Oscar Health will pull out of California's individual market for the 2024 plan year, CEO Mark Bertolini told investors Tuesday.
“We’re announcing today that we have decided to pause our participation in the California individual market for plan year 2024, as the plan has not met our targets,” Bertolini said on the insurtech’s earnings call. “We intend to reshape our strategy and product offerings in preparation to reenter the market in the future.”
Bertolini said the insurtech made some significant progress in the first quarter of 2023 compared to the first quarter of 2022 and sees a rosy—and profitable—future.
For 2023, Bertolini said the company is aiming to turn a profit for the first time. For 2024, the team wants to achieve total company adjusted earnings before interest, taxes, depreciation and amortization profitability, he said.
“A year ago, we were focused on absorbing our increased scale, ensuring that our operations could handle a sizable increase in growth,” said Bertolini, who assumed the CEO role five weeks ago. “Today, we are focused on advancing the capabilities and technology to best serve our members and have been able to shift our attention to implementing a series of initiatives aimed at improving the efficiency of our operations.”
“To achieve total company profitability, we will need to continue to improve the performance and profitability in our insurance business and manage the whole goal spend in line with our profitability targets,” Bertolini added.
Oscar Health posted a net loss of $39.7 million in the first quarter of 2023, slimming its losses considerably from $75.1 million in the prior-year quarter. Revenues in the quarter were $1.5 billion in the first quarter of 2023, up from $972.8 million in the first quarter of 2022.
The company reported about 1 million total members in its plans in both 2022 and 2023, although there were 56,000 fewer members this year than last. Membership in its individual and small group plans dropped from 1,032,768 in 2022 to 948,431 in 2023.
However, membership in its Cigna + Oscar offering, a jointly operated health plan that targets small businesses, grew considerably from 36,220 in the first quarter of 2022 to 67,108 in the first quarter of 2023.
In addition, Oscar Health ended the first quarter with $1.4 billion in premiums as well as a medical loss ratio of 76.3%, a 108 basis-points improvement. Adjusted EBITDA was $51.1 million, an improvement of $88.1 million from last year
Bertolini also said on the call that he wants Oscar Health to make greater use of artificial intelligence, saying that the company’s tech stack is a “sizable benefit for deploying large language models with great impact.”
“In our many pilots and tests, large language models are good at explaining in natural language how claims got paid, but only if the claim system produces coherent structured output,” he said.
Bertolini said Oscar Health is unique in being able to use large language models across every aspect of healthcare.
“We believe this can become a competitive advantage for us and our + Oscar offer,” he said.