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Form 8-K Oscar Health, Inc. For: Nov 10

November 10, 2021 4:10 PM EST

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Oscar Health, Inc.
ir.hioscar.com
News Release

Oscar Health Announces Results for Third Quarter 2021

November 10, 2021

Membership as of September 30, 2021 of 594,284, a 41% increase YoY        
For the quarter ended September 30, 2021:
Direct policy premiums of $895.4 million, a 53.1% increase YoY
Premiums earned of $441.7 million, a 345.6% increase YoY
Medical Loss Ratio of 99.7%, increased 920 bps YoY
InsuranceCo Administrative Expense Ratio of 23.1%, increased 70 bps YoY
InsuranceCo Combined Ratio of 122.8%, increased 990 bps YoY
Net loss of $212.7 million, an increase of $133.6 million YoY; Adjusted EBITDA loss of $188.7 million, an increase of $117.7 million YoY

New York, NY, November 10, 2021 - Health insurtech company Oscar Health, Inc. (NYSE: OSCR) today announced its financial results for the third quarter ended September 30, 2021.

"Oscar saw meaningful growth across its insurance business in the third quarter, and we experienced volatility on our Medical Loss Ratio as short term pressures from COVID, Special Enrollment Period (“SEP”) membership growth and prior year risk adjustments created headwinds in the quarter” said Mario Schlosser, CEO and Co-Founder of Oscar. "Our best-in-class member engagement and tech-driven ethos continues to drive demand and provide value for our members. With respect to 2022, we took a disciplined approach to pricing, balancing growth and margin improvement for our insurance business and are well-positioned heading into Open Enrollment.”

Total direct and assumed policy premiums were $899.2 million in the quarter, up 53.8% year-over-year (“YoY”), driven primarily by higher membership growth, including increased enrollment from SEP, and business mix shifts. Premiums earned in the quarter were up 345.6% YoY, driven both by membership growth and lower quota share cession rates in 2021.

Oscar’s InsuranceCo Combined Ratio, which is the sum of its Medical Loss Ratio (“MLR”) and the InsuranceCo Administrative Expense Ratio, increased 990 bps YoY to 122.8% largely reflecting a higher MLR. The MLR increased 920bps YoY to 99.7% in 3Q21 from 90.5% in 3Q20, primarily driven by higher net COVID costs as compared to the net benefit in 3Q20, an unfavorable prior year Risk Adjustment Data Validation (RADV) result, and the impact of significant SEP membership growth. The InsuranceCo Administrative Expense Ratio increased by 70 bps YoY, largely driven by the impact of RADV on the denominator as well as higher SEP distribution costs.


Financial Results Summary
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(in thousands)
Premiums before ceded reinsurance$673,460 $414,505 $2,007,486 $1,232,493 
Reinsurance premiums ceded(231,717)(315,360)(669,047)(934,373)
Premiums earned$441,743 $99,145 $1,338,439 $298,120 
Net loss$(212,745)$(79,132)$(373,184)$(216,955)
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Oscar Health, Inc.
News Release

Key Metrics and Non-GAAP Financial Metrics
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Direct Policy Premiums (in thousands)$895,407 $584,811 $2,554,296 $1,737,267 
Medical Loss Ratio99.7 %90.5 %85.8 %77.7 %
InsuranceCo Administrative Expense Ratio23.1 %22.4 %20.9 %23.0 %
InsuranceCo Combined Ratio
122.8 %112.9 %106.7 %100.7 %
Adjusted EBITDA(1) (in thousands)
$(188,659)$(70,975)$(265,309)$(185,964)
(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 OfferingAs of
September 30, 2021September 30, 2020
Individual and Small Group582,236 418,268 
Medicare Advantage3,881 1,850 
Cigna + Oscar(1)
8,167 — 
Total Members594,284 420,118 
(1)Represents total membership for Oscar’s co-branded partnership with Cigna.


Full Year 2021 Outlook
LowHigh
Direct and Assumed Policy Premiums (in thousands)$3,350,000 $3,450,000 
Medical Loss Ratio89 %91 %
InsuranceCo Administrative Expense Ratio21 %22 %
InsuranceCo Combined Ratio110 %112 %
Adjusted EBITDA(1) (in thousands)
$(480,000)$(450,000)
(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.


