OSCR - Earnings call transcript Q2 2024

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Operator

Good morning, everyone. My name is Ellie, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Oscar Health's Second Quarter 2024 Earnings Conference Call. Please note that this call is being recorded. [Operator Instructions] Thank you.

the and to Investor turn President Potochar, now Treasury of Relations. will conference Chris over Vice I

You may now begin.

Chris Potochar

Executive Mark Good morning, second found Oscar's Oscar's call. are Full on our call which Officer, call. will us joining Scott host Chief Chief results and our Bertolini, this be through Financial everyone. Thank quarter you Investor our XXXX for Officer; of Blackley, and website This morning's for release, Relations can accessed Investor earnings Relations management our details available commentary at also can our be website at ir.hioscar.com. in additional ir.hioscar.com. earnings

our XXXX, XXXX. XX-Q that Oscar the differ XXXX, materially period Actual those remarks our filed Form quarterly quarterly filings provisions those forward-looking be with safe various results report indicated future XX-Q constitute from harbor SEC, discussed the on statements ended including forward-looking factors, by of June Commission period statements of SEC. other within under result the Any Litigation as the to with the Exchange about meaning Form important Securities on a with of makes and filed quarterly may the the for report Private and those the Act in XX, for including March XX, ended Securities Reform

events Such forward-looking may developments and cause subsequent today. statements estimates that are based change. anticipates on of current expectations Oscar to as

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

would to our that, Mark over With to call turn CEO, the like I Bertolini.

Mark Bertolini

first all results, thank half you, solid performance Thank morning. and second the quarter This in Chris, year. delivering reported Oscar us. strong for you of joining the Good morning,

Our performance. were by membership driven growth, bottom consistent robust line solid results and improved positive execution and

results, the total quarter, an total Underlying achieved loss of $XX million year. by XX%. to $XXX.X our million We adjusted second year-over-year. of reported year-over-year medical $X.X EBITDA quarter ratio revenue versus points our company we XX increase XX% improvement improved the basis a We of nearly billion in prior

year-over-year first our $XXX addition, million. EBITDA In adjusted $XXX improvement significant was a million, half of

XXXX $XXX The year, of outperformance of our half half $X X million in is EBITDA first in raised history. range a $X.X first XXXX $XXX today, a best Based the million the to range of to to by guidance months to revenue the guidance and full year of we $XXX million. Oscar's our on adjusted billion billion

moments, updated few second a guidance. Scott detailed of will XXXX results review our provide In and quarter a

against share highlights Investor will I our First, momentum strong that strategic key demonstrates Day. plan with the we shared business at you

existing outlined In Oscar XXXX. our through and our revenue expansion. we at new our X% shared strategy double We least Insurance, June, our to footprint to addressable ACA margin by CAGR XX% in growing plan operating significantly market and opportunity achieve

products diversify to to business. our declared traditional Oscar's building ACA We down growth member the base. ICRA innovative commitment leading by also on that diverse We needs our doubled increasingly our path the of beyond introduce a meet

member asset, Finally, technology, to experiences, our efficiencies our which key Oscar's in affordability. continues we superior and investment operational reinforced drive

Medicaid strong drivers redeterminations in the SEP in results goals. approximately our long-term increased year-over-year. Key member existing We and retention, a continued. markets, quarter confidence additions growth million these included members, quarter achieving expansion membership new XX% increase with and second X.X Our closed as

our line in was expectations. utilization with Overall

states. complete additions second a Medicaid decelerated of process at rate, as is of to member now Oscar into half redetermination We the almost year the expect SEP continue the all in

growth strong our solid members results. year for that tailwind a this a to as foundation renew XXXX lays become SEP Our

continues deepen and year-over-year. We on winning We competent to We our drove culturally grew on presence. and deep experience. by captured ACA our XX% relationships engagement to states in more deep of of more personalize approximately our through leveraging market our individuals distribution the consumer to technology. plans provider our affordable ability Oscar market based understanding share our

unique Oscar powerful Our to creating give plan clients. and engine strong outcomes while continues technology health a Insurance market provider for edge

business. introduced campaigns we that several virtual members care example, Oscar's guided to For urgent

records models need individuals care. and in to member Our identify track search of terms immediate

interventions to million from campaigns $XX and settings care Insurance divert driving of lowering care, year. The costs close to this drove value Oscar worth urgent to member ER in brick-and-mortar

our In individuals among for visits in drive addition, an wellness helped that we campaigns increase with launched conditions. client annual year-over-year chronic +Oscar engagement XX%

