Oscar Health (NYSE:OSCR) reported record profitability for the first half of 2026 and raised its full-year operating outlook, citing membership growth, disciplined pricing, favorable utilization trends and lower administrative expense ratios.
Chief Executive Officer Mark Bertolini said the company generated $1.1 billion in earnings from operations and $1 billion in net income during the first six months of the year. In the second quarter, revenue rose 70% year over year to $4.9 billion, while the medical loss ratio, or MLR, improved by nearly 12 percentage points to 79.2%.
Guidance Raised Following First-Half Performance
Chief Financial Officer Scott Blackley said Oscar raised its full-year 2026 earnings-from-operations forecast to between $500 million and $700 million, representing a $250 million increase from its prior outlook. The company maintained its revenue outlook of $18.7 billion to $19 billion.
- Full-year MLR is now expected to be 81.5% to 82.5%, a 90-basis-point improvement at the midpoint from prior guidance.
- The SG&A expense ratio is expected to be 15.6% to 16.1%, an improvement of 20 basis points at the midpoint.
- Adjusted EBITDA is still expected to be roughly $115 million above earnings from operations.
The company’s SG&A expense ratio reached a record low of 14.2% in the second quarter, improving 450 basis points year over year. Blackley attributed the improvement to expense discipline, fixed-cost leverage and technology and artificial intelligence initiatives that reduced variable costs, partly offsetting higher taxes and exchange fees.
Oscar expects its SG&A ratio to remain relatively stable in the third quarter before increasing in the fourth quarter, when it typically invests in preparation for the following year’s enrollment cycle.
Risk Adjustment and Utilization Trends
Oscar received its final 2025 CMS risk-adjustment report during the quarter, which was approximately $160 million favorable to its first-quarter accruals and was fully recognized in the second quarter. The company also received an initial 2026 risk-adjustment report based on claims through April that showed market morbidity tracking favorably to pricing assumptions.
However, management said it recognized only a small portion of that favorability because the available claims data covered only four months. Risk adjustment represented about 20% of direct premiums during the first half, consistent with Oscar’s expectation for the full year.
Utilization through the first six months was moderately favorable to expectations. Inpatient, professional and pharmacy utilization were favorable, while outpatient utilization was elevated. Bertolini said the outpatient trends were stable and not concentrated in any particularly outsized category.
Management expects MLR to rise seasonally during the second half as members use more healthcare services after working through deductibles. The company said its membership has shifted across metal tiers, with some members moving from silver plans to bronze or gold offerings, but performance in those products has been consistent with or favorable to internal expectations.
Technology, AI and ICHRA Expansion
Bertolini said Oscar is using AI across benefits, billing, claims, clinical care and member support. The company’s claims platform has a 98.7% first-pass accuracy rate and processes most claims in less than 48 hours, according to management.
During the quarter, Oscar piloted a radiology program using its Oswell agent, which uses members’ claims history and clinical interactions to recommend next steps and care sites based on coverage, cost, location and availability. Bertolini said one in four members selected Oswell’s recommended site of care, saving an average of $75 per appointment.
The company also said it is using AI and medical-economics programs to identify pharmacy and utilization outliers. Management expects these capabilities to generate tens of millions of dollars in annual savings.
Oscar highlighted growing interest in individual coverage health reimbursement arrangements, or ICHRA, particularly from small businesses in healthcare and professional services. Blackley discussed the company’s ICHRAx platform, built on an electronic data exchange acquired last year. He said the platform includes competing insurers and is intended to help employers move from defined-benefit coverage toward defined-contribution arrangements.
Membership Churn Expected to Increase
Oscar expects membership churn to rise in the second half as CMS continues program-integrity and eligibility-verification efforts. Blackley said the company’s membership was essentially flat in the second quarter because lapses were lower than expected, with some anticipated disenrollments delayed into the latter half of the year.
Management now expects monthly churn to be closer to twice its prior estimate of 1% to 2%. Blackley characterized the change as primarily a timing issue and said it does not affect the company’s full-year revenue outlook. Oscar said it does not recognize revenue for members it expects to be disenrolled and has incorporated the effects of payment-integrity actions into its guidance.
Looking toward 2027, Bertolini said Oscar sees a rational pricing environment and believes the ACA market can remain stable or grow, absent major regulatory changes. The company plans to provide further details on its growth strategy at its Investor Day on Sept. 16.
About Oscar Health (NYSE:OSCR)
Oscar Health, trading on the New York Stock Exchange under the ticker OSCR, is a technology-driven health insurance company headquartered in New York, New York. Founded in 2012 by Mario Schlosser, Joshua Kushner and Kevin Nazemi, the company was built with the goal of simplifying healthcare coverage and enhancing member experience. Oscar leverages a proprietary digital platform to streamline plan enrollment, claims administration and member support, distinguishing itself in the individual, family and small group insurance markets.
The company’s primary products include on-exchange individual and family medical plans under the Affordable Care Act, off-exchange plans, as well as Medicare Advantage offerings.
