Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oscar Health Inc (OSCR, Financial) reported a 68% year-over-year increase in revenue, reaching $2.4 billion for the third quarter.
- The company achieved a total company adjusted EBITDA of $312 million year-to-date, representing a $246 million increase year over year.
- Oscar Health Inc (OSCR) closed the first nine months of 2024 with approximately 1.65 million members, a 68% increase year over year.
- The company is on track to achieve net income profitability this year, marking a significant milestone.
- Oscar Health Inc (OSCR) is expanding its market presence, increasing its total addressable lives to approximately 11 million, an increase of 700,000 lives year over year.
Negative Points
- The medical loss ratio increased by 80 basis points year over year to 84.6%, primarily driven by higher SEP membership and a late summer COVID uptick.
- SEP member additions have been higher than anticipated, creating a headwind for the medical loss ratio.
- The company expects a medical loss ratio towards the high end of their prior range of 80.5% to 81.5%, driven by SEP membership risk adjustment dynamics.
- Oscar Health Inc (OSCR) faces competitive pricing pressures, with some market players pricing closer to flat due to minimum MLR requirements.
- The company acknowledges that the 15% growth assumption for the ACA market next year may be at the high end of the range due to CMS's program integrity efforts.
Q & A Highlights
Q: Can you expand on your competitive positioning for 2025, especially regarding your rate increase compared to the market?
A: Mark Bertolini, CEO: Our average rate increase is about 6% versus the market at 7%. We believe the market is largely rational and stable from a pricing standpoint. While some players may chase market share, we don't think that's sustainable, and we expect a stable market this year.
Q: Can you explain the SEP pressure and why there's more pressure than expected?
A: R. Blackley, CFO: We've had more SEP additions than anticipated, which increased our top-line revenue guidance. The performance of SEP members has been on track with expectations, and utilization has been slightly favorable. The story is more about having more members than expected, which is reflected in both top-line and bottom-line performance.
Q: Regarding your long-term guidance, should we think about the 20% CAGR coming off the higher revenue base?
A: R. Blackley, CFO: We are encouraged by our year-to-date performance, which sets us up well to achieve a 20% CAGR through 2027. We won't be making any updates to the long-term guidance at this time.
Q: Can you help us understand the implied fourth-quarter MLR and why it might be flat quarter over quarter?
A: R. Blackley, CFO: COVID was a third-quarter phenomenon and won't continue. SEP additions will be lower in the fourth quarter, and we have payment integrity initiatives picking up. These factors should result in flatter growth in the fourth quarter.
Q: Has there been any change in your thinking regarding the assumption that extended subsidies will sunset?
A: Mark Bertolini, CEO: We haven't made any changes to our 2025 assumptions. We believe both parties have an incentive to ensure the program continues, as pulling back subsidies could create inflationary pressures.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
