Oscar Health, Inc.

Overview

We maintain liquidity at two levels of our corporate structure, through our health insurance subsidiaries (any subsidiary of Oscar Health, Inc. that has applied for or received a license, certification or authorization to sell health plans by any state Department of Insurance, Department of Financial Services, Department of Health, or comparable regulatory authority) and through our holding company (our parent company, Oscar Health, Inc., on a standalone basis (“Parent”) and subsidiaries excluding our health insurance subsidiaries).

The majority of the assets held by the holding company are in the form of cash and cash equivalents and investments. As of September 30, 2025 and December 31, 2024, total cash and cash equivalents and investments held by the holding company were $540.9 million and $189.8 million, respectively, of which $9.7 million and $12.8 million was restricted as of September 30, 2025 and December 31, 2024, respectively.

The majority of the assets held by our health insurance subsidiaries are in the form of cash and cash equivalents and investments. As of September 30, 2025 and December 31, 2024, total cash and cash equivalents and investments held by our health insurance subsidiaries were $4.3 billion and $3.8 billion, respectively, of which $18.2 million and $18.0 million, respectively, was on deposit with regulators as required for statutory licensing purposes. These amounts are classified as restricted deposits on the balance sheets.

Our health insurance subsidiaries’ states of domicile have statutory minimum capital requirements that are intended to measure capital adequacy, taking into account the risk characteristics of an insurer’s investments and products. The combined statutory capital and surplus of our health insurance subsidiaries was estimated to be approximately $1.3 billion and $1.2 billion as of September 30, 2025 and December 31, 2024, respectively, which was in compliance with and in excess of the minimum capital requirements for each period. The health insurance subsidiaries historically have required capital contributions from Parent to maintain minimum levels. The health insurance subsidiaries in aggregate exceeded the minimum statutory RBC requirement by approximately $734 million as of December 31, 2024 and are estimated to have approximately $564.1 million of excess capital as of September 30, 2025. The health insurance subsidiaries may be subject to additional capital and surplus requirements in the future, as a result of factors such as increasing membership and medical costs or changes in risk adjustment transfer estimates, which may require us to incur additional indebtedness, sell capital stock, or access other sources of funding in order to fund such requirements. During periods of increased volatility, adverse securities and credit markets, including those due to rising interest rates, may exert downward pressure on the availability of liquidity and credit capacity for certain issuers, and any such funding may not be available on favorable terms, or at all.

As certain of our health insurance subsidiaries have become profitable and to the extent their levels of statutory capital and surplus exceed minimum regulatory requirements, we may make periodic requests for dividends and distributions from our subsidiaries to fund our operations or seek to enter into transactions or structures that enable us to efficiently deploy this excess capital, which may or may not require approval by our regulators. During the nine months ended September 30, 2025, our health insurance subsidiaries made loan repayments of $15.0 million. During the nine months ended September 30, 2024, our health insurance subsidiaries issued dividends and made loan repayments of $133.0 million to Parent.

During the nine months ended September 30, 2025 and September 30, 2024, respectively, Parent made $65.8 million and $99.8 million of capital contributions to the health insurance subsidiaries. Our health insurance subsidiaries also utilize quota share reinsurance arrangements to reduce our minimum capital and surplus requirements, which are designed to enable us to efficiently deploy capital to fund our growth. We estimate that had we not had any quota share reinsurance arrangements in place, the health insurance subsidiaries would have been required to hold approximately $671.8 million and $553.8 million of additional capital as of September 30, 2025 and December 31, 2024, respectively, which the Parent would have been required to fund to the extent the applicable insurance subsidiary did not have excess capital to cover the requirement.

Short-Term Cash Requirements

The Company’s cash requirements within the next twelve months include benefits payable, risk adjustment transfer payables, current lease liabilities, interest payable on debt, other current liabilities and purchase commitments and other obligations. We expect the cash required to meet these obligations to be primarily funded by cash available for general corporate use, cash flows from current operations, and/or the realization of current assets, such as accounts receivable. Based on our current forecast, we believe the Company's cash, cash equivalents, and investments, not including restricted cash, will be sufficient to fund our operating requirements for at least the next twelve months.

Long-Term Cash Requirements

Our long-term cash requirements under our various contractual obligations and commitments include operating leases. We expect the cash required to meet our long-term obligations to be primarily generated through future cash flows from operations. See “Note 13 - Leases” in our Annual Report on Form 10-K for the year ended December 31, 2024 for further detail of our obligations and the timing of expected future payments.

