Oscar Health Q2 2026 Earnings Call: Complete Transcript

Oscar Health (NYSE: OSCR ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

9 billion. 2%, highlighting disciplined expense management and efficiency gains. 7 billion to $19 billion. 96 million, reflecting strong open enrollment growth and retention.

The company is leveraging AI to enhance operations, claims processing accuracy, and cost management, with expectations of significant annual savings. Oscar Health is actively expanding its ICHRA platform and leveraging technology to provide members with efficient and cost-effective healthcare options. Management expressed confidence in the stability of utilization trends and their strategic positioning for continued growth, despite potential CMS program integrity impacts on enrollment. Full Transcript Jeannie, Operator Good evening.

My name is Jeannie and I will be your conference operator today. At this time I would like to welcome everyone to Oscar Health's second quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Today we do ask you to limit yourself to one question and one follow-up. Thank you.

I will now turn the call over to Chris Potichar, Vice President of Treasury and Investor Relations. Chris Potichar, Vice President of Treasury and Investor Relations Good morning, everyone. Thank you for joining us for our second quarter 2026 earnings call. Mark Bertolini, Oscar Health's Chief Executive Officer, and Scott Blackley, Oscar Health's Chief Financial Officer, will host this morning's call.

com. com. Any remarks that Oscar makes about the future constitute forward-looking statements within the meaning of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in our Annual Report on Form 10-K for the period ended December 31, 2025, and the Quarterly Report on Form 10-Q for the period ended March 31, 2026, each as filed with the Securities and Exchange Commission, and other filings with the SEC, including our Quarterly Report on Form 10-Q for the period ended June 30, 2026, to be filed with the SEC. Such forward-looking statements are based on our current expectations as of today. Oscar anticipates that subsequent events and developments may cause estimates to change.

While the company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. The call will also refer to certain non-GAAP measures. com. We have not provided a quantitative reconciliation of estimated full-year 2026 adjusted EBITDA, as described on this call, to GAAP net income because Oscar is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence.

With that, I will turn the call over to our CEO, Mark Bertolini. Mark Bertolini, Chief Executive Officer Good morning. Thank you, Chris, and thank you all for joining us today. Oscar Health announced strong second quarter 2026 results with significant year-over-year improvement across all core metrics.

1 billion in earnings from operations, and $1 billion in net income in the second quarter. 9 billion. 2% year over year, with utilization moderately favorable to our expectations. 2%, reflecting disciplined expense management, technology-driven efficiencies, and continuing operating leverage.

Earnings from operations increased by $619 million year over year to $389 million. Our performance demonstrates superior execution against the fundamentals of our strategy. Disciplined pricing, differentiated consumer products, and a scalable technology platform work together to fuel individual market growth. We are raising our full-year 2026 outlook based on the strength of our operating performance and our model built for long-term profitable growth.

Now I will share our view on trends in the individual market, then I'll dive into our business highlights. The individual market is vital to our nation's economy and was built for the labor market now taking shape. The market is expanding coverage for people outside of traditional employer plans, including a growing number of entrepreneurs, gig workers, part-time employees, and early retirees. Over the past decade, the market drove down the uninsured rate and prevented billions in uncompensated care.

Over the next decade, its role will only grow as people move between full-time jobs, contract work, and retirement at twice the rate of prior generations. AI will accelerate that shift. Our nation's leaders should promote policies that put the next generation of American workers in charge of choosing their health care. Oscar is leading the charge with portable coverage and experiences that meet the expectations of the people powering our economy.

The future of American healthcare depends on a durable individual market, and 2026 trends reinforce our conviction in its long-term strength. 2 million, down 12% year over year, tracking favorable to our pricing assumptions and reflecting continued consumer demand. Wakely's first claim-based report of 2026 market morbidity is also favorable to our expectations, suggesting potential upside to our outlook. We expect further market contraction and remain cautious with only four months of morbidity data, but we expect both trends to remain favorable to our pricing assumptions.

