Oscar Health records first quarterly net profit, exceeds EPS expectations

Insurtech Oscar Health is standing by its full-year outlook after surpassing market expectations and beating year-over-year measures.

The company posted $2.1 billion in revenue, a 46% year-over-year increase, and a net income of $177.4 million, an improvement of $217.1 million compared to the previous year. Oscar’s earnings per share came in at $0.62, more than doubling estimates from analysts at Zacks Investment Research.

“Oscar reported strong first quarter results, showing year-over-year improvement across all core metrics and achieving positive net income,” said Mark Bertolini, CEO of Oscar Health, in a statement. “Our performance lays a solid foundation for 2024, and gives us a clear line of sight into total company adjusted EBITDA profitability this year. We remain on a path to sustainable growth and look forward to sharing details on our long-term strategic plan at our Investor Day in June.”

Over the last six months, Oscar’s stock price has surged 186% from $6.62 to $18.97 as of Monday night. The stock peaked above $35 in 2021 following its initial public offering.

Bertolini stressed the growth of the Affordable Care Act individual market. The company is also choosing to not renew the Cigna + Oscar small group health plans to “better align with our strategic direction.”

Small group health plans are going the way of its Medicare Advantage business, but Bertolini teased entering the Medicare business “a different way” through an announcement later this year.

“I think with Cigna + Oscar, both companies tried very, very hard over the last five years to get the thing to a place where, from an underwriting standpoint, it was profitable,” he explained. “We just couldn’t rationalize that in a way that would make the product work longer term.”

Small group health plans through the Cigna partnership constitute approximately $260 million of revenue for 2024 and has minimal impact to the bottom line, said Chief Financial Officer Scott Blackley.

The company instead reiterated its belief in individual coverage health reimbursement arrangements, or ICHRAs, as a much bigger opportunity for Oscar moving forward.

Oscar’s medical loss ratio was 74.2%, a 210 basis points improvement year over year, and its selling, general and administrative expenses ratio was 18.4% for the quarter. Company execs highlighted price and margin expansion as the two major drivers for improvement in this area in addition to its PBM partnership.

The company aims to make up to $8.4 billion in revenue this fiscal year and land between $125 million and $175 million EBITDA. If achieved, it will be the first time the company reaches full-year profitability.

Membership increased 42% year over year, even in states where competitors retreated, added Bertolini.

“We captured share in existing and expansion markets and drove superior customer satisfaction and record high retention,” he said,

Its Spanish-first program, HolaOscar, showed 247% growth, and the insurtech has launched diabetes-specific campaigns through the platform.