Oscar Health Inc. (NYSE:OSCR) stock fell nearly 10% on Thursday despite the health insurer reporting second-quarter revenue and earnings that topped Wall Street expectations and reaffirming its full-year revenue outlook.
The selloff appeared to reflect investor caution over second-half Affordable Care Act marketplace uncertainty, including higher-than-expected CMS-related membership churn.
Second-Quarter Results Beat Estimates
Oscar Health reported second-quarter revenue of approximately $4.88 billion, up from $2.86 billion a year earlier and above the analyst consensus estimate of $4.75 billion.
The increase was driven by higher membership and premium rate increases, partially offset by a higher net risk adjustment transfer accrual.
Earnings came in at $1.10 per share, beating the analyst consensus estimate of 49 cents.
The medical loss ratio was 79.2% compared to 91.1% a year ago, which included the entire first half impact of 2025 risk adjustment true-up driven by higher average market morbidity.
The decrease was primarily driven by disciplined pricing strategy and $164 million of favorable prior period reserve development.
Total membership increased to 2.96 million from 2.03 million a year earlier, driven by strong open enrollment growth and solid member retention.
CEO Sees Long-Term Growth Opportunity
CEO Mark Bertolini said labor market shifts, including more gig work and part-time employment, are expected to expand demand for individual health insurance over time.
“A durable individual market gives them greater choice and will power the future of American healthcare,” Bertolini said, adding that Oscar’s consumer-focused products, disciplined pricing and technology platform position the company for long-term profitable growth.
CFO Flags Higher Membership Churn
The company noted an expectation of increasing membership churn in the back half of the year as CMS program integrity processes continue.
During the conference call, management acknowledged that second-half Affordable Care Act marketplace membership churn is expected to increase as the Centers for Medicare & Medicaid Services (CMS) continues eligibility verification and program integrity reviews.
Chief Financial Officer Scott Blackley said churn, previously expected to be 1% to 2%, is now likely to be closer to twice that level. Executives stressed the higher churn is primarily a timing issue that is already reflected in the company’s guidance and does not change its full-year revenue outlook.
Outlook
Oscar Health reaffirmed its fiscal 2026 revenue guidance of $18.7 billion to $19.0 billion, compared with the Wall Street estimate of $18.62 billion.
The company also narrowed its expected medical loss ratio to 81.5% to 82.5%, improving from its prior forecast of 82.4% to 83.4%.
OSCR Price Action: Oscar Health shares were down 12.82% at $26.25 at the time of publication on Thursday, according to Benzinga Pro data.
Photo via Shutterstock
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