Oscar Health, Inc.

Good morning, everyone. My name is Ellie and I will be your conference operator for today. At this time, I would like to welcome everyone to the Oscar Health's second quarter 2024 earnings conference call. Please note that this call is being recorded. As of right now, everyone is joined on mute so we can avoid background noise. Thank you. I will now turn the conference over to Chris Potichar, Vice President of Treasury and Investor Relations. You may now begin.

Good morning, everyone. Thank you for joining us for our second quarter 2024 earnings call. Mark Berlini, Oscar's Chief Executive Officer, and Scott Blackley, Oscar's Chief Financial Officer, will host this morning'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 period ended March 31, 2024, filed with the Securities and Exchange Commission, and other filings with the SEC, including our quarterly report on Form 10-Q for the quarterly period ended June 30, 2024, 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 second quarter 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.

Good morning. Thank you, Chris, and thank you all for joining us. This morning, Oscar reported strong second quarter results, delivering solid performance in the first half of the year. Our positive results were driven by robust membership growth, solid and consistent execution, and improved bottom line performance. Underlying our second quarter results, we reported total revenue of $2.2 billion in the quarter, an increase of 46% year-over-year. We improved our medical loss ratio by 90 basis points year-over-year to 79%. We achieved total company adjusted EBITDA of $104.1 million, a nearly $69 million improvement versus the prior year. In addition, our first half adjusted EBITDA was $323 million, a significant year-over-year of improvement of $237 million. The first half of 2024 is the best six months in OSCAR's history. Based on our outperformance in the first half of the year, Today we raised our full year 2024 revenue guidance by $700 million to a range of $9 billion to $9.1 billion and adjusted EBITDA guidance to a range of $160 to $210 million. In a few moments, Scott will provide a detailed review of our second quarter results and updated 2024 guidance. First, I will share key business highlights that demonstrate strong momentum against the strategic plan we shared with you at our investor day. In June, we outlined our strategy to achieve at least 20% revenue CAGR and 5% operating margin by 2027. We shared our plan to double our footprint in Oscar Insurance, significantly growing our addressable ACA opportunity through existing and new market expansion. We also doubled down on our commitment to introduce innovative products that meet the needs of our increasingly diverse member base. We declared our path to diversify Oscars growth beyond the traditional ACA by building a leading ICHRA business. Finally, we reinforced our investment in Oscars key asset, our technology, which continues to drive superior member experiences, operational efficiencies, and affordability. Our second quarter results increased our confidence in achieving these long-term goals. We closed the quarter with approximately 1.6 million members a 63% increase year-over-year. Key growth drivers included strong retention, new membership in existing expansion markets, and SEP member additions as Medicaid redeterminations continued. Overall utilization was in line with our expectations. We expect SEP member additions to continue into the second half of the year at a decelerated rate. as the Medicaid redetermination process is now complete in almost all of OSCAR states. Our strong growth this year lays a solid foundation for 2025 as SEP members that renew become a tailwind to our results. OSCAR continues to deepen our market presence. We grew in approximately 80% of our states year over year. We captured more market share by leveraging our deep provider and distribution relationships and winning on experience. We drove more individuals to affordable, culturally competent plans based on our deep understanding of the ACA consumer and our ability to personalize engagement through our technology. Our powerful technology engine continues to give Oscar Insurance a unique market edge while creating strong outcomes for provider and health plan clients. For example, we introduced several campaigns that guided members to Oscar's virtual urgent care business. Our models track member search terms and records to identify individuals in need of immediate care. The campaigns drove interventions to divert care from ER settings and brick-and-mortar urgent care, lowering member costs and driving close to $18 million worth of value to Oscar Insurance this year. In addition, we launched engagement campaigns for our iPlus Oscar client that helped drive an 18% year-over-year increase in annual wellness visits among individuals with chronic conditions. Turning to ICRA, we continue to execute against our strategy. Small and mid-sized businesses are struggling to offer health insurance at reasonable costs. We are working with ICRA platforms to meet these unmet needs and make OSCQR a preferred carrier of choice throughout our innovative products. The ICRA value proposition is resonating in the market and at state policy levels. States including Indiana and Texas are enacting laws and considering legislation to make it easier for small businesses to adopt ICHRA. We expect other states will follow suit. State momentum keeps us bullish on ICHRA as a key solution to give consumers more choice and employers a more sustainable cost structure. Before I transition to Scott, I wanted to address the heightened attention on the ACA given the upcoming presidential election. The ACA is the fastest-growing market in health insurance and has created the largest risk pool in the industry, resulting in a significantly lower cost trend than conventional employer-sponsored coverage. The market serves nearly 22 million lives and has lowered the uninsured rate for small businesses from 25% to 16% and to 7% overall. The ACA fills a critical gap in the insurance market and has proven its value across states. We are seeing a notable shift in sentiment from federal and state policymakers. They are moving beyond repeal and replace to creating constructive solutions that position their marketplaces to better serve more Americans. Now I want to put a finer point on enhanced subsidies. As we said at Investor Day, we expect to achieve our 2027 top line revenue and operating margin targets regardless of the outcome on enhanced subsidies. However, the continuation of enhanced subsidies is a critical bipartisan issue. Subsidies have made affordable, comprehensive benefits accessible to hardworking Americans, ensuring individuals do not have to make tradeoffs on basic needs like food and housing. Without subsidies, the uninsured rate is expected to rise significantly and will largely affect notable coverage gains in Texas, South Carolina, Mississippi, Louisiana, and Georgia. Any administration, therefore, has a strong incentive to find a permanent solution. Again, we see a continuation of enhanced subsidies as upside to our base plan. In summary, Oscar continues to execute. The strategy we laid out is working, evidenced by strong revenue growth, improved operating margins, and bottom-line performance. Our outperformance through the second quarter positions us to achieve our total company adjusted EBITDA profitability target this year. I am confident we have the right team and strategy to achieve our updated 2024 guidance and long-term goals. Oscar has significant runway to grow through geographic expansion, our tech-driven products, and our leadership in ICRA. We have a strong belief in the individual market, and we have proven our ability to innovate in dynamic environments. We look forward to continuing to deliver strong results in 2024 to make the individual market the chosen solution for all Americans. Before I hand the call to Scott, I want to thank our OSCAR team. They are the A-team whose actions and hard work drive our outsized results. Scott?