View all news

Oscar Health Announces Results for Second Quarter 2021

08/12/2021
  • Membership as of June 30, 2021 of 563,114, a 34.9% increase YoY
  • For the quarter ended June 30, 2021:
    • Direct policy premiums of $838.1 million, a 44.4% increase YoY
    • Premiums earned of $528.2 million, a 364.3% increase YoY
    • Medical Loss Ratio of 82.4%, increased 2170 bps YoY
    • InsuranceCo Administrative Expense Ratio of 19.8%, improved 330 bps YoY
    • InsuranceCo Combined Ratio of 102.2%, increased 1840 bps YoY
    • Net loss of $(73.1) million, an increase of $32.1 million YoY; Adjusted EBITDA loss of $(50.4) million, an increase of $21.6 million YoY

Health insurtech company Oscar Health, Inc. (NYSE: OSCR) today announced its financial results for the second quarter ended June 30, 2021.

“Our second quarter results tell a clear story: that our member-centric, tech-first approach to health care, continues to generate market demand and value for our members and +Oscar clients,” said Mario Schlosser, CEO and Co-Founder of Oscar. “With membership steadily increasing, we’re well-positioned on our path towards profitability for our Insurance business. We look forward to building upon this momentum in 2022 by entering three new states and 146 counties.1 For +Oscar, we are actively driving growth through a robust and active pipeline.”

Total direct policy premiums were $838.1 million in the quarter, up 44.4% year-over-year (“YoY”), driven primarily by higher membership growth in existing and new states and business mix shifts as well as increased enrollment from the Special Enrollment Period. Premiums earned in the quarter were up 364.3% YoY, driven both by membership growth and lower quota share cession rates in 2021.

Oscar’s InsuranceCo Combined Ratio, which is the sum of its Medical Loss Ratio (“MLR”) and the InsuranceCo Administrative Expense Ratio, increased 1840 bps YoY to 102.2% largely reflecting a higher MLR. The MLR increased to 82.4% in 2Q21 from 60.7% in 2Q20, primarily driven by meaningfully lower utilization in 2Q20 as a result of COVID-19, as well as higher COVID-19 testing and treatment costs and a return to more normalized utilization in 2Q21. The InsuranceCo Administrative Expense Ratio improved by 330 bps YoY, driven by increasing operating leverage from higher revenue, scale efficiencies from our tech stack, and the repeal of the health insurer fee (“HIF”).

____________________________
1 Pending regulatory approvals.

Financial Results Summary

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(in thousands)

Premiums before ceded reinsurance

$

723,927

 

 

$

393,540

 

 

$

1,334,026

 

 

$

817,988

 

Reinsurance premiums ceded

(195,768)

 

 

(279,784)

 

 

(437,330)

 

 

(619,013)

 

Premiums earned

$

528,159

 

 

$

113,756

 

 

$

896,696

 

 

$

198,975

 

Net loss

$

(73,068)

 

 

$

(40,944)

 

 

$

(160,439)

 

 

$

(137,823)

 

Key Metrics and Non-GAAP Financial Metrics

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

Direct Policy Premiums (in thousands)

 

$

838,075

 

 

$

580,445

 

 

$

1,658,889

 

 

$

1,152,456

 

Medical Loss Ratio

 

82.4

%

 

60.7

%

 

78.7

%

 

71.3

%

InsuranceCo Administrative Expense Ratio

 

19.8

%

 

23.1

%

 

19.8

%

 

23.3

%

InsuranceCo Combined Ratio

 

102.2

%

 

83.8

%

 

98.5

%

 

94.6

%

Adjusted EBITDA(1) (in thousands)

 

$

(50,391)

 

 

$

(28,821)

 

 

$

(76,650)

 

 

$

(114,989)

 

  1. Adjusted EBITDA is a non-GAAP measure. See “Key Operating and Non-GAAP Metrics - Adjusted EBITDA” in this release for a reconciliation to net loss, the most directly comparable GAAP measure, and for information regarding Oscar’s use of Adjusted EBITDA.

