0001568651-25-000025
SEC filingRevenue grew 36% to $5.9B driven by 28% membership growth, but MLR expansion to 83% pressured margins.
For the six months ended June 30, 2025, Oscar Health reported total revenue of $5.9 billion, a 36% increase year-over-year driven primarily by a 28% rise in membership to 2.0 million effectuated members. Premium revenue grew 36% to $5.8 billion, partially offset by an increase in the net risk adjustment transfer accrual. Investment income rose 8% to $100.1 million on a larger asset base. Medical expenses increased 47% to $4.8 billion, outpacing premium growth, resulting in an MLR of 83.0% compared to 76.7% in the prior year. The deterioration was attributed to higher average market morbidity and a significantly increased risk adjustment transfer estimate following third-party reports in July 2025. Selling, general, and administrative expenses grew 23% to $1.0 billion, but the SG&A Expense Ratio improved by 180 basis points to 17.2% due to lower exchange fee rates and fixed cost leverage. Earnings from operations fell sharply to $66.6 million from $253.4 million, and net income attributable to Oscar Health declined to $46.9 million from $233.6 million. The effective tax rate rose to 14.0% from 2.4%.
Oscar operates primarily as a single segment focused on ACA individual and small group plans. Membership in Individual and Small Group grew 32.5% to 2.0 million, while the Cigna+Oscar co-branded partnership, which terminated at the end of 2024, saw membership decline to 10,090 from 58,293. The robust membership growth was fueled by above-market performance during the 2025 Open Enrollment period and contributions from the May 2025 acquisition of three businesses (INSXCloud, IHC Specialty Benefits, Healthinsurance.org). However, the membership base includes a higher proportion of special enrollment period enrollees and former Medicaid beneficiaries, which increased overall morbidity and risk adjustment liabilities. The company notes that risk adjustment estimates are subject to high uncertainty, particularly with outsized growth and lagged claims data.
Management did not provide explicit quantitative guidance but highlighted several key factors impacting future performance. Regulatory developments, including the One Big Beautiful Bill Act (OBBBA) and new CMS Program Integrity Rules, are expected to reduce marketplace participation and affect membership and morbidity. Potential tariffs on pharmaceuticals and medical supplies could increase medical costs. The enhanced APTCs are set to expire at the end of 2025, which could reduce affordability and enrollment. Oscar's strategic priorities include leveraging its technology platform, managing medical costs through data-driven insights, and efficiently allocating capital. The company believes its liquidity position, with $205.1 million at the holding company and $5.2 billion at insurance subsidiaries, is sufficient for near-term obligations. However, changes in risk adjustment or membership growth may require additional capital contributions to insurance subsidiaries to maintain statutory surplus requirements.
As of June 30, 2025, Oscar Health held $2,598.9 million in cash and cash equivalents and $2,784.0 million in investments (short-term $938.1M, long-term $1,845.9M), totaling $5.4 billion in liquid assets. Total debt was $299.9 million (convertible notes), with no outstanding borrowings on the $115M revolving credit facility. Shareholders' equity stood at $1,161.4 million. Unearned premiums (deferred revenue) were $69.5 million. The company's cash position strengthened significantly from December 2024 ($1,527M cash), driven by operating cash flow of $1,387.6M in H1 2025.
No material purchase commitments were disclosed. The company recorded a $24.1 million estimated net recovery from a cost-sharing reduction class action settlement, recognized in Q1 2025. Legal contingencies include various regulatory reviews and a previously dismissed securities class action. Quota share reinsurance arrangements resulted in a deposit liability of $45.7 million for fees due.
Oscar did not repurchase shares or pay dividends. Debt change was minimal (+$0.4M from amortization). Capital expenditures (property, equipment, capitalized software) totaled $18.3 million in H1 2025, or 0.3% of revenue. No new financing activities beyond stock option exercises ($29.3M). The company's convertible notes (due 2031, 7.25% coupon) became convertible in Q3 2025 but remain unconverted.
The company operates as a single reportable segment. The CODM reviews consolidated net income and earnings from operations. Revenue is predominantly from health insurance premiums (97% of total), with investment income and other revenues contributing the remainder. Geographic mix is not disclosed.