Oscar Health (OSCR) 7 May 242024 Q1 Earnings call transcript

Good morning. My name is Ellie, and I will be your conference operator today. At this time, I would like to welcome everyone to Oscar Health's First Quarter 2024 Earnings Conference Call. Please note that this call is being recorded. [Operator Instructions] Thank you.I will now turn the conference over to Chris Potochar, Vice President of Treasury and Investor Relations. ahead. go Please

differ the host with forward-looking Oscar factors, SEC, Thank as website quarter everyone. Executive joining for report through by XXXX, Officer, us and can materially This from Good be Litigation the ir.hioscar.com. that filed period for March be Act also earnings our to discussed for our our Reform Form those the harbor you details Full today. makes statements meaning Any which call. expectations SEC, first can release, accessed and will statements Financial in Chief our XXXX based anticipates and events Blackley, various Investor December important a of ended our Chief may morning's Mark earnings those our result constitute including ir.hioscar.com. of those Form XX-K annual call. XX, cause future in may of results XX, the of XXXX. change. Scott of the call on developments at results with to as XXXX, and on found period Relations XX-Q indicated Oscar morning, about our Oscar's report for the are current additional this quarterly on filed SEC.Such subsequent ended other with estimates Securities at Investor on Bertolini, forward-looking management Officer; Oscar's remarks the website that forward-looking the filings quarterly including Actual commentary provisions are available within Private Relations be statements under safe

to the to so.The measures. call we GAAP disclaim like the point also that, available to turn can call elect any of the website to update quarter directly obligation non-GAAP forward-looking these While some future, Bertolini. do press Investor statements the most specifically CEO, first company's to ir.hioscar.com.With Mark I reconciliation measures certain our in in be on will would refer these over earnings found to A the measures Relations company comparable at release may at

Thank you, our first billion. solid reported quarter for you, quarter all, all metrics. of total Underlying us. performance, Oscar morning. with Good thank revenue year-over-year we This Chris, improvement reported core morning, first and across strong results joining $X.X

improved basis income, $XXX XX% in by XX.X%. Our a a versus led we significant million We ratio XXX $XXX EBITDA of revenue retention, milestone in during achieved to of for increased important SEP line our membership enrollment, our year-over-year prior member the points generated above-market We improvement million and with Overall reported company growth strong loss history. utilization year-over-year was $XXX achieved income first million million, Medical net in $XXX addition, improvement positive year-over-year. total an adjusted time year. quarter. the the net expectations.In open additions.Oscar

grow positions us to our driving real strong to delivering results. path profitability.We provide a on will moments, over long-term. few improved detailed our adjusted year. on in scaled this sustainably Scott on our point are Our more we to has and of deliver a insurance We're seeing are remain and commitments strong total growth earnings quarter first The business review momentum company business. we the target membership EBITDA where our a profitability solid In a power

membership cost pricing attract our our growth exceeding enrollment retention.Our care strong marketplace. highlights.Oscar open Total plans satisfaction XXXX demonstrates markets increased continues and driven I of resonate consumers. a drove high year-over-year, and disciplined and XX% by record expectations. in that First, with proposition to We personalized initiatives share superior Oscar's captured affordable value existing and consumers. the with customer total ACA and our key period, will business the cover quarter expansion record enrollment in closed alongside

another with technology to affordable, our by the members carriers key technology. continued quarter and of XX.During more Kansas. high ] to drove record meet retreated, [ other benefit-rich driven experience member in our needs quarter, superior We consumer them. including Georgia ended through NPS plans Our we the retains states We for

