• Membership as of June 30, 2022 of 1,036,720, an 84% increase YoY
  • For the quarter ended June 30, 2022:
    • Direct and assumed policy premiums of $1.7 billion, a 101% increase YoY
    • Premiums earned of $995 million, a 88% increase YoY
    • Medical Loss Ratio of 82.2%, decreased 20 bps YoY
    • InsuranceCo Administrative Expense Ratio of 19.5%, decreased 30 bps YoY
    • InsuranceCo Combined Ratio of 101.7%, decreased 50 bps YoY
    • Adjusted Administrative Expense Ratio of 23.7%, decreased 140 bps YoY
    • Net loss of $112 million, an increase of $39 million YoY; Adjusted EBITDA loss of $76 million, an increase of $25 million YoY

Health insurtech company Oscar Health, Inc. (NYSE: OSCR) today announced its financial results for the second quarter ended June 30, 2022.

“Oscar’s first half results reflect our continued momentum and demonstrate our technology platform’s differentiated ability to support our increasing scale.” said Mario Schlosser, CEO and Co-Founder of Oscar. “We remain laser-focused on the execution of our strategic plan to reach our profitability target for the Insurance product in 2023, laying the foundation that we will continue to build upon.”

Total Direct and Assumed Policy Premiums were $1.7 billion in the quarter, up 101% year-over-year (“YoY”), driven primarily by higher membership, rate increases and mix shift to higher premium Silver plans. Premiums earned in the quarter were up 88% YoY, driven by the same factors that drove the increase in Direct and Assumed Policy Premiums, as well as lower ceded reinsurance premiums YoY as a percentage of premiums before ceded reinsurance due to new reinsurance contracts accounted for under deposit accounting.

Oscar’s InsuranceCo Combined Ratio, which is the sum of its Medical Loss Ratio (“MLR”) and the InsuranceCo Administrative Expense Ratio, improved 50 bps YoY to 101.7%, driven by a YoY improvement in both the InsuranceCo Administrative Expense Ratio and in the MLR. The InsuranceCo Administrative Expense Ratio decreased 30 bps YoY to 19.5%, driven by operating expense leverage associated with growth in premiums, and the MLR decreased 20 bps YoY to 82.2%, driven by pricing, lower net COVID-19 impact and mix shifts in the member population, partially offset by lower net favorable developments.

The Adjusted Administrative Expense Ratio decreased 140 bps YoY to 23.7%, primarily due to operating expense leverage associated with growth in premiums. Net loss of $112 million increased by $39 million YoY, but improved as a percentage of premiums before ceded reinsurance. The Adjusted EBITDA loss of $76 million increased by $25 million YoY, but improved as a percentage of premiums before ceded reinsurance.

Oscar is also reaffirming its 2022 outlook across all metrics.

Financial Results Summary

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

(in thousands)

Premiums before ceded reinsurance

$

1,368,477

 

 

$

723,927

 

 

$

2,683,541

 

 

$

1,334,026

 

Reinsurance premiums ceded

 

(373,882

)

 

 

(195,768

)

 

 

(733,545

)

 

 

(437,330

)

Premiums earned

$

994,595

 

 

$

528,159

 

 

$

1,949,996

 

 

$

896,696

 

Total revenue

$

1,017,319

 

 

$

529,281

 

 

$

1,990,084

 

 

$

898,669

 

Total operating expenses

$

1,123,806

 

 

$

601,787

 

 

$

2,165,100

 

 

$

1,035,216

 

Net loss

$

(112,125

)

 

$

(73,323

)

 

$

(189,445

)

 

$

(162,204

)

Key Metrics and Non-GAAP Financial Metrics

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Direct and Assumed Policy Premiums (in thousands)

$

1,694,927

 

 

$

841,260

 

 

$

3,376,138

 

 

$

1,664,485

 

Medical Loss Ratio

 

82.2

%

 

 

82.4

%

 

 

