OSCR - Earnings call 3 2023 | Oscar Health, Inc.

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Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to Oscar Health's 2023 Third Quarter Earnings Conference Call. [Operator Instructions]I will now turn the conference over to Chris Potochar, Vice President of Treasury and Investor Relations.

Chris Potochar

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

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

Mark Bertolini

our our and We of membership for leading total Chris. book Thanks I'll of increasing Good solid plan a profitability. and core for everyone. XXXX, drivers our a adjusted momentum call. strong performance, another to increased EBITDA strategic high sustainable strong profitability.We company business growth record NPS you, optimism Oscar's XX. and to with review preview retention across our had Today, Thank our deliver had morning, joining quarter

adjusted insurance ratio our and solidly strategy cost on all ratios pricing on improved year. performing to of is Our remains business track medical execution core our Insurance meaningfully our by well loss XX.X% points improving profitability basis in total the company with care EBITDA XXX year-over-year quarter, for year-to-date.In this XQ driven year-over-year disciplined and initiatives.

We also maintained total the company of $XX million. first XXXX X of EBITDA adjusted profitability through months with

in outperformance, XXXX us Given walk raising our call.Now later turn adjusted of through our to outlook. our Scott the view financial we are our metrics a will EBITDA I will highlights. business full detailed more year-to-date year

family We will Health ACA in expect as XXth individual we year technology-enabled footprint. a are and states prominent plans to new we X at on XXXX, bring achieve or the into open across to counties week broader competitive above in our XX premium Starting Insurance's in positioning, XXX enrollment, our XXXX. state new market. XX direct in Based marking market growth player Oscar

member balances our of Ohio, and experience.First, Our risk Iowa, The affordability, including that growth Oscar off focused build several existing accessibility, expanding structures provider distribution rate appropriately channels. counties includes drivers rural strategy and on in well, includes expansion and are knows Georgia. and we expansion

Spanish-speaking The growing Second, program HolaOscar for enhancing base. delivers we speak who authentic language. member experiences, program culturally providers leading are including our the our

of represent plan the our more we growing designs. member segment overall even a and Our have personalized are an Spanish-speaking than members market.Third, higher ACA NPS average introducing

builds us implemented execution.In suffering through in we in of X% include with total give strategy strategy; abuse confidence XX% The XXXX, on members XX% Our results, our initiatives; rates initiatives core building re-contracting. which and with administrative waste increases disciplined contract Breathe expansion. Easy to our margin The medication X, notable the network exams better higher care growth benefits PBM savings, balances diabetes from reduce plan and our; in including and aligns efforts. and care the screenings. plan, kidney XXXX Breathe expense of success processes disease eye needs and X, adherence, medical Easy, has our asthma. newest blocks plan, COPD of cost generated fraud, pricing X, sustainable expenses We of substantial

company largest new EBITDA agreement systems. an achievable to technology we to growth drive of leverages Focus Health the plan our with one program supporting PCP multiyear their areas interconnectivity member member to turning utilization, campaign and XXXX.Now +Oscar. engagement lay U.S. health in adherence. improving path agreement This and and appropriate provider-sponsored adjusted morning, clinical The through Plan, operations. builder retention, engagement, Sanford include factors these profitability of a total All announced a

example XX% partnership drove After the Plan campaign within potential increase of +Oscar annual just in XX% Health recent execution. Sanford Sanford large we serve includes a an physician patients. clients. lives.The of PCP Builder's group have third-parties, X engaged demonstrates XXX,XXX A of builder where addition builds with grown success Health XX wellness outreach of +Oscar. campaign visit MSO, which offering utilization of Campaign to approximately Our campaign, year we growth in to successfully a initiated days That on

AI +Oscar monitor +Oscar care. demonstrate enhancements new continue that the These integrate for access and our care personalized improve builder successes addition, deliver data potential remain are broader the In system.Looking continues profitability power expansion. These Oscar Longer and our term, to for to we Insurance. continued Insurance high and to margin interventions, focused signals Health synthesize to the quality from build committed intelligently better team health impact to strategy. making we Health term, multiple for route sources to and is leadership features campaign that ahead, Near targets. on Oscar clients frequency, our we open evolve

XXXX that up plan success for operating XXXX. us for groundwork strong and a the in sets lays have We

