Oscar(OSCR) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported total revenue of $2.2 billion for Q2 2024, representing a 46% year-over-year increase [5][13] - The medical loss ratio improved by 90 basis points year-over-year to 79% [5][13] - Adjusted EBITDA for Q2 was$ 104.1 million, an increase of nearly $69 million compared to the previous year [5][15] - The first half of 2024 saw adjusted EBITDA of$ 323 million, a significant year-over-year improvement of $237 million [5][15] - Net income for Q2 was approximately$ 56 million, improving by $72 million year-over-year [15] Business Line Data and Key Metrics Changes - The company closed the quarter with approximately 1.6 million members, a 63% increase year-over-year [6][13] - Membership growth was driven by strong retention, new memberships in existing markets, and special enrollment period (SEP) additions [7][13] - The company expects continued SEP member additions into the second half of the year, albeit at a decelerated rate [7] Market Data and Key Metrics Changes - The company experienced growth in approximately 80% of its states year-over-year, capturing more market share [7] - The ACA market serves nearly 22 million lives, significantly lowering the uninsured rate for small businesses [10] Company Strategy and Development Direction - The company aims for at least 20% revenue CAGR and a 5% operating margin by 2027, with plans to double its footprint in Oscar Insurance [6] - The company is focusing on diversifying growth beyond traditional ACA by building a leading ICRA business [6] - Investment in technology is emphasized as a key asset driving member experiences and operational efficiencies [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term goals, supported by strong first-half performance [11][12] - The company views the continuation of enhanced subsidies as a critical bipartisan issue that could impact the uninsured rate [11] - Management noted that the ACA is the fastest-growing market in health insurance, with a notable shift in sentiment from policymakers [10] Other Important Information - The company raised its full-year 2024 revenue guidance by$ 700 million to a range of $9 billion to$ 9.1 billion [5][16] - The expected medical loss ratio for 2024 is now in the range of 80.5% to 81.5% [16] - The SG&A expense ratio is expected to be lower, in the range of 19.75% to 20.25% [17] Q&A Session Summary Question: About the improved guidance and SEP membership dynamics - Management indicated that the difference in guidance is primarily driven by SEP growth, which comes with in-year MLR headwinds [19][21] Question: On 2025 rate requests and divergence in requested rate increases - Management explained that rate requests are driven by local market performance, leading to expected differences across geographies [24] Question: Pricing relative to competitors for 2025 and market growth expectations - Management anticipates market growth of around 15% in 2025, supported by strong distribution and enhanced subsidy programs [27][28] Question: Update on ICRA related conversations and membership opportunities - Management noted strong interest and opportunities in ICRA, with guidance on membership for 2025 to be provided later [31][32] Question: Clarification on guidance changes regarding revenue and MLR - Management confirmed that the additional SEP membership growth has higher MLR implications, but overall economics are in line with expectations [35][36]