Q4 2021 Oscar Health Inc Earnings Call

Yeah.

Good afternoon. My name is Rachel and I will be your conference operator today at this time I would like to welcome everyone to Oscar Health 2021 fourth quarter and full year earnings conference call. All lines have been placed on mute to prevent any background noise.

Speaker 1: Good afternoon. My name is Rachel, and I will be your conference operator today. At this time, I would like to welcome everyone to Oscar Health's 2021 fourth quarter and full year earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key.

After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question press the pound key.

Speaker 1: Thank you. I would now like to turn it over to Cornelia Miller, Vice President of Corporate Development and Investor Relations, to begin the conference. Ma'am, please go ahead.

I would now like to turn it over to Cornelia Mueller, Vice President of corporate development and Investor Relations to begin the conference Ma'am. Please go ahead.

Thank you Rachel and good afternoon, everyone. Thank you for joining us for our fourth quarter and year end earnings call, where we will discuss our financial results the benefits of our increasing scale and reaffirm our 2022 outlook Mario Schlosser, Oscars co founder and Chief Executive Officer, and Scott Blackley, Oscars, Chief Financial Officer will host this off.

Speaker 2: Thank you, Rachel, and good afternoon, everyone. Thank you for joining us for our fourth quarter and year-end earnings call, where we'll discuss our financial results, the benefits of our increasing scale, and reaffirm our 2022 outlook. Mario Schlosser, Oscar's co-founder and chief executive officer, and Scott Blackley, Oscar's chief financial officer, will host this afternoon's call, which can also be accessed through our investor relations website at ir.hiosker.com.

During this call, which can also be accessed through our Investor Relations website, IR Dot Hi, Oscar Dotcom.

Full details of our results and additional management commentary are available in our earnings release, which can be found on our investor Relations website at IR Dot Hi, Oscar Dotcom and.

Speaker 2: Full details of our results and additional management commentary are available in our earnings release, which can be found on our investor relations website at ir.hiosker.com.

Speaker 2: Any remarks that Oscar makes about the future constitute forward-looking statements within the meaning of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in our quarterly report on Form 10-2 for the quarterly period ended September 30, 2021, filed with the SEC and our other filings with the SEC.

Any remarks that Oscar makes about the future constitute forward looking statements within the meaning of the safe Harbor provisions under the private Securities Litigation Reform Act of 1995 actual results may differ materially from those indicated by those forward looking statements as a result of various important factors, including those discussed in our quarterly report on Form 10-Q for the quarterly period ended Sept.

Remember 30th 2021 filed with the SEC and our other filings with the SEC such forward looking statements are based on current expectations as of today Oscar anticipates that subsequent events and developments may cause estimates to change while the company may elect to update these forward looking statements at some point in the future, we specifically disclaim any obligation to do so.

Speaker 2: Such forward-looking statements are based on current expectations as of today. Oscar anticipates that subsequent events and developments may cause estimates to change. While the company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any application to do so.

Speaker 2: The call will also refer to certain non-GAAP measures. A reconciliation of these measures to the most directly comparable GAAP measures can be found in our fourth quarter 2021 press release, which is available on the company's investor relations website at ir.hiosker.com. With that, I would like to turn the call over to our CEO Mario Schlosser. Good evening.

Call will also refer to certain non-GAAP measures a reconciliation of these measures to the most directly directly comparable GAAP measures can be found in our fourth quarter 2021 press release, which is available on the company's Investor Relations website at IR Dot Hi, Oscar Dot com with that I would like to turn the call over to our CEO Mario Schlosser.

Good evening, everyone and thank you for joining US we have created something unique you had Oscar we enter 2022 with strong tailwind in our business.

Speaker 3: We have created something unique here at Oscar. We entered 2022 with strong tailwinds in our business in a clear strategy.

And a clear strategy sets for the years ahead.

Speaker 3: Building on our record breaking growth, we remain focused on scaling operations and driving towards profitability. We are leveraging the technology we have built to reduce medical costs, to provide better clinical outcomes for our members, and to reduce our operating expenses.

Building on our record breaking growth, we remain focused on scaling operations and driving towards profitability. We are leveraging the technology we have built.

To reduce medical costs to provide better clinical outcomes for our members and to reduce our operating expenses.

Speaker 3: The healthcare system is changing towards consumerization, towards risk sharing and towards increased adoption by technology. And we believe we are delivering on a unique set of business proof points to capitalize on this shift.

The health care system is changing towards consumer ization towards risk sharing and towards increased adoption by technology and we believe we are delivering on a unique set of business proof points to capitalize on the shifts.

