Oscar Health sustains heavy net loss in 2022, but executives still optimistic

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Oscar Health made gains on some vital financial metrics last year and beat analysts’ expectations for the fourth quarter, triggering its share price to rise Friday.

The insurtech’s medical loss ratio improved from 88.9% in 2021 to 85.3% last year and its administrative expense ratio declined from 21.8% to 20.6%, the company reported Thursday. Oscar Health recorded a $226.6 million net loss during the fourth quarter, which beat analyst expectations of $261.3 million in net losses.

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Oscar Health endured a $610 million net loss in 2022, up from $571 million the year before, but the health insurer predicted a better 2023. The company expects to lose $75 million to $175 million this year. Executives said Oscar Health is on track to be profitable by the end of next year and would continue to improve its margins.

“We believe we are better positioned than ever before to hit profitability based on disciplined execution,” Oscar Health CEO and co-founder Mario Schlosser said during a call with investors Thursday.

Wall Street welcomed the news: Oscar Health opened at $3.90 per share Friday and closed at $4.95, a 30.7% increase.

Oscar Health will continue to focus on efficiency and profitability without making major investments, Schlosser said. The company has been scaling back its operations amid financial strain.

In December, Oscar Health announced it would a href=”https://www.modernhealthcare.com/insurance/oscar-health-new-florida-members”>halt individual market sales in Florida weeks before the end of open enrollment on the health insurance exchanges. A month before, the company effectively ended its Medicare Advantage business. And in August, Oscar Health stopped offering technology services to insurers and providers transitioning to risk-based payment models.

Some remain skeptical about the insurer’s prospects. The fundamentals haven’t changed, said Ari Gottlieb, a principal at A2 Strategy Group. “I don’t think being an individual-only player is actually a viable business model long-term,” he said. “They will never have scale in the local market to negotiate with providers for really aggressive rates.”

Oscar Health’s recent finances were boosted by investment income related to high interest rates, executives conceded during the call with investors. Oscar Health collected $25 million from investments during the fourth quarter, up from $334,000 during the final quarter of 2021, a 7,385% increase.

This story first appeared in Digital Health Business & Technology.

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