79.9

%

 

 

78.7

%

InsuranceCo Administrative Expense Ratio

 

19.5

%

 

 

19.8

%

 

 

19.7

%

 

 

19.8

%

InsuranceCo Combined Ratio

 

101.7

%

 

 

102.2

%

 

 

99.6

%

 

 

98.5

%

Adjusted Administrative Expense Ratio

 

23.7

%

 

 

25.1

%

 

 

23.7

%

 

 

25.5

%

Adjusted EBITDA(1) (in thousands)

$

(75,805

)

 

$

(50,646

)

 

$

(112,845

)

 

$

(78,414

)

(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

 

 

June 30, 2022

 

June 30, 2021

Individual and Small Group

 

986,017

 

554,748

Medicare Advantage

 

4,658

 

3,749

Cigna + Oscar(1)

 

46,045

 

4,617

Total Members

 

1,036,720

 

563,114

(1)

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

Full Year 2022 Outlook

 

 

Low

 

High

Direct and Assumed Policy Premiums (in thousands)

 

$

6,100,000

 

 

$

6,400,000

 

Medical Loss Ratio

 

 

84

%

 

 

86

%

InsuranceCo Administrative Expense Ratio

 

 

19.5

%

 

 

20.5

%

InsuranceCo Combined Ratio

 

 

104

%

 

 

106

%

Adjusted Administrative Expense Ratio

 

 

24

%

 

 

26

%

Adjusted EBITDA(1) (in thousands)

 

$

(480,000

)

 

$

(380,000

)

(1)

  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, August 11, 2022, 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, 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 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 March 31, 2022, filed with the Securities and Exchange Commission (“SEC”), and our other filings with the SEC, including our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 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 June 30, 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)

(unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue

 

 

 

 

 

 

 

Premiums before ceded reinsurance

$

1,368,477

 

 

$

723,927

 

 

$

2,683,541

 

 

$

1,334,026

 

Reinsurance premiums ceded

 

(373,882

)

 

 

(195,768

)

 

 

(733,545

)

 

 

(437,330

)

Premiums earned

 

994,595

 

 

 

528,159

 

 

 

1,949,996

 

 

 

896,696

 

Administrative services revenue

 

20,452

 

 

 

353

 

 

 

38,945

 

 

 

694

 

Investment income and other revenue

 

2,272

 

 

 

769

 

 

 

1,143

 

 

 

1,279

 

Total revenue

 

1,017,319

 

 

 

529,281

 

 

 

1,990,084

 

 

 

898,669

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Claims incurred, net

 

808,639

 

 

 

419,879

 

 

 

1,543,205

 

 

 

687,927

 

Other insurance costs

 

170,200

 

 

 

94,790

 

 

 

335,602

 

 

 

174,627

 

General and administrative expenses

 

80,754

 

 

 

51,166

 

 

 

155,418

 

 

 

115,738

 

Federal and state assessments

 

68,749

 

 

 

36,873

 

 

 

138,616

 

 

 

67,388

 

Premium deficiency reserve release

 

(4,536

)

 

 

(921

)

 

 

(7,741

)

 

 

(10,464

)

Total operating expenses

 

1,123,806

 

 

 

601,787

 

 

 

2,165,100

 

 

 

1,035,216

 

Loss from operations

 

(106,487

)

 

 

(72,506

)

 

 

(175,016

)

 

 

(136,547

)

Interest expense

 

6,141

 

 

 

228

 

 

 

10,362

 

 

 

3,925

 

Other expenses (income)

 

(793

)

 

 

 

 

 

2,260

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

20,178

 

Loss before income taxes

 

(111,835

)

 

 

(72,734

)

 

 

(187,638

)

 

 

(160,650

)

Income tax provision

 

290

 

 

 

589

 

 

 

1,807

 

 

 

1,554

 

Net loss

 

(112,125

)

 

 

(73,323

)

 

 

(189,445

)

 

 

(162,204

)

Less: Net income (loss) attributable to noncontrolling interests

 

39

 

 

 

 

 

 

(2,129

)

 

 

 

Net loss attributable to Oscar Health, Inc.