We are well positioned to deliver on our vision of making healthier more accessible and more affordable for all.

Speaker 3: And we are well positioned to deliver on our vision of making healthcare more accessible and more affordable for all. We are doing this through both our risk-based business and our plus Oscar reclined relationship.

We are doing this through both our risk based business and our plus Oscar client relationships.

Speaker 3: As you will recall, we shared some preliminary Q4 2021 results, as well as 2022 guidance on January 27th. We will dig deeper into those metrics now. To start, Scott is going to take you through our Q4 and full year 2021 financials, and then I will come back and highlight the key themes for Oscar in 2022. With that, I would like to turn the call over to Scott.

As you would recall, we shared some preliminary Q4 2021 results as well as 2022 guidance on January 27, we would dig deeper into those metrics now to.

To start Scott, it's going to take you through our Q4 and full year of 2021 financials, and then I will come back and highlight the key themes for Oscar in 2022.

I would like to turn the call over to Scott.

Thank you Mario and good afternoon, everyone today, I'm going to walk through in more detail. The 2021 results and I'll reaffirm our 2022 guidance before I jump into the numbers I'll call out three key three themes that are emerging in our results. We are seeing strong traction gaining new members and retaining the majority of our existing.

Speaker 4: Today I'm going to walk through in more detail the 2021 results, and I'll reaffirm our 2022.

Speaker 4: Before I jump into the numbers, I'll call out three key themes that are emerging in our...

Speaker 4: We are seeing strong traction, gaining new members, and retaining the majority of our existence.

Just two months, we have made great progress on efficiency with our higher scale and there is room for more progress and lastly, we see opportunities for MLR improvement.

Speaker 4: We have made great progress on efficiency with our higher scale, and there is room for more progress. And lastly, we see opportunities.

Turning to the results we had a number of onetime items in 2020 that impacted our year over year results. The largest of which was a 52 million dollar net risk corridor settlement, which was recognized in the fourth quarter of 2020, we excluded this nonrecurring item from all of our 2020 key results, including adjusted EBITDA.

Speaker 4: Turning to the results, we had a number of one-time items in 2020 that impacted our year-over-year results.

Speaker 4: the largest of which was a $52 million net risk corridor settlement, which was recognized in the fourth quarter of 2020. We excluded this non-recurring item from all of our 2020 key results, including adjusted EVA-DAR.

Moving to membership.

Speaker 4: We ended the year with approximately 598,000 members, an increase of 49% year-over-year driven by growth in our individual C plus O and Medicare Advantage books.

We ended the year with approximately 598000 members an increase of 49% year over year driven by growth in our individual <unk> and Medicare advantage books of business membership growth continued to exceed our expectations throughout the year as consumers continue to select the Oscars plans throughout the special enrollment window.

Speaker 4: Membership growth continued to exceed our expectations throughout the year as consumers continue to select Oscar's plans throughout the special enrollment window.

Powering our growth.

Speaker 4: Powering our growth, we retained more than 80% of our year-end individual members in 2020.

Growth, we retained more than 80% of our yearend individual members in 2022.

Fourth quarter direct and assumed policy premiums increased 59% year over year to $873 million driven by higher membership as well as business mix shifts towards higher premiums silver plans and modest rate increases.

Speaker 4: Fourth quarter direct and assumed policy premiums increased 59% year over year to $873 million driven by higher membership as well as business mix shifts towards higher premiums, silver plans and modest ratings.

For the full year direct and assumed policy premiums increased 50% year over year to $3 4 billion largely driven by the same factors. This represents more than 70% annual top line growth over the past four years.

Speaker 4: For the full year, direct and assumed policy premiums increased 50% year over year to $3.4 billion, largely driven by the same factor.

Speaker 4: This represents more than 70% annual top-line growth over the past four years.

Our enhanced scale drove a fifth drove greater efficiencies across our businesses in 2021.

Speaker 4: Our enhanced scale drove a fit, drove greater efficiencies across our businesses in 2015.

Speaker 4: Specifically, our Q4 2021 insurance company administrative ratio was 24.5%, an improvement of 12 points year-over-year, and our full year insureco administrative ratio improved 430 basis points year-over-year to 21.8%.

Specifically, our Q4 2021 insurance company administrative ratio was 24, 5% an improvement of 12 points year over year and our full year ensure co administrative ratio improved 430 basis points year over year to 21, 8% fixed.

Speaker 4: fixed cost leverage, variable cost efficiencies, and the elimination of the health insurance fee, health insurer fee in 2021 drove the ratio lower year.