Our our ACA.Over in X, great technology commercializing company; X, +Oscar running the will to months, Oscar further and diversifying out the Health revenue momentum focus includes: strategy continue it look X, by by to Day beyond to Insurance in it member enhancing at Scott. the with our we forward platform; Investor that, an will market experience; accelerating a continually next the sharing X, driving over map and turn several XXXX.With I

Richard Blackley

you, morning, and everyone. Mark, Thank good

and quarter demonstrate year-to-date we are against executing our Our that strong third plan. well results

quarter, in meaningful expectations. Membership above quarter members, the our of with increased to saw or year-over-year All higher the improvement, to redetermined profitability ratios enrollment with additions line targets.We our we in modestly our Medicaid X% ended X tracking SEP million trends, including the largely retention to at by quarter.We continue special and lower core increased driven second membership monitor are compared by lives. and due lapse rates nearly as

$X.X are quarter, total which risk cost actions continues SEP increases. billion.Turning adjustment significantly to offset billion members year-over-year, XXX than premiums includes are exhibiting quarter due saw data we X% a that lower basis the driven to to and care indicate grew our our year-over-year last premiums Our of year-over-year not were trends by improved ratio patterns.Our X% transfer in XX.X% assumed anti-selection before our $X.X healthier Similar rate loss by The quarter, disciplined and impact of the lower expected partially decrease to in the points and policy by direct pricing medical to to initiatives. reinsurance, medical costs. the ceded membership,

trends line, recognized service of expectations. a closer our performed as overall and our to favorable categories, Rx second our for expectations. data risk due relative in favorable to were year member in Our remained professional consistent overall XXXX, this report our in below. to the premiums and inpatient as expect adjustment quarter.Compared lower a the population. benefit outpatient adjustment, shifting to line percent were Within We $XX million slightly pricing pricing to Wakely trends and claims risk received quarter continued transfer of to to the relative well be risk ACA specific to we the profile above, with last continue slightly On we assumptions,

across by company year-to-date the improved a to XXX million, points optimization.Taken to transfer in quarter, both insurance adjustment million an XXX improved of adjusted by profit On insurance improved combined points basis percent efficiencies. reflecting in premiums Year-to-date, The a million driven year-over-year. the MLR the improved to cost to and costs. $XXX member administrative per risk ratio improved quarter, to lower by year-over-year. ratio companies.Our admin company insurance expense by by of basis, EBITDA continue reserves.Switching $XXX ratio consolidated driven nearly together, our XXX.X% to approach the company by a XX.X% and $XXX distribution a million We $XX insurance insurance EBITDA adjusted company as XX.X%, of improved the XXX year-over-year year-over-year points significantly cautious maintain risk administrative basis combined significantly basis

ratio quarter increase on 'XX against income. due basis in adjusted is driven XX.X%, net we points year-over-year and significant the investment hold interest company core we by XXX reserves. third was and hold rate investment to year-over-year aforementioned A income admin our receive insurance capital given assets fundamental in improvements Our ratio business carry the the the expense higher the a administrative improved income higher environment.Investment of the we of

have rates from short year, We portfolio benefit investment to in our on base, Based duration duration. we and a strong extending begun our attractive this have capital our us maintained allowing rates. rising

We $XX EBITDA be income year-over-year. improvement EBITDA quarter year-to-date to to total $XX by continue of expect a profitable On of with tailwind million million, continues 'XX adjusted a XXXX.Our million, third adjusted $XXX a improved be significant loss company will year-over-year. of investment million in $XXX basis,

deliver sheet. adjusted out investment quarter. investments for the a of position second strong billion parent. was third to for ended date us as year transfer paid with and cash for quarter investments, adjustment the to company risk results to expected the $XXX Our million watermark both in EBITDA $X.X the quarter of the our including total and high Recall the cash cash profitability XXXX.Shifting and balance XXXX the we income at target to third well We operating be

Our capital position remains very strong.

subsidiaries XXXX, insurance year. million million and of our X strong approximately by capital, through had $XXX first the months capital XX, driven the $XXX excess September operating surplus, of including of of As performance

now We at position updates year to range. billion our high excess the well to future positions time.Turning the us to guidance. direct and opportunities our $X.X on continue be additional full optimize policy to us expect capital premiums assumed We over and of believe end billion capital allows our will fund $X.X to now growth