 

 

 

 

 

 

Membership by Offering

 

As of

 

 

 

June 30, 2021

 

June 30, 2020

 

Individual and Small Group

 

554,748

 

 

415,753

 

 

Medicare Advantage

 

3,749

 

 

1,727

 

 

Cigna + Oscar(1)

 

4,617

 

 

 

 

Total Members

 

563,114

 

 

417,480

 

 

  1. Represents total membership for Oscar’s co-branded partnership with Cigna.

Full Year 2021 Outlook

 

 

Low

 

High

Direct and Assumed Policy Premiums (in thousands)

 

$

3,200,000

 

 

$

3,300,000

 

Medical Loss Ratio

 

85.0

%

 

87.0

%

InsuranceCo Administrative Expense Ratio

 

21.0

%

 

22.0

%

InsuranceCo Combined Ratio

 

107.0

%

 

109.0

%

Adjusted EBITDA(1) (in thousands)

 

$

(380,000)

 

 

$

(350,000)

 

  1. Oscar has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net loss within this press release because Oscar is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include, but are not limited to, stock-based compensation expense. These items, which could materially affect the computation of forecasted GAAP net loss, are inherently uncertain and depend on various factors, some of which are outside of Oscar’s control. As such, any associated estimate and its impact on GAAP net loss could vary materially. For more information regarding Adjusted EBITDA, please see “Key Operating and Non-GAAP Metrics” below.

The foregoing statements represent management's current estimates as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Regarding Forward-Looking Statements included in this release. Management does not assume any obligation to update these estimates.

Quarterly Conference Call Details

Oscar will host a conference call to discuss the financial results today, August 12, 2021 at 5:00 p.m. (ET). A live audio webcast and a supplemental presentation will be available via the Investor Relations page of Oscar’s website at ir.hioscar.com. A replay of the webcast will be available for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

Non-GAAP Financial Information

This release presents Adjusted EBITDA, a non-GAAP financial metrics, which is provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A reconciliation of the non-GAAP financial information to the most directly comparable GAAP financial measure is provided in the accompanying tables found at the end of this release.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained herein are forward-looking statements. These statements include, but are not limited to, statements about our financial outlook and estimates, including direct policy premiums, medical loss ratio, administrative expense ratio and other financial performance, and the related underlying assumptions, our business and financial prospects, general and healthcare industry market conditions and trends, and our management’s plans and objectives for future operations, expectations and business strategy. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict and generally beyond our control.

Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, there are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: the impact of COVID-19 on global markets, economic conditions, the healthcare industry and our results of operations, and the response by governments and other third parties; our ability to retain and expand our member base; our ability to execute our growth strategy; our ability to maintain or enter into new partnerships or collaborations with healthcare industry participants; negative publicity, unfavorable shifts in perception of our digital platform or other member service channels; our ability to achieve and/or maintain profitability in the future; changes in federal or state laws or regulations, including changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”) and any regulations enacted thereunder; our ability to accurately estimate our incurred claims expenses or effectively manage our claims costs or related administrative costs, including as a result of fluctuations in medical utilization rates due to the impact of COVID-19; our ability to comply with ongoing regulatory requirements and applicable performance standards, including as a result of our participation in government-sponsored programs, such as Medicare; changes or developments in the health insurance markets in the United States, including the passage and implementation of a law to create a single-payer or government-run health insurance program; our ability to comply with applicable privacy, security, and data laws, regulations, and standards; our ability to maintain key in-network providers and good relations with the physicians, hospitals, and other providers within and outside our provider networks, or to arrange for the delivery of quality care; unfavorable or otherwise costly outcomes of lawsuits and claims that arise from the extensive laws and regulations to which we are subject; unanticipated results of risk adjustment programs; delays in our receipt of premiums; disruptions or challenges to our relationship with the Oscar Medical Group; cyber-security breaches of our and our partners’ information and technology systems; unanticipated changes in population morbidity and large-scale changes in health care utilization; and the other factors set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the Securities and Exchange Commission (“SEC”), and our other filings with the SEC.

You are cautioned not to place undue reliance on any forward-looking statements made in this press release. Any forward-looking statement speaks only as of the date as of which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise.

