Oscar Health Inc

Results of Operations

The following table sets forth our results of operations for the periods indicated:

Membership

We view the number of members enrolled in our health plans as an important metric to help evaluate and estimate revenue and market share. Additionally, the more members we enroll, the more data we have, which allows us to improve the functionality of our platform. The following table summarizes the Company’s membership by offering:

(1) Represents total membership for our co-branded partnership with Cigna.

(2) A member covered under more than one of our health plans counts as a single member for the purposes of this metric.

Membership increased by 610,182, or 63%, as of June 30, 2024, compared to June 30, 2023. The increase in membership is a result of strong retention and new enrollments in existing and expansion markets further supported by ACA market growth in 2024. The increase was partially offset by a decrease in Cigna+Oscar members served and our exit from the Medicare Advantage market.

Premium

Premium revenue increased $689.2 million, or 47%, for the three months ended June 30, 2024, compared to the same period in 2023, and increased $1.4 billion, or 47%, for the six months ended June 30, 2024, compared to the same period in 2023. These increases were primarily driven by higher membership and rate increases, partially offset by higher risk adjustment transfers as a percentage of premiums.

Investment Income

Investment income increased $8.5 million, or 21%, for the three months ended June 30, 2024, compared to the same period in 2023, and increased $15.4 million, or 20%, for the six months ended June 30, 2024, compared to the same period in 2023. These increases were due to a larger asset base, higher investment yields, and higher interest rates.

Services and Other

Services and other revenue increased $0.1 million, or 3%, for the three months ended June 30, 2024, compared to the same period in 2023, and increased $0.8 million, or 8%, for the six months ended June 30, 2024, compared to the same period in 2023. These increases were primarily driven by more customer arrangements in 2024 as compared to the same period in 2023.

Medical Expenses and MLR

Medical expenses increased $526.7 million, or 45%, for the three months ended June 30, 2024, compared to the same period in 2023, and increased $989.9 million, or 44%, for the six months ended June 30, 2024, compared to the same period in 2023. These increases were primarily due to increased membership. MLR improved for the three months ended June 30, 2024, compared to the same period in 2023, primarily due to favorable prior period development. MLR improved for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to favorable prior period development, as well as targeted rate actions, a disciplined pricing strategy to increase margins, and strong execution on initiatives to manage medical costs.

(1)Represents prior period development for claims ceded to reinsurers pursuant to quota share treaties accounted for under reinsurance accounting, which are in runoff.

(2)Represents prior period development for premiums ceded to reinsurers pursuant to quota share treaties accounted for under reinsurance accounting, which are in runoff.

Selling, General and Administrative Expenses and SG&A Expense Ratio

Selling, general and administrative expenses increased $98.0 million, or 29%, for the three months ended June 30, 2024, compared to the same period in 2023, and increased $93.6 million, or 13%, for the six months ended June 30, 2024, compared to the same period in 2023. These increases were driven by higher distribution and selling expenses associated with higher membership year over year, partially offset by the impact of the acceleration of stock compensation expense associated with the cancellation of the Founders Awards in the first quarter of 2023. The SG&A Expense Ratio improved 2.6 points quarter over quarter, and 5.6 points year over year primarily due to improved fixed cost leverage and variable cost efficiencies, partially offset by higher risk adjustment transfers as a percentage of premiums.

Depreciation and Amortization Expenses

Depreciation and amortization expenses increased $1.7 million, or 12%, for the six months ended June 30, 2024, compared to the same period in 2023. The increase was due to an increase in internally developed software placed into service.

Income Tax Expense (Benefit)

Our effective tax rate for the three months ended June 30, 2024 and 2023 was approximately 7.6% and (8.2)%, respectively, and 2.4% and (6.1)% for the six months ended June 30, 2024 and 2023, respectively.

Adjusted EBITDA

The table below sets forth the reconciliation of Net income (loss) to Adjusted EBITDA:

(1)Represents non-cash expenses related to equity-based compensation programs, which vary from period to period depending on various factors including the timing, number, and the valuation of awards. The six months ended June 30, 2023 includes a non-recurring charge of $46.3 million related to accelerated stock-based compensation expense recognized as a result of the cancellation of the Founders Awards. Refer to Note 13 - Cancellation of Founders Awards included elsewhere in this Quarterly Report on Form 10-Q for additional information.