We continue point to XX% year-over-year at low representing a expect improvement. our MLR to end XX% range, the of the will XXX be basis

of XXX basis of near improvement reflecting our company the expect an XX% to administrative will points insurance We be the ratio XX% year-over-year. range, midpoint

a be strong of the profit million Given will performance insurance insurance now we expect adjusted business, company our million. $XXX of approximately our $XXX EBITDA to

also adjusted now year-over-year of expect our ratio $XX the adjusted be XX.X% improvement. $XXX the expense the will improvement.Notably, range, reflecting near a EBITDA more expect basis of million total administrative than company $XX we We a midpoint to XX.X% the representing will range loss to million, be in million year-over-year point XXX

Looking positioning, ahead on XXXX. direct based or premium to in achieve growth competitive market to we expect XXXX, above our at

clear margin abuse administrative expect automation and initiatives point our driven and already At for we expect EBITDA the call over been XXXX.And mentioned, of cost fraud, let me to also expansion expansion in We by our have total profitability improvements.As of closing year new to that, many sight in savings PBM total line waste reductions expense and year, care re-contracting. of Mark significant and to company for from within this back Mark to our network total technology-driven related care, of initiatives, arrangement, cost the a adjusted drive actions taken, achieving with remarks. the providing margin target turn next

Mark Bertolini

had are disruptive quarter, track a Scott. is strong deliver summary, Thanks, we growing. we XXXX. another on In to Oscar and great and

market that, Oscar solution technology I are the a employees our to delivering the demonstrates this care to stakeholders. considerably health everyone. belief the we total continue our like significant strategic strength for magic company lower thank capture for more over X EBITDA Notably, compared a to XXXX ecosystem.Finally, is nearly call not These adjusted direction. do year-to-date our In It to our in could we Health well XXXX. our Oscar the our members. serve to serve of operator I with commitment to positioned insurance We the Insurance, to performance year individual profitability be total EBITDA of ACA, trends as without turn solid adjusted our +Oscar, a loss privilege Our our would expect support vision.With it for the market team's like can that company for reinforcing tailwinds we optimism million our profitability.In for to company would to Q&A. the

Operator

comes from question first Wells Your Baxter of line Stephen Instructions] Fargo. the from [Operator

Stephen Baxter

guess, just only expecting could I How update you're players contemplating level a more but of has is seems for enrollment, you growth It repricing become thinking. couple think as grow your of the you of will that or be a view hoping what pricing you're XXXX evolved? your I that, then available us So the competitive competitors. already XXXX, you just but completely I open like And entered data was view have your your in national at has going market your to on for premium for been may follow-up that to in positioning above?

Mark Bertolini

we I'm weekend. question, totally -- still On the first

XXs it track high low So every Trends we data. growth. have teens on of day. having membership to look do we a and whole don't premium growth target lot And

call the second so are our are we that's too out. but So early, rates Yes, far.On would pleased point, all it we true.

included is of reductions this our total we've rates care year, efficiencies. this what our notable in are operating and However, also cost created

over impact leverage, on unless operating you you leverage of won't look year-over-year So years, total see on of multiple cost impact care. the our and relatively

Very our we're rates. with comfortable. So comfortable

Stephen Baxter

And there as seen just become guess, in then fully competitors, positioning has you've their more of terms XXXX? has the of terms anything in surprising Yes. I for available what been

Mark Bertolini

Yes.

new the middle Blue Difficulty] of they've And carrier the but the less back. so Shield than priced. UnitedHealthcare in competitiveness. most out footprint carriers, the entry the group and probably their in prior remains a think I pulled in is aggressive only, Blue big big retrenched price the CVS serve. were level but think Aetna is to overall they're players, they X and Centene states, is the and in we of years. stable improving market modestly the group new increase the far competitive Wisconsin action [Technical its market We Cross markets generally actually

Operator

line the Ron from from of Bank comes question America. next Your of Adam

Adam Ron

to basis First major congrats my around the But you've of points is revenue. the that if on first I company last you've margins year. years, I question XXX the EBITDA increased the on goes a X math adjusted think adjusted of all, total this made progress have, you which use for kind year

XXX on next so targeting year, new of guidance, with basis EBITDA And that points imply you're the adjusted adjusted breakeven EBITDA improvement. roughly would

year, you've improvement you've headwinds about rate highlighted, momentum a all initiatives should tailwinds X highlighted, in growth context the that of market all coming you've given last so And year. margin the the improvement? much out of there for next XX% this had over the Are argue magnitude the think any we margin lower of years should