About Oscar Health

Oscar Health, Inc. (“Oscar”) is the first health insurance company built around a full stack technology platform and a relentless focus on serving its members. At Oscar, our mission is to make a healthier life accessible and affordable for all. Headquartered in New York City, Oscar has been challenging the health care system's status quo since our founding in 2012. The company’s member-first philosophy and innovative approach to care has earned us the trust of approximately 560,000 membersas of June 30, 2021. We offer Individual & Family, Small Group and Medicare Advantage plans, and +Oscar, our full stack technology platform to others within the provider and payor space. Our vision is to refactor health care to make good care cost less. Refactor is a term used in software engineering that means to improve the design, structure, and implementation of the software, while preserving its functionality. At Oscar, we take this definition a step further. We improve our members’ experience by building trust through deep engagement, personalized guidance, and rapid iteration.

Oscar Health, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Revenue

 

 

 

 

 

 

 

Premiums before ceded reinsurance

$

723,927

 

 

$

393,540

 

 

$

1,334,026

 

 

$

817,988

 

Reinsurance premiums ceded

(195,768)

 

 

(279,784)

 

 

(437,330)

 

 

(619,013)

 

Premiums earned

528,159

 

 

113,756

 

 

896,696

 

 

198,975

 

Investment income and other revenue

1,122

 

 

1,569

 

 

1,973

 

 

4,453

 

Total revenue

529,281

 

 

115,325

 

 

898,669

 

 

203,428

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Claims incurred, net

419,879

 

 

55,512

 

 

687,927

 

 

139,728

 

Other insurance cost

94,790

 

 

39,644

 

 

174,627

 

 

80,548

 

General and administrative expenses

50,911

 

 

35,994

 

 

113,973

 

 

67,833

 

Federal and state assessments

36,873

 

 

18,958

 

 

67,388

 

 

41,255

 

Health insurance industry fee

 

 

4,812

 

 

 

 

9,625

 

Premium deficiency reserve release

(921)

 

 

(244)

 

 

(10,464)

 

 

(262)

 

Total operating expenses

601,532

 

 

154,676

 

 

1,033,451

 

 

338,727

 

Loss from operations

(72,251)

 

 

(39,351)

 

 

(134,782)

 

 

(135,299)

 

Interest expense

228

 

 

 

 

3,925

 

 

 

Loss on extinguishment of debt

 

 

 

 

20,178

 

 

 

Loss before income tax expense

(72,479)

 

 

(39,351)

 

 

(158,885)

 

 

(135,299)

 

Income tax provision

589

 

 

1,593

 

 

1,554

 

 

2,524

 

Net loss

$

(73,068)

 

 

$

(40,944)

 

 

$

(160,439)

 

 

$

(137,823)

 

 

 

 

 

 

 

 

 

Earnings (Loss) per Share

 

 

 

 

 

 

 

Net loss per share, basic and diluted

$

(0.35)

 

 

$

(1.42)

 

 

$

(1.08)

 

 

$

(4.77)

 

Weighted average common shares outstanding, basic and diluted

207,478,268

28,905,083

148,505,273

28,889,801

 

Oscar Health, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

 

 

June 30, 2021

 

December 31, 2020

Assets:

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

1,671,540

 

 

$

826,326

 

Short-term investments

614,979

 

 

366,387

 

Premium and other receivables

85,629

 

 

65,322

 

Risk adjustment transfer receivable

39,917

 

 

31,157

 

Accrued investment income

3,794

 

 

1,862

 

Balances due from reinsurance programs

400,174

 

 

579,393

 

Total Current Assets

2,816,033

 

 

1,870,447

 

Property, equipment, and capitalized software, net

40,874

 

 

35,812

 

Long-term investments

803,289

 

 

325,740

 

Restricted deposits

26,455

 

 

26,478

 

Other assets

19,368

 

 

13,136

 

Net deferred tax asset

467

 

 

493

 

Total Assets

$

3,706,486

 

 

$

2,272,106

 

 

 

 

 

Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)

 

 

Current Liabilities:

 

 

 

Benefits payable

$

407,322

 

 

$

311,914

 

Risk adjustment transfer payable

1,043,863

 

 

716,370

 

Premium deficiency reserve

74,107

 

 

84,571

 

Unearned premiums

63,882

 

 

71,904

 

Accounts payable and accrued liabilities

135,339

 

 

137,524

 

Reinsurance payable

248,142

 

 

343,313

 

Total current liabilities

1,972,655

 

 

1,665,596

 

