8-K
Oscar Health, Inc. (OSCR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 10, 2022
Oscar Health, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-40154 | 46-1315570 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
75 Varick Street, 5th Floor
New York, New York 10013
(Address of Principal Executive Offices) (Zip Code)
(646) 403-3677
(Registrant’s telephone number, including area code)
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br>Symbols | Name of each exchange<br><br>on which registered |
|---|---|---|
| Class A Common Stock, $0.00001 par value per share | OSCR | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 10, 2022, Oscar Health, Inc. (the “Company”), announced the Company’s financial results for the fourth quarter and year ended December 31, 2021. A copy of the press release issued in connection with the announcement is attached and furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On February 10, 2022, the Company posted an earnings presentation in the “Investor Relations” portion of its website at ir.hioscar.com. A copy of the earnings presentation is attached and furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in Items 2.02 and 7.01 and Exhibits 99.1 and 99.2 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information and exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 8.01. Other Events.
The Company plans to host its 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”) on Thursday, June 9, 2022. The 2022 Annual Meeting will be held virtually. The details of the virtual annual meeting, including how stockholders can log into the virtual meeting, vote and submit questions, will be disclosed in the Company’s definitive proxy statement for the 2022 Annual Meeting, to be filed with the Securities and Exchange Commission.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated February 10, 2022 |
| 99.2 | Earnings Presentation, dated February 10, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Oscar Health, Inc. | |
|---|---|
| By: | /s/ R. Scott Blackley |
| Name: | R. Scott Blackley |
| Title: | Chief Financial Officer |
Date: February 10, 2022
Document
| Oscar Health, Inc.<br><br>ir.hioscar.com<br><br>News Release |
|---|
Oscar Health Announces Results for Fourth Quarter and Full Year 2021
February 10, 2022
•Membership as of December 31, 2021 of 598,169, a 49% increase YoY
•For the year ended December 31, 2021:
◦Direct and assumed premiums of $3,437 million, a 50% increase YoY
◦Premiums earned of $1,831 million, a 302% increase YoY
◦Net loss of $571 million, an increase of $165 million YoY; Adjusted EBITDA loss of $430 million, an increase of $27 million YoY
•Reaffirming 2022 outlook, including direct and assumed policy premiums of $6.1 - $6.4 billion, which would represent a more than 80% YoY increase, at the midpoint
New York, NY, February 10, 2022 - Health insurtech company Oscar Health, Inc. (NYSE: OSCR) today announced its financial results for the fourth quarter and year ended December 31, 2021.
“We had a strong performance in Q421 and are pleased to have met or exceeded all of our expectations across key metrics, including Medical Loss Ratio and EBITDA” said Mario Schlosser, CEO and Co-Founder of Oscar. “Our historic growth during Open Enrollment signifies that our tech-enabled member-centric strategy and brand recognition continue to resonate in the market. As we meaningfully increase scale in the business, we maintain a disciplined focus on efficiency and we believe we remain well positioned on our path to profitability for our insurance business in 2023.”
Direct and assumed policy premiums for 2021 were $3,437 million, at the high end of the Company’s outlook and an increase of 50% YoY, primarily due to a 49% YoY increase in membership as well as business mix shifts towards higher premium plans. Premiums earned for 2021 increased 302% YoY, driven by membership growth and lower quota share cession rates in 2021 compared to 2020.
Oscar’s InsuranceCo Combined Ratio for 2021, which is the sum of its Medical Loss Ratio (“MLR”) and the InsuranceCo Administrative Expense Ratio, was roughly flat YoY, largely reflecting an improvement in the InsuranceCo Administrative Expense Ratio that was offset by higher COVID-driven medical costs. Specifically, the InsuranceCo Administrative Expense Ratio for 2021 decreased 430 bps YoY to 21.8%, driven by fixed cost leverage and repeal of the health insurer fee. Conversely, the MLR for 2021 increased 420 bps YoY, driven by higher net COVID costs and higher growth during the Special Enrollment Period.
Oscar is reaffirming its 2022 outlook across all metrics, including direct and assumed policy premiums of $6.1 billion - $6.4 billion, an increase of more than 80% YoY, at the midpoint, and InsuranceCo Combined Ratio of 104% - 106%, an improvement of 570 bps, at the midpoint.
| Financial Results Summary | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, | Year Ended December 31, | |||||||
| 2021 | 2020 | 2021 | 2020 | |||||
| (in thousands) | ||||||||
| Premiums before ceded reinsurance | $ | 705,502 | $ | 439,846 | $ | 2,712,988 | $ | 1,672,339 |
| Reinsurance premiums ceded | (212,921) | (282,931) | (881,968) | (1,217,304) | ||||
| Premiums earned | $ | 492,581 | $ | 156,915 | $ | 1,831,020 | $ | 455,035 |
| Total revenue | $ | 496,067 | $ | 157,673 | $ | 1,838,715 | $ | 462,801 |
| Total operating expenses | $ | 692,322 | $ | 344,510 | $ | 2,383,196 | $ | 865,067 |
| Net loss | $ | (197,742) | $ | (189,870) | $ | (571,426) | $ | (406,825) |
Oscar Health, Inc.
