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    OSCR
    Earnings call· Jun 2026(Q2 FY26)

    Oscar Health Q2 FY26 earnings call OSCR

    Aug 6, 2026 Source

    Executive summary

    Oscar Health Q2 FY26 — Record Profitability and Raised Full-Year Outlook

    Oscar Health delivered record profitability in the first half of 2026, driven by strong revenue growth, improved MLR, and significant SG&A efficiency gains. The company raised its full-year outlook, reflecting confidence in its operating performance and scalable technology platform, despite anticipated membership churn from CMS program integrity efforts. Management emphasized the long-term strength of the individual market and Oscar's role in driving innovation and consumer choice.

    Highlights

    5

    • Revenue grew 70% year-over-year to $4.9 billion in Q2 FY26.

    • Medical Loss Ratio (MLR) improved 12 points year-over-year to 79.2% in Q2 FY26.

    • SG&A expense ratio improved 450 basis points to a record low of 14.2% in Q2 FY26.

    • Earnings from operations increased by $619 million year-over-year to $389 million in Q2 FY26.

    • Net income reached $1 billion for the first half of FY26, with $362 million in Q2 FY26.

    Concerns

    2

    • Outpatient utilization was elevated through the first 6 months of the year, though overall utilization was moderately favorable.

    • Expectation of increasing membership churn in the back half of the year, potentially double the typical 1%-2% per month, due to CMS program integrity processes.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year Earnings from Operations
    $500 million to $700 million
    high materiality
    High
    Full-year Total Revenues
    $18.7 billion to $19 billion
    high materiality
    High
    Full-year Medical Loss Ratio (MLR)
    81.5% to 82.5%
    high materiality
    High
    Full-year SG&A Expense Ratio
    15.6% to 16.1%
    medium materiality
    High
    Full-year Adjusted EBITDA
    Roughly $115 million above earnings from operations
    high materiality
    High
    Membership Churn
    Closer to twice the typical 1%-2% per month
    medium materiality
    Medium
    MLR Seasonal Pattern
    Continue to trend higher quarterly
    medium materiality
    High
    SG&A Ratio Seasonal Pattern
    Fourth quarter will be the highest SG&A ratio on a percentage basis
    low materiality
    High
    Risk Adjustment as % of Direct Premiums
    20%
    medium materiality
    High

    Operational metrics

    24
    Earnings from Operations
    $1.1 billion
    H1 FY26

    Record profitability for the first half of the year.

    Net Income
    $1 billion
    H1 FY26

    Record profitability for the first half of the year.

    Net Income
    $362 millionup $590 million YoY
    Q2 FY26

    Significant year-over-year increase in net income.

    Diluted EPS
    $3.16
    H1 FY26

    Reported for the first half of the year.

    Revenue Growth
    70%YoY
    Q2 FY26

    Driven by higher membership and rate increases.

    Medical Loss Ratio (MLR)
    79.2%improved 12 points YoY
    Q2 FY26

    Reflects disciplined pricing strategy and strong current year performance.

    SG&A Expense Ratio
    14.2%improved 450 basis points YoY
    Q2 FY26

    Record low, reflecting disciplined expense management and technology-driven efficiencies.

    Earnings from Operations
    $389 millionincreased $619 million YoY
    Q2 FY26

    Strong performance demonstrating superior execution.

    Operating Margin
    8%improved 16 points YoY
    Q2 FY26

    Significant improvement driven by operational efficiencies.

    Adjusted EBITDA
    $415 millionincreased $615 million YoY
    Q2 FY26

    Strong increase reflecting operational improvements.

    Cash and Investments
    $10.2 billion
    Q2 FY26

    Strong balance sheet position.

    Cash and Investments at Parent
    $462 million
    Q2 FY26

    Part of the total cash and investments.

    ACA Membership
    19.2 milliondown 12% YoY
    Current

    Tracking favorably to Oscar's pricing assumptions, reflecting continued consumer demand.

    First Pass Claims Accuracy
    98.7%
    Current

    Achieved by Oscar's claims platform, processing most claims in under 48 hours.

    Risk Adjustment Favorable Development (2025)
    $160 millionfavorable to Q1 accruals
    Q2 FY26

    From the final 2025 CMS risk adjustment report, fully recognized in the quarter.

    Prior Period Reserve Development (Total)
    $164 million
    Q2 FY26

    Total favorable prior period development in the second quarter.

    Prior Period Reserve Development (Total)
    $232 million
    H1 FY26

    Total favorable prior period development through the first six months of the year.

    Risk Adjustment as % of Direct Premiums
    20%
    H1 FY26

    Consistent with expectations for the full year.

    Implied Underlying MLR (Analyst Calculation)
    —
    Q2 FY26

    Analyst calculated ~85.2% after excluding favorable PPD and risk adjustment true-up. Management stated their calculation of MLR ex-PPD for Q2 was approximately 82%.

    Implied Current Year Risk Adjustment Transfer (Analyst Calculation)
    —
    Q2 FY26

    Analyst calculated ~17.9% of premiums, lower than the 20% expectation. Management reiterated 20% for H1 and full year.

    Prior Period Reserve Development (Q1 FY26)
    $68 million
    Q1 FY26

    Favorable PPD in the first quarter, mentioned by analyst.

