Oscar Health, Inc.

Current report

Our success and ability to grow our business depend in part on retaining and expanding our member base. If we fail to add new members or retain current members, or manage our membership growth appropriately to meet our business objectives, our business, revenue, operating results, and financial condition could be harmed.

Current report

We currently derive substantially all of our revenue from direct policy premiums, which are primarily driven by the number of members covered by our health plans. As a result, the size of our member base is critical to our success. We have experienced significant member growth since we commenced operations; however, we may not be able to maintain this growth or manage our membership growth appropriately to meet our business objectives, and our member base could decrease rapidly or shrink over time.

Current report

There are many factors that could negatively affect our ability to retain existing members and expand our member base, many of which are beyond our direct control, including if:

Current report

•we are unable to remain competitive on member experience, pricing, and insurance coverage options;

Current report

•we are unable to gain access to quality providers;

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•we are unable to develop or maintain competitive provider networks, or maintain adequate networks that comply with regulatory requirements and standards;

Current report

•insurance brokers that we rely on to build our member base are unable to market our insurance products effectively;

Current report

•we fail to attract brokers to sell our insurance products or lose important broker relationships to our competitors or otherwise, including in circumstances where we require brokers to use different enrollment services vendors;

Current report

•the enhanced APTCs under the ARPA are eliminated or reduced, or other APTCs or subsidies under the ACA are eliminated or reduced;

Current report

•our competitors or new market entrants successfully mimic our innovative product offerings or our full stack technology platform;

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•we are unable to maintain licenses and approvals, or there are material modifications or restrictions on our ability to offer insurance in our current markets or to participate on Health Insurance Marketplaces, obtain licenses and approvals to offer insurance in new markets, or to otherwise expand our plan offerings in an economically sustainable manner;

Current report

•we fail to continue to offer differentiated and competitive products, or there are regulatory actions that limit the types of plans that can be offered, such as the Notice of Benefit and Payment Parameters;

Current report

•initiatives designed to improve member and provider experience, including the use of AI technologies or other new technologies, are unsuccessful or discontinued, whether as a result of actions by us, our competitors, regulators, or other third parties;

Current report

•as a result of changes in law or otherwise, our competitors participate in the individual market to a greater extent than they have previously;

Current report

•there is an initiation of new Special Enrollment Period (“SEPs”) or other unexpected healthcare market developments, including in response to legislative, regulatory or political developments and executive orders;

Current report

•our digital platform experiences technical or other problems or disruptions that frustrate the experience of members or providers or other third party partners;

Current report

•we or our partners or other third parties with whom we collaborate sustain a cyber-attack or suffer privacy or data security breaches;

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•regulatory actions to improve the integrity in the ACA eligibility and enrollment process, including rules that make it more difficult for members to enroll in new plans or switch from one plan to another;

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•we experience unfavorable shifts in perception of our digital platform or other member service channels;

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•we suffer reputational harm to our brand resulting from negative publicity, whether accurate or inaccurate;

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•our strategic partners terminate or fail to renew our current contracts or we fail to enter into contracts with new strategic partners; or

Current report

•our efforts to partner with ICHRA platforms to transition small, mid-sized and large employers to the individual market where their employees can choose an Oscar product are not successful, or take significantly more time than expected to be successful.