Looking ahead to 2027, we anticipate a rational pricing environment with rates that reflect the effects of CMS's program integrity efforts. Now I will review our business highlights. 96 million members, up 46% year over year. Membership reflects above-market open enrollment growth and solid retention.

Our consumer products, designed around clinical, lifestyle, and cultural needs, are driving higher member satisfaction, and we continue to launch features that help members find high-value care and manage costs. We are also building momentum in ICHRA with steady growth and demand from small businesses in the healthcare and professional services industries. Our technology continues to differentiate the member experience. This quarter we piloted a radiology program with our Oswell agent.

Oswell uses a member's claims history and clinical interactions to initiate their next step for care. It confirms coverage, guides members to high-quality providers based on cost, location, and availability, and shows estimated savings from switching facilities. One in four members choose Oswell's recommended site of care and save $75 on average per appointment. We will expand this capability to additional procedures, using care standards from leading centers of excellence.

AI is powering operations across benefits, billing, claims, clinical care, and member support. 7% first-pass accuracy and processes most claims in under 48 hours. We are also deploying AI and medical economics programs to identify cost signals early and act before they become trends. Pharmacy is a clear example.

Our models analyze pharmacy activity alongside utilization, provider, broker, and member data to flag outliers. Root-cause analysis identifies the drivers so our teams respond with precision. We expect these capabilities to generate tens of millions of dollars in annual savings. Oscar's technology is transforming the economics of the business.

The team is embedding intelligence into all core workflows across our platform, making it smarter and more efficient with every deployment. As membership grows, we can serve more members without adding headcount at the same rate. That scale fuels operating leverage, expands margins, and bends the medical cost trend for us and for our members. In summary, Oscar delivered a strong second quarter and record profitability in the first half of 2026.

The fundamentals of the business are strong, our performance is favorable to plan, and our improved 2026 outlook reflects that momentum. We are entering the second half of the year from a position of strength, with the technology, scale, and operating discipline to deliver profitable growth. The ACA is the only health care market where private insurers compete directly for the consumer. Our job is to give consumers real choices, real price transparency, and reward what they value.

When that happens, the competitive market does what it does best: it drives out inefficiency, accelerates innovation, and lowers costs. Oscar is defining that future. We are replacing one-size-fits-all coverage with solutions that make healthcare as easy to use as any other consumer product. Our results reflect the team's focused execution across our products, platform, and strategy.

We will outline how we translate that performance into durable growth and long-term value at our Investor Day on September 16th. I will now turn the call over to Scott. Scott Blackley, Chief Financial Officer Scott, thank you, Mark, and good morning, everyone. This morning we reported strong second quarter results, and we are raising our full-year 2026 outlook to reflect our operating performance.

16 per diluted share. The fundamentals of the business are strong, and our results are favorable to our plan. Let me now turn to details on second quarter performance. 96 million effectuated members, an increase of 46% year over year, driven by above-market growth during open enrollment and solid retention.

9 billion, an increase of 70% year over year, driven by higher membership and rate increases, partially offset by higher risk adjustment payable accrual. 2%, an improvement of nearly 12 points year over year. Recall that in the prior-year period we recorded the entire first half impact of the 2025 risk adjustment true-up in the second quarter. The year-over-year MLR improvement was driven by our disciplined pricing strategy and a strong current-year performance compared to the market reset experienced a year ago.

We also benefited from favorable prior-period reserve development in the quarter. Now I'll spend a moment on risk adjustment. In the second quarter we received the final 2025 CMS risk adjustment report, which was approximately $160 million favorable to our first quarter accruals, and fully recognized in the quarter. We also received the first risk adjustment report for 2026 covering claims through April, which showed market morbidity tracking quite favorable to both our pricing and first quarter accruals.