$

(112,164

)

 

$

(73,323

)

 

$

(187,316

)

 

$

(162,204

)

 

 

 

 

 

 

 

 

Earnings (Loss) per Share

 

 

 

 

 

 

 

Net loss per share attributable to Oscar Health, Inc., basic and diluted

$

(0.53

)

 

$

(0.35

)

 

$

(0.89

)

 

$

(1.09

)

Weighted average common shares outstanding, basic and diluted

 

211,311,494

 

 

 

207,478,268

 

 

 

210,930,686

 

 

 

148,505,273

 

Oscar Health, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

 

 

June 30, 2022

 

December 31, 2021

Assets:

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

2,362,632

 

 

$

1,103,995

 

Short-term investments

 

909,006

 

 

 

587,086

 

Premiums and accounts receivable

 

174,249

 

 

 

138,414

 

Risk adjustment transfer receivable

 

54,518

 

 

 

40,659

 

Reinsurance recoverable

 

740,204

 

 

 

431,990

 

Other current assets

 

19,541

 

 

 

3,782

 

Total current assets

 

4,260,150

 

 

 

2,305,926

 

Property, equipment, and capitalized software, net

 

50,934

 

 

 

46,611

 

Long-term investments

 

314,836

 

 

 

844,476

 

Restricted deposits

 

27,179

 

 

 

28,085

 

Other assets

 

98,068

 

 

 

96,552

 

Total assets

$

4,751,167

 

 

$

3,321,650

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

Current Liabilities:

 

 

 

Benefits payable

$

880,527

 

 

$

513,582

 

Risk adjustment transfer payable

 

1,498,332

 

 

 

794,398

 

Premium deficiency reserve

 

21,505

 

 

 

29,246

 

Unearned premiums

 

72,691

 

 

 

75,044

 

Accounts payable and other liabilities

 

226,274

 

 

 

234,788

 

Reinsurance payable

 

430,919

 

 

 

205,231

 

Total current liabilities

 

3,130,248

 

 

 

1,852,289

 

Long-term debt

 

297,610

 

 

 

 

Other liabilities

 

74,906

 

 

 

76,839

 

Total liabilities

 

3,502,764

 

 

 

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 June 30, 2022 and December 31, 2021

 

 

 

 

 

Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 177,036,132 shares issued and outstanding as of June 30, 2022 and 175,212,223 shares issued and outstanding as of December 31, 2021

 

2

 

 

 

2

 

Class B common stock, $0.00001 par value; 82,500,000 shares authorized, 35,115,807 shares issued and outstanding as of June 30, 2022 and December 31, 2021

 

 

 

 

 

Treasury stock (314,600 shares as of June 30, 2022 and December 31, 2021)

 

(2,923

)

 

 

(2,923

)

Additional paid-in capital

 

3,450,409

 

 

 

3,393,533

 

Accumulated deficit

 

(2,187,028

)

 

 

(1,999,712

)

Accumulated other comprehensive income (loss)

 

(15,221

)

 

 

(3,671

)

Total Oscar Health, Inc. stockholders' equity

 

1,245,239

 

 

 

1,387,229

 

Noncontrolling interests

 

3,164

 

 

 

5,293

 

Total stockholders' equity

 

1,248,403

 

 

 

1,392,522

 

Total liabilities and stockholders' equity

$

4,751,167

 

 

$

3,321,650

 

Oscar Health, Inc.

