0001568651-26-000040
SEC filingMD&A highlights 53% revenue growth to $4.65B, MLR improvement to 70.5%, and operating income of $704M, driven by 56% membership expansion and disciplined cost management.
For the three months ended March 31, 2026, total revenue increased 53% to $4.65 billion, compared to $3.05 billion in the prior-year period. Premium revenue grew 53% to $4.58 billion, driven by a 56% increase in membership to 3.17 million effectuated members, partially offset by a higher net risk adjustment transfer accrual. Investment income rose 31% to $60.6 million, primarily due to higher invested assets.
Medical loss ratio (MLR) improved significantly to 70.5% from 75.4%, a 490-basis-point improvement, driven by disciplined pricing, favorable prior period reserve development, and claims seasonality from metal and new member mix. Medical expenses increased 43% to $3.23 billion, lower than the revenue growth rate, reflecting modestly lower medical cost trend.
Selling, general, and administrative (SG&A) expenses increased 46% to $706 million, but the SG&A expense ratio decreased 60 basis points to 15.2%, benefiting from fixed cost leverage and disciplined cost management. Depreciation and amortization remained relatively flat at $7.0 million.
Earnings from operations more than doubled to $704 million from $297 million, an increase of 137%. Net income attributable to Oscar Health, Inc. surged to $679 million from $275 million, reflecting strong operational performance.
The company operates primarily through its Health Insurance Subsidiaries, offering individual and small group plans under the ACA. As of March 31, 2026, individual and small group membership reached 3,174,489, a 57% increase from 2,021,484 a year earlier. The Cigna+Oscar Small Group segment was discontinued after December 31, 2024, and had no members in the current period. Other revenues of $5.7 million came from Marketplace Subsidiaries, +Oscar platform fees, and other sources, though no segment-level breakdown was provided.
Management discussed several factors expected to impact future performance. The expiration of enhanced Advanced Premium Tax Credits (eAPTCs) at the end of 2025, combined with new Program Integrity Rules and the One Big Beautiful Bill Act, are expected to negatively affect marketplace participation and membership growth. Proposed tariffs on pharmaceutical products may increase medical costs or reduce rebates, potentially raising MLR. Seasonality remains a factor, with a higher proportion of costs expected in the second half of the year as members meet deductibles. The company maintains a strong capital position, with Health Insurance Subsidiaries holding excess statutory capital of approximately $809 million as of March 31, 2026, and access to a new $475 million revolving credit facility. Management expects current cash and investments to fund operating requirements for at least the next twelve months.
Oscar Health's balance sheet strengthened significantly in Q1 2026. Cash and cash equivalents surged to $4.8B (up from $2.8B at year-end 2025), driven by strong operating cash flow of $2.6B. Total investments (short-term and long-term) stood at $3.3B, reflecting a conservative portfolio primarily in U.S. treasury and agency securities. The company's total assets reached $9.3B, while total liabilities were $7.6B, resulting in shareholders' equity of $1.67B (including noncontrolling interests). The liquidity position is robust, with no borrowings on the $475M revolving credit facility established in February 2026.
The Notes do not disclose any material purchase commitments or contractual obligations beyond the ordinary course. The company has contingent liabilities related to regulatory reviews and legal proceedings, but no amounts have been accrued as material. A notable item is the estimated net recovery of approximately $48M from the CSR subsidy class action settlement, which was received in April 2026.
No share repurchases or dividends were declared in Q1 2026. The company's debt structure consists of $35M in 2031 convertible notes (7.25% coupon) and $410M in 2030 convertible notes (2.25% coupon), with net carrying value of $430.9M. The change in total debt was minimal ($0.8M increase), primarily from amortization. Capital expenditures (property, equipment, and capitalized software) were $8.8M, in line with prior periods. The CEO's personal stock purchase of 1 million shares in April 2026 does not affect corporate capital allocation.
Oscar operates as a single reportable segment: Health Insurance. The CODM evaluates performance using consolidated net income and earnings from operations. No geographic or sub-segment breakdown is provided. Total revenue grew 52.6% YoY to $4.65B, with medical expenses of $3.23B and SG&A of $706M. Operating income doubled to $704M, reflecting improved underwriting and scale.
Net income of $679 million was significantly lower than operating cash flow of $2,619 million, indicating strong cash generation from working capital. The primary driver was a $1,993 million increase in payables to CMS, a liability that will reverse in future periods. Excluding this large working capital swing, adjusted CFO would be more modest. Other positive adjustments include stock-based compensation ($16M) and depreciation ($7M), offset by net accretion of investments ($7M) and deferred taxes ($6M). Investing cash flow was negative $590 million, primarily due to purchases of investments ($915M) partially offset by maturities/sales ($334M). Capital expenditures were only $8.8 million. No share repurchases or dividends were reported. The company ended the quarter with $4.8 billion in cash and equivalents, up from $2.8 billion. The large increase in payables to CMS is a seasonal effect (premium collections ahead of claim payments), which should normalize over the year. Overall, cash generation appears strong but is heavily reliant on timing of insurance-related payables.