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Oscar Health, Inc. (OSCR)·Q1 2025 Earnings Summary

Executive Summary

  • Oscar Health delivered strong Q1 2025 results with broad-based outperformance: revenue grew 42% YoY to $3.05B and diluted EPS reached $0.92; both exceeded S&P consensus (revenue by ~6.3% and EPS by ~13.9%) on higher membership and operating leverage . Revenue estimate: $2.87B*, EPS estimate: $0.808* (beat) (see Estimates Context).
  • Operating margin expanded YoY to ~9.8% (earnings from operations $297.1M), while the SG&A expense ratio improved to a company-best 15.8%, reflecting fixed cost leverage, lower exchange fees, and variable cost efficiencies .
  • MLR increased 120 bps YoY to 75.4% on a $31M unfavorable prior-period development (including a $92M increase to 2024 risk-adjustment payable), partly offset by favorable claims runout and CSR recovery accrual; utilization saw higher inpatient offset by favorable pharmacy .
  • Management reaffirmed all FY25 guidance (revenue $11.2–$11.3B; MLR 80.7–81.7%; SG&A 17.6–18.1%; earnings from operations $225–$275M), citing confidence in membership retention, pricing discipline, and cost control as catalysts for further margin expansion .

What Went Well and What Went Wrong

What Went Well

  • Record efficiency: SG&A ratio fell to 15.8% (lowest in company history) driven by fixed cost leverage, lower exchange fee rates, and variable cost efficiencies; CEO: “We delivered continued top-line growth and bottom-line performance” .
  • Strong growth and profitability: Revenue +42% YoY to $3.05B; net income attributable to OSCR rose to $275.3M (diluted EPS $0.92); Adjusted EBITDA increased to $328.8M .
  • Membership scale and engagement: ~2.04M effectuated members (+41% YoY) with digital/AI initiatives improving care and efficiency; e.g., live chat for Virtual Urgent Care reduced response times by 90% and boosted provider efficiency 28% .

What Went Wrong

  • Medical cost ratio pressure: MLR up 120 bps YoY to 75.4% on unfavorable prior-period development (net PPD ~$30–31M, driven by a $92M increase to 2024 risk adjustment payable) .
  • Utilization mix: Higher-than-expected inpatient utilization (partly offset by favorable pharmacy) led management to action cost-control initiatives; still early in claims completion (~15%) .
  • Policy/membership headwinds: Anticipated end of continuous SEP for ≤150% FPL could reduce H2 membership after 1H strength; broader integrity rules and APTC uncertainty pose 2026 planning risks .

Financial Results

Q1 2025 vs Consensus (S&P Global) and Actuals

MetricQ1 2025 EstimateQ1 2025 Actual
Revenue ($)$2,865,371,330*$3,046,263,000
Diluted EPS ($)$0.8075*$0.92
  • Surprise: Revenue beat ~6.3% (Actual $3.046B vs $2.865B*); EPS beat ~13.9% (Actual $0.92 vs $0.8075*).

Sequential Trend (prior quarter to current)

MetricQ4 2024Q1 2025
Total Revenue ($)$2,392,436,000 $3,046,263,000
Earnings from Operations ($)$(147,731,000) $297,123,000
Net Income attributable to OSCR ($)$(153,547,000) $275,271,000
Diluted EPS ($)$(0.62) $0.92
Medical Loss Ratio (%)88.1% 75.4%
SG&A Expense Ratio (%)19.5% 15.8%

Year-over-Year (Q1 2024 vs Q1 2025)

MetricQ1 2024Q1 2025
Total Revenue ($)$2,142,305,000 $3,046,263,000
Earnings from Operations ($)$185,558,000 $297,123,000
Net Income attributable to OSCR ($)$177,368,000 $275,271,000
Diluted EPS ($)$0.62 $0.92
Medical Loss Ratio (%)74.2% 75.4%
SG&A Expense Ratio (%)18.4% 15.8%

Three-Quarter Trend (Q3 2024 → Q4 2024 → Q1 2025)

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($)$2,423,482,000 $2,392,436,000 $3,046,263,000
Earnings from Operations ($)$(48,374,000) $(147,731,000) $297,123,000
Net Income attributable to OSCR ($)$(54,596,000) $(153,547,000) $275,271,000
Diluted EPS ($)$(0.22) $(0.62) $0.92
Medical Loss Ratio (%)84.6% 88.1% 75.4%
SG&A Expense Ratio (%)19.0% 19.5% 15.8%
Adjusted EBITDA ($)$(11,563,000) $(112,643,000) $328,828,000

KPIs and Balance Sheet Highlights

KPIQ1 2024Q1 2025
Total Members (Effectuated)1,448,408 2,039,467
Individual & Small Group Members1,386,980 2,021,484
Cigna+Oscar Members61,428 17,983
Adjusted EBITDA ($)$219,314,000 $328,828,000
Cash & Cash Equivalents ($)$2,230,799,000 $2,236,555,000
Short-term Investments ($)$624,461,000 (Dec 31, 2024) $751,489,000
Long-term Investments ($)$1,815,254,000 (Dec 31, 2024) $1,872,677,000