News Release
| Key Metrics and Non-GAAP Financial Metrics | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Direct and assumed premiums (in thousands) | $ | 872,904 | $ | 550,351 | $ | 3,436,626 | $ | 2,287,618 | ||||
| Medical Loss Ratio | 97.9 | % | 107.9 | % | 88.9 | % | 84.7 | % | ||||
| InsuranceCo Administrative Expense Ratio | 24.5 | % | 36.3 | % | 21.8 | % | 26.1 | % | ||||
| InsuranceCo Combined Ratio | 122.4 | % | 144.2 | % | 110.7 | % | 110.8 | % | ||||
| Adjusted Administrative Expense Ratio | 34.4 | % | 48.8 | % | 28.9 | % | 34.3 | % | ||||
| Adjusted EBITDA (1) (in thousands) | $ | (164,017) | $ | (216,483) | $ | (429,826) | $ | (402,447) |
(1) Adjusted EBITDA is a non-GAAP measure. See “Key Operating and Non-GAAP Metrics - Adjusted EBITDA” in this release for a reconciliation to net loss, the most directly comparable GAAP measure, and for information regarding Oscar’s use of Adjusted EBITDA.
| Membership by Offering | As of | |
|---|---|---|
| December 31, 2021 | December 31, 2020 | |
| Individual and Small Group | 577,799 | 400,120 |
| Medicare Advantage | 3,864 | 1,924 |
| Cigna + Oscar (1) | 16,506 | — |
| Total Members | 598,169 | 402,044 |
(1)Represents total membership for Oscar’s co-branded partnership with Cigna.
| Full Year 2022 Outlook | ||||||
|---|---|---|---|---|---|---|
| Low | High | |||||
| Direct and assumed premiums (in thousands) | $ | 6,100,000 | $ | 6,400,000 | ||
| Medical Loss Ratio | 84 | % | 86 | % | ||
| InsuranceCo Administrative Expense Ratio | 19.5 | % | 20.5 | % | ||
| InsuranceCo Combined Ratio | 104 | % | 106 | % | ||
| Adjusted Administrative Expense Ratio | 24 | % | 26 | % | ||
| Adjusted EBITDA (1) (in thousands) | $ | (480,000) | $ | (380,000) |
(1)Oscar has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net loss within this press release because Oscar is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include, but are not limited to, stock-based compensation expense. These items, which could materially affect the computation of forecasted GAAP net loss, are inherently uncertain and depend on various factors, some of which are outside of Oscar’s control. As such, any associated estimate and its impact on GAAP net loss could vary materially. For more information regarding Adjusted EBITDA, please see “Key Operating and Non-GAAP Metrics” below.
The foregoing statements represent management's current estimates as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Regarding Forward-Looking Statements included in this release. Management does not assume any obligation to update these estimates.
Oscar Health, Inc.
News Release
Quarterly Conference Call Details
Oscar will host a conference call to discuss the financial results today, February 10, 2022 at 5:00 p.m. (ET). A live audio webcast and a supplemental presentation will be available via the Investor Relations page of Oscar’s website at ir.hioscar.com. A replay of the webcast will be available for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.
Non-GAAP Financial Information
This release presents Adjusted EBITDA, a non-GAAP financial metric, which is provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A reconciliation of the non-GAAP financial information to the most directly comparable GAAP financial measure is provided in the accompanying tables found at the end of this release.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained herein are forward-looking statements. These statements include, but are not limited to, statements about our financial outlook and estimates, including direct and assumed policy premiums, medical loss ratio, InsureCo administrative expense ratio, adjusted administrative expense ratio, adjusted EBITDA and other financial performance, and the related underlying assumptions, our business and financial prospects, general and healthcare industry market conditions and trends, and our management’s plans and objectives for future operations, expectations and business strategy. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict and generally beyond our control.
Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: the impact of COVID-19 on global markets, economic conditions, the healthcare industry and our results of operations, and the response by governments and other third parties; our ability to retain and expand our member base; our ability to execute our growth strategy; our ability to maintain or enter into new partnerships or collaborations with healthcare industry participants; negative publicity, unfavorable shifts in perception of our digital platform or other member service channels; our ability to achieve and/or maintain profitability in the future; changes in federal or state laws or regulations, including changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”) and any regulations enacted thereunder; our ability to accurately estimate our incurred claims expenses or effectively manage our claims costs or related administrative costs, including as a result of fluctuations in medical utilization rates due to the impact of COVID-19; our ability to comply with ongoing regulatory requirements and applicable performance standards, including as a result of our participation in government-sponsored programs, such as Medicare; changes or developments in the health insurance markets in the United States, including the passage and implementation of a law to create a single-payer or government-run health insurance program; our ability to comply with applicable privacy, security, and data laws, regulations, and standards; our ability to maintain key in-network providers and good relations with the physicians, hospitals, and other providers within and outside our provider networks, or to arrange for the delivery of quality care; unfavorable or otherwise costly outcomes of lawsuits and claims that arise from the extensive laws and regulations to which we are subject; unanticipated results of risk adjustment programs; delays in our receipt of premiums; disruptions or challenges to our relationship with the Oscar Medical Group; cyber-security breaches of our and our partners’ information and technology systems; unanticipated changes in population morbidity and large-scale changes in health care utilization; and the other factors set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, filed with the Securities and Exchange Commission (“SEC”), and our other filings with the SEC.
You are cautioned not to place undue reliance on any forward-looking statements made in this press release. Any forward-looking statement speaks only as of the date as of which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise.
Oscar Health, Inc.
News Release
About Oscar Health
Oscar Health, Inc. (“Oscar”) is the first health insurance company built around a full stack technology platform and a relentless focus on serving its members. At Oscar, our mission is to make a healthier life accessible and affordable for all. Headquartered in New York City, Oscar has been challenging the health care system's status quo since our founding in 2012. The company’s member-first philosophy and innovative approach to care has earned us the trust of over one million members as of January 31, 2022. We offer Individual & Family, Small Group and Medicare Advantage plans, and +Oscar, our full stack technology platform to others within the provider and payor space. Our vision is to refactor health care to make good care cost less. Refactor is a term used in software engineering that means to improve the design, structure, and implementation of the software, while preserving its functionality. At Oscar, we take this definition a step further. We improve our members’ experience by building trust through deep engagement, personalized guidance, and rapid iteration.
Investor Contact:
Cornelia Miller
VP of Investor Relations
ir@hioscar.com
917-397-0251
Media Contact:
Jackie Kahn
SVP of Communications
comms@hioscar.com
202-538-0128
Source: Oscar Health, Inc.
Oscar Health, Inc.