    Medical Expense Growth
    17%QoQ
    Q2 FY26

    Analyst observation, attributed by management to seasonal patterns and membership mix.

    Oswell Agent Savings
    $75
    Per appointment

    Average savings for members using the Oswell Agent for radiology appointments.

    ICHRA Savings Potential
    26%
    Annual

    Potential savings for employers converting from defined benefit to defined contribution using ICHRAx.

    Industry KPIs

    3
    MetricValueDetails
    Retention persistencySolid
    Statutory regulatory capital$1.9 billionUSD
    Prior year reserve development$164 millionUSD

    Product announcements

    2
    ProductTypeDetails
    Oswell Agent Radiology Programlaunch
    HelloMenolaunch

    Deals & partnerships

    1
    ICHRAxElectronic Data Exchange (EDE) platform for ICHRA, inviting competitors to join.

    ICHRAx is built off an ACA-approved, CMS-approved EDE. It provides the infrastructure for ICHRA, allowing Oscar and its competitors to offer plans. It aims to facilitate employer transition from defined benefit to defined contribution, addressing network coverage concerns by including all competitors on the platform.

    Risks & headwinds

    3
    Elevated Outpatient UtilizationH1 FY26

    Elevated through the first 6 months of the year

    Mitigation: Overall utilization is moderately favorable, and trends are stable. Management is monitoring and acting quickly on 'flares' or hotspots in utilization.

    Increased Membership Churn due to CMS Program IntegrityH2 FY26

    Expected to be closer to twice the typical 1%-2% per month

    Mitigation: This is primarily a timing shift from Q2, not impacting full-year revenue guidance. Oscar is actively reviewing CMS files and has baked the financial implications into its full-year guidance, not seeing it as a risk to the outlook.

    Potential for Market ContractionCurrent

    Total ACA membership down 12% YoY to 19.2 million

    Mitigation: Oscar's pricing assumptions account for market contraction. Wakely's morbidity report suggests potential upside. Oscar is expanding into ICHRA and other markets to grow its total available market.

    What to watch in Q3 FY26

    5

    MLR Trend

    Q3 FY26
    Current79.2% in Q2 FY26
    TargetContinued quarterly increase as members burn through deductibles

    Why it matters

    The seasonal pattern of MLR is expected to trend higher in the second half, impacting full-year profitability. Verification will confirm if the expected seasonal pattern holds.

    I would expect that that's going to continue to pick up into the second half as members burn through their deductibles. So MLR from the first 6 months, I would expect it to continue to trend higher quarterly and the seasonal patterns will look, I think, pretty similar to what we've seen historically.

    Q&A highlights

    7

    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

    2 min read5 chapters

    Detailed Narrative

    01

    Individual Market Trends and Policy Advocacy

    Oscar Health views the individual market as vital and expanding, catering to entrepreneurs, gig workers, part-time employees, and early retirees. The company anticipates its role will grow as labor market shifts accelerate, driven by AI. Management advocates for policies that empower consumers to choose their healthcare, emphasizing portable coverage and experiences. Despite a 12% year-over-year contraction in total ACA membership to 19.2 million, this trend is favorable to Oscar's pricing assumptions, suggesting continued consumer demand and potential upside to their outlook.

    02

    Technology and AI-Driven Efficiency

    Oscar's scalable technology platform and AI initiatives are central to its strategy, driving operating leverage and margin expansion. The company piloted a radiology program with its Oswell Agent, which uses claims history to guide members to high-quality, cost-effective providers, resulting in 1 in 4 members choosing recommended sites and saving $75 per appointment. AI is also deployed in claims processing, achieving 98.7% first-pass accuracy, and in medical economics to identify and act on cost signals early, particularly in pharmacy, expecting tens of millions in annual savings.

    03

    Risk Adjustment and Utilization Dynamics

    The final 2025 CMS risk adjustment report was approximately $160 million favorable to first-quarter accruals, fully recognized in Q2. The first 2026 risk adjustment report (through April) showed market morbidity tracking favorably to pricing and Q1 accruals, though only a small portion was recognized due to early-stage data. Year-to-date utilization was moderately favorable overall, with inpatient, professional, and pharmacy utilization favorable, while outpatient was elevated. Management expects MLR to trend higher in the second half due to seasonal patterns as members burn through deductibles.

    04

    ICHRA Expansion and Partnership Strategy

    Oscar is building momentum in ICHRA (Individual Coverage Health Reimbursement Arrangement) with steady demand from small businesses in healthcare and professional services. The company launched ICHRAx, an Electronic Data Exchange (EDE) built off an ACA-approved platform, which allows Oscar and its competitors to offer plans to ICHRA members. This platform enables employers to transition to defined contribution models, potentially saving up to 26% of costs, by providing access to a broad network of plans and reducing employer concerns about network coverage.

    05

    2027 Rate Cycle and Market Outlook

    Management believes the 2027 rate cycle has been rational so far, with pricing decisions made on a market-by-market basis. They anticipate a rational pricing environment reflecting CMS' program integrity efforts. Oscar expects the ACA market enrollment to remain stable or grow in 2027, with opportunities to gain market share, particularly through ICHRA. The company is prepared to adjust product and pricing if needed, especially concerning potential changes to the Notice of Benefit and Payment Parameters (NBPP).

    AI-generated summary of the company’s earnings call. Not investment advice.