Oscar Health, Inc. (OSCR) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a mixed outlook. Positive elements include market expansion, product diversification, and AI integration. However, the shrinking market size, higher churn rates, and lack of specific guidance on key metrics temper enthusiasm. The Q&A section further highlights uncertainties, especially around membership and utilization trends. While there are positive strategic initiatives, the overall sentiment is balanced by market contraction and cautious financial guidance, leading to a neutral stock price prediction over the next two weeks.
Key Financial Performance
Total Revenue $11.7 billion, a 28% increase year-over-year. The increase was driven by membership growth, partially offset by an increase in the net risk adjustment payable.
SG&A Expense Ratio 17.5%, improved by approximately 160 basis points year-over-year. This improvement reflects continued efficiency gains through growth, disciplined expense management, and advancements in AI and technology.
Medical Loss Ratio (MLR) 87.4%, increased by 570 basis points year-over-year. The increase was primarily due to higher market morbidity resulting in a higher risk adjustment payable.
Loss from Operations $396 million, primarily due to higher market morbidity and a higher risk adjustment payable.
Net Loss $443 million in 2025, attributed to higher-than-expected claims and lower-than-expected risk adjustment offset.
Membership Growth Ended the year with approximately 2 million members, a 22% increase year-over-year. Growth was driven by solid retention, above-market growth during open enrollment, and continued SEP member additions.
Adjusted EBITDA Loss $280 million, a change of $479 million year-over-year, driven primarily by the higher risk adjustment payable.
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Operating Highlights
New Lifestyle Products: Oscar launched several new lifestyle offerings tailored to specific conditions and life stages, including HelloMeno (menopause plan), Buena Salud (Spanish-first experience for members with diabetes), and Hy-Vee Health with Oscar (landmark ICHRA plan). These products are attracting new consumer segments, improving retention rates, and increasing brand loyalty.
Market Share Growth: Oscar's market share increased from 17% in 2025 to 30% in 2026, driven by strong membership growth and geographic expansion in Arizona, Florida, New Jersey, and Texas.
Membership Growth: Oscar achieved a record 3.4 million members as of February 2026, with a 58% year-over-year increase in paid members expected by Q2 2026.
AI Integration: Oscar integrated AI across its platform, reducing administrative costs by 160 basis points year-over-year and improving operational efficiency. AI tools like the agentic AI bot reduced response times by 67%, and Oswell, the health agent, now handles 86% of member queries with high accuracy.
SG&A Expense Ratio: The SG&A expense ratio improved by 160 basis points year-over-year to 17.5%, driven by fixed cost leverage, disciplined cost management, and AI advancements.
Profitability Focus: Oscar is on track to return to profitability in 2026, with an expected $750 million year-over-year improvement in earnings from operations.
Pricing and Distribution Strategy: Oscar implemented disciplined pricing and expanded broker partnerships by 60%, enabling profitable growth and increased market share.
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Risk or Challenges
Market Morbidity: Higher market morbidity due to Medicaid lives entering the market and program integrity initiatives led to increased risk adjustment payable and higher claims costs, negatively impacting financial performance in 2025.
Risk Adjustment Payable: Oscar faced a significant increase in risk adjustment payable, including a $275 million true-up in Q4 2025, driven by healthier-than-expected membership relative to the broader market.
Expiration of Enhanced Premium Tax Credits: The expiration of enhanced premium tax credits led to elevated churn and market contraction, with passively enrolled members facing higher premiums likely to exit the market.
Medical Loss Ratio (MLR): The MLR increased by 570 basis points year-over-year to 87.4% in 2025, driven by higher claims and market morbidity, impacting profitability.
Membership Churn: Elevated churn is expected in 2026 due to higher premiums and CMS program integrity initiatives, potentially affecting revenue stability.
Utilization Trends: Outpatient and professional utilization increased in Q4 2025, potentially due to members accelerating care before the expiration of premium tax credits, adding pressure to medical costs.
