OSCR - Earnings call transcript Q3 2024

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Operator

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

Chris Potochar

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

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

Mark Bertolini

This reported thank you, joining for third results. morning, Thank Chris, quarter you all morning. Good Oscar positive and us.

increase performance. Underlying Our strong XX% above-market reported $X.X revenue improved by of driven disciplined third billion, financial growth, a results year-over-year. results, and quarter our we execution were

year-over-year. achieved expectations. relative modestly ratio XX.X% Our total a of $XXX with to utilization increase our medical increased loss EBITDA to overall company million representing We XX favorable adjusted million year-to-date, points basis $XXX

year-to-date $XXX total EBITDA year. reported $XXX is and deliver income plan profitability over driving track addition, on this a to adjusted of period also remain last expect our executing the and against We profit company In profitable million, Oscar to achieve we growth. improvement profitability a million year. same net

achieve Our moments. third a CAGR our strong X% for momentum by sets XX% foundation margin and at a in revenue to us XXXX results positions operating least will solid few XXXX. Scott and review quarter

months XXXX cover decelerated. We further First, than members, of I highlights. a as quarter million business will XX% X.XX with in closed increase approximately key XX,XXX additions X first year-over-year. SEP the Oscar more the members added

of XXXX through continue in We technology. as to MLR engage members to SEP expect we be our and members them tailwind these retain performance a

we operations our an and that optimizing further also AI the grow. In is technology fraud, quarter, waste data extracts tool Our prototyped abuse. we as to prevent

history. launched feature AI programs diagnoses to based preventative on to care, that a enhance also quicker intake pre-populates screening member medical We clinical that and for providers bot including gathers information a for recommendations Oscar speed

our enhance to growth to and continues us scale the business. technology Our position efficiently

XX total market more to across growth million, lives be now in XX-state new XXX,XXX individuals, open of our families year-over-year. expect businesses experience Oscar increase lives to markets through Oscar's addressable ACA The to continue will an XXXX footprint. We year-over-year. period available increases expansion double-digit and enrollment the our approximately

giving and more disciplined open member our diverse is this pricing X% expect X% strategy that enrollment. and overall Our year. Oscar compared total trend our average care fast-growing insurance for We approximately expansion increase initiatives will the next choices of meaningful base cost for priced drive health rate market. margin and to is in

members save strong and reduced book. pulmonary plan is a which our launched a which multi-condition The costs plan, XX% in member builds or solution that cardiovascular has more. helps members diabetes, we manage performer diseases our and First, diabetes can new from together, care

we tech-first Second, introduced experiences. a HMO frictionless that delivers

technology other before access gives opportunity markets. product providers new The no pain member segments HMOs Our for us an points like it. members addresses and across to known

Third, we X/X Oscar a up cultural who new health Buena The community Hispanics our builds them that Salud, to base, the a of heritage. shares their rolled prioritizes solution out of on success and our Spanish-first Latinos the which of Ola solution, connecting member make program. care preferences nearly

Oscar's making Employers now of carrier choice Oscar contributions through employees employers offer the can suite access for Finally, are ICRA. products. we of their to defined to

a with mid- variety transition with market. Industries part-time candidates. workers working prime of are populations employers are to platforms ICRA gig large-sized independent and to of We large the individual and

in their team small our enrollment. Most fewer small is group drive to to is increases help than sustainable working. largest industry with employee ACA on trend a access with pool businesses profitability. open and option rate on growth created addition, either is an summary, Stretch employees XX sizes. In and Dollar Oscar path the is facing cost with plan during the businesses plans. our lower has clear of is ACA risk double-digit all is or group for new The partnering the attractive and significantly In this of insurance to sign-ups

a pathways strategic targets. positions large-scale multiple Our goals, becoming XXXX us to and consistent execution we achieve are Oscar has to player. long-term achieve our our

Americans are new ACA strategically confident the in Oscar's am individual lines. markets, of in future our team. market. Oscar confident and across the in confident markets am attracting new consumer I the party of the underscores about growth. I growing continued expansion We am the maturing our for segments. I value

We quality lives. they to of products expectations their to what and our about is toward businesses. and use freedom marketplace for and tailored and for buy meets a larger do needs, the individual market are health the steps all Oscar consumer choice, other every what individuals, families like want insurance That part that is experience affordability. People in creates building a their

call am a successful look turn the to I for We over in off enrollment. thank want the I sure close, what work be Oscar to hard forward deliver to their I Scott. results. strong Scott? will team will open continuing to Before I now kicking