We membership engagement in program better new new population, for member launched show differentiated year.Our XX% more also base be diabetes-focused adults and also in in diagnosed Hola through and diabetes. which non-Hispanic Georgia. XXX% care campaigns just fast-growing our XX% Oscar, X Spanish-first example, diverse personalized interventions member likely in an our capabilities profiles results native in language. geographies.As growth our attracted Early program, teams our successfully Georgia products adults Oscar. their than our launched launched and retention member Hispanic to we with through several support are to Latino in The Hola Hispanic drives Spanish-speaking

introduced lives experience through to increase aspects exams we screening and messaging care. to campaigns that the engagement help +Oscar.Our programs eye externalize diabetes by and gaps healthcare group builder member our culturally relevant more all XX rates, continue our like efforts the Our screenings, speakers.Finally, kidney [ strong among system campaign our clients expanded NPS ] the relationship including to Tailored capabilities platform, In Spanish provider traction. of key to key our engagement gaining added are these and including of of in power XX,XXX quarter, health drive lives. closed a

We with momentum. +Oscar's are pleased

performance to product foundation and solid the a RFP pipeline.Our We total quarter and XXXX our have profitability strong achieve EBITDA active for company-adjusted the sets positions goal. continue in to set an mature us

to government makes enrolled the leading priorities enable the a vulnerable insurance that supporting most market.The country's and permanent, and than expanding a the market.The a a to Looking of conventional alternative in viable ACA's long-term affordability, more employer-based individual see that opportunity plans XXXX, grow The with ahead, aligned access, our in on consumers play consumer models. are segment With size it a populations, the Cigna of focused affirms economy, diverse health market reached and attractive remain that our consumerization, We markets. to ACA market this the driven meet is million strategic set now quality, and growth a fastest-growing individual critical insurance and continued a direction. has we and option, are long-term has by gap strategic needs group Oscar individual broader the role mind, policies. not in filling we but are by gig the offering renewing small XX +Oscar serving in people

good believe and business we to has further runway small grow. continue franchise businesses summary, the highly in value off this look XXXX. a start a ACA in in serving and of sizable to to competitive in We the market market, new the Oscar future.In forward scale is the ways in to building are a ahead and

Scott. the more required run mature company, look to and in execute, excellence I to growth to continue sharing confident returns. long-term a solid generate forward details long-term the We I our our We to at Oscar's prospects. business call plan, [ drive am over York.With will on Day on ] New ACA upcoming strategic strategy in turn Oscar's June that, including Scott? Investor X

Mark, and you, Thank good morning, everyone.

Our start to first solid financial year. results quarter the demonstrate a

We our Oscar. an to continue reported $X.XX approximately the We're million income our total to important per for diluted EBITDA and in achieve profitability net well-positioned $XXX this company target adjusted of for share, milestone first on commitments deliver year. quarter or

of reminder, and improve financial increase a our details the we get quarter beginning with performance in order structure new comparability. as reporting transparency financial implemented I first into Before this the quarter, a to

year-over-year member million first an by driven loss improved costs. medical in on additions.On earnings basis conjunction strategy percentage quarter, and our the more and discussion initiatives. performance cost driven well and of utilization results care first in year-over-year. includes results XX.X%, of guidance was premiums. today's trends XX% which as the with company. point our of under were service as we at XX% X-K, on XXX performance. revenue pricing year-over-year growth filed focused of the is billion to robust to increase by Our supplemental driven this reporting line total the points XXXX of total members, risk with increased In medical our our rate year.Switching in membership, new expectations the new X.X in $X.X Overall, Total release, costs, ratio information lower financial quarterly retention, with as to financial an than administrative areas, strong quarter existing by framework.Turning financial ended to by growth a markets increases, quarter We and adjustment higher Membership disciplined SEP

in Total first XX.X%. over recognized significant improving percentage quarter.Shifting year first income $XXX to year-over-year quarter variable risk due the of improved cost the as collectively adjustment which million was cancellation -- year-over-year points cost the resulted The XXX expense leverage, was SG&A by lower of quarter. by recognized also of premiums, points million stock-based driven XXX significantly balance The the company continue the basis first significantly improvement was points year-over-year the adjusted $XXX expense Awards, EBITDA This Net basis ratio $XXX in basis a sheet. significantly million by year-over-year to compensation in significant progress Founders' we to the year-over-year by of as $XXX as approximately remaining improved improved improvement period.We to result ratio. improved and XXX a on profitability. fixed as approximately well accelerated million of make prior in improvement efficiencies in of which