ICRA. to Turning

execute strategy, struggling and We are small at against continue midsized to health our insurance reasonable offer to businesses costs.

and We are with preferred to these a platforms Oscar make working meet unmet choice ICRA throughout our needs innovative products. of carrier

market Texas, States the and policy at Indiana ICRA. for proposition to levels. enacting and legislation The considering it value laws are ICRA businesses make state including resonating adopt to in and easier is small

State bullish will more to states on and a employers structure. choice follow as a us consumers other suit. momentum give sustainable more expect keeps solution ICRA We cost key

given risk insurance has I lower I serves The cost in largest ACA created market Before fastest-growing the uninsured and rate businesses the in to the market resulting small XX X% XX% trend pool health heightened has and the from to and and lives significantly for the in nearly to attention than upcoming a to conventional employer sponsored transition presidential lowered Scott, on address The is ACA overall. wanted the XX% the election. million industry coverage.

across gap value a market and its the insurance The ACA critical states. proven has in fills

more federal a repeal policymakers. sentiment and that seeing moving shift to serve constructive are are better to their Americans. beyond and solutions They notable state We from in replace marketplaces creating position

I to enhanced a Now point on put want subsidies. finer

subsidies. As and enhanced achieve on XXXX our operating we to margin line the Investor at Day, of regardless we said outcome top targets expect revenue

subsidies individuals do make of ensuring Americans, to to critical have like food on had benefits needs basic enhanced not continuation housing. the Subsidies accessible is affordable trade-offs issue. hard-working bipartisan and comprehensive a However, made

in will affect therefore, enhanced Louisiana find notable to of incentive to a largely coverage subsidies, upside permanent Any a Without Carolina, has strong administration, significantly Georgia. rate rise solution. uninsured gains to Texas, and a as subsidies the see Again, continuation base is South and Mississippi, we expected our plan.

execute. summary, out performance. continues strategy is In we growth, evidenced revenue Oscar strong bottom laid to and The improved margins by line operating working,

company second the updated achieve have adjusted XXXX achieve us in the our our year. profitability right strategy outperformance Our and long-term am EBITDA confident to total I positions guidance this target team and quarter to we goals.

leadership or and grow our to has expansion, in Oscar ICRA. tech-driven significant products runway geographic through

strong a individual proven in and make in We have the innovate strong in continuing market we belief dynamic to environments. We individual the have the to to to solution deliver market, our forward for chosen Americans. XXXX results look all ability

our the the I Before there want to actions thank team call our Oscar are team, drive to Scott, and whose Scott? A work results. hard I hand outsized

Richard Blackley

member diluted good the first year. delivered revenue Thank our you, first positions We've Total the Building year, year-over-year quarter morning, was income to of increased we a as higher rate and a the in of Membership for increase risk second half during profitability which increases, X.X adjusted achieve membership enrollment and strong $XX by the financial strong year-over-year. SEP million results on Mark, per reported quarter share. open approximately $X.X second us EBITDA momentum, offset additions. in this above-market quarter, approximately adjustment premiums. We XX% of retention, strong or XX% partially total million year-over-year growth to driven strong the $X.XX billion everyone. with ended by quarter percentage of by and members, growth net company higher driven well

Turning costs. to medical

primarily prior Overall, utilization with improved period second trends our medical basis XX points driven favorable The by were quarter in development. loss by expectations. to year-over-year ratio XX%, line

want additions expectations the decelerated We The on spend our members with moment I June in in thus have and for peaked and July. May growth far. SEP membership special second in been significant to in member economics these line quarter. a saw enrollment.