News Release
Oscar Health, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| (unaudited) | (unaudited) | (unaudited) | ||||||
| Revenue | ||||||||
| Premiums before ceded reinsurance | $ | 705,502 | $ | 439,846 | $ | 2,712,988 | $ | 1,672,339 |
| Reinsurance premiums ceded | (212,921) | (282,931) | (881,968) | (1,217,304) | ||||
| Premiums earned | 492,581 | 156,915 | 1,831,020 | 455,035 | ||||
| Investment income and other revenue | 3,486 | 758 | 7,695 | 7,766 | ||||
| Total revenue | 496,067 | 157,673 | 1,838,715 | 462,801 | ||||
| Operating Expenses | ||||||||
| Claims incurred, net | 482,492 | 84,233 | 1,623,995 | 309,353 | ||||
| Other insurance costs | 124,434 | 97,312 | 410,363 | 216,534 | ||||
| General and administrative expenses | 89,338 | 62,276 | 265,078 | 166,655 | ||||
| Federal and state assessments | 36,244 | 19,734 | 139,085 | 81,458 | ||||
| Health insurance industry fee | — | 4,813 | — | 19,251 | ||||
| Premium deficiency reserve release | (40,186) | 76,142 | (55,325) | 71,816 | ||||
| Total operating expenses | 692,322 | 344,510 | 2,383,196 | 865,067 | ||||
| Loss from operations | (196,255) | (186,837) | (544,481) | (402,266) | ||||
| Interest expense | 397 | 3,514 | 4,720 | 3,514 | ||||
| Other expense | 1,201 | — | 1,201 | — | ||||
| Loss on extinguishment of debt | — | — | 20,178 | — | ||||
| Loss before income taxes | (197,853) | (190,351) | (570,580) | (405,780) | ||||
| Income tax (benefit) provision | (111) | (481) | 846 | 1,045 | ||||
| Net loss | (197,742) | (189,870) | (571,426) | (406,825) | ||||
| Less: Net income attributable to noncontrolling interests | 1,180 | — | 1,180 | — | ||||
| Net loss attributable to Oscar Health, Inc. | $ | (198,922) | $ | (189,870) | $ | (572,606) | $ | (406,825) |
| Earnings (Loss) per Share | ||||||||
| Net loss per share attributable to Oscar Health, Inc., basic and diluted | $ | (0.95) | $ | (6.28) | $ | (3.20) | $ | (14.16) |
| Weighted average common shares outstanding, basic and diluted | 209,775,333 | 30,223,000 | 178,967,056 | 29,263,424 |
Oscar Health, Inc.
News Release
Oscar Health, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| December 31, 2021 | December 31, 2020 | |||
|---|---|---|---|---|
| (unaudited) | ||||
| Assets: | ||||
| Current Assets: | ||||
| Cash and cash equivalents | $ | 1,103,995 | $ | 826,326 |
| Short-term investments | 587,086 | 366,387 | ||
| Premium and other receivables | 138,414 | 65,322 | ||
| Risk adjustment transfer receivable | 40,659 | 31,157 | ||
| Accrued investment income | 3,782 | 1,862 | ||
| Balances due from reinsurance programs | 431,990 | 579,393 | ||
| Total current assets | 2,305,926 | 1,870,447 | ||
| Property, equipment, and capitalized software, net | 46,611 | 35,812 | ||
| Long-term investments | 844,476 | 325,740 | ||
| Restricted deposits | 28,085 | 26,478 | ||
| Other assets | 95,957 | 13,136 | ||
| Net deferred tax asset | 595 | 493 | ||
| Total Assets | $ | 3,321,650 | $ | 2,272,106 |
| Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit) | ||||
| Current Liabilities: | ||||
| Benefits payable | $ | 513,582 | $ | 311,914 |
| Risk adjustment transfer payable | 794,398 | 716,370 | ||
| Premium deficiency reserve | 29,246 | 84,571 | ||
| Unearned premiums | 75,044 | 71,904 | ||
| Accounts payable and accrued liabilities | 234,788 | 137,524 | ||
| Reinsurance payable | 205,231 | 343,313 | ||
| Total current liabilities | 1,852,289 | 1,665,596 | ||
| Long-term debt | — | 142,487 | ||
| Warrant liabilities | — | 15,005 | ||
| Other liabilities | 76,839 | — | ||
| Total liabilities | 1,929,128 | 1,823,088 | ||
| Commitments and contingencies | ||||
| Convertible Preferred Stock, $0.00001 par value; 407,156,831 shares authorized; 400,904,302 shares issued and outstanding as of December 31, 2020 | — | 1,744,911 | ||
| Stockholders' Equity (Deficit) | ||||
| Preferred stock, $0.00001 par value; 82,500,000 shares authorized, none issued or outstanding as of December 31, 2021 | — | — | ||
| Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 175,212,223 shares issued and outstanding as of December 31, 2021 | 2 | — | ||
| Class B common stock, $0.00001 par value; 82,500,000 shares authorized, 35,115,807 shares issued and outstanding as of December 31, 2021 | — | — | ||
| Series A common stock, $0.00001 par value, 680,000,000 shares authorized; 8,291,917 issued and outstanding as of December 31, 2020; Series B common stock, $0.00001 par value, 69,487,963 shares authorized; 23,162,654 shares issued and outstanding as of December 31, 2020; Series C common stock, $0.00001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2020 | — | 2 | ||
| Treasury stock (314,600 shares as of December 31, 2021 and December 31, 2020) | (2,923) | (2,923) | ||
| Additional paid-in capital | 3,393,533 | 133,255 | ||
| Accumulated deficit | (1,999,712) | (1,427,106) | ||
| Accumulated other comprehensive income (loss) | (3,671) | 879 | ||
| Total Oscar Health, Inc. stockholders’ equity (deficit) | 1,387,229 | (1,295,893) | ||
| Noncontrolling interests | 5,293 | — | ||
| Total stockholders’ equity (deficit) | 1,392,522 | (1,295,893) | ||
| Total Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit) | $ | 3,321,650 | $ | 2,272,106 |
Oscar Health, Inc.
News Release
Oscar Health Inc.