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Oscar Health, Inc.
News Release

Quarterly Conference Call Details
Oscar will host a conference call to discuss the financial results today, November 10, 2021 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 metrics, 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 policy premiums, medical loss ratio, administrative expense ratio 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 June 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.



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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 approximately 594,000 members as of September 30, 2021. 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.

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Oscar Health, Inc.
News Release

Oscar Health, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenue
Premiums before ceded reinsurance
$673,460 $414,505 $2,007,486 $1,232,493 
Reinsurance premiums ceded(231,717)(315,360)(669,047)(934,373)
Premiums earned441,743 99,145 1,338,439 298,120 
Investment income and other revenue2,236 2,555 4,209 7,008 
Total revenue
443,979 101,700 1,342,648 305,128 
Operating Expenses
Claims incurred, net
453,576 85,392 1,141,503 225,120 
Other insurance cost111,302 38,674 285,929 119,222 
General and administrative expenses
61,267 36,546 175,240 104,379 
Federal and state assessments
35,453 20,469 102,841 61,724 
Health insurance industry fee— 4,813 — 14,438 
Premium deficiency reserve release(4,675)(4,064)(15,139)(4,326)
Total operating expenses
656,923 181,830 1,690,374 520,557 
Loss from operations
(212,944)(80,130)(347,726)(215,429)
Interest expense
398 — 4,323 — 
Loss on extinguishment of debt— — 20,178 — 
Loss before income tax expense
(213,342)(80,130)(372,227)(215,429)
Income tax (benefit) provision
(597)(998)957 1,526 
Net loss
$(212,745)$(79,132)$(373,184)$(216,955)
Earnings (Loss) per Share
Net loss per share, basic and diluted
$(1.02)$(2.72)$(2.21)$(7.50)
Weighted average common shares outstanding, basic and diluted
208,159,343 29,042,932 168,585,157 28,941,215 
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Oscar Health, Inc.
News Release

Oscar Health, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
September 30, 2021December 31, 2020
Assets:
Current Assets:
Cash and cash equivalents
$1,076,699 $826,326 
Short-term investments
586,954 366,387 
Premium and other receivables
117,534 65,322 
Risk adjustment transfer receivable
43,099 31,157 
Accrued investment income
3,086 1,862 
Balances due from reinsurance programs
413,789 579,393 
Total Current Assets
2,241,161 1,870,447 
Property, equipment, and capitalized software, net
43,376 35,812 
Long-term investments
838,273 325,740 
Restricted deposits
27,757 26,478 
Other assets
18,828 13,136 
Net deferred tax asset
485 493 
Total Assets
$3,169,880 $2,272,106 
Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)
Current Liabilities:
Benefits payable
$497,324 $311,914 
Risk adjustment transfer payable
613,230 716,370 
Premium deficiency reserve
69,432 84,571 
Unearned premiums
56,175 71,904 
Accounts payable and accrued liabilities
159,196 137,524 
Reinsurance payable
221,311 343,313 
Total current liabilities
1,616,668 1,665,596 
Long-term debt— 142,487 
Warrant liabilities— 15,005 
Total liabilities1,616,668 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 September 30, 2021
— — 
Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 174,056,898 shares issued and outstanding as of September 30, 2021
— 
Class B common stock, $0.00001 par value; 82,500,000 shares authorized, 35,115,807 shares issued and outstanding as of September 30, 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
— 
Treasury stock at (314,600 shares at September 30, 2021 and December 31, 2020)
(2,923)(2,923)
Additional paid-in capital3,356,406 133,255 
Accumulated deficit
(1,800,290)(1,427,106)
Accumulated other comprehensive income (loss)
17 879 
Total Stockholders’ Equity (Deficit)
1,553,212 (1,295,893)
Total Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)
3,169,880 2,272,106 
6