Fixed cost leverage variable cost efficiencies and the elimination of the health insurance fee health insurer fee in 2021 dropped the ratio lower year over year.

Scale benefits also possibly impacted our newest metric our adjusted administrative expense ratio, which was 34, 4% in the quarter and 28, 9% for the full year the full year metric improved by 560 basis points.

Speaker 4: Scale benefits also possibly impacted our newest metric, our adjusted administrative expense ratio, which was 34.4% in the quarter and 28.9% for the full year. The whole year metric improved by five.

Turning to medical costs, our medical loss ratio was 97, 9% in the quarter down 10 points from the fourth quarter of 2020, we.

Speaker 4: Turning to medical costs, our medical loss ratio was 97.9% in the quarter, down 10 points from the fourth quarter of 2020.

Speaker 4: We recognize 35 million of favorable development in the fourth quarter of 21, driven by lower than expected utilization in the third quarter of 21 and some positive prior year development.

We recognized 35 million of favorable development in the fourth quarter of 'twenty, one driven by lower than expected utilization in the third quarter of 'twenty, one and some positive prior year development.

The full year MLR of 88, 9% was at the low end of our guidance as utilization came in as expected and we benefited from the favorable development.

Speaker 4: The full year MLR of 88.9% was at the low end of our guidance. This utilization came in as expected and we benefited from the favorable development.

Speaker 4: Compared to 2020, MLR increased 420 basis points year over year, largely due to higher net COVID costs and higher SCP growth in 2021, which was partially offset by favorable developments.

Compared to 2020, MLR increased 420 basis points year over year, largely due to higher net COVID-19 costs and higher SCP growth in 2021, which was partially partially offset by favorable development.

Speaker 4: Let me spend a moment on COVID. Overall net COVID costs were in line with our expectations in the fourth quarter.

Let me spend a moment on Covid overall net COVID-19 costs were in line with our expectations in the fourth quarter of 'twenty one.

We continued to see direct COVID-19 costs, being partly offset by lower non COVID-19 utilization.

Speaker 4: continue to see direct COVID costs being partly offset by lower non-COVID lab.

Our overall combined ratio, which is the sum of our medical loss ratio in the insurance companies and administrative expense ratio was 122, 4% in the quarter and 110, 7% for the full year.

Speaker 4: Our overall combined ratio, which is the sum of our medical loss ratio and the insurance company's administrative expense ratio, was 122.4% in the quarter and 110.7% for the full year.

Speaker 4: The full year 21 combined ratio was essentially flat on a year-over-year basis as improvements in administrative efficiencies were offset by higher net COVID costs in the MLR.

The full year 'twenty, one combined ratio was essentially flat on a year over year basis as improvements in administrative efficiencies were offset by higher net COVID-19 costs and the MLR.

Speaker 4: Our fourth quarter 21 adjusted EBITDA loss of 164 million was $52 million better year over year. And for 2021, it was 430 million, an increase of 27 million euro.

Our fourth quarter 'twenty, one adjusted EBITDA loss of $164 million was $52 million better year over year and for 2021. It was $430 million an increase of $27 million year over year. In addition to the drivers impacting the MLR in the administrative ratios year over year, we had a we had to.

Speaker 4: In addition to the drivers impacting the MLR and the administrative ratios year over year, we had a release of premium deficiency reserves in 2021 versus an increase in 20...

Release of premium deficiency reserves in 2021 versus an increase in 2020.

Speaker 4: Turning to the balance sheet, we ended the quarter with over $2.5 billion in total company cash and investments, including roughly $740 million of cash and investments at The Parent and another $1.8 billion of cash and investments that aren't short of $2.5 billion.

Turning to the balance sheet, we ended the quarter with over $2 5 billion in total company cash and investments and crew, including roughly $740 million of cash and investments at the parent and another $1 8 billion of cash and investments at our insurance subsidiaries.

Speaker 4: The new funding of $305 million that we announced two weeks ago provides us with strong balance sheet resilience as we...

The new funding of 305 million that we announced two weeks ago provides us with a strong balance sheet resilience as we start the year.

Speaker 4: We are also reiterating our 2022 guidance, which reflects the increased scale of the business and builds on the momentum we see.

We are also reiterating our 2022 guidance, which reflects the increased scale of the business and builds on the momentum we saw last year.

Speaker 4: This includes an expectation for more than 80% growth at the midpoint in our direct and assumed policy premiums to $6.1 to $6.4 billion, as well as 400 basis points of improvement at the midpoint in our MLR to 84 to 86%. I'd note that our MLR guidance assumes non-COVID utilization returns to baseline levels.