Convertible Senior Notes

On February 3, 2022, we issued $305.0 million in aggregate principal amount of convertible senior notes due 2031 (the “2031 Notes”) in a private placement to funds affiliated with or advised by Dragoneer Investment Group, LLC, Thrive Capital, LionTree Investment Management, LLC, and Tenere Capital LLC (the “Initial Purchasers”). In connection with the sale and issuance of the 2031 Notes, on January 27, 2022, we entered into an investment agreement with the Initial Purchasers (the “Investment Agreement”) and on February 3, 2022, we entered into an indenture with U.S. Bank, as Trustee (the “2031 Indenture”). On September 11, 2025, we entered into an amendment to the Investment Agreement. The purpose of the Amendment was to permit the private offering of the 2030 Notes (as defined below) under the Investment Agreement.

The 2031 Notes bear interest at a rate of 7.25% per annum, payable in cash, semi-annually in arrears on June 30 and December 31 of each year, commencing on June 30, 2022. The 2031 Notes will mature on December 31, 2031, subject to earlier repurchase, redemption, or conversion.

The holders of the 2031 Notes may require us to repurchase the 2031 Notes for cash, upon a fundamental change (as defined in the 2031 Indenture) or on June 30, 2027 and each anniversary thereof until June 30, 2030. In addition, we may redeem the 2031 Notes on or after December 31, 2026 if certain Class A common stock sales price and other conditions are satisfied.

The 2031 Notes may be converted at the election of the holders under certain circumstances, including if we call the 2031 Notes for redemption or upon satisfaction of a Class A common stock sale price condition. During the quarterly period ended September 30, 2025, the Class A common stock sale price condition was satisfied. As a result, the 2031 Notes are convertible during the fourth quarter of 2025 at the option of the holder. Upon conversion, we may elect to settle the 2031 Notes in shares of Class A common stock, cash, or a combination of both, unless an Initial Purchaser of the 2031 Notes elects to receive the consideration due upon conversion solely in shares of Class A common stock pursuant to the terms of the Investment Agreement.

In October 2025, the Company received conversion notices from certain of the Initial Purchasers to convert a total of $20.0 million in aggregate principal amount of the 2031 Notes. The Company elected to issue approximately 2.4 million shares of Class A common stock to settle these conversions.

On November 3, 2025, the Company and Oasis FD Holdings, LP (“Dragoneer”) entered into an Exchange Agreement (the “Exchange Agreement”) pursuant to which, until December 14, 2025, Dragoneer may elect to exchange up to $250,000,000 aggregate principal amount of the 2031 Notes, representing the balance of its 2031 Notes, for aggregate consideration consisting of (A) a number of shares of Class A common stock based on the conversion rate set forth in the 2031 Indenture, and (B) up to $17.8 million, payable in shares of Class A common stock and/or cash, pursuant to the terms of the Exchange Agreement and subject to the satisfaction of certain conditions. On November 5, 2025, Dragoneer exchanged $187,500,000 aggregate principal amount of the 2031 Notes in exchange for 23,273,179 shares of Class A common stock.

In connection with the Exchange Agreement and the related transactions, as of November 5, 2025, the debt covenants in the Investment Agreement were extinguished, and the 2030 Notes (as defined below) ceased to be subordinated to the 2031 Notes.

For more information on our 2031 Notes, including details relating to repurchase, redemption and conversions of the 2031 Notes, see“Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Convertible Senior Notes” and“Note 9 - Debt” to our Consolidated Financial Statements, each in our Annual Report on Form 10-K for the year ended December 31, 2024, and,“Note 8 – Debt” to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Convertible Senior Subordinated Notes

On September 18, 2025, the Company issued $410.0 million aggregate principal amount of convertible senior subordinated notes due 2030 (the “2030 Notes”). The 2030 Notes were issued pursuant to an indenture (the “2030 Indenture”), dated as of September 18, 2025, between the Company and U.S. Bank Trust Company, National Association, as trustee.

The 2030 Notes will accrue interest at a rate of 2.25% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2026. The 2030 Notes will mature on September 1, 2030, unless they are earlier repurchased, redeemed, or converted.

The holders of the 2030 Notes may require us to repurchase the 2030 Notes for cash, upon a fundamental change (as defined in the 2030 Indenture), subject to certain conditions. In addition, we may redeem the 2030 Notes on or after September 6, 2028, if certain Class A common stock sales price and other conditions are satisfied.

Before June 1, 2030, noteholders may only convert their 2030 Notes upon the occurrence of certain events. From June 1, 2030 until the second scheduled trading day before the maturity date, noteholders may elect to convert their 2030 Notes at any time. Upon conversion, the Company may choose to settle the 2030 Notes in shares of Class A common stock, cash, or a combination of both.

On September 15, 2025, in connection with the pricing of the offering of 2030 Notes, the Company entered into privately negotiated capped call transactions (the “Base Capped Call Transactions”) with certain of the 2030 Notes initial purchasers or their affiliates and certain other financial institutions (the “Option Counterparties”). In addition, on September 16, 2025, in connection with the initial purchasers’ exercise of their option to purchase additional 2030 Notes, the Company entered into additional capped call transactions (the “Additional Capped Call Transactions,” and, together with the Base Capped Call Transactions, (the “Capped Call Transactions”) with each of the Option Counterparties. The Capped Call Transactions cover the aggregate number of shares of the Company’s Class A common stock that initially underlie the 2030 Notes (subject to customary anti-dilution adjustments), and are expected to reduce potential dilution to the Company’s Class A common stock upon any conversion of 2030 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2030 Notes, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions.