Richard Blackley

you, Mark, Thank good morning, everyone. and

and Our results execution. million the income $XXX $XXX consistent quarter. increase rate year-over-year demonstrate XXXX and member adjusted growth net growth ended by revenue strong SEP quarter, membership and open XX% increases. nearly additions Consistent with grew member during XX% our third year-over-year year-over-year year-over-year. Membership third SEP and in decelerated enrollment, XX% driven million strong million third of reported a quarter of increased with above-market and solid $X.X additions. driven We X.XX in approximately year-to-date. Total approximately by year-to-date EBITDA We higher membership expectations, the members, was by billion of retention to the quarter

Turning costs. to medical

primarily relative medical The summer prior period development. Overall expectations. favorable utilization driven basis higher loss modestly and by a year-over-year late to by points XX third uptick, were quarter XX.X%, SEP by COVID trends which were to membership ratio partially favorable increased offset our

we to stated, in and for an year short As carry the partial primarily risk utilization in-year the occur. headwind, added adjustment previously SEP have dynamics of warning due risk members MLR second half to year the and window

to costs. will growth the in expect to tailwind a be membership that year. Switching administrative next continue strong to SEP We

leverage points year-over-year fixed quarter ratio efficiencies. SG&A cost and XXX to XX%, variable approximately expense third by driven cost by The basis improved higher

quarter year-over-year. of improved adjusted EBITDA loss third approximately million $XX by Our $X million

balance adjusted position year. Shifting our total the well EBITDA profitability on to to date Our strong us this target to results company sheet. operating deliver

year, our position the ended quarter X $X.X investments, first capital $XXX cash Our and at approximately the approximately million the million of with subsidiaries. strong. billion distributions insurance Through very remains and from of months cash received $XXX We third parent. investments including capital of of the the parent

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

believe capital growth positions optimize position us fund to over our capital additional to time. continue opportunities excess We well our us allow to and future

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

total our our by billion, raising more member and as another $XXX driven of by to range favorable to We million lapse are SEP compared a $X.X additions expectations. $X.X to revenue for membership, higher rates billion reflecting guidance

earlier range since XX.X% by SEP has I Our previously. XX.X%, initial high dynamics our this loss our the guidance year. We membership of towards driven revenue now primarily that by million ratio the end mentioned of the adjustment expect risk prior guidance increased medical to $XXX

to SG&A expense lower to greater as XX.X% adjustment percentage continue risk year-over-year. Switching even fixed a of in by to range expect consistent largely to an premiums the be cost of We ratio now expect we driven leverage. XX.X%, SG&A,

million profitability this We expect towards achieve in year, EBITDA adjusted range of expect $XXX high Oscar. for be $XXX to another of And million. addition, end important to income company milestone net total we our the to

operator initiatives driven pricing and margin by encouraged by our guidance competitive quarter look strategy, to cost turn and savings. call call. of to total care XXXX, of the provide to call. With that, are ahead when expansion forward We to the expect disciplined details fourth we our additional be XXXX Looking the Q&A our we administrative for I'll portion meaningful sharing positioning the during over

Operator

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

Stephen Baxter

seem of a XXXX. rate I like market bit said hoping does a a your for expand X% at was appreciate, could there's It I positioning you on out bit little you there. barbell X%. increase competitive the in

essentially seem it how are minimum players book. I'd requirements some then You to thought or call have and competitive the environment if that flat, closer months nature could something have you characterize X their players pricing to that versus due that now or might certain also looked, to maybe MLR it, larger ago. how X you love they're restructuring looks like

Mark Bertolini

in I at people series your increase to of we pricing the versus pricing standpoint. you where and would rational and Again, market our would that have prior versus that think market Stephen. X% about to point a is series rate from about average have years. remind stable Thanks, you watch. largely X% is time you It's think out the that were I first is that a

believe place. of is And we markets is confident going to in players sustainable. don't few everybody believe market think are so, a few year. who We're be a always good after that that's There market that. a this the a We share. we stable chase in pretty And

Stephen Baxter

why you're Or more expected? Are obviously, of aggregate to on you piece before. you understand the is than too. the additions guidance, a expand might And of if too. I'd that expected? little inside I to than trying have than still there the commentary EBITDA pressure the thought Just that level your understand drag you the just a thought appreciate during better, adjustment size it SEP impact SEP reason? risk appreciate for you some higher decelerated insight, than to to bit more there's from willing that worse there pressure. But little in guess lives costs And Are quarter. just I the