Oscar Health, Inc.
News Release
Oscar Health Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September 30,
20212020
Cash flows from operating activities:
Net loss$(373,184)$(216,955)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred tax— 
Net realized gain on sale of financial instruments(268)(936)
(Gain) loss on fair value of warrant liabilities12,856 (509)
Depreciation and amortization expense10,635 7,990 
Amortization of debt issuance costs329 — 
Stock-based compensation expense58,028 21,984 
Investment amortization, net of accretion5,490 1,511 
Debt extinguishment loss20,178 — 
Changes in assets and liabilities:
(Increase) / decrease in:
Premium and other receivables(52,211)(37,806)
Risk adjustment transfer receivable(11,941)(21,303)
Accrued investment income(1,224)(484)
Balances due from reinsurance programs165,604 (127,519)
Other assets(5,210)(7,517)
Increase / (decrease) in:
Benefits payable185,410 119,955 
Unearned premiums(15,729)32,315 
Premium deficiency reserve(15,139)(4,326)
Accounts payable and accrued liabilities25,287 26,050 
Reinsurance payable(122,003)109,143 
Risk adjustment transfer payable(103,140)232,156 
Net cash (used in) provided by operating activities(216,224)133,749 
Cash flows from investing activities:
Purchase of investments(1,525,908)(838,927)
Sale of investments422,030 370,133 
Maturity of investments364,254 120,860 
Purchase of property, equipment and capitalized software(18,679)(10,696)
Change in restricted deposits3,625 (723)
Net cash used in investing activities(754,678)(359,353)
Cash flows from financing activities:
Debt prepayment(153,173)— 
Debt extinguishment costs(12,994)— 
Proceeds from IPO, net of underwriting discounts1,348,321 — 
Offering costs from IPO(9,447)— 
Convertible preferred stock and call option issuances— 224,431 
Proceeds from exercise of warrants and call options9,191 — 
Proceeds from exercise of stock options43,841 2003 
Net cash provided by financing activities1,225,739 226,434 



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Oscar Health, Inc.
News Release
Increase in cash, cash equivalents and restricted cash equivalents
254,837 830 
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
$1,097,942 $354,210 
Cash and cash equivalents
1,076,699 337,409 
Restricted cash and cash equivalents included in restricted deposits
21,243 16,801 
Total cash, cash equivalents and restricted cash and cash equivalents
$1,097,942 $354,210 
Supplemental Disclosures:
Interest payments$3,994 $— 
Income tax payments$936 $1,918 
Non-cash investing and financing activities:
Conversion of redeemable convertible preferred stock to common stock upon initial public offering$1,744,914 $ 
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 one of our health plans. 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 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. Through March 31, 2021, APTC was available to those individuals and families with annual incomes between 100% and 600% of the federal poverty level in California and 100% and 400% of the federal poverty level in all other states under the ACA. Starting April 1, 2021, consumers enrolling in Individual health plans through a health insurance marketplace could take advantage of additional subsidies available under the American Rescue Plan, which caps premium payment at 8.5% of household income, and expands maximum coverage subsidies to anyone who received unemployment insurance benefits in 2021. We believe direct policy premiums are an important metric to assess our growth.

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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 EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands)
Direct claims incurred before ceded reinsurance (1)
$668,966 $370,329 $1,725,089 $961,946 
Assumed reinsurance claims5,504 — 9,589 (2)
Excess of loss ceded claims (2)
(3,432)1,824 (13,005)(8,671)
State reinsurance (3)
(4,700)(3,091)(9,869)(7,420)
Net claims before ceded reinsurance (A)
$666,338 $369,062 $1,711,804 $945,853 
Premiums before ceded reinsurance$673,460 $414,505 $2,007,486 $1,232,493 
Excess of loss reinsurance premiums (4)
(5,083)(6,568)(11,295)(15,167)
Net premiums before ceded reinsurance (B)
$668,377 $407,937 $1,996,191 $1,217,326 
Medical Loss Ratio (A divided by B)
99.7 %90.5 %85.8 %77.7 %
(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.

