Oscar Health (OSCR) Q2 FY26 earnings call: guidance and Q&A

Can you elaborate on elevated outpatient utilization and how you view the pace of utilization for the rest of the year?

Outpatient is elevated but not outsized, with other categories favorable. Overall trends are stable and reasonable, consistent with expectations for the year.

“And at this point, the trends are stable. And so the utilization looks very reasonable and is favorable to our -- to what we would expect it at this point in the year.”

asked by Andrew Mok · answered by Mark Bertolini

How is AI accelerating the shift to untraditional employment, and how does this impact Oscar's intermediate-term growth view?

AI is driving a shift to gig work, part-time jobs, and early retirees, creating a huge opportunity for ICHRA and expanding the total addressable market. Oscar's single platform and data set give it an advantage in deploying AI at scale for efficiency and member experience.

“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.”

asked by Andrew Mok · answered by Mark Bertolini

Clarify the MLR impact of the 2025 reconciliation and how Oscar has visibility into utilization despite higher deductibles.

MLR excluding PPD was a little over 82% in Q1. Favorable prior period development (including risk adjustment and claims) gives confidence in reserves and pricing. Visibility into utilization is good due to 6 months of data, stable trends, and the Wakely report confirming morbidity is less than priced for.

“So everything there looks appropriate and stable. Turning to your question on utilization and our confidence in the back half. I would just make a couple of observations. One, at this point in the year, we've had enough time to have a pretty good sense of the risk of the membership that we've got.”

asked by Jessica Tassan · answered by Mark Bertolini

How is Oscar approaching the 2027 rate cycle, and what is the strategy for positioning rates and baking in conservatism?

The market has been rational so far, and Oscar prices by market. They have flexibility to change product and pricing if needed, especially with potential NBPP changes. They are confident in their position and have plans in place.

“We believe the market so far has been rational. And again, we price by market. So we look at opportunities by market. And so comparing the overall rate filings is probably not a good way of measuring it.”

asked by Parker Snure · answered by Mark Bertolini

Decompress the strong SG&A performance, any timing dynamics, and how investment spending is planned for the rest of the year.

Strong SG&A performance is due to efficiencies from AI and technology, offsetting higher exchange fees. The first 6 months are indicative of the year, with Q4 expected to have the highest SG&A ratio due to investments for 2027 enrollment.

“I would characterize our SG&A as being -- what you've seen in the first 6 months is a good indication of the rest of the year. I do think that we'll see the fourth quarter will be the highest SG&A ratio on a percentage basis.”

asked by Scott Fidel · answered by Richard Blackley

What capabilities does the ICHRAx partnership offer, and what is the pace for this offering into 2027?

ICHRAx is an EDE that provides the rails for ICHRA, allowing employers to convert to defined contribution. It hosts all competitors, giving members choice and employers access to wide networks at narrow network rates. This allows for significant cost savings and higher margins for Oscar in the front-end conversion process.

“So we now have the rails upon which to run ICHRA, which has not been the case in the past. How do we convert members from a defined benefit to a defined contribution, how does the employer step aside and allow these people to sign up.”

asked by Raj Kumar · answered by Mark Bertolini

Regarding CMS's list of 1 million potentially unauthorized members, how many are Oscar members, what is the retention expectation, and what is the financial impact?

Oscar is reviewing the file and expects increased churn in H2, a timing shift from Q2. Financial implications are baked into guidance, as revenue is not recognized for anticipated disenrolled members. They are actively working through the files, and the impact is not seen as a risk to the full-year outlook.

“With respect to the financial implications, we don't recognize revenue for members that we anticipate are going to be disenrolled. We set up those -- the payments that we received from CMS as a liability on the balance sheet. And all of the impacts of what's going on across the industry with payment integrity is baked into our full year guidance.”

asked by Justin Lake · answered by Justin Lake