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Oscar Health, Inc. (OSCR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 67% year-over-year to $2.39B, but the quarter recorded a net loss of $153.5M and adjusted EBITDA loss of $112.6M; management attributed the higher MLR and revenue shortfall to increased risk adjustment accruals, while utilization was slightly favorable versus pricing expectations .
  • Full-year 2024 reached first-time profitability milestones: adjusted EBITDA of $199.2M and net income of $25.4M, with SG&A ratio improving 520 bps to 19.1% and MLR at 81.7% (up 10 bps YoY) .
  • 2025 guidance introduced “Earnings from Operations” ($225M–$275M) alongside revenue ($11.2B–$11.3B), MLR (80.7%–81.7%), and SG&A ratio (17.6%–18.1%); management expects adjusted EBITDA to be roughly $140M higher than Earnings from Operations and positive net income in 2025 .
  • Membership momentum continues: 1.68M members at year-end 2024, with 1.8M “paid” members as of Feb 1 (post payment integrity actions), positioning Oscar for above-market growth and margin expansion catalysts in 2025 .

What Went Well and What Went Wrong

What Went Well

  • “Oscar reported positive full year 2024 results, capping the strongest year of financial performance in Company history,” with both adjusted EBITDA and net income profitability achieved for the first time .
  • SG&A efficiency sustained: full-year SG&A ratio improved to 19.1% (-520 bps YoY), reflecting fixed-cost leverage and variable cost efficiencies; management highlighted ongoing AI-driven initiatives and operational “blocking and tackling” behind the cost improvements .
  • Strong capital position: ~$4B cash and investments, ~$190M at parent; ~$1.2B capital and surplus in insurance subsidiaries (including ~$774M excess capital), supporting growth with minimal impact on parent cash .

What Went Wrong

  • Q4 MLR rose to 88.1% (+170 bps YoY) and came above the high end of prior expectations due to increased risk scores in several markets (per Wakely’s report), driving both higher risk transfer accruals and lower revenue; utilization was slightly favorable .
  • Q4 adjusted EBITDA loss remained large at ~$113M, essentially flat YoY, and net loss of $153.5M widened vs Q3 as risk adjustment drove pressure .
  • Payment integrity and “file-to-reconcile” processes created effectuation frictions; Oscar de-risked guidance by using paid membership (1.8M) and assuming ~9.1% impact vs effectuated counts (1.98M), implying potential near-term membership pressure until final April rechecks .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$1,431.7 $2,219.3 $2,423.5 $2,392.4
Diluted EPS ($)$(0.66) $0.20 $(0.22) $(0.62)
Medical Loss Ratio (%)86.4% 79.0% 84.6% 88.1%
SG&A Expense Ratio (%)25.4% 19.6% 19.0% 19.5%
Adjusted EBITDA ($USD Millions)$(111.6) $104.1 $(11.6) $(112.6)
Net Income attributable ($USD Millions)$(150.0) $56.2 $(54.6) $(153.5)

Segment/Offering Membership (as of date)

OfferingDec 31, 2023Dec 31, 2024
Individual & Small Group967,002 1,636,400
Medicare Advantage1,781 —
Cigna+Oscar67,500 40,570
Total Members1,036,283 1,676,970

KPIs

KPIQ3 2024Q4 2024Notes
Total Members (period-end)1,654,284 (as of Sept 30) 1,676,970 (as of Dec 31) Growth driven by OE, retention, SEP
Paid Members (as of Feb 1, 2025)—1,800,000 Used for 2025 revenue guidance
Risk Adjustment as % of Premiums (FY)—~14.5% (FY 2024) Consistent YoY; increased risk scores in select markets
Prior Period Development—$62M in Q4; $126M FY Favorable PPD offset part of RA pressure

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ActualChange
Total RevenueFY 2024$9.2B–$9.3B $9.1776B (Actual) Slightly below prior midpoint
SG&A Expense RatioFY 202419.4%–19.6% 19.1% (Actual) Lower than guided (better)
Medical Loss RatioFY 2024Toward high end of 80.5%–81.5% 81.7% (Actual) Above prior high end
Adjusted EBITDAFY 2024$160M–$210M $199.2M (Actual) Near high end
Total RevenueFY 2025—$11.2B–$11.3B New metric/guidance
Medical Loss RatioFY 2025—80.7%–81.7% New guidance
SG&A Expense RatioFY 2025—17.6%–18.1% New guidance
Earnings from OperationsFY 2025—$225M–$275M New primary operating metric
Adjusted EBITDA bridgeFY 2025—~EFO + $140M (implied) Clarified bridge

