Oscar Health Incorporated (NYSE: OSCR) released its financial results for the fourth quarter, showcasing revenue growth alongside wider losses and elevated medical cost ratios compared to the prior year period. The quarter's financial performance reflects the complex dynamics the healthcare technology company is navigating as it seeks to restore profitability in the near term.
The company generated approximately $2.81 billion in revenue for the quarter ending 2025, representing a substantial increase compared to $2.39 billion reported in the same quarter a year prior. However, this figure fell short of analyst expectations, missing the consensus forecast of $3.12 billion. This top-line increase is primarily attributed to growth in membership numbers, which rose significantly. For the full fiscal year 2025, Oscar Health reported total revenues totaling roughly $11.7 billion, up from $9.2 billion the preceding year.
Despite the revenue advancement, Oscar Health experienced a notable increase in its medical loss ratio (MLR) for the quarter to 95.4%, contrasted with 88.1% one year earlier. The company attributes this rise chiefly to higher average morbidity across its market base. This trend led to an increased net risk adjustment transfer accrual. Additionally, healthcare service utilization escalated and was not fully compensated through risk adjustment mechanisms, thereby contributing to the elevated MLR.
Regarding profitability metrics, Oscar Health posted a loss of $1.24 per share during the quarter, underperforming relative to the consensus estimate of a loss of 89 cents per share. Operating expenses, measured as selling, general and administrative (SG&A) costs, improved slightly, with the expense ratio decreasing to 18.2% from 19.5% year-over-year. This reduction is attributed to enhanced fixed cost leverage, decreased exchange fee rates, and disciplined cost controls. However, these gains were partially offset by the impact of higher risk adjustment costs relative to premium revenues.
Operating losses widened substantially, reaching $333.75 million compared to $147.73 million reported in the corresponding quarter of the previous year. The elevated losses reflect the combined effects of increased morbidity, higher medical utilization, and the resulting risk adjustment accrual. The company's adjusted EBITDA loss narrowed to $101.5 million in the quarter versus a loss of $307.78 million in the prior year period.
Membership gains were a positive highlight, with total members expanding from 1.68 million to 2.04 million quarter-over-quarter. This surge in membership serves as a key factor in the company’s strategy to drive future profitability.
Mark Bertolini, Chief Executive Officer of Oscar Health, characterized fiscal 2025 as a "reset year" for the individual health insurance market. He emphasized the company's decisive initiatives aiming to restore profitability by 2026. Mr. Bertolini pointed to the introduction of a new suite of affordable product offerings, integration of agentic artificial intelligence features, and a focus on delivering an exceptional member experience as drivers behind the record-high membership totals achieved. He expressed confidence that these elements collectively position the company favorably to generate significantly improved financial outcomes in the coming year.
In terms of capital structure, Oscar Health successfully secured a $475 million revolving credit facility with a three-year term. Chief Financial Officer Scott Blackley described this move as opportunistic steps to bolster the company's balance sheet and optimize capital allocation. The financing was underscored by support from a syndicate of highly regarded banking institutions and reportedly completed on terms favorable to the company. This enhanced liquidity and financial flexibility is intended to support long-term growth prospects and accelerate adoption among individual market consumers and employers.
For the fiscal year 2026, Oscar Health projects revenues between $18.7 billion and $19 billion, substantially outstripping the consensus Wall Street estimate of approximately $12.57 billion. The company anticipates its medical loss ratio will improve to a range of 82.4% to 83.4%, alongside a reduction in SG&A expense ratio to between 15.8% and 16.3%. Operating earnings are expected to reach between $250 million and $450 million, marking a meaningful shift toward profitability.
Oscar's shares saw positive movement on the day of the report's release, trading up 5.60% to $13.39, after hitting an intraday high of $14.37 and a low of $13.01, according to financial market data.
Key Points
- Oscar Health experienced revenue growth in Q4 2025 driven by expanding membership but failed to meet consensus revenue estimates.
- The medical loss ratio increased notably due to higher average morbidity and healthcare utilization, impacting profitability.
- Operating losses widened compared to the prior year, though adjusted EBITDA losses improved sequentially.
- The company finalized a $475 million revolving credit facility to strengthen its capital structure and support growth initiatives.
- Projections for 2026 include significant revenue growth, improved cost ratios, and operating profitability.
Risks and Uncertainties
- Elevated medical loss ratio driven by higher morbidity and utilization may continue to pressure profitability if not effectively managed.
- Repeated missing of revenue estimates could impact investor confidence and share price performance.
- The realization of projected cost efficiencies and improved operating margins depends on the successful execution of strategic initiatives and market conditions.
- Dependence on risk adjustment mechanisms to offset higher utilization introduces financial variability.