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| (unaudited) | ||||
| Cash flows from operating activities: | ||||
| Net loss | $ | (571,426) | $ | (406,825) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Deferred taxes | (101) | (67) | ||
| Net realized gain on sale of financial instruments | (209) | (1,246) | ||
| Loss on fair value of warrant liabilities | 12,856 | 5,101 | ||
| Depreciation and amortization expense | 14,605 | 11,285 | ||
| Amortization of debt issuance costs | 329 | 327 | ||
| Stock-based compensation expense | 86,296 | 35,869 | ||
| Investment amortization, net of accretion | 8,031 | 2,588 | ||
| Debt extinguishment loss | 20,178 | — | ||
| Changes in assets and liabilities: | ||||
| (Increase) / decrease in: | ||||
| Premium and other receivables | (66,953) | (35,254) | ||
| Risk adjustment transfer receivable | (9,502) | (6,035) | ||
| Accrued investment income | (1,920) | (417) | ||
| Balances due from reinsurance programs | 147,403 | (63,329) | ||
| Other assets | (9,379) | 2,627 | ||
| Increase / (decrease) in: | ||||
| Benefits payable | 201,667 | 155,357 | ||
| Unearned premiums | 3,140 | 46,596 | ||
| Premium deficiency reserve | (55,325) | 71,816 | ||
| Accounts payable and accrued liabilities | 98,619 | 75,800 | ||
| Reinsurance payable | (138,082) | (89,197) | ||
| Risk adjustment transfer payable | 78,028 | 417,736 | ||
| Net cash (used in) provided by operating activities | (181,745) | 222,732 | ||
| Cash flows from investing activities: | ||||
| Purchase of investments | (1,810,076) | (1,001,038) | ||
| Sale of investments | 624,077 | 489,528 | ||
| Maturity of investments | 430,694 | 182,060 | ||
| Purchase of property, equipment and capitalized software | (25,885) | (14,021) | ||
| Change in restricted deposits | 6,675 | (1,243) | ||
| Net cash (used in) provided by investing activities | (774,515) | (344,714) | ||
| Cash flows from financing activities: | ||||
| Debt prepayment | (153,173) | 147,000 | ||
| Debt extinguishment costs | (12,994) | — | ||
| Payments of debt issuance costs | — | (4,840) | ||
| Proceeds from IPO, net of underwriting discounts | 1,348,321 | — | ||
| Offering costs from IPO | (9,447) | — | ||
| Convertible preferred stock and call option issuances | — | 375,671 | ||
| Proceeds from exercise of warrants and call options | 9,191 | 74,581 | ||
| Proceeds from partial sale of subsidiary to noncontrolling interest | 7,230 | — | ||
| Proceeds from exercise of stock options | 49,584 | 19,295 | ||
| Net cash (used in) provided by financing activities | 1,238,712 | 611,707 |
Oscar Health, Inc.
News Release
| Increase (decrease) in cash, cash equivalents and restricted cash equivalents | 282,452 | 489,725 | ||
|---|---|---|---|---|
| Cash, cash equivalents, restricted cash and cash equivalents—beginning of period | 843,105 | 353,380 | ||
| Cash, cash equivalents, restricted cash and cash equivalents—end of period | $ | 1,125,557 | $ | 843,105 |
| Cash and cash equivalents | 1,103,995 | 826,326 | ||
| Restricted cash and cash equivalents included in restricted deposits | 21,562 | 16,779 | ||
| Total cash, cash equivalents and restricted cash and cash equivalents | $ | 1,125,557 | $ | 843,105 |
| Supplemental Disclosures: | ||||
| Interest payments | $ | 4,256 | $ | — |
| Income tax payments | $ | 697 | $ | 1,525 |
| Non-cash investing and financing activities: | ||||
| Conversion of redeemable convertible preferred stock to common stock upon initial public offering | $ | 1,744,911 | $ | — |
| Net exercise of preferred stock warrants to preferred stock upon initial public offering | $ | 28,248 | $ | — |
| Adjustment to fair value of preferred stock warrant liability upon initial public offering | $ | 13,243 | $ | — |
Key Operating and Non-GAAP Financial Metrics
We regularly review a number of metrics, including the following key operating and non-GAAP financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions. We believe these operational and financial measures are useful in evaluating our performance, in addition to our financial results prepared in accordance with GAAP.
Members
Members are defined as any individual covered by a health plan that we offer directly or through a co-branded arrangement. 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.
Direct and Assumed Policy Premiums
Direct Policy Premiums are defined as the premiums collected from our members or from the federal government during the period indicated, before risk adjustment and reinsurance. These premiums include APTC, or premium subsidies, which are available to individuals and families with certain annual incomes.
Assumed Policy Premiums are premiums we receive primarily as part of our reinsurance arrangements under our Cigna+Oscar small group plan offering.
We previously presented Direct Policy Premiums as a key operating metric for the year ended December 31, 2020, and for each of the quarterly and year-to-date periods ended March 31, June 30 and September 30 during our 2021 fiscal year and the corresponding periods in our 2020 fiscal year, as we had received only insignificant Assumed Policy Premiums prior to the launch of our Cigna+Oscar small group plan offering for the 2021 plan year. We believe Direct and Assumed Policy Premiums is an important metric to assess the growth of our individual and small group plan offerings going forward. Management also views Direct and Assumed Policy Premiums as a key operating metric because each of our MLR, InsuranceCo Administrative Expense Ratio, InsuranceCo Combined Ratio and Adjusted Administrative Expense Ratio are calculated on the basis of Direct and Assumed Policy Premiums.
| Three Months Ended | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| (in thousands) | ||||||||
| Direct policy premiums | $ | 866,032 | $ | 550,052 | $ | 3,420,328 | $ | 2,287,319 |
| Assumed premiums | 6,872 | 299 | 16,298 | 299 | ||||
| Direct and assumed premiums | $ | 872,904 | $ | 550,351 | $ | 3,436,626 | $ | 2,287,618 |
Oscar Health, Inc.
