Oscar Health’s third quarter results fell short of Wall Street’s expectations, reflecting persistent challenges in the individual health insurance market. Management attributed the underperformance mainly to increased market morbidity, which refers to a higher proportion of sicker individuals entering the risk pool, driven in part by Medicaid redeterminations and program integrity efforts. CEO Mark Bertolini described 2025 as a “reset moment” for the market, noting, “Overall risk adjustment data from Wakely in the third quarter show continued higher market morbidity, which we attribute to Medicaid lives entering the market and the initial impacts of program integrity efforts.” The company also pointed to disciplined cost controls and improved administrative expense ratios as partial offsets to these headwinds.
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Oscar Health (OSCR) Q3 CY2025 Highlights:
- Revenue: $2.99 billion vs analyst estimates of $3.09 billion (23.2% year-on-year growth, 3.3% miss)
- Adjusted EPS: -$0.53 vs analyst estimates of -$0.58 (8.7% beat)
- Adjusted EBITDA: -$101.5 million vs analyst estimates of -$119.5 million (-3.4% margin, 15.1% beat)
- Operating Margin: -4.3%, down from -2% in the same quarter last year
- Market Capitalization: $3.99 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Oscar Health’s Q3 Earnings Call
- Hua Ha (Baird) asked about the drivers behind rising market morbidity and potential shifts in risk pool quality. CFO Richard Blackley explained that recent data did not yet reflect the full effects of program integrity but confirmed that higher-risk members were entering and exiting as anticipated.
- Jessica Tassan (Piper Sandler) inquired about enrollment and retention in condition-specific plans. Blackley said these plans attract engaged members and contribute to retention, though they remain a smaller portion of total membership.
- Scott Fidel (Goldman Sachs) requested early insights into open enrollment trends and share gains. CEO Mark Bertolini noted increased activity but cautioned against drawing conclusions this early in the enrollment period.
- Stephen Baxter (Wells Fargo) probed Oscar’s competitive pricing and low-cost positioning. Blackley stated Oscar doubled the number of markets where it is a low-cost provider, leveraging narrow networks for cost advantage.
- Steven Couche (Jefferies) asked for quantification of the cost advantage from Oscar’s narrow network strategy. Blackley declined to provide specifics but emphasized the importance of curated provider networks for maintaining competitive costs and above-market growth.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) the effectiveness of Oscar’s 2026 pricing strategy as the individual market contracts, (2) progress on administrative cost reductions and AI-driven efficiency gains, and (3) early enrollment trends in new and existing markets, especially as enhanced premium tax credits and program integrity measures evolve. The impact of product diversification and technology adoption will also be important to track.
Oscar Health currently trades at $15.03, down from $17.05 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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