Consolidated Statements of Cash Flows

(in thousands) (unaudited)

 

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net loss

 

(189,445

)

 

$

(162,204

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Deferred taxes

 

4

 

 

 

26

 

Net realized gain (loss) on sale of financial instruments

 

508

 

 

 

(248

)

Loss on fair value of warrant liabilities

 

 

 

 

12,856

 

Depreciation and amortization expense

 

7,490

 

 

 

6,990

 

Amortization of debt issuance costs

 

324

 

 

 

329

 

Stock-based compensation expense

 

54,681

 

 

 

37,388

 

Investment amortization, net of accretion

 

3,141

 

 

 

3,029

 

Debt extinguishment loss

 

 

 

 

20,178

 

Changes in assets and liabilities:

 

 

 

(Increase) / decrease in:

 

 

 

Premiums and accounts receivable

 

(35,835

)

 

 

(20,307

)

Risk adjustment transfer receivable

 

(13,859

)

 

 

(8,759

)

Reinsurance recoverable

 

(308,214

)

 

 

179,219

 

Other assets

 

(16,826

)

 

 

(7,680

)

Increase / (decrease) in:

 

 

 

Benefits payable

 

366,945

 

 

 

95,408

 

Unearned premiums

 

(2,353

)

 

 

(8,022

)

Premium deficiency reserve

 

(7,741

)

 

 

(10,464

)

Accounts payable and other liabilities

 

(11,125

)

 

 

2,967

 

Reinsurance payable

 

225,687

 

 

 

(95,171

)

Risk adjustment transfer payable

 

703,934

 

 

 

327,493

 

Net cash provided by operating activities

 

777,316

 

 

 

373,028

 

Cash flows from investing activities:

 

 

 

Purchase of investments

 

(312,104

)

 

 

(1,198,325

)

Sale of investments

 

243,400

 

 

 

287,440

 

Maturity of investments

 

261,334

 

 

 

181,102

 

Purchase of property, equipment and capitalized software

 

(12,265

)

 

 

(12,531

)

Change in restricted deposits

 

1,023

 

 

 

 

Net cash provided by (used in) investing activities

 

181,388

 

 

 

(742,314

)

Cash flows from financing activities:

 

 

 

Proceeds from long-term debt

 

305,000

 

 

 

 

Payments of debt issuance costs

 

(7,035

)

 

 

 

Proceeds from joint venture contribution

 

1,271

 

 

 

 

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

)

Proceeds from exercise of warrants and call options

 

 

 

 

9,191

 

Proceeds from exercise of stock options

 

924

 

 

 

32,640

 

Net cash provided by financing activities

 

300,160

 

 

 

1,214,538

 

Increase in cash, cash equivalents and restricted cash equivalents

 

1,258,864

 

 

 

845,252

 

Cash, cash equivalents, restricted cash and cash equivalents—beginning of period

 

1,125,557

 

 

 

843,105

 

Cash, cash equivalents, restricted cash and cash equivalents—end of period

$

2,384,421

 

 

$

1,688,357

 

 

 

 

 

Cash and cash equivalents

 

2,362,632

 

 

 

1,671,540

 

Restricted cash and cash equivalents included in restricted deposits

 

21,789

 

 

 

16,817

 

Total cash, cash equivalents and restricted cash and cash equivalents

$

2,384,421

 

 

$

1,688,357

 

Supplemental Disclosures:

 

Interest payments

$

9,550

$

3,742

 

Income tax payments

$

1,105

$

814

 

 

 

 

Non-cash investing and financing activities:

 

 

 

Conversion of redeemable convertible preferred stock to common stock upon initial public offering

$

$

1,744,914

 

Net exercise of preferred stock warrants to preferred stock upon initial public offering

$

$

28,248

 

Adjustment to fair value of preferred stock warrant liability upon initial public offering

$

$

13,243

 

Key Operating and Non-GAAP Financial Metrics

We regularly review a number of metrics, including the following key operating and non-GAAP financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions. We believe these operational and financial measures are useful in evaluating our performance, in addition to our financial results prepared in accordance with GAAP.

