Business Context and Reporting Period
Company: Oscar Health, Inc. (OSCR)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Oscar is a healthcare technology company offering health plans through the Affordable Care Act (ACA) to individuals, families, and employees. As of December 31, 2025, the company served approximately 2.0 million effectuated members across 18 states. The company also operates the +Oscar platform, providing technology solutions to providers and payors, and recently acquired businesses (Lucie, Inc., IHC Specialty Benefits, Inc., and Healthinsurance.org, LLC) to support its Individual Coverage Health Reimbursement Arrangement (ICHRA) strategy.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Revenue | $11.70 billion | $9.18 billion | +27.5% |
| Premium Revenue | $11.47 billion | $8.97 billion | +27.9% |
| Medical Expenses | $10.02 billion | $7.33 billion | +36.6% |
| SG&A Expenses | $2.05 billion | $1.76 billion | +16.8% |
| Net Income (Loss) | $(443.2) million | $25.4 million | Reversal to Loss |
| Medical Loss Ratio (MLR) | 87.4% | 81.7% | +5.7 pts |
| SG&A Expense Ratio | 17.5% | 19.1% | -1.6 pts |
| Cash & Investments (Parent) | $414.2 million | $189.8 million | +118.5% |
| Cash & Investments (Subsidiaries) | $5.1 billion | $3.8 billion | +34.2% |
Note: The filing text does not provide a specific "Operating Cash Flow" line item in the summary tables, but the Consolidated Statements of Cash Flows indicate net cash provided by operating activities was $1.09 billion for 2025.
Material Changes vs. Prior Period
- Profitability Reversal: After achieving profitability in 2024, Oscar reported a net loss of $443.2 million in 2025. This was primarily driven by a significant increase in the Medical Loss Ratio (MLR) to 87.4% from 81.7%.
- Membership Growth: Effectuated members increased to 2.04 million in 2025 from 1.68 million in 2024, driven by above-market growth during the 2025 Open Enrollment Period.
- Risk Adjustment Impact: The increase in MLR was largely attributed to higher average market morbidity, which resulted in a substantial increase in the net risk adjustment transfer accrual (payable). In Q4 2025, the company increased its estimated risk adjustment transfer payable due to lower-than-anticipated relative risk scores.
- Debt Restructuring: The company issued $410 million in 2030 Convertible Senior Notes in September 2025. Additionally, in November 2025, a significant portion of the 2031 Convertible Senior Notes ($250 million) was exchanged for Class A common stock, reducing the principal balance of the 2031 Notes to $35 million.
- Acquisitions: In May 2025, Oscar acquired Lucie, Inc., IHC Specialty Benefits, Inc., and Healthinsurance.org, LLC to diversify its business and support ICHRA offerings.
Guidance, Outlook, Risks, and Unusual Items
Outlook and Management Commentary
Management noted that the expiration of enhanced Advanced Premium Tax Credits (eAPTCs) at the end of 2025 and the implementation of new CMS "Program Integrity Rules" and the "One Big Beautiful Bill Act" (OBBBA) are expected to impact enrollment and market morbidity in 2026. The company anticipates these regulatory changes could reduce overall participation in Health Insurance Marketplaces. Oscar plans to continue pricing for margin expansion and optimizing its plan design portfolio to achieve profitability.
Key Risks and Contingencies
- Regulatory Changes: Significant uncertainty surrounds the potential renewal of eAPTCs in 2026 and the impact of stricter eligibility verification rules. Changes to the ACA or its regulations could materially affect the business.
- Risk Adjustment Volatility: Estimates for risk adjustment transfers are subject to high variability and judgment. Actual transfers have historically differed materially from assumptions, impacting revenue and capital requirements.
- Medical Cost Estimation: The company faces risks related to accurately estimating incurred medical expenses and market morbidity. Unfavorable development in claims or higher utilization could negatively impact financial results.
- Capital Requirements: The company relies on quota share reinsurance to meet regulatory capital requirements. If regulators do not approve these arrangements or if the company cannot renew them, it may need to raise significant additional capital.
- Legal Proceedings: The company is subject to various investigations and lawsuits, including a securities class action (dismissed with prejudice in April 2025) and ongoing regulatory reviews regarding claims practices and risk adjustment.
Investor Verification Checklist
- Risk Adjustment Payable: Verify the magnitude of the risk adjustment transfer payable ($2.59 billion as of Dec 31, 2025) and the sensitivity of this estimate to changes in market morbidity and risk scores.
- MLR Drivers: Analyze the specific components driving the 5.7 percentage point increase in MLR, distinguishing between medical cost trends, utilization, and risk adjustment impacts.
- Regulatory Impact on 2026: Assess the potential impact of the expiration of eAPTCs and the "Program Integrity Rules" on 2026 enrollment projections and premium revenue.
- Capital Adequacy: Review the statutory capital and surplus levels of Health Insurance Subsidiaries ($1.0 billion estimated) and the reliance on reinsurance to meet Risk-Based Capital (RBC) requirements.
- Debt Covenants: Examine the financial covenants in the new $475 million 2026 Revolving Credit Facility (entered Feb 2026) and the remaining terms of the 2030 and 2031 Convertible Notes.