News Release
Medical Loss Ratio
Medical loss ratio is calculated as set forth in the table below. Medical claims are total medical expenses incurred by members in order to utilize health care services less any member cost sharing. These services include inpatient, outpatient, pharmacy, and physician costs. Medical claims also include risk sharing arrangements with certain of our providers. The impact of the federal risk adjustment program is included in the denominator of our MLR. We believe MLR is an important metric to demonstrate the ratio of our costs to pay for health care of our members to the premiums before ceded reinsurance. MLRs in our existing products are subject to various federal and state minimum requirements. Below is a calculation of our MLR for the periods indicated.
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (in thousands) | ||||||||||||
| Direct claims incurred before ceded reinsurance (1) | $ | 678,019 | $ | 402,486 | $ | 2,403,108 | $ | 1,364,432 | ||||
| Assumed reinsurance claims | 12,067 | 294 | 21,656 | 292 | ||||||||
| Excess of loss ceded claims (2) | 505 | (4,962) | (12,500) | (13,633) | ||||||||
| State reinsurance (3) | (4,786) | (2,606) | (14,655) | (10,026) | ||||||||
| Net claims before ceded quota share reinsurance (A) | $ | 685,805 | $ | 395,212 | $ | 2,397,609 | $ | 1,341,065 | ||||
| Premiums before ceded reinsurance | $ | 705,502 | $ | 439,846 | $ | 2,712,988 | $ | 1,672,339 | ||||
| Excess of loss reinsurance premiums (4) | (4,971) | (8,899) | (16,266) | (24,066) | ||||||||
| Other non-recurring items (5) | — | (64,538) | — | (64,538) | ||||||||
| Net premiums before ceded quota share reinsurance (B) | $ | 700,531 | $ | 366,409 | $ | 2,696,722 | $ | 1,583,735 | ||||
| Medical Loss Ratio (A divided by B) | 97.9 | % | 107.9 | % | 88.9 | % | 84.7 | % |
(1)See the Appendix to this release for a reconciliation of direct claims incurred to claims incurred, net appearing on the face of our statement of operations.
(2)Represents claims ceded to reinsurers pursuant to an excess of loss treaty, for which such reinsurers are financially liable. We use excess of loss reinsurance to limit the losses on individual claims of our members.
(3)Represents payments made by certain state-run reinsurance programs established subject to CMS approval under Section 1332 of the ACA.
(4)Represents excess of loss insurance premiums paid.
(5)Represents adjustments for litigation settlements recognized during the year ended December 31, 2020 related to risk corridor and risk adjustment programs.
InsuranceCo Administrative Expense Ratio
InsuranceCo Administrative Expense Ratio is calculated as set forth in the table below. The ratio reflects the costs associated with running our combined insurance companies. We believe InsuranceCo Administrative Expense Ratio is useful to evaluate our ability to manage our expenses as a percentage of premiums before ceded quota share reinsurance. Expenses necessary to run the insurance company are included in other insurance costs and federal and state assessments. These expenses include variable expenses paid to vendors and distribution partners, premium taxes and healthcare exchange fees, employee-related compensation, benefits, marketing costs, and other administrative expenses. Below is a calculation of our InsuranceCo Administrative Expense Ratio for the periods indicated.
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (in thousands) | ||||||||||||
| Other insurance costs | $ | 124,434 | $ | 97,312 | $ | 410,363 | $ | 216,534 | ||||
| Ceding commissions | 24,260 | 29,956 | 82,246 | 126,840 | ||||||||
| Stock-based compensation expense | (13,307) | (7,155) | (42,295) | (18,299) | ||||||||
| Health insurance industry fee | — | 4,813 | — | 19,251 | ||||||||
| Federal and state assessment of health insurance subsidiaries | 36,043 | 20,294 | 138,369 | 81,199 | ||||||||
| Other non-recurring items (1) | — | (12,102) | — | (12,102) | ||||||||
| Health insurance subsidiary adjusted administrative expenses (A) | $ | 171,430 | $ | 133,118 | $ | 588,683 | $ | 413,423 | ||||
| Premiums before ceded reinsurance | $ | 705,502 | $ | 439,846 | $ | 2,712,988 | $ | 1,672,339 | ||||
| Excess of loss reinsurance premiums | (4,971) | (8,899) | (16,266) | (24,066) | ||||||||
| Other non-recurring items (1) | — | (64,538) | — | (64,538) | ||||||||
| Net premiums before ceded quota share reinsurance (B) | $ | 700,531 | $ | 366,409 | $ | 2,696,722 | $ | 1,583,735 | ||||
| InsuranceCo Administrative Expense Ratio (A divided by B) | 24.5 | % | 36.3 | % | 21.8 | % | 26.1 | % |
(1)Represents adjustments for litigation settlements recognized during the year ended December 31, 2020 related to risk corridor and risk adjustment programs.
Oscar Health, Inc.
News Release
InsuranceCo Combined Ratio
InsuranceCo Combined Ratio is defined as the sum of MLR and InsuranceCo Administrative Expense Ratio. We believe this ratio best represents the current overall performance of our insurance business for activities that can be compared to peers.
Adjusted Administrative Expense Ratio
The Adjusted Administrative Expense Ratio is an operating ratio that reflects the Company’s total administrative expenses (or “Total Administrative Expenses”), net of non-cash and non-recurring items (as adjusted, “Adjusted Administrative Expenses”), as a percentage of total revenue, including quota share reinsurance premiums ceded and excluding excess of loss reinsurance premiums ceded and non-recurring items (or “Adjusted Total Revenue”). Total Administrative Expenses are calculated as Total Operating Expenses, excluding non-administrative insurance-based expenses and ceding commissions. Adjusted Administrative Expenses are Total Administrative Expenses, net of non-cash and non-recurring expense items. The Company believes Adjusted Administrative Expenses is a useful measure of its administrative expenses, as it excludes insurance-based expenses, non-cash expenses and non-recurring expenses. The Company believes Adjusted Administrative Expense Ratio is useful to evaluate the Company’s ability to manage its overall administrative expense base. This ratio also provides further clarity into the Company’s overall path to profitability. Below is a calculation of our Adjusted Administrative Expense Ratio for the periods indicated.