SEP risk members and adjustment utilization window MLR in to scoring As added short half dynamics, in-year due year the the and the partial a occur. second headwind year carry reminder, to an risk of for

in a We had MLR will the their members year in of Historically, been similar SEP retaining following year. enrollment expect and tailwind next performance growth to the record SEP strong track has we've membership members. to open a good that be other

final report XXXX increase to adjustment. CMS consistent expectations was resulting payable. for The to our a risk only largely transfer with our Turning modest in risk

Wakely We also received for first the report XXXX.

a us, our largely of percentage overall expect performance of year be are With consistent X behind to XXXX, premiums we full trending well. adjustment underwriting risk For months economics as now year-over-year.

costs. Switching to administrative

offset fixed XX.X% by cost ratio percentage second by improved The of year-over-year by which were risk efficiencies, SG&A partially variable XXX as expense driven adjustment and cost premiums. leverage, higher a to basis higher quarter points

we revenue which that delivered strong income the executing Our growth demonstrate first substantial and the in increase drove the a are first for net year-over-year quarter well. results X in We adjusted and EBITDA of months and year. profitability, half improved significant

by increased Second $XX year-over-year. Adjusted $XXX approximately of improved $XX quarter by million $XX million of net year-over-year. income million EBITDA million

adjusted of million $XXX by First net first improved EBITDA income half $XXX year-over-year. $XXX increased $XXX million of million year-over-year. million And finally, nearly half by

Shifting balance to sheet. the

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

of excess of had June of surplus, which was capital, our subsidiaries operating driven approximately As billion capital XX, strong our performance. in million $X.X by $XXX including insurance

Let to me updates year XXXX guidance. full turn now our to

higher revenue our $X guidance billion, reflecting billion by SEP $XXX range membership to We a to total driven by $X.X are of additions. for raising million

largely in Medicaid SEP adjustment to primarily a mentioned. is driven the mentioned, range complete We that XX.X%, XX.X% of medical Mark of redeterminations As now ratio loss in all risk states. member process dynamics expect by almost previously the I our

SG&A, range risk as to greater lower a ratio by and now lower fixed leverage. a of cost adjustment in we to expect XX.XX% the SG&A of premiums expense driven percentage Switching XX.XX%

year expect million. to are a and company total range this $XXX our to to million profitability adjusted $XXX to raising estimate continue achieve of We EBITDA

months the In Oscar's in closing, we've history. best delivered X

by can and in demonstrates margin long-term half of growth our company in for path operating least ability our and EBITDA XXXX. Our this to CAGR adjusted remain the towards strong achieve improved XX% targets outperformance X% achieve profitability solid first at the that the line strong confident setting of foundation We a top total a profitability. year year we

I that, the will call. of the over our to With for the Q&A operator call portion turn

Operator

Instructions] [Operator

first comes from Our Steve Fargo. from Baxter question Wells

Stephen Baxter

to the improved I guidance. about ask So just wanted

million you guidance that plan. the think So $XX you said you April, million, by Investor Day running about raised above at the were I of $XX EBITDA as

dynamics Just square trying guidance SEP now wondering that provisioning membership you've you Investor discussed the around to Day? the and X adopted those numbers at

Richard Blackley

question. the for thanks Steve,

ahead million did what's year, difference $XX the is and driving for full we midpoint at as between you're questions and Investor today of full think is the Day forecast the where guidance, SEP, to driver most answer to the the just So year so were going we about be the SEP to I going growth. biggest the the hear at

due remember, dynamics. adjustment may risk year your the in you As growth MLR to the partial comes SEP with headwind

the significant we're to to to be can us to portion seeing growth be tailwind a there. those for So we would and excited year strong are this that excited about that have into we we them. expect as going We're SEP XXXX continue of as members a performance retain go able that we're actually

Stephen Baxter

there I embedded think, give Is that? exceeded whether EBITDA inside a you whether full what could if the membership now or $XX is the it's had million you portion $XX on embedded adds And million a SEP some outlook discussed, us headwind of you sense in initial it. your Got guidance? potentially

Richard Blackley

at in think is, the try now paint, that and membership see unmix growth I Yes. of slower what we than the our through But the strong SEP in won't embedded the -- here expectations we've to continued I the but you saw for in if point pace seen The the -- now to expecting a second growth will. rest quarter. quarter, second we're year, we've

Operator

Sandler. comes Tassan Piper question next from from Our Jessica

Jessica Tassan

is of the XXXX like good the maybe XX.X% a you in up little and rate on hoping Texas, kind about Georgia bit Can request as the help the was of request divergence -- or look us versus respectively. about X%, talk up they're Missouri, some understand like I increases Congrats results. X% requested could or states

in on request country. comment one if geographic at the interested and area the could just divergence then like of XXXX on So all also what seems the you