Richard Blackley

reflective is of beginning had Yes. of Good with performance through fact morning, slightly the increased we we been members has the SEP, right Steve, quarter. The anticipated the what that so favorable. with top would expect. we've expectations year been the third what we of than track the Utilization to and which additions had obviously, to track even our revenue respect SEP line our more on with at guidance, has on SEP

So, is of just we've the performance, performance the story, would quarter we expected. what and of And than strong we underwriting got is the more for members think, story have is these anticipated. had I initially book the

part line the anticipate you seeing EBITDA? want second quarter. is back in will on fourth company. the seen seen do we guess, the slow that the to both into do repeat top we've the to performance deceleration one, later and bottom as We've I that You're And come that your of in well that adjusted line the that growth call. the occur. We'll of slowing already in as question And

Operator

Raymond of with the Ransom from Your comes next line James. question John

John Ransom

So, you CAGR my I your going I the first XXXX. provided question a map before Day, to to back mean, to road mean, follow-up. Analyst XX%

that should started? about kind that higher, right put is the higher off the would CAGR where coming there XX% that base? is base some that you adjustment of revenue Now revenue Or we number think 'XX

Richard Blackley

by encouraged in not think to going that. long-term update performance we're I terms Look, an say to that that would we guidance, I our make are year-to-date growth. of Yes. the

call up updates CAGR the I But We'll XX% well we be this information achieve you year. making some we guidance this that sets long-term to at about 'XX. 'XX won't quarter us any think time. give more think that to I fourth when do through the

John Ransom

MLR 'XX? XX% that is if just attach then 'XX, we should that higher, my is, like to, we the second a Or revenue should talked you're question into the your SEP think say, And lift to members, there apply this you where more would expect for about generating revenue about MLR year upside? we

Mark Bertolini

I coming have if outsized kind of anticipate would given pressure MLR that's our that we do compared to that's the redetermination in think future full you guidance, SEP in. of look and what probably at year amount the de-average Medicaid the we

core equal, So, with very the been things all our performance expectations consistent much this book of the year. has

would anticipate the over in that full a MLR X absent I a seen SEP, you little lower So, year. the range would point for have of

Operator

line Piper next question Sandler. the Jessica Your comes Tassan from with of

Jessica Tassan

X just if wouldn't would favorable medical help the claims flat might implies things prior us you PMPM fourth like either especially guess, period I in guess I shrinks those expense payable third development, adjustment it start guide expense just I which is that understand included why either occur, of the quarter? repeat quarter looks the quarter-over-quarter some claims can or risk quarter-over-quarter. with

Richard Blackley

MLR, just couple drivers in some specifically spike was third then looking before COVID, that question. that third quarter. the quarter, quarter really the which quarter I I third appreciate phenomenon. points. the I of at called One, would end the fourth out the a and implied saw of make We of Yes. a And conclude

So, continue. that won't

throughout We And so some won't but we executing additional quarter, additions quarter. integrity initiatives that payment we year, that the fourth then particularly into pressure. expect will up have in fourth the we've considerably are lower SEP be picking have been the

we of we flatter things are historically we've guidance all would versus in guidepost result So, the a quarter the those that fourth seen growth out. will the anticipate and for put in what kind

Jessica Tassan

the how years how practice ultimate to kind adjustment higher has your you process can of yes, risk X the over the and or then changed risk understand accounting just make just last of over And, evolved more help it adjustment last fidelity us to forecasting the maybe also kind reconciliation? years? accurate X And has and

Richard Blackley

Yes.

estimate our history that this well. We've strong I It to estimates has we financial make that because market. predict own quarter a our that want consistent with information. our is do have practices. volatility, calculation risk both the we've area say I a have use But modeling of risk to have I that years. and to and we adjustment is the and complicated for that with think practices score respect always of to as inherent we to we get And risk relative adjustment, a of following is That risk been in where always had helps on our an a level Risk methodology fortunate risk that do do caution. have on strong is consistent stable us the position the an most lot to several but adjustment, would to most high to estimate do been for input modeling. very adjustment practices, we've we score as challenging very there basis. We served as well the market the a cumulative us make, weekly lot statements every but have