Regulatory Capital Requirements: Oscar must maintain approximately $50 million of capital for every $1 billion of premiums, which could strain resources as the company grows.
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Guidance & Outlook
Revenue Expectations: Oscar Health expects total revenues for 2026 to be in the range of $18.7 billion to $19 billion, representing a 61% year-over-year increase at the midpoint.
Profitability: The company anticipates a return to profitability in 2026, with earnings from operations expected to range between $250 million and $450 million, implying an operating margin of approximately 1.9% at the midpoint. Adjusted EBITDA is projected to be approximately $115 million higher than earnings from operations.
Medical Loss Ratio (MLR): The 2026 MLR is expected to range between 82.4% and 83.4%, reflecting a 450 basis point improvement year-over-year at the midpoint. MLR is anticipated to be lowest in Q1 and highest in Q4 due to deductible seasonality.
SG&A Expense Ratio: The SG&A expense ratio for 2026 is projected to range between 15.8% and 16.3%, representing a 140 basis point improvement year-over-year at the midpoint, driven by scale, fixed cost leverage, and efficiencies from technology and AI.
Membership Growth: Oscar expects to start Q2 2026 with approximately 3 million paid members, a 58% increase year-over-year. The company projects elevated churn due to higher premiums and CMS program integrity initiatives but anticipates solid retention and above-market growth.
Market Dynamics: The individual market is expected to contract at the high end of the 20%-30% range due to the expiration of enhanced premium tax credits and CMS program integrity initiatives. However, Oscar's pricing and product strategies are designed to profitably capture market share.
Capital Position: Oscar has strengthened its capital position with $5.5 billion in cash and investments as of December 31, 2025, including $414 million at the parent level. The company has also secured a $475 million 3-year revolving credit facility to support growth.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How do you get comfort on the new membership coming in for 2026 and why do you think the MLRs will be down so much?
A:The company is confident in its membership projections due to a significant portion of renewing members and the use of third-party data to gather clinical information on new members. This data provides insights into historical utilization trends and helps target outreach for care management. For MLR projections, the company expects risk adjustment as a percentage of direct revenues to increase to about 20% in 2026. They are also working with Wakely to improve market visibility and forecasting accuracy.
Q:Can you elaborate on the fourth quarter utilization pull forward and its relation to 2026 utilization expectations?
A:Utilization was modestly higher than expected in the quarter, driven by members losing subsidies and seeking care before benefits expired. This included increases in outpatient, professional, substance abuse, mental health, and lab services. The company does not expect these activities to have a significant carryforward impact on 2026 utilization.
Q:Can you offer any color on the overall size of the market post-effectuation and comments on market-wide pricing adequacy?
A:The market has shrunk by 5%, with significant shifts in plan designs. Silver plan membership dropped by half, while Bronze increased by almost 50% and Gold quadrupled. The company expects the market size to decrease by 20%-30% by year-end due to higher out-of-pocket costs and potential disenrollment.
Q:Where did OEP membership land for the book, and how are paid rates tracking in January 2026 versus January 2025?
A:OEP ended with 3.4 million lives enrolled. Paid rates are close to last year’s levels but slightly lower than in 2023 and 2024. The company expects 3 million paid members by the end of the first quarter.
Q:What are the expected membership cadence and churn patterns throughout the year?
A:Membership is expected to decrease from 3.4 million to 3 million by the end of the first quarter due to higher premiums. Churn patterns are expected to resemble pre-ARPA levels, with 1%-2% monthly churn. Less SEP membership is anticipated, leading to a decrease in overall membership throughout the year.
Q:Can you discuss the mix of metal tiers and historical experience with Bronze plans?
A:Bronze membership increased significantly, while Silver decreased and Gold grew. Historically, Bronze has been a high-performing product. The company expects all plans to contribute to profitability, though higher deductibles in Bronze plans may lead to higher churn.
