Adjusted Administrative Expense Ratio improved 440 bps YoY to 24.6%, primarily due to operating expense leverage and scale efficiencies. The Adjusted EBITDA loss of $462 million increased by $32 million YoY, but decreased as a percentage of premiums before ceded reinsurance by 7 points as compared to the prior year. Net loss of $610 million increased by $38 million YoY and decreased as a percentage of premiums before ceded reinsurance by 10 points YoY.

The Company is introducing its outlook for 2023 including anticipated Direct and Assumed Policy Premiums of $6.4 billion to $6.6 billion, an InsuranceCo Combined Ratio at or less than 100%, and a significantly improved Adjusted EBITDA loss of ($175) million to ($75) million.

Financial Results Summary
	Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
	(in thousands)
Premiums before ceded reinsurance	$	1,332,931			$	705,502			$	5,334,520			$	2,712,988
Reinsurance premiums ceded		(365,474	)			(212,921	)			(1,463,403	)			(881,968	)
Premiums earned	$	967,457			$	492,581			$	3,871,117			$	1,831,020
Total revenue	$	995,127			$	496,067			$	3,963,638			$	1,838,715
Total operating expenses	$	1,217,606			$	692,322			$	4,553,505			$	2,383,196
Net loss	$	(226,560	)		$	(197,742	)		$	(609,552	)		$	(571,426	)

Key Metrics and Non-GAAP Financial Metrics
	Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
Direct and Assumed Policy Premiums (in thousands)	$	1,784,012			$	872,904			$	6,842,439			$	3,436,626
Medical Loss Ratio		91.6	%			97.9	%			85.3	%			88.9	%
InsuranceCo Administrative Expense Ratio		22.3	%			24.5	%			20.6	%			21.8	%
InsuranceCo Combined Ratio		113.9	%			122.4	%			105.8	%			110.7	%
Adjusted Administrative Expense Ratio		26.0	%			34.4	%			24.6	%			28.9	%
Adjusted EBITDA(1) (in thousands)	$	(189,656	)		$	(164,017	)		$	(462,255	)		$	(429,826	)

(1)

Adjusted EBITDA is a non-GAAP measure. See "Key Operating and Non-GAAP Metrics - Adjusted EBITDA" in this release for a reconciliation to net loss, the most directly comparable GAAP measure, and for information regarding Oscar’s use of Adjusted EBITDA.

Membership by Offering		As of December 31,
		2022		2021
Individual and Small Group		1,084,404		577,799
Medicare Advantage		4,452		3,864
Cigna + Oscar(1)		62,627		16,506
Total Members		1,151,483		598,169

(1)

Represents total membership for Oscar’s co-branded partnership with Cigna.

Full Year 2023 Outlook
		Low				High
Direct and Assumed Policy Premiums (in thousands)		$	6,400,000			$	6,600,000
Medical Loss Ratio			82	%			84	%
InsuranceCo Administrative Expense Ratio			17	%			18	%
InsuranceCo Adjusted EBITDA (1) (in thousands)		$	20,000			$	120,000
Adjusted Administrative Expense Ratio			20.5	%			21.5	%
Adjusted EBITDA(2) (in thousands)		$	(175,000	)		$	(75,000	)

(1)		Oscar has not provided a quantitative reconciliation of forecasted InsureCo Adjusted EBITDA to the appropriate forecasted GAAP metric within this press release because Oscar is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. InsureCo Adjusted EBITDA is defined as premiums before ceded reinsurance less medical claims and administrative expenses for the InsureCo, adjusting for the impact of quota share reinsurance, premium deficiency reserves, investment income, depreciation and amortization and stock-based compensation expense.
(2)		Oscar has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net loss within this press release because Oscar is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include, but are not limited to, stock-based compensation expense. These items, which could materially affect the computation of forecasted GAAP net loss, are inherently uncertain and depend on various factors, some of which are outside of Oscar’s control. As such, any associated estimate and its impact on GAAP net loss could vary materially. For more information regarding Adjusted EBITDA, please see "Key Operating and Non-GAAP Metrics" below.

The foregoing statements represent management's current estimates as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Regarding Forward-Looking Statements included in this release. Management does not assume any obligation to update these estimates.

Quarterly Conference Call Details

Oscar will host a conference call to discuss the financial results today, February 9, 2023, at 5:00 p.m. (ET). A live audio webcast and a supplemental presentation will be available via the Investor Relations page of Oscar’s website at ir.hioscar.com. A replay of the webcast will be available for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

Non-GAAP Financial Information

This release presents Adjusted EBITDA, a non-GAAP financial metric, which is provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"). A reconciliation of the non-GAAP financial information to the most directly comparable GAAP financial measure is provided in the accompanying tables found at the end of this release.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained herein are forward-looking statements. These statements include, but are not limited to, statements about our financial outlook and estimates, including direct and assumed policy premiums, medical loss ratio, administrative expense ratio and other financial performance metrics, and the related underlying assumptions, our business and financial prospects, and our management’s plans and objectives for future operations, expectations and business strategy. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict and generally beyond our control.

Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: the impact of COVID-19 on global markets, economic conditions, the healthcare industry and our results of operations, and the response by governments and other third parties; our ability to retain and expand our member base; our ability to execute our growth strategy and scale our operations; our ability to meet increased capital requirements as a result of expanding membership; our ability to maintain or enter into new partnerships, service arrangements or collaborations with healthcare industry participants; negative publicity, unfavorable shifts in perception of our digital platform or other member service channels; our ability to achieve and/or maintain profitability in the future; changes in federal or state laws or regulations, including changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the "ACA") and any regulations enacted thereunder; our ability to accurately estimate our incurred claims expenses or effectively manage our claims costs or related administrative costs, including as a result of fluctuations in medical utilization rates due to the impact of COVID-19; our ability to comply with ongoing regulatory requirements and applicable performance standards, including as a result of our participation in government-sponsored programs, such as Medicare, and as a result of changing regulatory requirements; changes or developments in the health insurance markets in the United States, including the passage and implementation of a law to create a single-payer or government-run health insurance program; our ability to comply with applicable privacy, security, and data laws, regulations, and standards; our ability to maintain key in-network providers and good relations with the physicians, hospitals, and other providers within and outside our provider networks, or to arrange for the delivery of quality care; unfavorable or otherwise costly outcomes of lawsuits, regulatory investigations and audits and claims that arise from the extensive laws and regulations to which we are subject; unanticipated results of risk adjustment programs; delays in our receipt of premiums; disruptions or challenges to our relationship with the Oscar Medical Group; cyber-security breaches of our and our partners’ information and technology systems; unanticipated changes in population morbidity and large-scale changes in health care utilization; and the other factors set forth under the caption "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022, filed with the Securities and Exchange Commission ("SEC"), and our other filings with the SEC, including our Annual Report on Form 10-K for the annual period ended December 31, 2022, to be filed with the SEC.

You are cautioned not to place undue reliance on any forward-looking statements made in this press release. Any forward-looking statement speaks only as of the date as of which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise.

About Oscar Health

Oscar Health, Inc. ("Oscar") is the first health insurance company built around a full stack technology platform and a relentless focus on serving its members. At Oscar, our mission is to make a healthier life accessible and affordable for all. Headquartered in New York City, Oscar has been challenging the health care system's status quo since our founding in 2012. The company’s member-first philosophy and innovative approach to care has earned us the trust of over one million members as of December 31, 2022. We offer Individual & Family, Small Group and Medicare Advantage plans, and +Oscar, our full stack technology platform, to others within the provider and payor space. Our vision is to refactor health care to make good care cost less. Refactor is a term used in software engineering that means to improve the design, structure, and implementation of the software, while preserving its functionality. At Oscar, we take this definition a step further. We improve our members’ experience by building trust through deep engagement, personalized guidance, and rapid iteration.

Oscar Health, Inc. Consolidated Statements of Operations (in thousands, except share and per share amounts)
	Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
	(unaudited)				(unaudited)				(unaudited)
Revenue
Premiums before ceded reinsurance	$	1,332,931			$	705,502			$	5,334,520			$	2,712,988
Reinsurance premiums ceded		(365,474	)		$	(212,921	)			(1,463,403	)			(881,968	)
Premiums earned		967,457				492,581				3,871,117				1,831,020
Administrative services revenue		2,681				3,152				61,047				5,394
Investment income and other revenue		24,989				334				31,474				2,301
Total revenue		995,127				496,067				3,963,638				1,838,715
Operating Expenses
Claims incurred, net		884,904				482,492				3,280,798				1,623,995
Other insurance costs		195,859				124,434				706,439				410,363
General and administrative expenses		75,808				89,338				309,783				265,078
Federal and state assessments		71,788				36,244				281,518				139,085
Premium deficiency reserve release		(10,753	)			(40,186	)			(25,033	)			(55,325	)
Total operating expenses		1,217,606				692,322				4,553,505				2,383,196
Loss from operations		(222,479	)			(196,255	)			(589,867	)			(544,481	)
Interest expense		6,135				397				22,623				4,720
Other expenses (income)		(1,339	)			1,201				(2,415	)			1,201
Loss on extinguishment of debt		—				—				—				20,178
Loss before income taxes		(227,275	)			(197,853	)			(610,075	)			(570,580	)
Income tax expense (benefit)		(715	)			(111	)			(523	)			846
Net loss		(226,560	)			(197,742	)			(609,552	)			(571,426	)
Less: Net income (loss) attributable to noncontrolling interests	$	(514	)		$	1,180			$	(3,277	)		$	1,180
Net loss attributable to Oscar Health, Inc.	$	(226,046	)		$	(198,922	)		$	(606,275	)		$	(572,606	)
Earnings (Loss) per Share
Net loss per share attributable to Oscar Health, Inc., basic and diluted	$	(1.05	)		$	(0.95	)		$	(2.85	)		$	(3.20	)
Weighted average common shares outstanding, basic and diluted		215,194,230				209,775,333				212,474,615				178,967,056