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 EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands)
Other insurance costs$111,302 $38,674 $285,929 $119,222 
Ceding commissions18,214 31,609 57,986 96,884 
Stock-based compensation expense(10,122)(3,785)(28,988)(11,144)
Health insurance industry fee— 4,813 — 14,438 
Federal and state assessment of health insurance subsidiaries
35,112 20,191 102,326 60,905 
Health insurance subsidiary adjusted administrative expenses(A)
$154,506 $91,502 $417,253 $280,305 
Premiums before ceded reinsurance$673,460 $414,505 $2,007,486 $1,232,493 
Excess of loss reinsurance premiums (5,083)(6,568)(11,295)(15,167)
Net premiums before ceded quota share reinsurance(B)
$668,377 $407,937 $1,996,191 $1,217,326 
Insurance Co Administrative Expense Ratio(A divided by B)
23.1 %22.4 %20.9 %23.0 %


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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 EBITDA
Adjusted EBITDA is defined as net loss for the Company and its consolidated subsidiaries before interest expense, income tax 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.

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 EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands)
Net loss$(212,745)$(79,132)$(373,184)$(216,955)
Interest expense398 — 4,323 — 
Income tax (benefit) expense(597)(998)957 1,526 
Depreciation and amortization3,645 2,925 10,635 7,990 
Stock-based compensation/warrant expense (1)
20,640 6,230 70,884 21,475 
Other non-recurring items (2)
— — 21,076 — 
Adjusted EBITDA$(188,659)$(70,975)$(265,309)$(185,964)
(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 our initial public offering.






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Oscar Health, Inc.
News Release



Appendix


Oscar Health, Inc.
News Release
Reinsurance Impact


Three Months EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands)
Quota share ceded premiums$(215,032)$(332,259)$(712,760)$(985,081)
Quota share ceded claims212,762 283,670 570,301 720,782 
Ceding commission18,214 31,609 57,986 96,884 
Experience refund(11,245)23,325 55,465 68,449 
Net quota share impact$4,699 $6,345 $(29,008)$(98,966)
    

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 EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands)
Reinsurance premiums ceded, gross
$(220,472)$(338,685)$(724,512)$(1,002,822)
Experience refunds
(11,245)23,325 55,465 68,449 
Reinsurance premiums ceded(231,717)(315,360)(669,047)(934,373)
Reinsurance premiums assumed
3,830  9,426 — 
Total reinsurance premiums ceded and assumed
$(227,887)$(315,360)$(659,621)$(934,373)

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 EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands)
Direct claims incurred
$668,966 $370,329 $1,725,089 $961,946 
Ceded reinsurance claims
(220,894)(284,937)(593,175)(736,824)
Assumed reinsurance claims
5,504 — 9,589 (2)
Total claims incurred, net
$453,576 $85,392 $1,141,503 $225,120 

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 EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands)
Other insurance costs, gross
$129,516 $70,283 $343,915 $216,106 
Ceding commissions
(18,214)(31,609)(57,986)(96,884)
Other insurance costs, net
$111,302 $38,674 $285,929 $119,222 


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:

September 30, 2021December 31, 2020
(in thousands)
Ceded reinsurance claim recoverables$378,921 $435,331 
Reinsurance ceding commissions27,559 41,586 
Experience refunds on reinsurance agreements7,309 102,476 
Balances due from reinsurance programs$413,789 $579,393 



HIOSCAR.COM Oscar Health, Inc. Third Quarter 2021 Earnings Presentation November 10, 2021


 
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 policy premiums, medical loss ratio, administrative expense ratio 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 June 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 in 3Q21 ● Total quarter end membership increased 41% YoY to 594,300 in 3Q21 from 420,100 in 3Q20 ● 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 +41%


 
HIOSCAR.COM 4 44% Premium Growth Outpaced Membership Growth ● Direct and Assumed Policy Premiums increased 54% 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) +54%


 
Premiums Earned (millions) HIOSCAR.COM 5 3Q21 Premiums Earned Up ~4.5x, Driven by Strong Membership Growth and Lower Quota Share 3Q21 Premiums Walk (millions) Quota Share as % of Premiums before Ceded: 80% 32% +346% ($231M)