Members

Members are defined as any individual covered by a health plan that we offer directly or through a co-branded arrangement. We view the number of members enrolled in our health plans as an important metric to help evaluate and estimate revenue and market share. Additionally, the more members we enroll, the more data we have, which allows us to improve the functionality of our platform.

Direct and Assumed Policy Premiums

Direct Policy Premiums are defined as the premiums collected from our members or from the federal government during the period indicated, before risk adjustment and reinsurance. These premiums include APTC, or premium subsidies, which are available to individuals and families with certain annual incomes.

Assumed Policy Premiums are premiums we receive primarily as part of our reinsurance arrangements under our Cigna+Oscar small group plan offering.

We believe Direct and Assumed Policy Premiums is an important metric to assess the growth of our individual and small group plan offerings going forward. Management also views Direct and Assumed Policy Premiums as a key operating metric because each of our MLR, InsuranceCo Administrative Expense Ratio, InsuranceCo Combined Ratio and Adjusted Administrative Expense Ratio are calculated on the basis of Direct and Assumed Policy Premiums.

Medical Loss Ratio

Medical loss ratio is calculated as set forth in the table below. Medical claims are total medical expenses incurred by members in order to utilize health care services less any member cost sharing. These services include inpatient, outpatient, pharmacy, and physician costs. Medical claims also include risk sharing arrangements with certain of our providers. The impact of the federal risk adjustment program is included in the denominator of our MLR. We believe MLR is an important metric to demonstrate the ratio of our costs to pay for health care of our members to the premiums before ceded reinsurance. MLRs in our existing products are subject to various federal and state minimum requirements. Below is a calculation of our MLR for the periods indicated.

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

(in thousands)

Direct claims incurred before ceded reinsurance (1)

$

1,092,416

 

 

$

598,904

 

 

$

2,102,451

 

 

$

1,056,123

 

Assumed reinsurance claims

 

32,555

 

 

 

2,308

 

 

 

56,797

 

 

 

4,085

 

Excess of loss ceded claims (2)

 

1,509

 

 

 

(4,837

)

 

 

(9,924

)

 

 

(9,573

)

State reinsurance (3)

 

(6,946

)

 

 

(2,826

)

 

 

(18,275

)

 

 

(5,169

)

Net claims before ceded quota share reinsurance (A)

$

1,119,534

 

 

$

593,549

 

 

$

2,131,049

 

 

$

1,045,466

 

 

 

 

 

 

 

 

 

Premiums before ceded reinsurance

$

1,368,477

 

 

$

723,927

 

 

$

2,683,541

 

 

$

1,334,026

 

Excess of loss reinsurance premiums (4)

 

(6,638

)

 

 

(3,277

)

 

 

(14,766

)

 

 

(6,212

)

Net premiums before ceded quota share reinsurance (B)

$

1,361,839

 

 

$

720,650

 

 

$

2,668,775

 

 

$

1,327,814

 

Medical Loss Ratio (A divided by B)

 

82.2

%

 

 

82.4

%

 

 

79.9

%

 

 

78.7

%

(1)

  See the Appendix to this release for a reconciliation of direct claims incurred to claims incurred, net appearing on the face of our statement of operations.

(2)

  Represents claims ceded to reinsurers pursuant to an excess of loss treaty, for which such reinsurers are financially liable. We use excess of loss reinsurance to limit the losses on individual claims of our members.

(3)

  Represents payments made by certain state-run reinsurance programs established subject to CMS approval under Section 1332 of the ACA.

(4)

  Represents excess of loss insurance premiums paid.

InsuranceCo Administrative Expense Ratio

InsuranceCo Administrative Expense Ratio is calculated as set forth in the table below. The ratio reflects the costs associated with running our combined insurance companies. We believe InsuranceCo Administrative Expense Ratio is useful to evaluate our ability to manage our expenses as a percentage of premiums before the impact of quota share reinsurance. Expenses necessary to run the insurance company are included in other insurance costs and federal and state assessments. These expenses include variable expenses paid to vendors and distribution partners, premium taxes and healthcare exchange fees, employee-related compensation, benefits, marketing costs, and other administrative expenses. The impact of the Company’s quota share arrangements is excluded from the numerator and denominator in the calculation below. Below is a calculation of our InsuranceCo Administrative Expense Ratio for the periods indicated.