With only four months of claims in the data, we recognized only a small portion of that favorability, which we believe is appropriate at this stage in the year. Through the first six months of the year, risk adjustment as a percentage of direct premiums was approximately 20%, consistent with our expectations for the full year. Overall, year-to-date utilization was moderately favorable to our expectations. By category, inpatient, professional, and pharmacy utilization were favorable, while outpatient was elevated through the first six months of the year.

On administrative expenses, we delivered another record-low SG&A expense ratio. 2%, a 450 basis point year-over-year improvement and the lowest in the company's history. The improvement was primarily driven by disciplined expense management, including an increasing impact from technology and AI initiatives, fixed cost leverage, and lower risk adjustment as a percentage of premium. We reported earnings from operations of $389 million in the second quarter, a $619 million year-over-year improvement.

Operating margin was 8%, a 16 point improvement year over year. Net income was $362 million, a $590 million increase year over year. Adjusted EBITDA was $415 million in the quarter, an increase of $615 million year over year. Through the first six months of 2026, our results reflect disciplined execution and strong year-over-year improvement across all key metrics.

Shifting to the balance sheet, our capital position remains very strong. 2 billion of cash and investments, including $462 million of cash and investments at the parent. 9 billion of capital and surplus, including $994 million of excess capital, which was driven by our strong operating performance. Let me now turn to updates on our 2026 full-year guidance.

Based on our first half performance, we are raising our full-year earnings from operations guidance to a range of $500 million to $700 million, an increase of $250 million from our prior outlook. 7 billion to $19 billion. 5%, an improvement of 90 basis points at the midpoint from our prior outlook. 1%, an improvement of 20 basis points at the midpoint.

We continue to expect adjusted EBITDA to run roughly $115 million above our earnings from operations. Our improved outlook reflects our strong first half performance, including favorable prior-period development, market morbidity trends, and an expectation of increasing membership churn in the back half of the year as CMS program integrity processes continue. As I mentioned, the market morbidity data that we received for claims through April was quite favorable to our expectations. Given this early stage in the year, we have not taken full credit for that favorability in our outlook.

If the favorability holds as claims develop, that could present a tailwind to our full-year outlook. In closing, our disciplined execution drove strong operating results and record profitability through the first half of the year. We are confident in our improved 2026 outlook and are on track to deliver our strongest performance to date. With that, let's turn the call over to the operator for the Q&A portion of our call.

Jeannie, Operator At this time, I would like to remind everyone, in order to ask one question and one follow-up, press star, then the number one on your telephone keypad. And your first question comes from Andrew Mopp with Barclays. Please go ahead. Andrew Mopp, Analyst at Barclays Hi, good morning.

On utilization trends, you noted inpatient, professional, and pharmacy were favorable, but outpatient was elevated. Can you elaborate a bit on what you saw there, particularly on the outpatient side, and how you're thinking about the pace of utilization for the balance of the year? Scott Blackley, Chief Financial Officer Thanks. Yep.

Good morning, Andrew. You know, in outpatient I would say that there are a handful of areas that we're paying attention to. Honestly, none of them is particularly outsized. And what I think is most important there is that we're seeing stability in these trends.

And so while outpatient is a bit elevated, as you mentioned, we're seeing the other categories running favorable, and at this point the trends are stable. So the utilization looks very reasonable and is favorable to what we would expect at this point in the year. Andrew Mopp, Analyst at Barclays Great. And appreciate all the comments that AI is accelerating the shift to untraditional employment.

Would love to hear what you're observing in the market driving that commentary and how that impacts your view of intermediate-term growth. Thanks. Mark Bertolini, Chief Executive Officer A couple of things on AI. First, we don't see the massive unemployment that a lot of other CEOs have painted a very dark picture of.

We see a transition to different kind of job groups, and those are in the gig economy, that's in part-time work, that's in multiple part-time jobs, that's in early retirees. And in that economy, employer-based insurance doesn't necessarily work well.