Long-term debt

 

 

142,487

 

Warrant liabilities

 

 

15,005

 

Total liabilities

1,972,655

 

 

1,823,088

 

Commitments and contingencies

 

 

 

Convertible Preferred Stock, $0.00001 par value; 407,156,831 shares authorized; 400,904,302 shares
issued and outstanding as of December 31, 2020

 

 

1,744,911

 

Stockholders' Equity (Deficit)

 

 

 

Preferred stock, $0.00001 par value; 82,500,000 shares authorized, none issued or outstanding as of June
30, 2021

 

 

 

Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 172,454,211 shares issued
and outstanding as of June 30, 2021

2

 

 

 

Class B common stock, $0.00001 par value; 82,500,000 shares authorized, 35,115,807 shares issued
and outstanding as of June 30, 2021

 

 

 

Series A common stock, $0.00001 par value, 680,000,000 shares authorized; 8,291,917 issued and
outstanding as of December 31, 2020; Series B common stock, $0.00001 par value, 69,487,963 shares
authorized; 23,162,654 shares issued and outstanding as of December 31, 2020; Series C common stock,
$0.00001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2020

 

 

2

 

Treasury stock at (314,600 shares at June 30, 2021 and December 31, 2020)

(2,923)

 

 

(2,923)

 

Additional paid-in capital

3,324,337

 

 

133,255

 

Accumulated deficit

(1,587,545)

 

 

(1,427,106)

 

Accumulated other comprehensive income (loss)

(40)

 

 

879

 

Total Stockholders’ Equity (Deficit)

1,733,831

 

 

(1,295,893)

 

Total Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)

3,706,486

 

 

2,272,106

 

 

Oscar Health Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Six Months Ended June 30,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net loss

$

(160,439)

 

 

$

(137,823)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Deferred tax

26

 

 

125

 

Net realized gain on sale of financial instruments

(248)

 

 

(456)

 

(Gain) loss on fair value of warrant expense

12,856

 

 

548

 

Depreciation and amortization expense

6,990

 

 

5,065

 

Amortization of debt issuance costs

329

 

 

 

Stock-based compensation expense

37,388

 

 

14,697

 

Investment amortization, net of accretion

3,029

 

 

480

 

Debt extinguishment loss

20,178

 

 

 

Changes in assets and liabilities:

 

 

 

(Increase) / decrease in:

 

 

 

Premium and other receivables

(20,307)

 

 

(25,353)

 

Risk adjustment transfer receivable

(8,759)

 

 

(20,344)

 

Accrued investment income

(1,932)

 

 

(31)

 

Balances due from reinsurance programs

179,219

 

 

82,895

 

Other assets

(5,748)

 

 

(4,286)

 

Increase / (decrease) in:

 

 

 

Benefits payable

95,408

 

 

85,055

 

Unearned premiums

(8,022)

 

 

(8,865)

 

Premium deficiency reserve

(10,464)

 

 

(262)

 

Accounts payable and accrued liabilities

1,202

 

 

26,943

 

Reinsurance payable

(95,171)

 

 

(20,583)

 

Risk adjustment transfer payable

327,493

 

 

354,867

 

Net cash provided by operating activities

373,028

 

 

352,672

 

Cash flows from investing activities:

 

 

 

Purchase of investments

(1,198,325)

 

 

(167,738)

 

Sale of investments

287,440

 

 

196,130

 

Maturity of investments

181,102

 

 

54,271

 

Purchase of property, equipment and capitalized software

(12,531)

 

 

(7,866)

 

Change in restricted deposits

 

 

(1,010)

 

Net cash (used in) provided by investing activities

(742,314)

 

 

73,787

 

Cash flows from financing activities:

 

 

 

Debt prepayment

(153,173)

 

 

 

Debt extinguishment costs

(12,994)

 

 

 

Proceeds from IPO, net of underwriting discounts

1,348,321

 

 

 

Offering costs from IPO

(9,447)

 

 

 

Convertible preferred stock and call option issuances

 

 

224,431

 

Proceeds from exercise of warrants and call options

9,191

 

 

 

Proceeds from exercise of stock options

32,640

 

 

765

 

Net cash provided by financing activities

1,214,538

 

 

225,196

 

