Oscar Health Charts Risky Path Toward 2026 Profitability

Oscar Health, Inc. ((OSCR)) has held its Q4 earnings call. Read on for the main highlights of the call.

Oscar Health’s latest earnings call struck a cautiously optimistic tone, blending sharp 2025 setbacks with a confident turnaround story for 2026. Management highlighted robust revenue growth, record enrollment and sizable market share gains, but was candid about heavy losses, elevated medical costs and risk-adjustment volatility that cloud near-term visibility.

Strong Revenue Growth

Oscar posted 2025 revenue of $11.7 billion, up 28% year over year, reflecting rapid expansion in its ACA-focused model. For 2026, the company guided to $18.7–$19.0 billion in revenue, implying roughly 61% growth at the midpoint and underscoring how pricing and membership scale are set to drive the top line.

Large Membership and Market Share Gains

Membership reached 3.4 million as of February 1, 2026, with Oscar expecting about 3.0 million paid members by the start of the second quarter, a 58% jump versus last year. Within its footprint, market share surged from 17% in 2025 to 30% in 2026, signaling strong competitive positioning even as the overall ACA market shrinks.

Clear Path to Profitability in 2026

After a loss-making 2025, management outlined a path to profitability next year, guiding to earnings from operations of $250–$450 million in 2026. The midpoint implies about a $750 million year-over-year swing and roughly a 1.9% operating margin, with adjusted EBITDA expected to land about $115 million above operating earnings.

Material SG&A Efficiency Improvements

The company reduced its full-year SG&A expense ratio to 17.5%, about 160 basis points better than last year, reflecting scale and disciplined cost control. For 2026, Oscar targets an SG&A ratio of 15.8%–16.3%, implying another roughly 140 basis points improvement and further leverage on its growing revenue base.

AI and Technology-Driven Operational Gains

Oscar credited AI and technology for lowering administrative costs by about 160 basis points year over year, emphasizing automation as a structural advantage. Its agentic AI care guide cut response times by 67% during peak enrollment, while its Oswell system now handles 86% of member questions, supporting better service at lower cost.

Product and Distribution Momentum

The company reported a record open enrollment season, boosted by product innovation such as Hello Menno, A Salud and Hive Health with Oscar. Broker partnerships expanded 60%, and Oscar noted that lifestyle-oriented product members are more engaged, more likely to recommend the brand and more inclined to enroll directly.

Balance Sheet and Capital Actions

Oscar ended the year with about $5.5 billion in cash and investments, including $414 million at the parent company, giving it substantial liquidity. Management also highlighted a $410 million convertible offering yielding $360 million in net proceeds, a new $475 million revolver and roughly $1.0 billion in insurance subsidiary surplus, including $315 million of excess capital.

Large 2025 Losses

Despite growth, 2025 was deeply unprofitable, with a loss from operations of roughly $396 million and a net loss of $443 million. Adjusted EBITDA was a loss of about $280 million, representing a $479 million deterioration versus the prior year and underscoring the financial hit from adverse market dynamics.

Elevated Medical Loss Ratios in 2025

Oscar’s full-year medical loss ratio rose to 87.4%, about 570 basis points worse year over year, indicating higher-than-anticipated medical costs. The fourth quarter was particularly challenging, with MLR at 95.4%, roughly 730 basis points higher than last year, driven mainly by elevated market morbidity and risk-adjustment impacts.

Risk Adjustment Volatility and Q4 True-Up

The company was forced to increase its Q4 risk-adjustment accrual by $275 million after data showed members were healthier than market assumptions. Overall, 2025 risk transfers reached about 18.5% of direct premiums, up 390 basis points, and Oscar expects around 20% in 2026, signaling persistent pressure and volatility from the risk-adjustment regime.

Uncertainty on Final Paid Membership and Churn

Management warned of elevated churn as passively enrolled members face higher premiums following the expiration of enhanced subsidies, with paid membership expected to drop from 3.4 million to about 3.0 million by the end of the first quarter. Additional contraction could come after midyear data, though Oscar expects overall ACA market shrinkage to land toward the low end of its prior 20%–30% range.

Utilization Shifts and Pull-Forward Risk

In the fourth quarter, inpatient utilization moderated while outpatient and professional services ran somewhat higher than expected, possibly reflecting members accelerating care before subsidy changes. The company also cited increases in mental health and substance use disorder utilization, flagging timing and seasonality risks as it looks ahead to 2026.

Metal Mix Shift to Higher Deductible Plans

Oscar reported a significant shift in plan mix, with bronze enrollment rising from about 25% to 39% while silver dropped from roughly 71% to 36% and gold climbed to 25%. Heavier exposure to lower-premium, higher-deductible bronze plans could heighten churn and nonpayment risk among more price-sensitive members, complicating margin management.

Limited Visibility into Market Risk Dynamics

Management stressed that industry-wide visibility into risk-adjustment behavior remains limited, given reliance on external reporting and third-party data. Leaders acknowledged that predicting risk-adjustment outcomes is difficult and that this uncertainty remains a central risk to their outlook despite operational improvements.

GAAP Reconciliation Limitations

Oscar did not provide a detailed reconciliation from its 2026 adjusted EBITDA guidance to GAAP net income, saying certain items cannot be projected with reasonable certainty. While not unusual in a volatile market, this gap reduces transparency for investors seeking a full GAAP view of the company’s earnings power in its targeted profitability year.

2026 Outlook and Guidance

Looking forward, Oscar expects 2026 revenue of $18.7–$19.0 billion on roughly 3.0 million paid members by early Q2 and about a 28% weighted average rate increase. Guidance calls for an MLR of 82.4%–83.4%, lower SG&A at 15.8%–16.3%, operating earnings of $250–$450 million and adjusted EBITDA about $115 million higher, all backed by a stronger balance sheet and conservative assumptions about market contraction.

Oscar’s earnings call painted a complex picture of a fast-growing insurer navigating real structural headwinds while pushing hard toward profitability. For investors, the story hinges on whether disciplined pricing, AI-enabled efficiency and careful capital management can offset risk-adjustment volatility, membership churn and utilization swings to deliver on the ambitious 2026 targets.