Oscar Health's Q1 2025: Unpacking Contradictions in Membership Dynamics, Risk Adjustments, and Pricing Strategies

Member payment and effectuated membership, risk adjustment and MLR seasonality, fraudulent member issue and pricing strategy, membership and enrollment dynamics, risk adjustment and MLR are the key contradictions discussed in Oscar Health's latest 2025Q1 earnings call.



Revenue and Membership Growth:
- Oscar Health reported total revenue of $3 billion in Q1 2025, a 42% year-over-year increase.
- The company ended the quarter with approximately 2 million effectuated members, a 41% year-over-year increase.
- Growth was driven by strong top line growth, retention, new membership, and strong performance of condition-focused plans.

Operational Efficiency and Expense Reduction:
- Earnings from operations grew by $112 million to $297 million, and the operating margin improved by 110 basis points year-over-year to 9.8%.
- The SG&A expense ratio improved by 260 basis points year-over-year to 15.8%, the lowest quarterly SG&A expense ratio in the company's history.
- These improvements were due to fixed cost leverage, lower exchange fee rates, and variable cost efficiencies, supported by the company's tech capabilities.

Medical Loss Ratio (MLR) and Risk Adjustment:
- The first quarter MLR was 75.4%, an increase of 120 basis points year-over-year, impacted by $31 million of unfavorable prior period development.
- The risk adjustment true up for 2024 contributed to the MLR increase, while favorable claims run out and CSR recovery partially offset this.
- The MLR is expected to be flatter in the second half of the year due to ongoing risk adjustment and operational efficiency.

Policy Environment and Market Dynamics:
- Oscar Health advocates for constructive solutions that strengthen the individual market, amid attention on policy changes affecting enrollment windows and premium increases.
- The company views a competitor's exit from the market as an opportunity, with significant overlap and plans to maintain competitive pricing, supported by discipline in underwriting and risk adjustment.