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 671,124, or 68%, as of September 30, 2024, compared to September 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 $976.2 million, or 70%, for the three months ended September 30, 2024, compared to the same period in 2023, and increased $2,330.4 million, or 54%, for the nine months ended September 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 $8.0 million, or 19%, for the three months ended September 30, 2024, compared to the same period in 2023, and increased $23.4 million, or 20%, for the nine months ended September 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.

Medical Expenses and MLR

Medical expenses increased $840.8 million, or 72%, for the three months ended September 30, 2024, compared to the same period in 2023, and increased $1,830.7 million, or 53%, for the nine months ended September 30, 2024, compared to the same period in 2023. These increases were primarily due to increased membership. MLR increased for the three months ended September 30, 2024, compared to the same period in 2023, due to modestly higher medical costs, primarily driven by higher SEP membership resulting in higher risk adjustment transfers as well as higher COVID-related costs, partially offset by favorable prior period development. MLR improved for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to favorable prior period development, partially offset by higher SEP membership resulting in higher risk adjustment transfers.

(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 $134.5 million, or 41%, for the three months ended September 30, 2024, compared to the same period in 2023, and increased $228.1 million, or 21%, for the nine months ended September 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 360 basis points year over year, and 500 basis points year over year for the three and nine months ended September 30, 2024, respectively, primarily due to improved fixed cost leverage and variable cost efficiencies.

Depreciation and Amortization Expenses

Depreciation and amortization expenses decreased $1.7 million, or (18)%, for the three months ended September 30, 2024, compared to the same period in 2023. The decrease was due to less internally developed software placed into service.

Income Tax Expense (Benefit)

Our effective tax rate for the three months ended September 30, 2024 and 2023 was approximately (3.97)% and (1.41)%, respectively, and 4.12% and (3.51)% for the nine months ended September 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 nine months ended September 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.