Increase in cash, cash equivalents and restricted cash equivalents

845,252

 

 

651,655

 

Cash, cash equivalents, restricted cash and cash equivalents—beginning of period

843,105

 

 

353,380

 

Cash, cash equivalents, restricted cash and cash equivalents—end of period

$

1,688,357

 

 

$

1,005,035

 

 

 

 

 

Cash and cash equivalents

1,671,540

 

 

988,530

 

Restricted cash and cash equivalents included in restricted deposits

16,817

 

 

16,505

 

Total cash, cash equivalents and restricted cash and cash equivalents

$

1,688,357

 

 

$

1,005,035

 

 

 

 

 

Supplemental Disclosures:

 

 

 

Interest payments

$

3,742

 

 

$

 

Income tax payments

$

814

 

 

$

351

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

Conversion of redeemable convertible preferred stock to common stock upon initial public offering

$

1,744,914

 

 

$

 

Net exercise of preferred stock warrants to preferred stock upon initial public offering

$

28,248

 

 

$

 

Adjustment to fair value of preferred stock warrant liability upon initial public offering

$

13,243

 

 

$

 

Key Operating and Non-GAAP Financial Metrics

We regularly review a number of metrics, including the following key operating and non-GAAP financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions. We believe these operational and financial measures are useful in evaluating our performance, in addition to our financial results prepared in accordance with GAAP.

Members

Members are defined as any individual covered by one of our health plans. We view the number of members enrolled in our health plans as an important metric to help evaluate and estimate revenue and market share. Additionally, the more members we enroll, the more data we have, which allows us to improve the functionality of our platform.

Direct Policy Premiums

Direct policy premiums are defined as the premiums collected from our members or from the federal government during the period indicated, before risk adjustment and reinsurance. These premiums include APTC, or premium subsidies, which are available to individuals and families with certain annual incomes. Through March 31, 2021, APTC was available to those individuals and families with annual incomes between 100% and 600% of the federal poverty level in California and 100% and 400% of the federal poverty level in all other states under the ACA. Starting April 1, 2021, consumers enrolling in Individual health plans through a health insurance marketplace could take advantage of additional subsidies available under the American Rescue Plan, which caps premium payment at 8.5% of household income, and expands maximum coverage subsidies to anyone who received unemployment insurance benefits in 2021. We believe direct policy premiums are an important metric to assess our growth.

Medical Loss Ratio

Medical loss ratio is calculated as set forth in the table below. Medical claims are total medical expenses incurred by members in order to utilize health care services less any member cost sharing. These services include inpatient, outpatient, pharmacy, and physician costs. Medical claims also include risk sharing arrangements with certain of our providers. The impact of the federal risk adjustment program is included in the denominator of our MLR. We believe MLR is an important metric to demonstrate the ratio of our costs to pay for health care of our members to the premiums before ceded reinsurance. MLRs in our existing products are subject to various federal and state minimum requirements. Below is a calculation of our MLR for the periods indicated.

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

 

 

(in thousands)

Direct claims incurred before ceded reinsurance (1)

 

$

598,904

 

 

$

246,109

 

 

$

1,056,123

 

 

$

591,617

 

Assumed reinsurance claims

 

2,308

 

 

 

 

4,085

 

 

(2)

 

Excess of loss ceded claims (2)

 

(4,837)

 

 

(5,560)

 

 

(9,573)

 

 

(10,495)

 

State reinsurance (3)

 

(2,826)

 

 

(3,425)

 

 

(5,169)

 

 

(4,329)

 

Net claims before ceded reinsurance (A)

 

$

593,549

 

 

$

237,124

 

 

$

1,045,466

 

 

$

576,791

 

 

 

 

 

 

 

 

 

 

Premiums before ceded reinsurance

 

$

723,927

 

 

$

393,540

 

 

$

1,334,026

 

 

$

817,988

 

Excess of loss reinsurance premiums (4)

 

(3,277)

 

 

(3,052)

 

 

(6,212)

 

 

(8,599)

 

Net premiums before ceded reinsurance (B)

 

$

720,650

 

 

$

390,488

 

 

$

1,327,814

 

 

$

809,389

 

Medical Loss Ratio (A divided by B)

 

82.4

%

 

60.7

%

 

78.7

%

 

71.3

%

  1. See the Appendix to this release for a reconciliation of direct claims incurred to claims incurred, net appearing on the face of our statement of operations.
  2. Represents claims ceded to reinsurers pursuant to an excess of loss treaty, for which such reinsurers are financially liable. We use excess of loss reinsurance to limit the losses on individual claims of our members.
  3. Represents payments made by certain state-run reinsurance programs established subject to CMS approval under Section 1332 of the ACA.
  4. Represents excess of loss insurance premiums paid.