investments quarter and billion position We at $XXX million first investments, remains cash strong. $X.X very including capital approximately parent. and of cash the Our ended with of the

surplus, including the subsidiaries insurance XX, to Based $XXX had driven XXXX results, of which excess approximately guidance. March full-year in $XXX our was of all metrics. million our of million operating are first full-year As quarter our we capital our reaffirming guidance by of XXXX, performance.Turning now strong capital, on

the XX.X% $X.X range of XX.X% the to and ratio We SG&A of to range in of expect medical ratio $X.X to the in in expense total range loss revenues XX%. XX.X%, billion billion,

achieve have of $XXX claims to transfer. corresponding our $XXX adjusted million may new estimate expect to member underwriting economics. the to to not of per EBITDA our the changes on per our the a overall continue company and risk for denominator range member impact as numerator impact with the to expect would in reminder, Such policy We year but MLR, matures, them the we would million.As change an total levels impacts profitability

this call to to year.With net adjusted to turn expect continue profitability let a we in our income to the for to profitability are delivered over that, me solid total addition, XXXX, first We start MLR closing although for closing, with similar quarterly the remarks. Oscar's history, year. the seasonality be company to back and slope.In time had Mark we've well-positioned a In steeper EBITDA we achieve

In Scott. Thank a I quarter business. our strong you, and performance commitments, our can in closing, Oscar our XXXX. momentum on lays see for the to deliver continues first foundation

adjusted our are this EBITDA We goal will achieve we total confident company year.

consumers of position on which market is expectations Oscar capture Our long-term order. solutions.I all to and objectives, to another innovation more the us emerging thank our growth in our bring delivering the team want efforts remains their tech-first meet employees healthcare. in to opportunities focused of strong purpose-built rising for

the walk laid dedication members our results, drives impact our I month. commitment halls, which Their our in serving team's passion. and to our As I last we and report continued feel partners out

We future, I equitable Oscar we continue and Q&A the both serve. to of look that, the a our forward more call operator portion for call. Day in to of communities the our with at sustainable the at you I month.With to will many turn over build and Investor next speaking

Our Instructions] Fargo. Wells question Baxter Stephen of first from [Operator comes

quarter it to update you use see like a the through how need expecting then last risk for quarter, in phrasing on adjustment would to around guidance? of I I compared factor What how your where guidance [ get is looks terms your kind be, you like the ]. membership big in point to think, would let your the question in be the that's the expectations And in pretty the on of flow guess update the full can an starting So, growth not upside guess, of just and metal Obviously, order a performance first where you year-over-year? I the sounds us like I to changed you're expectations? of to necessarily And feels mix wanted those sit you terms of it XXXX. to numbers the that saw you solid sit the year. in swing and first mix

which over members that a if not time. and to year, forward get SEP on later million happen through quarters, recover is in We less quarter we year is than Steve. grow insight but of that's or the rate, in time, going longer We're redetermination would risk this X.X through reported year the work to the next will all at early continue it less that and we're have data we over in year. it in we stronger when expect growth expected Medicaid been we the pull as of sure the will growth November, first if later in adjusters Scott? that's CMS. what's we'll us that Thanks, And to going look against submitted

Yes.

So, X, expecting. first expenses SG&A, medical strong what think a slightly excited about membership were we favorable number super that Steve, growth, I that quarter, we're to was on strong plan.

good an to typically to the did plan would what than see in we in has growth. we SEP QX, start SEP With membership the we growth of that's end higher strong growth, you So that a XX% for would respect that at OE. about the told our year. our we call, the year anticipate in see MLR as And

high of those portion retaining members. history a We have of a

to other look they members. that have in MLRs OE next So tend like year, just the

that time growth just year, know a a the in about, point as QX. membership At grabbing going for thing persist SEP talked of pull really year in to SEP the question saw is don't this XXXX. this we membership? visibility that is to is, the current a us have moment good So robust certain. And Mark forward big at we is enough In or for trend that's that for

that's a with if SEP our we've and thinking the first we will and year to of half impacts, a little start full the position just guidance bit strong And so year do about some quarter. more with we MLR back come growth, see got impacting think great that in a