Operator

comes question from Joshua the line Research. Raskin with Nephron of next Your

Joshua Raskin

I because to $X.XX? included so to the it's Has impact that thinking that the in Day, maybe and But subsidies changes Investor assumption would ask been in extended or guess you there change path that assumption around any indeed estimated to any your change the mind. sunset. at out top I you have of no the the laid in $X.XX one, First EPS or

Mark Bertolini

add of low U.S. few We're that made to at any haven't a let of that program parties changes have an it. currently 'XX, ensure We below the to in uninsured. but Josh, me around both the believe incentive historic X% We points continues.

inflationary former Trump only President President. around reelected and the other resulted impacts race confound the that current the being would in focused Going the way

as we Republicans And out believe have much they as interest an much, in that figuring the have so, subsidies.

ACA state-based our know states and pull of worse, into them a care own standing it out uncompensated in what's same of will we a, comes burden in when being they end. Probably exchanges already them this the pressure within create and be membership bands. is Now, an that, subsidies pocket their here up change as people There be and not. able there care sure of that every stay; of now? top pulling be that is are may at to entertainment. intention exactly think you health are and the or out having as that back inflationary and to that's XX% don't shifts red a states a about result There to food, pushing and even b, the from make may afford for the required red But increase product of home we and at gasoline their

Joshua Raskin

assuming guess number. something if were sunset, I you'd assumes I revisit a million guess, to you're But change the favorably, $X.XX that

that guess I helpful. So, definitely

Mark Bertolini

Definitely.

Joshua Raskin

second then just question, new And the development. around product

interested And those couple you that I'm that estimates if specifically be You HMO how guys members and any product, for on ICRA perhaps guided subsidized? have more care to then XXXX membership had have guys interesting releases. of any a Are less updates well? or in as works. expected

Mark Bertolini

provider past. the start So, HMOs our frictionless products, and process that it means laborious isn't means digital to of like on through in so HMO building, and sets. getting product denials We we and we of authorizations things I eyes than around different about new make the create would care focus review, this the there how on do technology approvals. facilitate member, rolling it using our referrals of believe that which the digital the was rejections, must the And out was in the HMO particularly product product

product believe to we hard couple get use a in product So, our year. the It real that launching it hard opportunity. a we've HMO in at to own this our intention has markets be is a past, taken that at back a work worked of speak it this the we enrollment need and how will open believe, We're look in going frictionless California. on population, in as can some we is we of side a into ICRA, on X,XXX the But product, HMO We to the with the a California have now as more we of present markets. place. On there. regulators good before really members number look

get I pretty our the ourselves plan of from you overall company membership plan. predicting. low standpoint of the will in we revenue total the remind the ahead But had X-year So, won't of in that

our could we hit numbers that growth on opportunity So, drive for point as a tipping be numbers. to that could or we're even not an relying ICRA at We're ICRA looking higher. view our

Operator

question Michael of the next The comes line from with Ha Baird.

Hua Ha

So, recently one CMS' one peers market view expectation record implementation impacted growth loss also of of mentioned to their of industry mid-single of on growth of larger growth. Also, X% that digits. They your your of agent XX% policy assumption. mentioned sort of mentioned industry hospitals their

that you on given next expectations So, XX% and assumption year. year, these peers? discuss different your growth you if I that still Is do your could was are all you between next difference your the than view? your reconcile wondering for growth view XX% How

Mark Bertolini

So, enrollment open to we grow 'XX. digits market double overall and to ACA continue expect by

believe done program that's of that's at by we end has now the subsidies. given be So, driven regarding may the strengthening what And efforts. CMS the and We the year-over-year. continued range XX% believe integrity Medicaid redeterminations enhanced high

total markets us open the will for markets. again, that we added will but growth year-over-year but in that now CAGR all for hit about the And up what see picked pressure, enrollment. have to and open open XX% overall. of for as be, again, the launching our we XXX,XXX some ACA We to enrollment $XX of going talk forward. too to million double-digit market now early obviously new it's downward And we in new opportunity believe still that we we'll an are running are So, see a growth it TAM

Richard Blackley

of bringing And the just add the enrollment, in the lives for seeing place I based growing growth market seen redetermination, of on to things. quick we've put year. digits well just as really factors cannot CMS those to for that explained have to Michael, the comparison the on growth And marketplace. Medicaid in think, that's growth is strong has that enhanced to fact by substantial that you've be just a X underlying top to information Medicaid fundamentals the that, out. And impact then you we're gig new that into expect redetermination. got the mid-single Because this you as gets distribution open And redetermination. that's continue. consider are happening throughout this those subsidy, economy We Medicaid the would that's already

think are those we So, things of tailwind going be continued a enrollment. to through open all