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (in thousands) | ||||||||||||
| Total Operating Expenses | $ | 692,322 | $ | 344,510 | $ | 2,383,196 | $ | 865,067 | ||||
| Claims incurred, net | (482,492) | (84,233) | (1,623,995) | (309,353) | ||||||||
| Premium deficiency reserve release | 40,186 | (76,142) | 55,325 | (71,816) | ||||||||
| Ceding commissions | 24,260 | 29,956 | 82,246 | 126,840 | ||||||||
| Total Administrative Expenses | $ | 274,276 | $ | 214,091 | $ | 896,772 | $ | 610,738 | ||||
| Stock-based compensation expense/warrant expense | (28,268) | (19,495) | (99,152) | (40,970) | ||||||||
| Depreciation and amortization | (3,970) | (3,295) | (14,605) | (11,285) | ||||||||
| Other non-recurring items (1)(2) | — | (12,102) | (898) | (12,102) | ||||||||
| Adjusted Administrative Expenses (A) | $ | 242,038 | $ | 179,199 | $ | 782,117 | $ | 546,381 | ||||
| Total Revenue | $ | 496,067 | $ | 157,673 | $ | 1,838,715 | $ | 462,801 | ||||
| Reinsurance premiums ceded | 212,921 | 282,931 | 881,968 | 1,217,304 | ||||||||
| Excess of loss reinsurance premiums | (4,971) | (8,899) | (16,266) | (24,066) | ||||||||
| Other non-recurring items (2) | — | (64,538) | — | (64,538) | ||||||||
| Adjusted Total Revenue (B) | $ | 704,017 | $ | 367,167 | $ | 2,704,417 | $ | 1,591,501 | ||||
| Adjusted Administrative Expense Ratio (A divided by B) | 34.4 | % | 48.8 | % | 28.9 | % | 34.3 | % |
(1)Represents debt extinguishment costs of $20.2 million incurred on the prepayment of the Company's Term Loan and approximately $0.9 million of non-recurring expenses incurred in connection with the IPO during the year ended December 31, 2021.
(2)Represents adjustments for litigation settlements recognized during the year ended December 31, 2020 related to risk corridor and risk adjustment programs.
Adjusted EBITDA
Adjusted EBITDA is defined as net loss for the Company and its consolidated subsidiaries before interest expense, income tax (benefit) expense, depreciation and amortization as further adjusted for stock-based compensation, warrant contract expense, changes in the fair value of warrant liabilities, and other non-recurring items as described below. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA is a non-GAAP measure. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations.
We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate Adjusted EBITDA in the same manner.
Oscar Health, Inc.
News Release
Management uses Adjusted EBITDA:
•as a measurement of operating performance because it assists us in comparing the operating performance of our business on a consistent basis, as it removes the impact of items not directly resulting from our core operations;
•for planning purposes, including the preparation of our internal annual operating budget and financial projections;
•to evaluate the performance and effectiveness of our operational strategies; and
•to evaluate our capacity to expand our business.
By providing this non-GAAP financial measure, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for net loss or other financial statement data presented in our consolidated financial statements as indicators of financial performance.
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| (in thousands) | ||||||||
| Net loss | $ | (197,742) | $ | (189,870) | $ | (571,426) | $ | (406,825) |
| Interest expense | 397 | 3,514 | 4,720 | 3,514 | ||||
| Other expense | 1,201 | — | 1,201 | — | ||||
| Income tax (benefit) expense | (111) | (481) | 846 | 1,045 | ||||
| Depreciation and amortization | 3,970 | 3,295 | 14,605 | 11,285 | ||||
| Stock-based compensation/warrant expense (1) | 28,268 | 19,495 | 99,152 | 40,970 | ||||
| Other non-recurring items(2)(3) | — | (52,436) | 21,076 | (52,436) | ||||
| Adjusted EBITDA | $ | (164,017) | $ | (216,483) | $ | (429,826) | $ | (402,447) |
(1)Represents (i) 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, (ii) warrant contract expense, and (iii) changes in the fair value of warrant liabilities.
(2)Represents debt extinguishment costs of $20.2 million incurred on the prepayment of the Company's Term Loan and approximately $0.9 million of non-recurring expenses incurred in connection with the IPO during the year ended December 31, 2021.
(3)Represents adjustments for litigation settlements recognized during the year ended December 31, 2020 related to risk corridor and risk adjustment programs.
Oscar Health, Inc.
News Release
Appendix
Oscar Health, Inc.
News Release
Reinsurance Impact
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| (in thousands) | ||||||||
| Quota share ceded premiums | $ | (192,003) | $ | (299,549) | $ | (904,764) | $ | (1,284,597) |
| Quota share ceded claims | 203,314 | 312,352 | 773,615 | 1,039,324 | ||||
| Ceding commissions | 24,260 | 29,956 | 82,246 | 126,840 | ||||
| Experience refunds | (15,948) | 25,518 | 39,062 | 91,360 | ||||
| Net quota share impact | $ | 19,623 | $ | 68,277 | $ | (9,841) | $ | (27,073) |
The composition of total reinsurance premiums ceded and reinsurance premiums assumed, which are included as components of total earned premiums in the consolidated statement of operations, is as follows:
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| (in thousands) | ||||||||
| Reinsurance premiums ceded, gross | $ | (197,441) | $ | (305,453) | $ | (921,953) | $ | (1,308,275) |
| Experience refunds | (15,480) | 22,522 | 39,985 | 90,971 | ||||
| Reinsurance premiums ceded | (212,921) | (282,931) | (881,968) | (1,217,304) | ||||
| Reinsurance premiums assumed | 6,872 | 299 | 16,298 | 299 | ||||
| Total reinsurance premiums (ceded) and assumed | $ | (206,049) | $ | (282,632) | $ | (865,670) | $ | (1,217,005) |
The Company records claims expense net of reinsurance recoveries. The following table reconciles the total claims expense to the net claims expense as presented in the consolidated statement of operations:
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| (in thousands) | ||||||||
| Direct claims incurred | $ | 678,019 | $ | 402,486 | $ | 2,403,108 | $ | 1,364,432 |
| Ceded reinsurance claims | (207,594) | (318,547) | (800,769) | (1,055,371) | ||||
| Assumed reinsurance claims | 12,067 | 294 | 21,656 | 292 | ||||
| Total claims incurred, net | $ | 482,492 | $ | 84,233 | $ | 1,623,995 | $ | 309,353 |
The Company records selling, general and administrative expenses net of ceding commissions. The following table reconciles total other insurance costs to the amount presented in the consolidated statement of operations:
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| (in thousands) | ||||||||
| Other insurance costs, gross | $ | 148,694 | $ | 127,268 | $ | 492,609 | $ | 343,374 |
| Ceding commissions | (24,260) | (29,956) | (82,246) | (126,840) | ||||
| Other insurance costs, net | $ | 124,434 | $ | 97,312 | $ | 410,363 | $ | 216,534 |
Oscar Health, Inc.