Our next from from Adrian Bank question of comes Wong America.

mentioned exiting it the be a but and small that company, think don't and in you've product single group quarter sounds you're Cigna the Oscar you past Medicare I want to relationship. line Oscar this Advantage, like exiting

and a hear rationale first exactly to be love you bit the is business? a XX% Cigna then we'd Is a opportunities? more grew major it see you in for separate color from line? the product the single [ company it little the those only won't Oscar, IT, you just more businesses, like are as still believe seems revenue what ] X the services Like the do because and like on So health exit So to on what behind ICHRA expect color the extent line what + that quarter.

around or are that that hear if ICHRA term opportunity to what and So beyond would see just the longer love IT expectations you there are, things health in?

we about the talk + pull there we'll segments, of access doing to launching significant on that pilots -- the had O, XX the because anything place out product. to and in to in made Medicare part last be set Adrian. did lot them in provider a But an getting the fix the when to standpoint of where get a and We place standpoint the year we'll which Thanks, way, opportunity We wasn't was have have C over thing market under tried a ICHRA, our X Day. think to tried could large relationships in lives in we we near-term market middle were with is for very we've XX and talk from Investor companies on anticipate hard from of us entering products both the we'll 'XX.I different underwriting and million do years this June unsustainable, the a it do profitable. and profitable we we and over we about ICHRA believe the the progress

the of when importantly, get you product rationalize would believe term.But work is economics appropriately middle platform. in we different a just opportunity more the will the make the for bigger getting full different way we on about solution on stream ICHRA much -- we we And use group work work it in couldn't to platform use that think we a We to be can that pieces way revenue small organizations. make a and to believe that, going a as externalized the that sure owner have that longer in ready going that need it focus have way on platform. market, I and market in clients want it's now order we investment how for and right.+Oscar, that

we're the +Oscar say we to out to more June today have about when So rolling Xth. Investor at We'll get components. Day

from from comes question Ransom John next The James. Raymond

ultimate to Just you looking margin? at years, your your kind you SG&A to as line, a what sustainable think look to SG&A few get do revenue you out the of level targeted is of

rest Yes, John, question. lot more we efficient. performance making the the Founders to we think there improvement things one thanks We're forward going the obviously improvement continue the is of related our fixed Award, cost called the significant a for impacts year-over-year in those us. improvement of SG&A, item. will seeing the certainly X were leverage, sticky -- seeing technology, timer we'll and of line I our the about for operations continue And of and that but are that out Look, excited

future. so where think Day, our the into destination would thus over will say are for get business to that SG&A we future And even confidence that continue Investor able we'll there's improvement it more I than the we've level to trends us the still but better expect that at that to more in we far of drive seen be we'll anticipate we give and to economics the that the

question from Raskin next Josh comes Nephron. from The

was curious billion? risk real the you've What's just meaningfully expected, all this down $X.X the in year-over-year the revenue I'm the clarification to is first year billion that expectation premiums. despite on Just increase $X.X if payable my And I + adjuster question on Cigna embedded preliminary Oscar. then else? know but is in a how this execution you And data sort improvement that first look, point and that's membership do Blackley or much or a just normal risk of more better external much at sort pool? And from of is of anyone anything that how your coding? of any got then think

I'm sure risk to one the transfer. going I'm on of but questions Josh, comment Okay. miss I'll those

they're an transfer just there's younger is we're They throughout risk risk the mainly up that's end percentage book, by will of in. at to a we transfer with the part estimate. typically have So increase going of The data. A the transfer risk risk that point is but the seasonality expecting members and don't external internal this of group. -- year -- in that year. We a having also transfer of have SEP higher driven come lot

