Days after decreasing full-year guidance by about half a billion dollars, Oscar Health missed earnings projections for the second quarter.
The insurer posted a higher-than-anticipated loss per share of 89 cents, according to estimates by FactSet, reported Sherwood News.
Oscar also recorded a net loss of $228 million, one quarter after having a net profit of $275 million. The insurer saw quarterly revenues hit $2.86 billion and its medical loss ratio (MLR) climb to 91.1%.
The stark jump from a MLR of 79% was due to an increase in market morbidity in the Affordable Care Act exchanges, leading to a net risk adjustment transfer accrual, CEO Mark Bertolini told investors.
Market morbidity has changed due to new members entering the marketplace from Medicaid redeterminations and healthier members with low levels of utilization leaving due to “program integrity efforts,” he said. Last quarter, Bertolini expressed concern over the impacts of a proposed shortened enrollment window by the Centers for Medicare & Medicaid Services (CMS) to crack down on improper payments.
The company has already submitted new rate filings to states based on the assumption of program integrity changes and the expiration of enhanced premium tax credits at the end of this year, though Republican lawmakers are increasingly discussing some sort of fix in the upcoming continuous resolution legislation.
“We are focused on what we can control,” Bertolini said simply. He added he expects the market to turn around favorably in 2026.
Oscar’s stock tanked in premarket trading but quickly rebounded following the company’s earnings call.
The insurer expects $60 million in administrative cost savings next year, half driven by a reduction in workforce and half from “AI-driven efficiencies” and “medical cost affordability initiatives.” Oscar did not immediately respond to a request for comment about upcoming layoffs.
Oscar also announced a new partnership and numerous small acquisitions expected to have long-term payoff.
First, the company is launching a Hy-Vee Health-branded individual coverage health reimbursement arrangement plan for employers and employees in Des Moines, Iowa. The plan has concierge medicine through Hy-Vee Health clinics.
Nationwide, Hy-Vee has more than 570 grocery and convenience store locations and 270 retail pharmacies.
Oscar also acquired INSXCloud, one of 11 CMS-approved technology platforms that creates a “digital storefront” for health products, said Bertolini. Additionally, the company acquired IHC Specialty Benefits, an individual market brokerage providing medical and supplemental health benefits for carriers in 50 states.
The insurer also bought consumer education website healthinsurance.org, an affiliate of IHC Specialty Benefits.
Oscar is not opting yet to adjust its long-term vision spelled out during its investor day last year, which included a 5% operating margin and $2.25 earnings per share in 2027.