Oscar Health, Inc.

Good evening. My name is Bhavesh and I'll be your conference operator today. At this time, I would like to welcome everyone to Oscar Health's fourth quarter and full year 2023 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, please press the star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the one once again. Thank you. I will now turn the conference over to Chris Potichar, Vice President of Treasury and Investor Relations.

Good evening, everyone. Thank you for joining us for our fourth quarter and full year 2023 earnings call. Mark Berlini, Oscar's Chief Executive Officer, and Scott Blackley, Oscar's Chief Financial Officer, will host this evening's call. This call can also be accessed through our Investor Relations website at ir.highoscar.com. Full details of our results and additional management commentary are available in our earnings release, which can be found on our investor relations website at ir.highoscar.com. Any remarks that Oscar makes about the future constitute forward-looking statements within the meaning of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in our quarterly report on Form 10-Q for the quarterly period ended September 30, 2023, filed with the SEC, and other filings with the SEC, including our annual report on Form 10-K for the period ended December 31, 2023, to be filed with the SEC. Such forward-looking statements are based on current expectations as of today. Oscar anticipates that subsequent events and developments may cause estimates to change. While the company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. The call will also refer to certain non-GAAP measures. A reconciliation of these measures to the most directly comparable GAAP measures can be found in the fourth quarter and full year 2023 earnings press release available on the company's investor relations website at ir.highoscar.com. With that, I would like to turn the call over to our CEO, Mark Bertolini.

Thank you, Chris. Good evening, everyone. When I joined Oscar, I highlighted three priorities for the business. One, achieve insurance company adjusted EBITDA profitability in 2023. Two, achieve total company adjusted EBITDA profitability for 2024. Three, continue to enhance the value of our technology to the Plus Oscar business and bring more of our capabilities to market. We have made major progress toward achieving these priorities. We closed out 2023 with another strong quarter, driving financial performance for the full year and achieving the first of our priorities. The insurance company generated $169 million of adjusted EBITDA profitability in 2023, a milestone Oscar committed to in early 2022. Our medical loss ratio improved 370 basis points year over year to 81.6%, below the low end of our guidance range. For the full year, overall claims trends were favorable relative to our expectations. Utilization trends by category remain consistent throughout the year with inpatient performance in line, outpatient and pharmacy slightly above, and professional well below. Total company adjusted EBITDA improved by $417 million versus the prior year to a loss of $45 million. Our strong momentum positions us well to achieve the second priority I mentioned, total company adjusted EBITDA profitability in 2024. Our business is well positioned for sustainable long-term growth and margin expansion. We exceeded our 2024 open enrollment expectations and expect to serve over 1.3 million members. We continue to see strong retention, which we believe is driven by our superior member experience. Our disciplined pricing for 2024 is allowing us to grow our membership well above the market while driving margin expansion. We expect another year of MLR improvement given our pricing strategy and total cost of care initiatives, including significant PBM savings, and enhanced payment integrity efforts. We also anticipate continued operational cost improvement, including vendor savings from our enhanced scale and the benefit of operating leverage as we return to growth. Finally, our technology is making the healthcare experience more seamless for over 1 million OSCAR members, the 500,000 client lives we now serve through Plus OSCAR, and the providers who care for them. Overall, 2023 was an exceptional year for OSCAR. We are delivering on our commitments and are on a solid path to deliver sustained growth with improved margins. Now I will turn to our business highlights. This past open enrollment marked OSCAR's 11th year as a prominent player in the ACA market. We expanded into 165 new counties and are now privileged to serve over 1.3 million members across 20 states. Our above-market growth was driven by strong retention and new members in both existing expansion markets. Consumers choose us for our affordable and innovative plan designs, and they stay with us for our superior member experience. Our MPS continues to be an industry-leading 60. We continue to grow in key states for OSCQR, including Florida, Georgia, and Ohio. We also outperformed our expectations in new service areas. including Cincinnati, West Central Tennessee, Topeka, and Iowa. We believe our superior member experience is meeting members' needs and continue to demonstrate we can launch and succeed in new markets outside of major metropolitan areas. We introduced new products to meet the needs of our fast-growing and diverse member population, including expanding our chronic illness plans, diabetes care, and Breathe Easy to new markets. We also launched an enhanced Spanish-first experience to deliver culturally authentic experience to our growing Spanish-speaking member base. Consumers expect a level of convenience and accessibility in healthcare comparable to the best consumer companies in the U.S. Oscar makes this experience possible through our full-stack technology. Since inception, Oscar has been focused on building our technological infrastructure and end-to-end experience. We believe this stack offers greater control over the member experience, engagement, and affordability. Our platform has fueled major strides in operational efficiency. We launched powerful capabilities to digitalize more interactions with providers and members and automate a growing number of clinical and administrative workflows via AI-powered features. As an example, we leveraged automation to support members more effectively, and efficiently during open enrollment. We enhanced our member services IVR and launched an AI-powered secure messaging feature. Self-service features like these make it faster and easier for members to get the answers they need and allow our care team to support more complex member needs. While membership increased this open enrollment, call volume remained steady, call abandonment rates decreased, and member satisfaction increased. We are making our superior member experience and innovative technology available to others in the healthcare system, enabling a higher quality experience for consumers, and driving better engagement, outcomes, and business performance for clients. We are pleased with the traction of Campaign Builder, plus Oscar's engagement and automation platform. Campaign Builder now serves approximately 500,000 client lives, in addition to the 1.3 million members enrolled in Oscar Health Insurance. Campaign builder clients saw impressive results in the second half of 2023. One payer client saw a retention rate of over 96% for Medicare Advantage members engaged with a retention program. A diabetes care gap program for another client resulted in over 40% of the eligible population completing a preventative diabetes screening within 90 days of engaging with the campaign. We are encouraged with these proof points and committed to bringing more capabilities to market to power more of the healthcare system. As we've shared on prior calls, AI continues to be a part of our overall strategy to ensure our technology can deliver a superior member experience, improve health outcomes, meet provider needs, and lower costs. We continue to build AI use cases, including integrating OpenAI's GPT technology into Campaign Builder. We believe our AI-powered tools can be easily incorporated into client workflows to support their strategic business objectives and patient needs. Our outperformance in 2023 sets a solid foundation for us to deliver on our target for total company adjusted EBITDA profitability in 2024. Our strategic priorities include, one, running a great company with market-leading, sustainable, scalable operations. Two, continually investing in our superior member experience. Three, harnessing our technology to power others. And four, continuing to innovate market offerings to extend beyond the ACA. Our strategic priorities also include the long-term growth opportunity we see in the individual market and the potential we see to serve a broader set of customers, including employers and employees. The HCA is the fastest growing segment of health insurance with over 21 million people enrolled in individual insurance plans on exchanges for 2024. OSCAR is well positioned to capitalize and innovate on this strong market growth, as well as leading the industry in trends driving the future of healthcare. OSCAR was purpose-built with a focus on accessibility, affordability, and a superior member experience. Member experience is in our DNA. We believe we are best positioned to win in an increasingly digital and consumer-centric marketplace. We look forward to sharing more on our long-term strategic plan at our next Investor Day in June in New York. With that, I will turn the call over to Scott.