Current report

For example, CMS is increasingly focused on improving integrity in the Health Insurance Marketplace eligibility and enrollment process, and we expect this focus to continue. During the second half of 2024, CMS enacted new measures to respond to increases in unauthorized changes in consumer enrollments by agents and brokers and to reduce consumer burdens related to unauthorized enrollments, and these measures may make it more difficult for members to enroll in new plans or switch from one plan to another. In addition, on March 10, 2025 CMS issued a proposed Program Integrity Rule that, among other initiatives, would change the annual open enrollment period (“OEP”) for all individual market coverage to run from November 1 through December 15 preceding the coverage year, instead of through January 15 of the coverage year. Historically a material number of members enroll in the final month of the OEP, and furthermore, if the enhanced APTCs are not renewed at the end of 2025, a shortened OEP could make it more difficult for individuals to determine what plan they can afford in the time period allowed. Although we expect a shortened OEP to result in a reduction in the number of enrolled individuals in the Health Insurance Marketplace, we are unable to predict with certainty the magnitude of the impact to the overall Health Insurance Marketplace or to our future membership. In addition, this proposed rule creates stricter income eligibility verification processes, including annual income data matching issues (“DMIs”) when applicants attest to income above 100 percent of the Federal Poverty Level (“FPL”), but trusted data sources show income below 100 percent of the FPL, and remove an automatic 60-day extension for applicants to provide documentation to verify household income when there is an income inconsistency. While we expect these stricter income eligibility verification processes to result in a number of individuals in states where we operate to no longer qualify for APTCs and therefore reduce the number of enrolled individuals in the Health Insurance Marketplace, we are unable to predict with certainty the magnitude of the impact to the overall Health Insurance Marketplace or to our future membership. The proposed Program Integrity Rule, if enacted, could have a material impact on the Health Insurance Marketplace and could also have a material impact on our business, revenue, operating results, and financial condition.

Current report

We operate in a highly competitive environment and some of the health insurers with which we compete have greater financial and other resources, offer a broader scope of products, and may be able to price their products more competitively than ours. Many of our competitors also have relationships with more providers and provider groups than we do, and can offer a larger network or obtain better unit cost economics. Our inability to overcome these challenges could impair our ability to attract new members and retain existing members, and could have a material adverse effect on our business, revenue, operating results, and financial condition. Additionally, if we are not able to grow our membership, we may be unable to attract additional partners to our +Oscar platform or maintain existing +Oscar partnerships, which could impact our ability to execute our growth strategy.

Current report

Failure to accurately estimate our incurred medical expenses or effectively manage our medical costs or related administrative costs could negatively affect our financial position, results of operations, and cash flows.

Current report

We set our premiums in advance of each policy year based on competitive factors in each market in which we participate as well as a projection of future expenses. As a result, the profitability of our insurance business depends, to a significant degree, on our ability to accurately estimate and effectively manage our medical expenses and administrative costs.

Current report

Numerous factors impact our ability to accurately estimate and control our medical expenses, many of which are not within our control, including, but not limited to:

Current report

•changes in healthcare regulations and practices, including subregulatory guidance, regulations, or statutes that govern individual plans, or the Health Insurance Marketplaces;

Current report

•the impact on the morbidity of our members or the broader market member population from ongoing regulatory actions to improve the integrity in the ACA eligibility and enrollment process, the potential elimination of enhanced APTCs, Medicaid redeterminations and tariffs and related medical cost increases;

Current report

•increases in the costs of healthcare facilities and services, medical devices and supplies, pharmaceutical products and ingredients, including due to the introduction and adoption of new or costly medical technologies and pharmaceuticals, the impact of legislative or regulatory actions, including the imposition of tariffs on certain pharmaceuticals or other foreign imports, or macroeconomic inflationary effects;

Current report

•changes in purchase discounts or pharmacy volume rebates received from drug manufacturers and wholesalers, or the guaranteed minimum discounts or rebates we agree to with the pharmacy benefit manager that negotiates and collects such discounts and rebates on our behalf;

Current report

•continued increases in broker fees due to the proportion of broker-acquired business continuing to increase in line with the macro trend in the Health Insurance Marketplace of fewer members signing up directly on exchanges;

Current report

•the broader competitive landscape, including new membership resulting from other health insurers exiting our markets or changing their pricing strategies, initiation of new SEPs and general expansion of the individual health insurance market;

Current report

•lack of credible data in new regions or with respect to new plan offerings;

Current report

•changes in the utilization of prescription drugs, medical services or other covered items or services;

Current report

•changes in our member demographic mix, the geographic concentration of our members, and the distribution of members among our plans;

Current report

•increased incidences or acuity of high dollar claims related to catastrophic illnesses or medical conditions, including claims for which we may not have adequate reinsurance coverage;

Current report

•changes to, or reductions of, our utilization management functions, such as preauthorization of services, concurrent review or requirements for physician referrals;

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•the occurrence of natural disasters, terrorism, public health emergencies, major epidemics and pandemics; and

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•provider or broker fraud.