Richard Blackley

question. the Jessica, how are I you, appreciate

by think in I are obviously, look, those local driven So see that requests, in the rate geographies, market much market. on what we by performance very

would to, from of have market So expect pretty say the and consistent others as just about Georgia well. we with always what you asked with and they're specifically, respect divergence, going that's we've I reflective seen would that it's that there, overall to think differences I

forward our responsive would I So economics. be that local think actions we that always to will expect going rate would

Jessica Tassan

Got in year-to-date. the whether follow-up. risk that whether adjustment it. And you new about reflects assumptions then just XXXX members your Maybe I initial just at all your had for one can added XQ PMPM quick increased number members or entirely changed talk the

Richard Blackley

expect question full why other of is our now for say premiums. amount drivers. the for risk the the year's up, as that of year a the risk the be is and transfer push would relative closer last and to actually the actually year, a SEP members the predominant impact full risk risk hand, just that Appreciate adjustment on market on we've that with we Yes. to is a addition couple which And seen adjustment. would getting Obviously, transfer to higher closer year, full for the average, of comes percentage of risk I guidance but

that also for think the we we in I -- half we got first the look first on where kind results headed. the is, underwriting points of performance, at right Wakely year, confirm for, it's I the that make plan, there our the we're think of would

we've built percentage mid-teens outlook risk year of factors those into full So feel our of adjustment like a of as premiums. got all

Operator

Joshua Our Research. next question Raskin Nephron from comes from

Joshua Raskin

to a growth The can how overall thinking XXXX, you've relative about expectations speak exchanges are And now little market for that next data? on then to first question you you for the is, seen pricing year? competitors

Richard Blackley

kind there's based strong We an believe, at benefit the for of fundamentals XXXX. that but we growth lingering the of expectations I growth, to redetermination, would with Day which Investor having level growth in we think is, on a underlying which of opportunity say, previously overall starting enhanced XX% the just strong distribution we of Medicaid some, program. see shared see include be of strong our see market in we market, today, that what there'll subsidy effects also and around

on what we all So and estimate of the we'll in is we of our see marketplace the of year this year. get the happen where based that's those kind full are. But update this market. the anticipate through of end -- factors we kind where year at Obviously, moment, the

Mark Bertolini

we built time are the that's but our the overall And not adding we growth our And are additional of than growth, and grow in just ability Josh, see over why markets. the expectations, off market better markets that to over XX% years.

Richard Blackley

at to other and Josh, characterize as would been of of far, look early rational starting and Then I is XXXX. an had Thus -- them we we which for -- we're get kind when what preview all expecting. stable rates

so nothing far. of So we've terms unexpected seen in what

Joshua Raskin

vendor your membership with And the progress. provide in That's helpful. mentioned just update perhaps -- sense external you an any Maybe And just you I of opportunities, can give us could on of even little then in a a know XXXX. maybe ICRA-related start sort you remarks, prepared if conversations. then

Mark Bertolini

front guidance of interest, get built deployed, give on and however, of went We've when there, we've membership changes not will until partnerships But in interesting Josh, those XXXX us. we in made of along. then. we go-to-market a opportunities we to as the driving We a as lot learned some but lot we've already We're we strategies the already ground. got for

employer, far, overall people play first that through the our will and plans, but how strong. need time brokers sale, at figure look to and out X how been getting trying level to into really so have we learnings the then We're over distribution and out best and the

And the the believe positive opportunity coming we some have very here. in XXXX, by interest to into Our year. we'll continues results grow

Operator

Ron Our question from comes next of from Adam Bank America.

Adam Ron

incremental If I it guidance. revenue like changes XX.X% the into the the XX% guidance backing MLR, revenue versus dig MLR in on into the I'm looks like in prior

points MLR into basis expected roughly And to in have versus the so SEP, you would if on difference those what to like be that all year. that's related members XXX coming of

delta First right? is that

you second, SEP difference your and prior are inside Just to And in there prior any periods. versus members on compare color how in expectations of returning what how members that between SEP saw the cycles, does members? trending

Richard Blackley

Yes.

membership SEP does year have higher outlook embedded additional MLR our growth is the full implications. So that now in

for we next slope. shape And or going bit rest of anticipate last it's so a while similar with year to the little seasonality probably what this of steeper year, we be similar saw to year,

the overall second to getting would kind healthier, year their PCP the and the performance retain why I enrollment for think be members from have so to past. those years, that anticipated -- to and start the reasons members into they With respect score system the average for the may than when what MLR this that's the respect one the is than in lot Medicaid to that we we far, open into things, them and utilization younger engage performance interesting. X we've members numbers. With year's start of they we've X anticipate to So seen They in -- look like we're really to of getting of we're what members members, more those as They're with coming population. redetermination, on are pharmacy to it's SEP half. a risk higher tend SEP with all which able we benefits SEP second

