Health insurance company Oscar Health (NYSE: OSCR) missed Wall Street’s revenue expectations in Q4 CY2025, but sales rose 17.3% year on year to $2.81 billion. On the other hand, the company’s full-year revenue guidance of $18.85 billion at the midpoint came in 47.8% above analysts’ estimates. Its non-GAAP loss of $1.24 per share was 34.6% below analysts’ consensus estimates.

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StockStory’s Take

Oscar Health’s fourth quarter results drew a positive market response, despite revenue and earnings missing Wall Street expectations. Management attributed the miss to higher claims costs and increased risk adjustment payables, which reflected broader shifts in the Affordable Care Act (ACA) market. CEO Mark Bertolini cited the influx of Medicaid members and industry-wide changes in market morbidity as primary drivers, emphasizing that the company’s disciplined pricing and operational efficiency, including expanded AI deployment, helped offset some of these external headwinds. Bertolini stated, "Oscar embraced the change and positioned the company for strong top line growth and margin expansions in 2026."

Looking ahead, Oscar Health’s guidance is anchored on continued membership growth, product innovation, and operational improvements. Management expects margin expansion and a return to profitability, driven by new plan designs, a focus on consumer experience, and broader adoption of AI to reduce administrative costs. CFO Richard Blackley noted that rate increases, a younger average member profile, and a shift toward bronze and gold plans are expected to improve the medical loss ratio. Bertolini added, "Our strategic priorities position Oscar to shape the next evolution of the individual market... accelerate National IFP and ICRA expansion, create lifestyle products with an exceptional consumer experience, and drive operational excellence through AI."

Key Insights from Management’s Remarks

Oscar Health’s management identified market morbidity shifts, product expansion, and technology investment as central to their recent performance and outlook.

• Market morbidity impact: Management cited a challenging year for ACA carriers, with increased claims and risk adjustment payables tied to a surge in higher-risk members entering the market, especially due to Medicaid redeterminations and regulatory changes.
• Membership growth: The company achieved above-market growth during open enrollment, ending the quarter with 2 million members and expecting a 58% year-over-year increase in paid membership by the start of Q2. This growth was driven by improved retention and expansion in strategic markets such as Arizona, Florida, New Jersey, and Texas.
• Product innovation: Oscar introduced new lifestyle and condition-specific plans, including a menopause-focused product and tailored offerings for Spanish-speaking diabetics. These new products are attracting new consumer segments and showing higher retention and brand loyalty.
• Broker network and distribution: Management expanded broker partnerships by 60% and provided tailored tools for brokers to guide members through subsidy changes, which facilitated a smoother transition for members affected by the expiration of enhanced premium tax credits.
• AI-driven efficiency: The company highlighted significant administrative cost reductions and improved service response times through the integration of AI tools, such as their Agentic AI bot for care guides and the Oswell health assistant. These advancements have enabled scalable growth and enhanced member engagement.

Drivers of Future Performance

Oscar Health’s outlook is shaped by disciplined pricing, expanded product offerings, and ongoing technology investments amid continued industry volatility.

• Rate and product mix adjustments: Management expects that higher average premium rates and a shift toward lower-cost bronze and gold plans will help improve margins, even as the average member age declines. These shifts are intended to counteract the expiration of enhanced premium tax credits and anticipated market contraction.
• Operational efficiency through technology: Oscar is counting on further reductions in its selling, general, and administrative (SG&A) expense ratio, driven by AI-powered automation and cost management. This is expected to support profitability as the company scales, despite elevated churn and ongoing regulatory changes.
• Managing risk adjustment volatility: The company is investing in new data partnerships and industry reporting initiatives to gain better visibility into market-wide risk adjustment trends. While management anticipates risk adjustment as a percentage of direct premiums to rise, improved data analytics and member engagement are expected to stabilize this metric over time.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the stability of paid membership following the expiration of enhanced premium tax credits, (2) the effectiveness of new product launches in sustaining member growth and retention, and (3) progress in AI-driven operational efficiency as a lever for margin improvement. Additional focus will be given to the company’s ability to manage risk adjustment volatility and adapt to evolving ACA market dynamics.

Oscar Health currently trades at $13.05, up from $12.66 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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