• Total Revenue: Increased 57% year-over-year to $9.2 billion.
• Adjusted EBITDA: Achieved profitability at $100 million, a $245 million year-over-year improvement.
• Net Income: Reached $25 million, a $296 million increase over the prior year.
• Medical Loss Ratio (MLR): Stable year-over-year, increasing 10 basis points to 81.7%.
• SG&A Ratio: Improved by more than 500 basis points year-over-year to 19.1%.
• Fourth Quarter Revenue: Increased 67% year-over-year to approximately $4 billion.
• Fourth Quarter Adjusted EBITDA Loss: Approximately $113 million, flat year-over-year.
• Cash and Investments: Ended the year with $4 billion, including $190 million at the parent.
• Capital and Surplus: Insurance subsidiaries had approximately $1.2 billion, including $774 million of excess capital.

• Warning! GuruFocus has detected 5 Warning Sign with ASX:BWP.

Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Oscar Health Inc (NYSE:OSCR) reported its strongest financial performance in history, achieving adjusted EBITDA profitability of $100 million, a $245 million improvement year-over-year.
• The company achieved net income profitability for the first time, with a net income of $25 million, marking a $296 million increase over the previous year.
• Total revenue grew by 57% year-over-year to $9.2 billion, driven by record high membership and strong retention.
• Oscar Health Inc (NYSE:OSCR) experienced significant market share gains, particularly in key states like Florida, Tennessee, and Texas, and performed well in new geographies such as North Carolina.
• The company's technology platform, with AI integration, is enhancing operational efficiency and member engagement, reducing provider administrative tasks, and improving care delivery.

Negative Points

• The fourth quarter medical loss ratio (MLR) increased by 170 basis points year-over-year, indicating some pressure on profitability.
• Oscar Health Inc (NYSE:OSCR) faced challenges with risk adjustment settlements, which impacted both MLR and revenue.
• The company anticipates a 9.1% impact of effectuation against actual paying members, reflecting potential enrollment declines.
• There is a potential risk of attrition throughout the year as members may gain employment or stop paying premiums.
• Oscar Health Inc (NYSE:OSCR) is making investments in SG&A to accelerate growth, which may impact short-term profitability despite long-term benefits.

Q & A Highlights

Q: Can you discuss the impact of payment integrity issues and reverification programs on enrollment and effectuation rates? A: Mark Bertolini, CEO, explained that Oscar Health is tracking actual numbers of members who have paid their premiums, which stands at 1.8 million. This reflects a 9.1% impact of effectuation against the gross number of 1.98 million members. Scott Black (Trades, Portfolio), CFO, added that the effectuation rates are consistent year-over-year, and the company has incorporated potential risks from payment integrity issues into their revenue guidance.

Q: Why did the Medical Loss Ratio (MLR) come in above the high end of guidance, and are there any changes to interest expenses with the shift to earnings from operations? A: Mark Bertolini noted that utilization was as expected, and the MLR increase was due to risk adjustment settlements. Scott Black (Trades, Portfolio) added that the MLR pressure was driven by updated accruals based on risk reports, and the biggest difference between adjusted EBITDA and earnings from operations will be stock compensation and depreciation, with interest expenses expected to remain consistent.

Q: Can you clarify the 2025 guidance for earnings from operations and its relation to EBITDA? A: Scott Black (Trades, Portfolio) confirmed that the top end of the guidance for earnings from operations is $275 million, with an additional $140 million leading to an adjusted EBITDA of around $415 million. This aligns with the Street's expectations.

Q: What is the retention rate for SEP lives, and are there any dynamics that might affect the expected MLR improvement in 2025? A: Scott Black (Trades, Portfolio) stated that retention was solid, and the company expects the SEP cohort to have an MLR in 2025 similar to the rest of the open enrollment. The risk scores for the SEP population will mature, contributing to the expected MLR improvement.

Q: How does Oscar's pricing strategy ensure enrollment of active and intentional premium-paying members? A: Scott Black (Trades, Portfolio) explained that Oscar maintains a disciplined pricing strategy to balance growth and margin creation. The company works with CMS to ensure valid member enrollment and actively monitors brokers for irregularities, reporting any concerns to CMS.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.