For more information on our 2030 Notes, including details relating to repurchase, redemption and conversions of the 2030 Notes, and the Capped Call Transactions, see “Note 8 – Debt” to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Revolving Credit Facility

On December 28, 2023, we entered into a third amendment to our senior secured credit agreement with Wells Fargo Bank, National Association, as lender and administrative agent, and certain other lenders party thereto from time to time (collectively, the “Lenders”), and Oscar Management Corporation, as a subsidiary guarantor, which amended the senior secured credit agreement, dated as of February 21, 2021 (as previously amended by the First Amendment to Credit Agreement, dated as of January 27, 2022 and the Second Amendment to Credit Agreement, dated as of July 21, 2023, the “Amended Credit Agreement”). The Amended Credit Agreement provided for a revolving loan credit facility (the “Revolving Credit Facility”) in the aggregate principal amount of $115.0 million, with proceeds to be used for general corporate purposes of the Company. On September 18, 2025, we terminated the Revolving Credit Facility. At the time of termination, there were no outstanding borrowings under the Revolving Credit Facility.

Investments

We generally invest our cash in U.S. Treasury instruments, federal and state agency securities, investment grade corporate bonds, and asset backed securities to improve our overall investment return. These investments are purchased pursuant to board-approved investment policies that reflect our obligations under our credit agreement and conform to applicable state laws and regulations.

Our investment policies are designed to provide liquidity, preserve capital, and optimize the total return on invested assets. These policies also align with the constraints of state regulations governing the types of investments our health insurance subsidiaries can hold. These investment policies require that our investments in U.S. corporate bonds and asset backed securities have final maturities of no more than five years from the date of issuance and U.S. federal and state government obligations have final maturities of no more than seven years from the settlement date. Professional portfolio managers operating under documented guidelines manage our investments and a portion of our cash equivalents. Our portfolio managers are directed to obtain our prior approval before selling investments in a loss position.

Net investment income on a consolidated basis was $53.2 million and $50.3 million for the three months ended September 30, 2025, and 2024, respectively, and $153.3 million and $143.3 million for the nine months ended September 30, 2025 and 2024, respectively. Net investment income for our health insurance subsidiaries was $50.6 million and $47.8 million for the three months ended September 30, 2025 and September 30, 2024, respectively, and $146.7 million and $135.3 million for the nine months ended September 30, 2025, and September 30, 2024, respectively.

Our restricted investments consist primarily of cash and cash equivalents and U.S. Treasury securities; we have the ability to hold such restricted investments until maturity. The Company maintains cash and cash equivalents and investments on deposit or pledged to various state agencies as a condition for licensure. We classify our restricted deposits as long-term given the requirement to maintain such assets on deposit with regulators.

Summary of Cash Flows

Our cash flows used in operations may differ substantially from our net income due to non-cash charges or due to changes in balance sheet accounts.

The timing of our cash flows from operating activities can also vary among periods due to the timing of payments made or received. Some of our payments and receipts, including loss settlements, rebates from our pharmacy benefit manager, risk adjustment transfers, and subsequent reinsurance receipts, can be significant. Therefore, their timing can influence cash flows from operating activities in any given period. The potential for a large claim under an insurance or reinsurance contract means that our health insurance subsidiaries may need to make substantial payments within relatively short periods of time, which would have a negative impact on our operating cash flows.

Our primary operating cash flow sources are premiums and investment income. Our primary operating cash flow uses are payments for claims, risk adjustment transfers, and operating expenses, including interest expense. For the nine months ended September 30, 2025, net cash provided by operating activities was $423.0 million as compared with $631.4 million provided by operating activities for the same period in 2024. The decrease was primarily due to higher claim disbursements, risk adjustment payments, premium taxes, and broker expenses, partially offset by higher premiums.

Cash flows from investing activities primarily include the purchase and disposition of financial instruments. For the nine months ended September 30, 2025, net cash used in investing activities was $192.4 million as compared to net cash used in investing activities of $1,356.0 million for the same period in 2024. The change was primarily due to a reduction in the purchases of securities, partially offset by a lower level of maturing investment.

Cash flows from financing activities may include proceeds from the issuance of debt securities, proceeds from stock option exercises, and tax payments related to the net settlement of share-based awards. For the nine months ended September 30, 2025, net cash provided by financing activities was $391.0 million as compared to $64.6 million for the same period in 2024. The increase was due to proceeds from newly issued convertible notes.