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

(in thousands)

Other insurance costs

$

170,200

 

 

$

94,790

 

 

$

335,602

 

 

$

174,627

 

Impact of quota share reinsurance (1)

 

39,189

 

 

 

20,466

 

 

 

75,668

 

 

 

39,772

 

Stock-based compensation expense

 

(12,411

)

 

 

(9,171

)

 

 

(25,489

)

 

 

(18,866

)

Federal and state assessment of health insurance subsidiaries

 

68,561

 

 

 

36,616

 

 

 

138,772

 

 

 

67,214

 

Health insurance subsidiary adjusted administrative expenses(A)

$

265,539

 

 

$

142,701

 

 

$

524,553

 

 

$

262,747

 

 

 

 

 

 

 

 

 

Premiums before ceded reinsurance

$

1,368,477

 

 

$

723,927

 

 

$

2,683,541

 

 

$

1,334,026

 

Excess of loss reinsurance premiums

 

(6,638

)

 

 

(3,277

)

 

 

(14,766

)

 

 

(6,212

)

Net premiums before ceded quota share reinsurance(B)

$

1,361,839

 

 

$

720,650

 

 

$

2,668,775

 

 

$

1,327,814

 

Insurance Co Administrative Expense Ratio(A divided by B)

 

19.5

%

 

 

19.8

%

 

 

19.7

%

 

 

19.8

%

(1)

  Includes ceding commissions received from reinsurers, net of the impact of deposit accounting of $(1,827) for the three months ended June 30, 2022 and $(3,659) for the six months ended June 30, 2022.

InsuranceCo Combined Ratio

InsuranceCo Combined Ratio is defined as the sum of MLR and InsuranceCo Administrative Expense Ratio. We believe this ratio best represents the current overall performance of our insurance business for activities that can be compared to peers.

Adjusted Administrative Expense Ratio

The Adjusted Administrative Expense Ratio is an operating ratio that reflects the Company’s total administrative expenses (“Total Administrative Expenses”), net of non-cash and non-recurring items (as adjusted, “Adjusted Administrative Expenses”), as a percentage of total revenue, including quota share reinsurance premiums ceded and excluding excess of loss reinsurance premiums ceded and non-recurring items (“Adjusted Total Revenue”). Total Administrative Expenses are calculated as Total Operating Expenses, excluding non-administrative insurance-based expenses and the impact of quota share reinsurance. Adjusted Administrative Expenses are Total Administrative Expenses, net of non-cash and non-recurring expense items. Adjusted Administrative Expenses exclude insurance-based expenses, non-cash expenses and non-recurring expenses. The Company believes Adjusted Administrative Expense Ratio is useful to evaluate the Company’s ability to manage its overall administrative expense base. This ratio also provides further clarity into the Company’s overall path to profitability. Below is a calculation of our Adjusted Administrative Expense Ratio for the periods indicated.

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

(in thousands)

Total Operating Expenses

$

1,123,806

 

 

$

601,786

 

 

$

2,165,100

 

 

$

1,035,216

 

Claims incurred, net

 

(808,639

)

 

 

(419,879

)

 

 

(1,543,205

)

 

 

(687,927

)

Premium deficiency reserve release

 

4,536

 

 

 

921

 

 

 

7,741

 

 

 

10,464

 

Impact of quota share reinsurance (1)

 

39,189

 

 

 

20,466

 

 

 

75,668

 

 

 

39,772

 

Total Administrative Expenses

$

358,892

 

 

$

203,294

 

 

$

705,304

 

 

$

397,525

 

Stock-based compensation expense/warrant expense

 

(26,991

)

 

 