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesQ2: Platform focus; best six months narrative . Q3: “Technology continues to enhance our growth and positions us to efficiently scale the business” .Multiple AI use cases deployed; >50% onboarding/post-care instructions AI-powered; ER follow-up tool lowered readmissions ~10% for a client .Expanding deployment; tangible operational benefits
Payment integrity/effectuationNot highlighted in Q2/Q3 PRs .Using paid membership (1.8M) for guidance; ~9.1% impact vs effectuated; CMS/IRS April re-verification built into guidance .Heightened focus; risk de-risked in guidance
Risk adjustment dynamicsQ2: higher RA % of premiums headwind in outlook . Q3: higher RA transfers from SEP members .Increased market risk scores (Wakely) → raised risk transfer payable; drove higher MLR and revenue shortfall; FY RA ≈14.5% of premiums .Persistent headwind; accrual sensitivity remains
SG&A efficiencyQ2/Q3: SG&A ratio improved via fixed cost leverage and variable cost efficiencies .Continued leverage; AI efficiencies emerging; full-year SG&A beat guidance (19.1% vs 19.4%–19.6%) .Improving; structural cost actions plus AI
Membership/retentionQ2/Q3: strong membership growth and retention .1.68M YE; 1.8M paid members; expecting flat membership through 2025; solid SEP retention; demographics and plan mix detailed .Stable trajectory; above-market growth strategy
Metric framework shift—Emphasis shifting to Earnings from Operations; adjusted EBITDA still provided; explicit bridge and seasonality commentary .Evolving reporting to align with 5% operating margin goal

Management Commentary

  • CEO: “We reported both Adjusted EBITDA and net income profitability – two significant milestones. Our strong top and bottom line performance, all-time-high-membership, and consistent execution demonstrate our ability to deliver sustained profitable growth.”
  • CFO: “We ended the year with $4 billion of cash and investments, including $190 million at the parent… insurance subsidiaries had approximately $1.2 billion of capital and surplus, including $774 million of excess capital… 2025 ceding percentage ~50%.”
  • CEO on AI execution: “More than 50% of onboarding and post-care instructions today are AI-powered in Oscar Urgent Care… ER follow-up tool lowered readmission rates by close to 10%.”
  • CFO on the new metric: “We would expect adjusted EBITDA to be roughly $140 million higher than earnings from operations… Additionally, we expect positive net income in 2025.”

Q&A Highlights

  • Payment integrity and effectuation: Oscar guided on 1.8M paid members (vs 1.98M effectuated) and incorporated April CMS/IRS re-verifications; effectuation impact ~9.1% vs prior year ~4.1% .
  • MLR pressure drivers: Not utilization; accruals increased after Wakely’s risk score report in several markets; this also reduced revenue via higher risk transfer payable .
  • Metric bridge: At top-end EFO $275M, adjusted EBITDA would be +$140M higher ($415M), clarifying investor confusion on EBITDA vs EFO .
  • SG&A drivers: Sustained efficiencies and “blocking and tackling,” with first wave of AI effects supporting 2025 improvement despite growth investments .
  • SEP cohort retention and MLR tailwind: Solid retention and expected maturation of risk scores in 2025; utilization in 2024 slightly favorable .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable due to a data source limit at the time of retrieval; therefore, quantitative beat/miss vs consensus cannot be shown. Values retrieved from S&P Global were unavailable due to request limits.

Key Takeaways for Investors

  • The shift to Earnings from Operations with explicit bridges and seasonality guidance enhances transparency toward the 5% operating margin goal by 2027; adjusted EBITDA remains supported in 2025 (+$140M over EFO) with expected positive net income .
  • Near-term volatility from risk adjustment accruals can obscure otherwise favorable utilization trends; monitoring interim RA reports and market risk score changes remains critical for quarterly MLR prints .
  • SG&A trajectory is structurally improving, with early AI efficiencies and continued fixed-cost leverage driving a lower ratio; full-year 2024 beat prior guidance (19.1% vs 19.4%–19.6%) .
  • Membership growth and retention underpin revenue outlook; using paid members (1.8M as of Feb 1) mitigates effectuation uncertainty, and management expects flat membership in 2025 post re-verifications .
  • Capital strength (excess surplus ~$774M; minimal parent cash impact for 2025 growth) and steady reinsurance ceding (~50%) provide flexibility to fund growth and absorb RA dynamics .
  • 2025 guidance implies margin expansion through lower MLR (midpoint -50 bps YoY) and SG&A ratio improvement (~125 bps), setting up narrative catalysts around operating discipline and scalability .
  • Leadership changes (President of Oscar Insurance appointment) aim to centralize insurance operations and strengthen execution, potentially aiding operational KPIs and market expansion efforts .

Appendix: Additional Data Points

  • Q4 2024 revenue was $2.392B vs $1.432B in Q4 2023 (+67% YoY); full-year revenue $9.178B (+56.5% YoY) .
  • Full-year 2024 adjusted EBITDA $199.2M, net income $25.4M, diluted EPS $0.10; Q4 diluted EPS $(0.62) .
  • Prior period development: $62M in Q4; $126M for FY 2024 (favorable) .