News Release
The Company records reinsurance recoverables as “balances due from reinsurance programs” within current assets on its consolidated balance sheets. The composition of the reinsurance recoverables balance is as follows:
| December 31, 2021 | December 31, 2020 | |||
|---|---|---|---|---|
| (in thousands) | ||||
| Ceded reinsurance claim recoverables | $ | 406,017 | $ | 435,331 |
| Reinsurance ceding commissions | 23,517 | 41,586 | ||
| Experience refunds on reinsurance agreements | 2,456 | 102,476 | ||
| Balances due from reinsurance programs | $ | 431,990 | $ | 579,393 |
a4q21earningspresentatio
HIOSCAR.COM Oscar Health, Inc. Fourth Quarter and Full Year 2021 Earnings Presentation February 10, 2022
HIOSCAR.COM 2 Safe Harbor Statement and Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained herein are forward-looking statements. These statements include, but are not limited to, statements about our financial outlook and estimates, including direct and assumed policy premiums, medical loss ratio, InsuranceCo administrative expense ratio, adjusted administrative expense ratio, adjusted EBITDA, and other financial performance, and the related underlying assumptions, our business and financial prospects, general and healthcare industry market conditions and trends, and our management’s plans and objectives for future operations, expectations and business strategy. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict and generally beyond our control. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: the impact of COVID-19 on global markets, economic conditions, the healthcare industry and our results of operations, and the response by governments and other third parties; our ability to retain and expand our member base; our ability to execute our growth strategy; our ability to maintain or enter into new partnerships or collaborations with healthcare industry participants; negative publicity, unfavorable shifts in perception of our digital platform or other member service channels; our ability to achieve and/or maintain profitability in the future; changes in federal or state laws or regulations, including changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”) and any regulations enacted thereunder; our ability to accurately estimate our incurred claims expenses or effectively manage our claims costs or related administrative costs, including as a result of fluctuations in medical utilization rates due to the impact of COVID-19; our ability to comply with ongoing regulatory requirements and applicable performance standards, including as a result of our participation in government-sponsored programs, such as Medicare; changes or developments in the health insurance markets in the United States, including passage and implementation of a law to create a single-payer or government-run health insurance program; our ability to comply with applicable privacy, security, and data laws, regulations, and standards; our ability to maintain key in-network providers and good relations with the physicians, hospitals, and other providers within and outside our provider networks, or to arrange for the delivery of quality care; unfavorable or otherwise costly outcomes of lawsuits and claims that arise from the extensive laws and regulations to which we are subject; unanticipated results of risk adjustment programs; delays in our receipt of premiums; disruptions or challenges to our relationship with the Oscar Medical Group; cyber-security breaches of our and our partners’ information and technology systems; unanticipated changes in population morbidity and large-scale changes in health care utilization; and the other factors set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, filed with the Securities and Exchange Commission (“SEC”), and our other filings with the SEC. You are cautioned not to place undue reliance on any forward-looking statements made in this presentation. Any forward-looking statement speaks only as of the date as of which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. This presentation presents Adjusted EBITDA, a non-GAAP financial metric, which is provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A reconciliation of such non-GAAP financial information to the most directly comparable GAAP financial measure is provided at the end of this presentation.
HIOSCAR.COM 3 Strong Membership Gains to Close Out the Year ● Total quarter end membership increased 49% YoY to 598,200 in 4Q21 from 402,000 in 4Q20 ● Membership growth was primarily driven by growth in the Individual book of business during the Open Enrollment and Special Enrollment Periods, as well as Medicare Advantage and Cigna + Oscar growth Total Membership +49%
HIOSCAR.COM 4 44% Premium Growth Outpaced Membership Growth ● Direct and Assumed Policy Premiums increased 59% YoY driven by membership growth, including SEP growth, and business mix shift to higher premium Silver and MA plans Direct and Assumed Policy Premiums (millions) +59%
Premiums Earned (millions) HIOSCAR.COM 5 4Q21 Premiums Earned Up ~3x, Driven by Strong Membership Growth and Lower Quota Share 4Q21 Premiums Walk (millions) Quota Share as % of Premiums before Ceded: 68% 27% +214% ($213M)
HIOSCAR.COM 6 4Q21 MLR Lower YoY due to PPD and One-Time Items ● 4Q21 MLR of 97.9% improved 10 pts YoY driven largely by favorable PPD in 4Q21 and certain one-time items in the comparable period ● Net COVID costs in 4Q21 were in-line with expectations 4Q21 MLR FY 2021 MLR ● FY 2021 MLR of 88.9% increased ~400bps YoY due to higher net COVID costs, and to a lesser extent, the effect of SEP growth ● Net COVID costs were ~500bps in FY 2021 ● Lower non-COVID utilization partially offset direct COVID costs