Guidance Changes

MetricPeriodPrevious Guidance (Feb 4, 2025)Current Guidance (May 7, 2025)Change
Total Revenue ($)FY 2025$11.2B–$11.3B $11.2B–$11.3B (reaffirmed) Maintained
Medical Loss Ratio (%)FY 202580.7%–81.7% 80.7%–81.7% (reaffirmed) Maintained
SG&A Expense Ratio (%)FY 202517.6%–18.1% 17.6%–18.1% (reaffirmed) Maintained
Earnings from Operations ($)FY 2025$225M–$275M $225M–$275M (reaffirmed) Maintained
Adjusted EBITDA ($)FY 2025~EFO + $140M (implied) ~EFO + $140M (reminder) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
AI/Technology and efficiencyContinued investment; SG&A improvement (19.0% in Q3) ; AI central to strategy; multiple LLM use cases improving care and operations Virtual Urgent Care live chat cut response times 90% and raised provider efficiency 28%; new AI tools for Care Guides; record-low SG&A ratio Improving
MLR and risk adjustmentQ3 MLR 84.6% on SEP mix and higher COVID costs; higher risk-adjustment transfers MLR 75.4%; $31M unfavorable PPD including $92M 2024 risk-adjustment increase; inpatient up, pharmacy favorable Mixed (RA headwind; utilization managed)
Membership/retentionQ3 total members 1.65M ; strong growth into 2024 year-end ~2.04M effectuated (+41% YoY); CFO expects 1H up, H2 down as continuous SEP ends; flat for year overall Stable to slightly declining H2
SG&A trajectoryQ3 SG&A 19.0%; FY24 SG&A 19.1% (–520 bps YoY) 15.8% in Q1 (record low); drivers: fixed leverage (~40% of YoY improvement), variable efficiencies (~15%), lower fees/geography remainder Improving
Guidance/OutlookIntroduced FY25 outlook and path to 5% operating margin by 2027 All FY25 guidance reaffirmed; EFO $225–$275M; adj. EBITDA ≈ EFO + $140M Stable
Regulatory/IntegrityPayment integrity and file-to-reconcile framework discussed; paid count 1.8M baseline Supports integrity goals; concerned about shortened shopping window; APTC and CSR policy paths being monitored Watchlist (policy risk)
ICRA (individual coverage HRA)Emerging momentum into 2025 Growing mid-market interest; employer dialogues underway; pricing discipline emphasized Improving
Competitive dynamics—Competitor exiting exchanges in 2026 presents share opportunity; risk adjustment “levels playing field” Potential tailwind 2026

Management Commentary

  • “We delivered continued top-line growth and bottom-line performance with significant year-over-year increases in revenue and net income. We continue to expect meaningful margin expansion this year.” – CEO Mark Bertolini .
  • “We reported the lowest SG&A ratio in the company's history at 15.8%, a 260-basis point improvement year-over-year.” – CEO Mark Bertolini .
  • “The first quarter MLR was impacted by $31 million of unfavorable prior period development… an increase to our 2024 risk adjustment payable… partially offset by favorable claims runout and the CSR recovery.” – CFO Richard Blackley .
  • “We continue to expect earnings from operations in the range of $225 million to $275 million… we would expect adjusted EBITDA to be roughly $140 million higher than earnings from operations.” – CFO Richard Blackley .
  • “Use of [Virtual Urgent Care live chat] decreased member response times by 90% and drove a 28% boost in provider efficiency.” – CEO Mark Bertolini .

Q&A Highlights

  • Membership trajectory and guidance anchoring: Q1 effectuated ~2.04M vs ~1.9M paid; CFO set paid membership as baseline for guidance, expects 1H up then H2 down with continuous SEP ending; full-year roughly flat .
  • Risk adjustment/PPD: Net PPD unfavorable ~$30–31M; RA increased ~$92M; ~60 bps of YoY MLR increase due to PPD; rest mix-driven .
  • Utilization: Higher inpatient utilization with favorable pharmacy; overall above expectations but early (~15% claims completion); management deploying cost levers not in guidance .
  • SG&A drivers and durability: ~40% of YoY SG&A ratio improvement from fixed leverage, ~15% from variable efficiencies; remainder from fees/geography; management still expects gradual quarterly increases from Q1 trough .
  • Guidance mechanics: EFO guidance implies Adjusted EBITDA ≈ EFO + $140M; reiterated on the call .
  • Regulatory stance: Supports payment integrity; cautions shortened enrollment windows; monitoring APTC/CSR policy implications for 2026 .

Estimates Context

  • Q1 2025: Revenue $3.046B vs consensus $2.865B* → beat (~6.3%); Diluted EPS $0.92 vs consensus $0.8075* → beat (~13.9%) .
  • Street context: Beats driven by higher membership and SG&A efficiencies, partially offset by MLR headwind from RA true-up; estimate revisions may trend up for FY revenue/EPS, while models may incorporate slightly higher MLR seasonality and RA accrual sensitivity .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quality beat and reaffirm: Broad beats on revenue/EPS with reaffirmed FY25 guidance and record-low SG&A ratio signal operating momentum and confidence in full-year margin expansion .
  • MLR dynamics manageable: Near-term MLR pressure from RA true-up and inpatient utilization is being offset by pharmacy favorability and actionable cost levers; RA should normalize as the year progresses .
  • Scale advantages strengthening: Membership scale (+41% YoY) and AI-enabled operations are reducing unit costs and supporting sustained SG&A leverage .
  • Capital strength: ~$4.9B cash/investments at quarter-end, ~$907M excess capital in subs, and parent cash available support growth and resilience .
  • Watch policy catalysts: End of continuous SEP (≤150% FPL) could pressure H2 membership; APTC/CSR policy decisions remain key for 2026 pricing/mix; competitor exit in 2026 offers potential share gains .
  • Estimate implications: Post-beat, models may raise FY revenue/EPS; keep EFO/Adj EBITDA framework in focus (Adj EBITDA ≈ EFO + $140M) for valuation comparability .
  • Trading lens: Reaffirmed guide and operating margin progress are likely positive catalysts; investors should monitor utilization trends, RA updates, and any regulatory developments across 2H that could affect membership trajectory .

Footnote: Values marked with an asterisk (*) are retrieved from S&P Global.