Hua Ha

for to where the when I for Day, this bps Investor believe, your year expected SG&A it midpoint you out at at the XX% your laid over year. now 'XX, SG&A XXX target is than assumption And higher is finish

could you tracking profile about to it operating outperform fixed your XX% you mature be So, somewhere by just of in nature you're given better XX-XX just low the in variable now end-state 'XX? about say talk of you on given to the reasonable the teens? talk pace commissions, than, G&A split? leverage cost low updated much point SG&A? Are broker experiencing, be Could the your thoughts would sort the And on very would of opportunity

Mark Bertolini

over I'll Yes, it start turn and Michael, Scott. to off, I'll

product As look an affordable we we continue we pull incoming as we choice, they believe administration. the creating that provide to affordability key the And costs, a allows opportunity that at aims view that operating to consistent as they believe freedom at and need product. we underlying the with it's have want. And next that people of administration, to look plan of to variation our lever the that's

of part it. important an So,

at room for to we have now, it grow. to always As in SG&A our that I'll time look Scott. And color, over more point kind turn of we

Richard Blackley

probably cost given destination going of we've of arriving said of that think taxes on part from you coming kind forward. Fixed represent kind that leverage, total improvements be. is speak you've both share best the which fixed in that that really drive that variable really and of coming you've able low that dynamics for us half critical mid-teens to the year to are in there we're actually I cost efficiencies, seen got fact a well right from obviously, leverage code you're to at in Yes. The of is could And ratio. opportunities roughly the the cost the of long-term is fact this half in SG&A ratio got improvement SG&A ZIP fees and efficiency SG&A, expenses, that terms broker the a our of large Michael, our very of is

But I and that down And are think to of more got that's scalable. but efficient reasonable initiatives gain also to about a lot costs. other leverage, excited still estimate. in-house initiatives cost the operating we we've opportunities fixed significant AI really drive our and we're opportunities variable making more to processes running a our speak

just that expense front we on able drive to So, performance we're side. continued the on the being leverage end and of think

Mark Bertolini

as point, year. the And 'XX, in an has going lowered been exchange well, which enhancement one fees administration more has the into the

Operator

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

Adam Ron

this that was off take about point you MLR If that next this that, recur? year a Or does us we size year assume MLR favorable year, can that years? mentioned of development think help jumping of we should you come should back? that from the won't for point the dragging the to SEP couple try that aside And

Richard Blackley

Yes.

in prior we of than impact third the of we the favorable favorable XX The period think roughly when had development. impact that was quarter. think about we in PPD, more had the from was SEP. the you the year-over-year COVID COVID, basis quarter, I pronounced basis SEP MLR on points had a perspective

MLR. But were the impact So, run our given on think probably at improve price like, about, you optimize pressure look terms build to in about we somewhere I some I X of at talked of always is, to we're care, when into good pricing the the in in continue MLR. And trajectory there's there's the I effects of total looking the that on and to bottom and things year for about given overall MLR, MLR. XX% we the of I where the impact continue neutralizing that go-forward a position, at cost will line, our to what range year SEP of MLR those MLR, forward. think Obviously, the going you're got those on talked we fall of allow dynamics as rate in to the you what if terms mid-XXs just quarter, XX.X% we've think to chance just that opportunity this low

Adam Ron

next your said then will pricing the think over trend least you for few X%. term you about exchanges next Investor And Day, I to that the at year, be your years, to thought the at X% point on long or

I think year. next that for you if above correctly, you priced heard I

built view? So, curious what's into driving that and that what's

Richard Blackley

Yes. That absolutely phenomenon. is said. what would market-by-market we pricing is And a I say that

some the us took we above allows And so, We in margin that markets, pricing think X% is improvement to our to drive X%, average. and also be competitive.

some averaging price out markets, always others looking that's again, In higher significantly increases we lower, an about X%. So, those that to have for. are the average. you're But things X and

Operator

no you questions, There conference are Thank further today's concludes all for call. joining. and that

disconnect. now may You

Oscar Health (OSCR) 7 Nov 242024 Q3 Earnings call transcript