0001568651-25-000037
SEC filingRevenue grew 23% YoY to $2.99B, but operating loss widened to -$129M due to increased risk adjustment and medical costs.
For the three months ended September 30, 2025, total revenue increased 23% to $2.99 billion from $2.42 billion in the prior-year period, driven by a 28% increase in membership to 2.12 million. Premium revenue grew 23% to $2.92 billion, partially offset by a higher net risk adjustment transfer accrual. Investment income rose 6% to $53.2 million due to a larger asset base, partially offset by lower yields. Other revenues increased to $8.8 million from $4.9 million.
Medical expenses increased 29% to $2.59 billion, outpacing premium growth, resulting in an MLR of 88.5% compared to 84.6% in Q3 2024. The 390-basis-point increase was primarily due to an increase in average market morbidity that led to a significantly higher net risk adjustment transfer accrual, partially offset by favorable prior-period development. The SG&A expense ratio improved 150 basis points to 17.5% from 19.0%, reflecting greater fixed cost leverage, lower exchange fee rates, and disciplined cost management, though partly offset by the impact of higher risk adjustment as a percentage of premium. The operating loss widened to -$129.3 million from -$48.4 million, and net loss attributable to Oscar Health, Inc. increased to -$137.5 million from -$54.6 million.
For the nine months ended September 30, 2025, revenue grew 31% to $8.90 billion, with medical expenses rising 40% to $7.40 billion. The MLR for the nine-month period was 84.8% versus 79.5% in the prior year. Operating income fell to a loss of -$62.6 million from income of $205.0 million, and net loss was -$90.5 million versus income of $179.0 million.
The company reports membership by offering as a segment proxy. Individual and Small Group membership increased to 2,111,736 as of September 30, 2025, up 32% from 1,602,993 a year earlier, driven by above-market growth during the 2025 Open Enrollment period. The Cigna+Oscar co-branded partnership expired at the end of 2024, and its membership declined to 5,168 from 51,291. Revenue from this segment is minimal in 2025. The revenue growth is almost entirely attributable to the Individual and Small Group segment, with higher membership partially offset by increased risk adjustment transfers.
The MD&A does not provide explicit financial guidance. Management highlights several key factors impacting future performance: potential expiration of enhanced APTCs at the end of 2025, the recently enacted Program Integrity Rules and the One Big Beautiful Bill Act (OBBBA) which may reduce marketplace participation, and the impact of proposed tariffs on medical costs. The company expects that the enhanced APTCs, if not renewed, could make insurance unaffordable for some and reduce membership. However, the litigation stay has suspended certain provisions of the Program Integrity Rules for the 2026 open enrollment. Medicaid redeterminations, which previously contributed to membership growth, are expected to have a less significant future impact. The company also notes that SEP enrollment volumes in 2025 are largely back to historical baselines. Management's strategic priorities include managing medical cost trends, improving MLR, and leveraging fixed costs to improve the SG&A expense ratio. The recent issuance of $410 million in convertible senior subordinated notes and the termination of the revolving credit facility indicate a focus on optimizing the capital structure.
As of September 30, 2025, the company's total debt consisted of $395.9 million net carrying amount of the new 2.25% convertible senior subordinated notes due 2030 and $290.4 million net carrying amount of the existing 7.25% convertible senior notes due 2031. Total debt net carrying amount was $686.3 million, up from $299.6 million at year-end 2024, primarily reflecting the $410 million issuance in September 2025. The company also entered into capped call transactions for $34.4 million to reduce potential dilution. Cash and cash equivalents were $2.1 billion per the balance sheet, although not explicitly restated in the Notes. Restricted deposits were $27.9 million. The company maintains a significant reinsurance recoverable of $159.4 million and a risk adjustment transfer payable net of $1.68 billion.
The Notes do not disclose traditional purchase commitments (e.g., supply or capacity agreements). However, Note 12 (Commitments and Contingencies) describes ongoing legal proceedings and a $49 million estimated net recovery from a CSR settlement. Additionally, Note 9 (Reinsurance) reports a deposit liability of $93.6 million for quota share arrangements accounted for under deposit accounting. No other contractual obligations are explicitly quantified in the Notes.
Capital allocation activities in the nine months ended September 30, 2025 were dominated by the $410 million issuance of 2030 convertible subordinated notes. No share repurchases or dividends were declared. The company terminated its $115 million revolving credit facility in September 2025 with no outstanding borrowings. The capped call transactions cost $34.4 million, recorded as a reduction to additional paid-in capital. There is no disclosure of capital expenditure in the Notes, though the cash flow statement (not part of the Notes) shows $27.3 million in purchases of property, equipment, and capitalized software.
The company operates as a single reportable segment. The CODM uses consolidated net income (loss) and earnings from operations to allocate resources and evaluate performance. For the nine months ended September 30, 2025, total revenue was $8,896 million, medical expenses $7,399 million, and SG&A expenses $1,539 million, resulting in an operating loss of $62.6 million. The company provides geographic breakdown in its risk adjustment disclosures but not for segment reporting. No individual geographic segment data is presented.
For the nine months ended September 30, 2025, Oscar Health reported net loss of $90.5M compared to net income of $179.4M in the prior-year period. Despite the loss, operating cash flow was positive at $422.95M, though down from $631.37M in 9M FY2024. The decline in CFO was driven by significant working capital changes: a large increase in risk adjustment transfer payable ($213.0M) was offset by a decrease in benefits payable growth ($207.7M vs $390.7M in 2024). The net income loss was reconciled by non-cash items like stock-based compensation ($69.6M), depreciation ($21.0M), and a reduction in provision for credit losses ($24.0M).
Capex intensity remained low at $27.3M (6.5% of CFO), slightly higher than $21.1M (3.3% of CFO) in 2024. Investing cash outflow improved dramatically (-$192.4M vs -$1.356B) due to lower investment purchases. Financing activities saw a large inflow from new long-term debt ($410M) net of issuance costs and capped call purchases, resulting in $391.0M. The overall cash position increased by $621.6M. Notably, interest payments were $11.5M and income tax payments $17.5M, both modest. No share repurchases or dividends were reported.