Mark Bertolini

Thanks, Adam.

week. to for updated of this not midst operating the finishing our the Board our have and guidance We We're XXXX. presenting it plan in

a So would we'll have adjustment more to Scott? our I early later earnings year-over-year that are too guidance where quarter make call. on fourth to you think But it's going. say

Richard Blackley

Adam. Yes,

of couple thoughts. a Just

think we in trajectory leveraging that the we've activities forward out calling years the trend same are you to 'XX. take the and those and that last several same appreciate and to metrics company's speaks the strategy of trends that to set I used plan, drive one, really over So us into those because we

to So I when you breakeven quarter on think EBITDA, be look the total the in on forward about things the that an exact giving adjusted we're some about we expecting for -- clarity We on talked more 'XX, expecting on adjusted we we're call. basis fourth think amounts will to that EBITDA being you either the company. see profitable

Adam Ron

couple of clarifications. a then And

of like supposed the major about XXXX. saying of shortfall Florida you kind I to like in a accruals one payments. there on took reserve a X in alone. make assuming payments adjustment like was CMS be of And they that talked So report to to they Florida, competitors had risk CMS in related a according and report it kind was wouldn't those $XXX competitors million collecting And were risk your of your adjustment think

so for through already And to and made flows if that. adjustment all you wondering you've that if at an I'm

Mark Bertolini

So of Adam. couple points, just a

And benefit of to respect payer. adjustment So recognized to are in a 'XX. related risk quarter, adjustment, risk we million we $XX the with

exposed receivables in not others exposed the to collection to. So we're are of that market

some carriers related the apply So to to issues don't exiting us.

Adam Ron

comfortable you of amount think feel market capital capital. the million, loan? then from of excess the is to my you come you outlays do capital, a think, do capital I'm question subsidiaries. excess that the -- about with grow to run all a capital last $XXX parent? through goal pointed of of that And excess amount, if to fund some Do given grows if talk statutory companies sure Or not I can to actually XX% just lot XX%, you is portion need your But excess the you that substantial you having

Mark Bertolini

Yes, question. great

in And excess us do to And estimates. that on but have based quota so only our we talking as our excess fund do said points, next backed my capital I is excess think that our we the capital, capital not reinsurance. by year growth share positions

fund So quota continue will our we of to we XXX% share use the footprint. year, and total next we'll and growth, don't evaluate

it as that in I modestly increase there's likelihood a think we to certain that states down. opposed taking that

So the that we level point, excess the right capital scenarios very growth to most that, support this that feel I we see. think of have we of comfortable at in

Operator

Nephron [Operator of Instructions] line Josh question Research. Your the Raskin next comes from from

Joshua Raskin

for questions me. Two

of risk any And one that the important -- can kind there ICRA importantly, of on expansion trying on the partnership +Oscar there curious is you group longer I'm to market. you're the side? the the arrangement fees how your on first with strategy do Is involved what opportunity small just speak revenue views Cigna, and in just to the risk Sanford. small more market. group or of at risk term then new is The just any with sort your with

Mark Bertolini

Sanford Josh, there Health on agreement, the no risk. is

no I Campaign and Builder in at a the don't others. All are program that this expect of medical for there point. future. reaches engages our risk groups have out patients and any is This relationships, to really

And growth see so good high we this high and a margin, us. a product for being product margin

of +Oscar.On of we ICRA, we'll the in middle a group are small together but out putting to approach strategy market. the roll the only not market, small the many through midst in Just first the that group market,

that value market we And to relationship and well move be that middle continue Cigna We small the individualized with as as market, evolving digitized. see our continue group and the we will will forward. it think to and more

we look that forward And to that so partners And to change. work for driving be and make to across the country. looking able distribution ultimately

Richard Blackley

Josh, thing -- C+O. me one one add just I'll let thing on on add just

way that our a to really IFP same took the approach performance. measured trying drive in So strong we XXXX business, at for

prior I focus year, think what in seen than that's rates on way growth been against marketplace. the in and have the that making slower we're disciplined in primarily execute C+O, sure there we've the a we

potential think a create I making just taken sure So continue that But approach and can measured business. the of a business, we to the outcomes. we've excited for be happy about really with we're

Operator

this participation. you today's are Thank conference for concludes your there And at further This no time. questions call.

may You disconnect. now

Oscar Health (OSCR) 7 Nov 232023 Q3 Earnings call transcript