HIOSCAR.COM 7 4Q21 Admin Ratio Lower YoY Driven by Op Leverage, Efficiencies, and Repeal of the HIF ● 4Q21 InsuranceCo Administrative Expense Ratio of 24.5% decreased ~12 pts YoY ● The YoY decrease was largely driven by fixed operating leverage, variable expense efficiencies, and the repeal of the HIF in FY 2021, and one-time items in 4Q20 4Q21 InsuranceCo Admin Ratio ● FY 2021 InsuranceCo Administrative Expense Ratio of 21.8% decreased ~430bps YoY ● The YoY decrease was driven by operating leverage from higher revenue, variable expense efficiencies, and the repeal of the HIF in FY 2021 FY 2021 InsuranceCo Admin Ratio
HIOSCAR.COM 8 4Q21 Combined Ratio Lower YoY Due to Lower MLR and Admin Ratio 4Q21 Combined Ratio FY 2021 Combined Ratio ● FY 2021 InsuranceCo Combined Ratio of 110.7%, reflecting the sum of the MLR and InsuranceCo Administrative Expense Ratio, was roughly flat YoY ● The lower benefit of the YoY InsuranceCo Administrative Expense Ratio was essentially offset by the increase in the MLR in FY 2021 ● 4Q21 InsuranceCo Combined Ratio of 122.4%, reflecting the sum of the MLR and the InsuranceCo Administrative Expense Ratio decreased ~22 pts YoY ● The YoY decrease was driven by the same factors that drove the MLR and InsuranceCo Administrative Expense Ratio lower YoY
HIOSCAR.COM 9 Executing on Path to Profitability Demonstrated by Lower YoY Adjusted Administrative Expense Ratio ● 4Q21 Adj. Administrative Expense Ratio of 34.4% decreased ~15 pts YoY ● The YoY decrease was largely driven by fixed cost leverage, variable efficiencies, and the repeal of the HIF in FY 2021 4Q21 Adj. Admin Expense Ratio ● FY 2021 Adj. Administrative Expense Ratio of 28.9% decreased ~540bps YoY ● The YoY decrease was driven by fixed cost leverage, variable efficiencies, and the repeal of the HIF in FY 2021 FY 2021 Adj. Admin Expense Ratio
HIOSCAR.COM 10 4Q21 Adj. EBITDA Loss Decreased due to Improved Combined Ratio 4Q21 Adjusted EBITDA FY 2021 Adjusted EBITDA ● FY 2021 Adjusted EBITDA loss of ($430M) increased $27M YoY ● The increase in the loss YoY was largely driven by higher membership volume and an essentially flat InsuranceCo Combined Ratio YoY, as well as, higher HoldCo expenses, which were partially offset by lower PDR and quota share impacts ● 4Q21 Adjusted EBITDA loss of ($164M) decreased $52M YoY ● The decrease in loss YoY was driven by the improved InsuranceCo Combined Ratio, as well as, lower YoY PDR impact. These benefits were partially offset by lower quota share benefit YoY and higher SG&A expenses attributable to our Holding Company (“HoldCo expenses”) (1) Adjusted EBITDA is a non-GAAP financial measure. See “Appendix” for a reconciliation to net loss. Net loss was ($197.7M) for 4Q21 vs. ($189.9M) for 4Q20, and ($571.4M) for FY 2021 vs. ($406.8M) for FY 2020.
HIOSCAR.COM 11 44% Oscar’s Differentiated Member Experience is Driving Strong Top-Line Growth ● Direct and Assumed Policy Premiums are expected to increase ~70% on CAGR basis from 2019 - 2022e ● Strong top-line growth driven by membership growth, as well as, business mix shifts to higher premium plans Direct and Assumed Policy Premiums (millions) ~70% CAGR * Using the midpoint of 2022 guidance range
HIOSCAR.COM 12 44% Disciplined Pricing Leading to Limited MLR Volatility Despite Strong Membership Growth and COVID/SEP Impacts ● Robust membership and premium growth has driven limited MLR volatility over the past several years ● MLR performance demonstrates disciplined and balanced pricing strategy with focus on growth and margin improvement Medical Loss Ratio * Using the midpoint of 2022 guidance range
HIOSCAR.COM 13 44% Robust Top-Line Growth Driving Operating Leverage ● InsuranceCo Administrative Expense Ratio projected to decline ~550bps between 2019 and 2022e ● Strong top-line growth expected to continue to drive InsuranceCo Administrative Expense Ratio lower as operating leverage and tech efficiencies from scale are realized InsuranceCo Administrative Expense Ratio * Using the midpoint of 2022 guidance range
14 Full-Year 2022 Outlook Low Direct & Assumed Policy Premiums $6,100M Medical Loss Ratio 84.0% InsuranceCo Admin Ratio 19.5% Combined Ratio 104% High $6,400M 86.0% 20.5% 106% Adjusted Administrative Expense Ratio 24% 26% (1) Oscar has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net loss within this presentation because Oscar is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include, but are not limited to, stock-based compensation expense. These items, which could materially affect the computation of forecasted GAAP net loss, are inherently uncertain and depend on various factors, some of which are outside of Oscar’s control. As such, any associated estimate and its impact on GAAP net loss could vary materially. For more information regarding Adjusted EBITDA, please see “Key Operating and Non-GAAP Metrics” in our press release announcing our results for the three months ended December 31, 2021. Adjusted EBITDA(1) ($480M) ($380M) HIOSCAR.COM
HIOSCAR.COM 15 Appendix: Adjusted EBITDA GAAP Reconciliation December 31, 2021* December 31, 2020* Net loss $ (197,742) $ (189,870) Interest expense 397 3,514 Other expense 1,201 - Income tax expense (benefit) (111) (481) Depreciation and amortization 3,970 3,295 Stock-based compensation/warrant expense 28,268 19,495 Other non-recurring items - (52,436) Adjusted EBITDA $ (164,017) $ (216,483) Three Months Ended *(in thousands)
HIOSCAR.COM 16 Appendix: Adjusted EBITDA GAAP Reconciliation December 31, 2021* December 31, 2020* Net loss $ (571,426) $ (406,825) Interest expense 4,720 3,514 Other expense 1,201 - Income tax expense (benefit) 846 1,045 Depreciation and amortization 14,605 11,285 Stock-based compensation/warrant expense 99,152 40,970 Other non-recurring items 21,076 (52,436) Adjusted EBITDA $ (429,826) $ (402,447) Twelve Months Ended *(in thousands)