InsuranceCo Administrative Expense Ratio

InsuranceCo Administrative Expense Ratio is calculated as set forth in the table below. The ratio reflects the costs associated with running our combined insurance companies. We believe InsuranceCo Administrative Expense Ratio is useful to evaluate our ability to manage our expenses as a percentage of premiums before ceded quota share reinsurance. Expenses necessary to run the insurance company are included in other insurance costs and federal and state assessments. These expenses include variable expenses paid to vendors and distribution partners, premium taxes and healthcare exchange fees, employee-related compensation, benefits, marketing costs, and other administrative expenses. Below is a calculation of our InsuranceCo Administrative Expense Ratio for the periods indicated.

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

 

 

(in thousands)

Other insurance costs

 

$

94,790

 

 

$

39,644

 

 

$

174,627

 

 

$

80,548

 

Ceding commissions

 

20,466

 

 

30,249

 

 

39,772

 

 

65,275

 

Stock-based compensation expense

 

(9,171)

 

 

(3,273)

 

 

(18,866)

 

 

(7,359)

 

Health insurance industry fee

 

 

 

4,812

 

 

 

 

9,625

 

Federal and state assessment of health insurance subsidiaries

 

36,616

 

 

18,690

 

 

67,214

 

 

40,714

 

Health insurance subsidiary adjusted administrative expenses(A)

 

$

142,701

 

 

$

90,122

 

 

$

262,747

 

 

$

188,803

 

 

 

 

 

 

 

 

 

 

Premiums before ceded reinsurance

 

$

723,927

 

 

$

393,540

 

 

$

1,334,026

 

 

$

817,988

 

Excess of loss reinsurance premiums

 

(3,277)

 

 

(3,052)

 

 

(6,212)

 

 

(8,599)

 

Net premiums before ceded quota share reinsurance(B)

 

$

720,650

 

 

$

390,488

 

 

$

1,327,814

 

 

$

809,389

 

Insurance Co Administrative Expense Ratio(A divided by B)

 

19.8

%

 

23.1

%

 

19.8

%

 

23.3

%

InsuranceCo Combined Ratio

InsuranceCo Combined Ratio is defined as the sum of MLR and InsuranceCo Administrative Expense Ratio. We believe this ratio best represents the current overall performance of our insurance business for activities that can be compared to peers.

Adjusted EBITDA

Adjusted EBITDA is defined as net loss for the Company and its consolidated subsidiaries before interest expense, income tax expense, depreciation and amortization as further adjusted for stock-based compensation, warrant contract expense, changes in the fair value of warrant liabilities, and other non-recurring items as described below. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA is a non-GAAP measure. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations.

We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate Adjusted EBITDA in the same manner.

Management uses Adjusted EBITDA:

  • as a measurement of operating performance because it assists us in comparing the operating performance of our business on a consistent basis, as it removes the impact of items not directly resulting from our core operations;
  • for planning purposes, including the preparation of our internal annual operating budget and financial projections;
  • to evaluate the performance and effectiveness of our operational strategies; and
  • to evaluate our capacity to expand our business.

By providing this non-GAAP financial measure, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for net loss or other financial statement data presented in our consolidated financial statements as indicators of financial performance.