Q:Are new members coming from new markets, and how has third-party data improved member insights?
A:New members are not necessarily from new markets but are influenced by broker outreach and plan transitions. Third-party data provides clinical insights into new members, aiding in cost management and early engagement for risk adjustment. A portion of new members lacks detailed data, but historical trends provide a basis for projections.
Q:What percentage of members work with brokers versus passive renewals?
A:Approximately 90%-95% of members come through brokers, with some direct enrollment for specific plans. Passive renewals are more likely to drop off if they transition from $0 premium plans to plans requiring out-of-pocket payments.
Q:What are the key levers for achieving EBITDA profitability without enhanced subsidies?
A:Key levers include growth, AI-driven member experience improvements, cost management, and utilization management. The company also focuses on contract negotiations and trend management to maintain profitability.
Q:What steps are being taken to improve risk adjustment transparency and reduce volatility?
A:The company is working with Wakely to improve market visibility and expects a new industry report to provide more timely information. They believe increased transparency will aid in better forecasting and reduce volatility over time.
Q:What is the potential for ICHRA and condition-specific plans to drive growth?
A:ICHRA offers opportunities beyond membership, including employer conversions and brokerage revenue. Condition-specific plans aim to provide tailored healthcare solutions, enhancing member retention and creating a large, stable market.
Q:What are the new member engagement rates for 2026 compared to last year?
A:It is too early to determine new member engagement rates for 2026. The company expects to have more insights after the first quarter.
Q:What assumptions are made about the percentage of non-utilizers in 2026 compared to 2019?
A:The company does not disclose specific percentages of non-utilizers but notes that a younger membership may not necessarily lead to lower non-utilization rates. Projections are based on historical data and current trends.
Q:What is the expected MLR for the 400,000 members expected to roll off by the end of the quarter?
A:The company does not provide specific MLR data for these members but attributes changes in MLR to market morbidity and pricing adjustments for 2026.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the MLR for the 400,000 members expected to roll off by the end of the quarter, as well as the exact percentage of non-utilizers in 2026 compared to 2019. Additionally, they did not disclose new member engagement rates for 2026, stating it was too early to tell.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ACA
AI
CMS
Health
IFP ICHRA
Investor Relations
SGA expense
adjustment loss
cost
distribution
enrollment
expense ratio
experience
expiration tax
healthcare
improvement midpoint
industry
lifestyle product
market contraction
market morbidity
membership market
outlook
premium
product consumer
profitability
program integrity
promise
ratio basis
risk adjustment
tax credit
OSCR Transcript
Oscar Health, Inc. (OSCR) Presents at Goldman Sachs 47th Annual Global Healthcare Conference 2026 Transcript
Neutral6-8
Oscar Health, Inc. (OSCR) Q1 2026 Earnings Call Transcript
Positive5-6
The earnings call summary reflects strong financial performance with a 61% revenue growth forecast and improved profitability metrics. The Q&A section further supports this with favorable market morbidity reports and effective risk management strategies. Despite some uncertainties, the overall sentiment is optimistic, especially with a confirmed membership growth and strategic market positioning. The company's solid capital position and strategic plans for market share capture also contribute to a positive outlook, suggesting a likely stock price increase over the next two weeks.
Oscar Health, Inc. (OSCR) Q4 2025 Earnings Call Transcript
Unknown2-10
The earnings call reveals a mixed outlook. Positive elements include market expansion, product diversification, and AI integration. However, the shrinking market size, higher churn rates, and lack of specific guidance on key metrics temper enthusiasm. The Q&A section further highlights uncertainties, especially around membership and utilization trends. While there are positive strategic initiatives, the overall sentiment is balanced by market contraction and cautious financial guidance, leading to a neutral stock price prediction over the next two weeks.
Oscar Health, Inc. (OSCR) Presents at UBS Global Healthcare Conference 2025 Transcript
Neutral11-10
OSCR Report
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