ER, that, we are for had what have case. But economics line We higher that is members example. with the We overall anticipated. some see the for some evidence the seen those of importantly, usage in right

pleased we're the the book. And far performance so thus of with

Mark Bertolini

secondly, getting through the the not that understand in add, revenue would mix, reporting. risk as year cost. adjusters all not through just come whole medical our it's the mix don't have And in. you well, the impact I the It's

math come with think incremental to it's I exactly X.X%. up So don't

Adam Ron

Fair. And clarification the No, X I questions squeeze that one. appreciate then I'll color. into

the MLR prior developments. You due or mentioned favorable that increase primarily period in release year-over-year to was decrease

just And you preliminary rate filings, could now. I they think that. on be if explain the public should So all then second,

just can might XXXX? covered at and in So Investor but there's new this you go -- any Day, have geographies or you if the states over

Richard Blackley

the of to we in with Yes. was make out PPD, run one respect have favorable to period I million favorable just second $XX I that in quarter. claims the context. you question, respect of development, development that roughly ask prior terms right time? quarter in And more want a to the sure the your MLR, favorable With and have did can

Adam Ron

Yes.

Sorry.

the XXXX the since should the are any wondering entered that new analysis, haven't but if like rate that... filings Just new if geographies preliminary just indicate numbers entered any you done how out, and states, you I

Richard Blackley

I think go we that have think as into of the year, point The this in to would the and the end get to the appreciate about the closer question. I -- geographies expansion I we at year. that plans. won't the -- We'll say more I

Mark Bertolini

But markets necessarily we doubled have not our states. overall, but

Adam Ron

it. answers. Got All the it. all right. appreciate Got I

Operator

Instructions] [Operator

next from Ha We Michael have question Baird. from our

Olivia Miles

Ha. Miles Michael Olivia on for

with So bucket. into ballpark million years? in interested in over embedded components over in TAM within specifically In and expectations? XX% making on backed is can years. growth the the that opportunity? helpful. and roughly ramp X ICRA, long-term of the that is up new that color a next $XX Day, it Investor sits Is And provide XX% the roughly X cadence you that on the growth given of XX% color What ICRA lives number more the the Any over the revenue be the I would XXX,XXX the you next your new market what's next we consistent was of And about mentioned to product opportunity first hearing market the X years.

Richard Blackley

ICRA this and I on have TAM to to of in we refer Day Olivia we have call an that terms offline We're details, the prefer no and would the focus you outlook back happy in that. updates to about but the conversation opportunity. to Investor think the quarter for

is done We we've continue on made what just year the there. opportunity more bullish work And to even the be excited us that. this about has

can feel Day the team IR to the a give they walk So of through IR details call the free after, materials.

Olivia Miles

follow-up. I a if can And ask

As deployable we target think billion. about next is over X $X.X potential I the capital around your implied years, believe

assuming I Is should were $X.X And so and statutory if toggle a in about share we to roughly that time? quota out down how back to around a billion And XX% share over minimal ballpark? CapEx. XX% capital. getting expect the to of I'm capital quota deployable

Richard Blackley

that Yes. would that we're XXXX earnings Scale markets to great expand over I of that be the do to generate of comment all, wherever on lean the able won't to use It organic want and is significant gives use to we the fixed excess cost get capital through us. It growth capital positive specifically trajectory to amount I But -- excess organic leverage. is capital we of into and projecting. going continuing the with excess company and our expectations how into first creates or our us for capital possible, ability new fund growth. think business.

plays business. help look our fund the how is that for. we efficient would have out we We'll would for that of share, will this as So share less to us on that first have and growth that's optimize partners. there And rely terms capital we we that we way share We excess expect with time. over respect see a quota the we to quota when then around reinsurance the partnership very in of quota with appreciate point

can fund business. the an that's we think of how enduring we part So

Operator

you. Thank

end have call, to conference wonderful day. We attending hope We and reached would the everyone we Q&A have for you session. thank our of like today's a

disconnect. now may You

Oscar Health (OSCR) 7 Aug 242024 Q2 Earnings call transcript