(18,273

)

 

 

(54,681

)

 

 

(50,245

)

Depreciation and amortization

 

(3,691

)

 

 

(3,587

)

 

 

(7,490

)

 

 

(6,990

)

Other non-recurring items (2)

 

 

 

 

 

 

 

 

 

 

(898

)

Adjusted Administrative Expenses (A)

$

328,210

 

 

$

181,434

 

 

$

643,133

 

 

$

339,392

 

Total Revenue

$

1,017,319

 

 

$

529,281

 

 

$

1,990,084

 

 

$

898,669

 

Reinsurance premiums ceded

 

373,882

 

 

 

195,768

 

 

 

733,545

 

 

 

437,330

 

Excess of loss reinsurance premiums

 

(6,638

)

 

 

(3,277

)

 

 

(14,766

)

 

 

(6,212

)

Adjusted Total Revenue (B)

$

1,384,563

 

 

$

721,772

 

 

$

2,708,863

 

 

$

1,329,787

 

Adjusted Administrative Expense Ratio (A divided by B)

 

23.7

%

 

 

25.1

%

 

 

23.7

%

 

 

25.5

%

(1)

  Includes ceding commissions received from reinsurers, net of the impact of deposit accounting of $(1,827) for the three months ended June 30, 2022 and $(3,659) for the six months ended June 30, 2022.

(2)

  Represents approximately $0.9 million of non-recurring expenses incurred in connection with the Company’s initial public offering (“IPO”) during the six months ended June 30, 2021.

Adjusted EBITDA

Adjusted EBITDA is defined as net loss for the Company and its consolidated subsidiaries before interest expense, income tax (benefit) expense, depreciation and amortization as further adjusted for stock-based compensation, warrant contract expense, changes in the fair value of warrant liabilities, and other non-recurring items as described below. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA is a non-GAAP measure. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations.

We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate Adjusted EBITDA in the same manner.

Management uses Adjusted EBITDA:

  • as a measurement of operating performance because it assists us in comparing the operating performance of our business on a consistent basis, as it removes the impact of items not directly resulting from our core operations;
  • for planning purposes, including the preparation of our internal annual operating budget and financial projections;
  • to evaluate the performance and effectiveness of our operational strategies; and
  • to evaluate our capacity to expand our business.

By providing this non-GAAP financial measure, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for net loss or other financial statement data presented in our consolidated financial statements as indicators of financial performance.

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

(in thousands)

Net loss

$

(112,125

)

 

$

(73,323

)

 

$

(189,445

)

 

$

(162,204

)

Interest expense

 

6,141

 

 

 

228

 

 

 

10,362

 

 

 

3,925

 

Other expenses

 

(793

)

 

 

 

 

 

2,260

 

 

 

 

Income tax expense

 

290

 

 

 

589

 

 

 

1,807

 

 

 

1,554

 

Depreciation and amortization

 

3,691

 

 

 

3,587

 

 

 

7,490

 

 

 

6,990

 

Stock-based compensation/warrant expense (1)

 

26,991

 

 

 

18,273

 

 

 

54,681

 

 

 

50,245

 

Other non-recurring items (2)

 

 

 

 

 

 

 

 

 

 

21,076

 

Adjusted EBITDA

$

(75,805

)

 

$

(50,646

)

 

$

(112,845

)

 

$

(78,414

)

(1)

  Represents (i) non-cash expenses related to equity-based compensation programs, which vary from period to period depending on various factors including the timing, number, and the valuation of awards, (ii) warrant contract expense, and (iii) changes in the fair value of warrant liabilities.

(2)

  Represents debt extinguishment costs of $20.2 million incurred on the prepayment of the Company's $150.0 million first lien term loan and approximately $0.9 million of non-recurring expenses incurred in connection with our IPO during the six months ended June 30, 2021.