Oscar Health, Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts)
	December 31, 2022			December 31, 2021
	(unaudited)
Assets:
Current Assets:
Cash and cash equivalents	1,558,595			1,103,995
Short-term investments	1,397,287			587,086
Premium and other receivables	216,475			138,414
Risk adjustment transfer receivable	49,861			40,659
Reinsurance recoverable	892,887			431,990
Other current assets	6,450			3,782
Total current assets	4,121,555			2,305,926
Property, equipment, and capitalized software, net	59,888			46,611
Long-term investments	222,919			844,476
Restricted deposits	27,483			28,085
Other assets	94,756			96,552
Total Assets	4,526,601			3,321,650
Liabilities and Stockholders' Equity
Current Liabilities:
Benefits payable	937,727			513,582
Risk adjustment transfer payable	1,517,493			794,398
Premium deficiency reserve	4,214			29,246
Unearned premiums	78,998			75,044
Accounts payable and accrued liabilities	297,841			234,788
Reinsurance payable	427,649			205,231
Total current liabilities	3,263,922			1,852,289
Long-term debt	297,999			—
Other liabilities	72,280			76,839
Total liabilities	3,634,201			1,929,128
Commitments and contingencies
Stockholders' Equity
Preferred stock, $0.00001 par value; 82,500,000 shares authorized, none issued or outstanding as of December 31, 2022 and 2021	—			—
Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 181,176,239 and 175,212,223 shares issued and outstanding as of December 31, 2022 and 2021, respectively	2			2
Class B common stock, $0.00001 par value; 82,500,000 shares authorized, 35,115,807 shares issued and outstanding as of December 31, 2022 and 2021	—			—
Treasury stock (314,600 shares as of December 31, 2022 and 2021)	(2,923	)		(2,923	)
Additional paid-in capital	3,509,007			3,393,533
Accumulated deficit	(2,605,987	)		(1,999,712	)
Accumulated other comprehensive loss	(9,715	)		(3,671	)
Total Oscar Health, Inc. stockholders’ equity	890,384			1,387,229
Noncontrolling interests	2,016			5,293
Total stockholders’ equity	892,400			1,392,522
Total Liabilities and Stockholders' Equity	4,526,601			3,321,650

Oscar Health, Inc. Consolidated Statements of Cash Flows (in thousands)
	Year Ended December 31,
		2022				2021
	(unaudited)
Cash flows from operating activities:
Net loss		(609,552	)		$	(571,426	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Deferred taxes		(165	)			(101	)
Net realized loss (gain) on sale of financial instruments		1,274				(209	)
Loss on fair value of warrant liabilities		—				12,856
Depreciation and amortization expense		15,283				14,605
Amortization of debt issuance costs		713				329
Stock-based compensation expense		112,329				86,296
Investment amortization, net of accretion		2,480				8,031
Debt extinguishment loss		—				20,178
Changes in assets and liabilities:
(Increase) / decrease in:
Premium and other receivables		(78,061	)			(66,953	)
Risk adjustment transfer receivable		(9,202	)			(9,502	)
Reinsurance recoverable		(460,897	)			147,403
Other assets		(243	)			(11,299	)
Increase / (decrease) in:
Benefits payable		424,146				201,667
Unearned premiums		3,953				3,140
Premium deficiency reserve		(25,033	)			(55,325	)
Accounts payable and other liabilities		57,811				98,619
Reinsurance payable		222,418				(138,082	)
Risk adjustment transfer payable		723,095				78,028
Net cash (used in) provided by operating activities		380,349				(181,745	)
Cash flows from investing activities:
Purchase of investments		(1,192,706	)			(1,810,076	)
Sale of investments		360,616				624,077
Maturity of investments		633,467				430,694
Purchase of property, equipment and capitalized software		(29,012	)			(25,885	)
Change in restricted deposits		1,116				6,675
Net cash used in investing activities		(226,519	)			(774,515	)
Cash flows from financing activities:
Proceeds from long-term debt		305,000				—
Payments of debt issuance costs		(7,035	)			—
Proceeds from joint venture contribution		1,846				—
Debt prepayment		—				(153,173	)
Debt extinguishment costs		—				(12,994	)
Proceeds from IPO, net of underwriting discounts		—				1,348,321
Offering costs from IPO		—				(9,447	)
Convertible preferred stock and call option issuances		—				—
Proceeds from exercise of warrants and call options		—				9,191
Proceeds from partial sale of subsidiary to noncontrolling interest		—				7,230
Proceeds from exercise of stock options		1,299				49,584