 
HIOSCAR.COM 6 3Q21 and YTD MLR Impacted by RADV, COVID Variance, and SEP Growth ● 3Q21 MLR of 99.7% driven higher YoY due to prior period unfavorable risk adjustment data validation (RADV) results, higher net COVID costs in 3Q21 vs. the prior year period, and SEP growth ● Net COVID costs were ~600bps in 3Q21 ● Lower non-COVID utilization partially offset direct COVID costs 3Q21 MLR YTD MLR ● YTD MLR of 85.8% driven higher YoY due to COVID-19 driven deferral of care in 2020 and higher direct COVID costs in 2021 as well as SEP growth ● Net COVID costs are ~500bps on a YTD basis ● Non-COVID utilization is slightly below baseline


 
HIOSCAR.COM 7 3Q21 Admin Ratio Slightly Higher due to RADV and SEP Membership Growth, but Lower YTD ● 3Q21 InsuranceCo Administrative Expense Ratio of 23.1% increased ~70bps YoY ● The YoY increase was largely driven by the negative impact on RADV on premiums as well as higher distribution costs, which were partially offset by the lack of HIF and operating leverage 3Q21 InsuranceCo Admin Ratio ● YTD InsuranceCo Administrative Expense Ratio of 20.9% decreased ~210bps YoY ● The YoY decrease was driven by operating leverage from higher revenue, and the repeal of the HIF, partially offset by RADV impact in 3Q and higher distribution costs YTD InsuranceCo Admin Ratio


 
HIOSCAR.COM 8 3Q21 Combined Ratio Driven Higher by COVID and SEP Growth 3Q21 Combined Ratio YTD Combined Ratio ● YTD InsuranceCo Combined Ratio of 106.7%, reflecting the sum of the MLR and InsuranceCo Administrative Expense Ratio ● The YoY increase was driven by the same factors that drove the MLR and InsuranceCo Administrative Expense Ratio higher YoY ● 3Q21 InsuranceCo Combined Ratio of 122.8%, reflecting the sum of the MLR and the InsuranceCo Administrative Expense Ratio ● The YoY increase was driven by the same factors that drove the MLR and InsuranceCo Administrative Expense Ratio higher YoY


 
HIOSCAR.COM 9 3Q21 Adj. EBITDA Loss Increased due to Higher Membership and COVID Impact 3Q21 Adjusted EBITDA YTD Adjusted EBITDA ● YTD Adjusted EBITDA loss of ($265M) increased $79M YoY ● The increase in the loss YoY was largely driven by higher losses in 3Q due to higher membership volume and MLR volatility ● 3Q21 Adjusted EBITDA loss of ($189M) increased $118M YoY ● The increase in loss YoY was driven by higher membership volume, MLR volatility, and higher operating expenses (1) Adjusted EBITDA is a non-GAAP financial measure. See “Appendix” for a reconciliation to net loss. Net loss was ($212.7M) for 3Q21 vs. ($79.1M) for 3Q20, and ($373.2M) for 3Q21 YTD vs. ($217.0M) for 3Q20 YTD.


 
HIOSCAR.COM 10 Full-Year 2021 Outlook Low Direct & Assumed Policy Premiums $3,350M Medical Loss Ratio 89.0% InsuranceCo Admin Ratio 21.0% Combined Ratio 110% High $3,450M 91.0% 22.0% 112% Adjusted EBITDA(1) ($480M) ($450M) (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 September 30, 2021.


 
HIOSCAR.COM 11 Appendix: Adjusted EBITDA GAAP Reconciliation September 30, 2021* September 30, 2020* Net loss $ (212,745) $ (79,132) Interest expense 398 - Income tax expense (benefit) (597) (998) Depreciation and amortization 3,645 2,925 Stock-based compensation/warrant expense 20,640 6,230 Adjusted EBITDA $ (188,659) $ (70,975) Three Months Ended *(in thousands)


 
HIOSCAR.COM 12 Appendix: Adjusted EBITDA GAAP Reconciliation September 30, 2021* September 30, 2020* Net loss $ (373,184) $ (216,955) Interest expense 4,323 - Income tax expense (benefit) 957 1,526 Depreciation and amortization 10,635 7,990 Stock-based compensation/warrant expense 70,884 21,475 Other non-recurring items 21,076 - Adjusted EBITDA $ (265,309) $ (185,964) Nine Months Ended *(in thousands)


 


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