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

 

 

(in thousands)

Net loss

 

$

(73,068)

 

 

$

(40,944)

 

 

$

(160,439)

 

 

$

(137,823)

 

Interest expense

 

228

 

 

 

 

3,925

 

 

 

Income tax expense

 

589

 

 

1,593

 

 

1,554

 

 

2,524

 

Depreciation and amortization

 

3,587

 

 

2,521

 

 

6,990

 

 

5,065

 

Stock-based compensation/warrant expense (1)

 

18,273

 

 

8,009

 

 

50,244

 

 

15,245

 

Other non-recurring items (2)

 

 

 

 

 

21,076

 

 

 

Adjusted EBITDA

 

$

(50,391)

 

 

$

(28,821)

 

 

$

(76,650)

 

 

$

(114,989)

 

  1. Represents (i) non-cash expenses related to equity-based compensation programs, which vary from period to period depending on various factors including the timing, number, and the valuation of awards, (ii) warrant contract expense, and (iii) changes in the fair value of warrant liabilities.
  2. Represents debt extinguishment costs of $20.2 million incurred on the prepayment of the Company's Term Loan and approximately $0.9 million of non-recurring expenses incurred in connection with our initial public offering.

Appendix

Reinsurance Impact

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

 

 

(in thousands)

Quota share ceded premiums

 

$

(235,852)

 

 

$

(300,622)

 

 

$

(497,728)

 

 

$

(652,822)

 

Quota share ceded claims

 

173,670

 

 

181,612

 

 

357,539

 

 

437,112

 

Ceding commission

 

20,466

 

 

30,249

 

 

39,772

 

 

65,275

 

Experience refund

 

43,485

 

 

26,643

 

 

66,710

 

 

45,124

 

Net quota share impact

 

$

1,769

 

 

$

(62,118)

 

 

$

(33,707)

 

 

$

(105,311)

 

The composition of total reinsurance premiums ceded and reinsurance premiums assumed, which are included as components of total earned premiums in the consolidated statement of operations, is as follows:

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

 

 

(in thousands)

Reinsurance premiums ceded, gross

 

$

(239,253)

 

 

$

(306,427)

 

 

$

(504,040)

 

 

$

(664,137)

 

Experience refunds

 

43,485

 

 

26,643

 

 

66,710

 

 

45,124

 

Reinsurance premiums ceded

 

(195,768)

 

 

(279,784)

 

 

(437,330)

 

 

(619,013)

 

Reinsurance premiums assumed

 

3,185

 

 

 

 

5,596

 

 

 

Total reinsurance premiums ceded and assumed

 

$

(192,583)

 

 

$

(279,784)

 

 

$

(431,734)

 

 

$

(619,013)

 

The Company records claims expense net of reinsurance recoveries. The following table reconciles the total claims expense to the net claims expense as presented in the consolidated statement of operations:

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

 

 

(in thousands)

Direct claims incurred

 

$

598,904

 

 

$

246,109

 

 

$

1,056,123

 

 

$

591,617

 

Ceded reinsurance claims

 

(181,333)

 

 

(190,597)

 

 

(372,281)

 

 

(451,887)

 

Assumed reinsurance claims

 

2,308

 

 

 

 

4,085

 

 

(2)

 

Total claims incurred, net

 

$

419,879

 

 

$

55,512

 

 

$

687,927

 

 

$

139,728

 

The Company records selling, general and administrative expenses net of ceding commissions. The following table reconciles total other insurance costs to the amount presented in the consolidated statement of operations:

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

 

 

(in thousands)

Other insurance costs, gross

 

$

115,256

 

 

$

69,893

 

 

$

214,399

 

 

$

145,823

 

Ceding commissions

 

(20,466)

 

 

(30,249)

 

 

(39,772)

 

 

(65,275)

 

Other insurance costs, net

 

$

94,790

 

 

$

39,644

 

 

$

174,627

 

 

$

80,548

 

The Company records reinsurance recoverables as “balances due from reinsurance programs” within current assets on its consolidated balance sheets. The composition of the reinsurance recoverables balance is as follows:

 

 

June 30, 2021

 

December 31, 2020

 

 

(in thousands)

Ceded reinsurance claim recoverables

 

$

326,587

 

 

$

435,331

 

Reinsurance ceding commissions

 

32,051

 

 

41,586

 

Experience refunds on reinsurance agreements

 

41,536

 

 

102,476

 

Balances due from reinsurance programs

 

$

400,174

 

 

$

579,393

 

 

Investor Contact:
Cornelia Miller
VP of Investor Relations
ir@hioscar.com
917-397-0251

Media Contact:
Jackie Kahn
VP of Communications
comms@hioscar.com
202-538-0128

Source: Oscar Health, Inc.

Multimedia Files:

View all news