And so, throughout as going year second the half, up. drive risk we are the growth SEP expecting transfer that into will

we transfer. So that at that risk say a need this collecting very I to point for good the support process codes have would we

to that, think I a other very got that allow some having area get strong us lot We've of history that's deployment we a in deliver of AI things in And [indiscernible]. that that in processes, and of process. very lot an including efficient way. a techniques value

for So members our convert, we that certain we the making us feel credit about get that care are the full receiving. for to medical opportunity good

just a O + C And then revenues?

book we Sorry, revenue bottom million O, insignificant. and $XXX would that probably million that's was line both the years +O it'll think bottom of to for of bottom runoff forward, when into impact be line a one minimal expect much the to line, smaller but goes in XXXX, $XXX be impact, revenue + going I in has range that forgot. the XXXX, C on that -- On I in

question from Sachs. Nathan comes Rich from Next Goldman

And kind it your more do levels slope. range. maybe just and of like would first kind quarter following to of level how mentioned longer in you that consistent compared seeing kind geographic curious how the the a of the up change steeper performance the in balance trend mix MLR. year? kind -- MLR be over thinking of And in cost Is the that any just of like with And of cadence for your with term, plan how then the over feel the high Scott, underlying was to and long-term you peers I expectations. line member Maybe can about you your exposure get be you're that with I'd know some on operate time? opportunity seems peer you're XX% in MLR? those the your

utilization, what was your more on where Nathan, into of saw less always utilization this or but pretty At on puts much that were MLR don't MLR, full There's quarter takes summary, we we think plan. in performance expectations consistent the first visibility year, was year in point you anticipating. huge and that in we I our have of with book. the saw in the amount that the

comforting so what in still far of early expected. in I that it's the seeing thus And what But would the we we away say it's would terms from days take year. we're performance that

a MLR starting quarter So think point. we do is that first good

there year, For some would that is seasonality. year. The those and the dynamics historically seen talked about it the members there We've risk members year, rest our do this SEP we've have of in this expect adverse of business we again effects. be the the of MLR throughout to addition adjustment

pricing that's so seasonality to future, we'll achieve price point this component we think we pricing, that that making and us I to a that of are allows another we and that see committed want. that. in your respect I components say we the have to One that X MLR there's that always of objectives is would year.With the maintain that and sure And disciplined growth

to things expenses medical care those continue think got improve balance way us a we cost our So for that we've support wanted we of to to members. total out.I in always opportunities in

grow a perform with levels of and we will to at that think down. time. continue the out balance to objectives we industry the can't drive to that into our driving see expenses opportunities competitive no of care are But lead rest that peers. a that allows of there's over really having total market ultimately, the pricing that can our we MLR us But reason of in so trend cost business And

James. from John comes next Our from Ransom Raymond question

ask know follow just the question. I rules to I and one you want

me a star. yes, So gold give

if are I we would key question, the order the what MLR -- key new look say magnitude, contract. at have were year-over-year the of the you a you kind of know PBM improvement, in what On attributes there?

You've the your your those at of year-over-year? of top kind X drivers improvement all menu what has But of adjusted kind MLR you your the one, things, or changed. if pricing, mix look of were X,

the it's I I were driver being that and thing the most important seeing Yes, expansion think risk XXXX we and driver in and the year. run a really was year-over-year the performance. this first it about be is call We favorable, development just would was pricing had to significant about out pricing $XX a on small going out take, that In million for amount of which prior period thoughtful margin quarter, first really claims. that the

was going quarter performance. in So thing we're to and seeing the is I'm MLR the would fact that from what And MLR, that important are probably I good. with MLR the first takeaway persist just say that are have confident we'd trends the most

how PBM, did help? the that And then much

again? I'm sorry, say

how that re-contracting, The help PBM did much year-over-year?

into to specifically for. call Yes, in going the of in the ultimately PBM, and did we the we're that impact embedded you performance. are gets seeing the pricing PBM it really Obviously, out built not price We is margin. what into It that.

improvement. to PBM and price a that ability a clearly competitive continued of our at significant is level driver drive market so, And and to was

now have session. We disconnect. Thank the you. a conference attending question-and-answer you the Thank end may today's wonderful you and for call. reached of day Have