Appendix

Reinsurance Impact

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

(in thousands)

Quota share ceded premiums

$

(383,337

)

 

$

(235,852

)

 

$

(743,265

)

 

$

(497,728

)

Quota share ceded claims

 

310,897

 

 

 

173,670

 

 

 

587,845

 

 

 

357,539

 

Ceding commission, net of deposit accounting impact (1)

 

39,189

 

 

 

20,466

 

 

 

75,668

 

 

 

39,772

 

Experience refund

 

16,093

 

 

 

43,485

 

 

 

24,486

 

 

 

66,710

 

Net quota share impact

$

(17,158

)

 

$

1,769

 

 

$

(55,266

)

 

$

(33,707

)

(1)

  Includes ceding commissions received from reinsurers, net of the impact of deposit accounting of $(1,827) for the three months ended June 30, 2022 and $(3,659) for the six months ended June 30, 2022

The composition of total reinsurance premiums ceded and reinsurance premiums assumed, which are included as components of total earned premiums in the consolidated statement of operations, is as follows:

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

(in thousands)

Reinsurance premiums ceded, gross

$

(393,857

)

 

$

(239,253

)

 

$

(760,968

)

 

$

(504,040

)

Experience refunds

 

19,975

 

 

 

43,485

 

 

 

27,423

 

 

 

66,710

 

Reinsurance premiums ceded

 

(373,882

)

 

 

(195,768

)

 

 

(733,545

)

 

 

(437,330

)

Reinsurance premiums assumed

 

34,095

 

 

 

3,185

 

 

 

58,885

 

 

 

5,596

 

Total reinsurance premiums (ceded) and assumed

$

(339,787

)

 

$

(192,583

)

 

$

(674,660

)

 

$

(431,734

)

The Company records claims expense net of reinsurance recoveries. The following table reconciles the total claims expense to the net claims expense as presented in the consolidated statement of operations:

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

(in thousands)

Direct claims incurred

$

1,092,416

 

 

$

598,904

 

 

$

2,102,451

 

 

$

1,056,123

 

Ceded reinsurance claims

 

(316,332

)

 

 

(181,333

)

 

 

(616,043

)

 

 

(372,281

)

Assumed reinsurance claims

 

32,555

 

 

 

2,308

 

 

 

56,797

 

 

 

4,085

 

Total claims incurred, net

$

808,639

 

 

$

419,879

 

 

$

1,543,205

 

 

$

687,927

 

The Company records selling, general and administrative expenses net of ceding commissions. The following table reconciles total other insurance costs to the amount presented in the consolidated statement of operations:

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

(in thousands)

Other insurance costs, gross

$

211,216

 

 

$

115,256

 

 

$

414,929

 

 

$

214,399

 

Reinsurance ceding commissions

 

(41,016

)

 

 

(20,466

)

 

 

(79,327

)

 

 

(39,772

)

Other insurance costs, net

$

170,200

 

 

$

94,790

 

 

$

335,602

 

 

$

174,627

 

The Company records reinsurance recoverables within current assets on its consolidated balance sheets. The composition of the reinsurance recoverable balance is as follows:

 

 

June 30, 2022

 

December 31, 2021

 

 

(in thousands)

Ceded reinsurance claim recoverables

 

$

647,299

 

$

406,017

Reinsurance ceding commissions

 

 

46,742

 

 

23,517

Experience refunds on reinsurance agreements

 

 

46,163

 

 

2,456

Reinsurance recoverable

 

$

740,204

 

$

431,990

 

Investor Contact: Cornelia Miller VP of Investor Relations ir@hioscar.com 917-397-0251 Media Contact: Jackie Kahn SVP of Communications comms@hioscar.com 202-538-0128

Oscar Health (NYSE:OSCR)
Historical Stock Chart
From Aug 2022 to Sep 2022 Click Here for more Oscar Health Charts.
Oscar Health (NYSE:OSCR)
Historical Stock Chart
From Sep 2021 to Sep 2022 Click Here for more Oscar Health Charts.