This includes an expectation for more than 80% growth at the midpoint in our direct and assumed policy premiums to six one to $6 4 billion as well as 400 basis points of improvement at the midpoint and our MLR to 84% to 86% I'd note that our MLR guidance assumes non COVID-19 utilization returns.

The baseline levels this year.

We've had a strong track record of delivering high growth, while still driving MLR improvement our direct policy premiums increased 70% on average annually over the past four years and during that period, we decreased our MLR roughly eight points, excluding COVID-19 , our MLR decreased 13 points since 2017 as we effect.

Speaker 4: We have had a strong track record of delivering high growth while still driving MLR improvement. Our direct policy premiums increased 70% on average annually over the past four years, and during that period we decreased our MLR roughly 80%.

Speaker 4: including COVID, our MLR decreased 13 points since 2017 as we effectively absorbed higher membership while reducing medical.

Lilly absorbed higher membership, while reducing medical costs.

Speaker 4: We're also seeing a step change in our PlusOscar business results, as we are expecting $65 to $70 million of fee-based revenue in 2021.

We're also seeing a step change in our plus Oscar business results are as we are expecting 65 to 70 70 million of fee based revenue in 2022.

Speaker 4: Our positive top-line momentum and increase scale continues to drive meaningful progress on our administrative expense rate.

Our positive top line momentum and increase scale continues to drive meaningful progress on our administrative expense ratios. Our adjusted administrative expense ratio has declined roughly 500 basis points over the past two years and we're expecting another 300 basis points of improvement in 2022 importantly, the majority of these costs are in our <unk>.

Speaker 4: Our adjusted administrative expense ratio has declined roughly 500 basis points over the past two years, and we're expecting another 300 basis points of improvement in 2022. Importantly, the majority of

Troll.

Speaker 4: All told, for 2022, we are expecting an adjusted EBITDA loss between 380 and 480 million, which at the midpoint is roughly consistent with 2021 on an absolute basis.

All told for 2022 we are expecting an adjusted EBITDA loss between 380 and $480 million, which at the midpoint is roughly consistent with 2021 on an absolute basis.

Speaker 4: On a relative basis, this is roughly half of that of 2021 measured at the percentage of premiums before seeded.

On a relative basis. This is roughly half of that of 2021 measured as a percentage of premiums before ceded reinsurance.

Speaker 4: Our larger scale is a tailwind for reaching our 2023 profitability target for the insurance.

Our larger scale as a tailwind for reaching our 2023 profitability target for the insurance company.

Speaker 4: We look forward to discussing this in more detail at our March 25th investment.

We look forward to discussing this in more detail at our March 25th Investor Day.

Speaker 3: And with that, let me turn the call over to Mario. Thank you, Scott. I want to close with a summary of why Oscar is positioned for success in 2022 and beyond.

And with that let me turn the call over to Mario.

Thank you Scott I want to close with a summary of why Oscar is positioned for success in 2022 and beyond.

I firmly believe that Oscars, the vanguard for the new way healthcare will be delivered in the U S. We feel that we have found a model that works and consumer driven markets that are best served with deep provider partnerships and with a frictionless experience.

Speaker 3: I firmly believe that Oscar is the vanguard for the new way healthcare will be delivered in the U.S. We feel that we have found a model that works in consumer-driven markets, that are best served with deep provider partnerships and with a frictionless experience.

And we see clear signs of more of the U S Health care system will move further in this direction in the future.

Speaker 3: And we see clear signs that more of the US healthcare system will move further in this direction in the future.

The ACL your markets has been a proving ground for the value of this fixture zimbra experience in health care.

Speaker 3: The ACA market has been a proving ground for the value of this frictionless member experience in healthcare. And our innovative approach, which couples our full-stack technology with industry-leading member engagements, resulted in a powerful open enrollment season where we saw monumental growth and record high retention rates.

And our innovative approach, which couples our full stack technology with industry, leading member engagements resulted in the powerful open enrollment season, but we saw a monumental growth and record high retention rates to.

Speaker 3: to the point where today approximately 1 in 15 ACA members are now served by OSCAR.

So the point we are today approximately one in 15 AC a members are now served by Oscar.

And the value of the experience. We deliver is also evident in our retention with just above 80% of our IOP members, 85% of the groups and C plus O.

Speaker 3: And the value of the experience we deliver is also evident in our retention, with just above 80% of our IFP members, 85% of the groups in C++O, 90% in our latest Co-Bandit Plus Oscar Medicaid Vantage Plan staying with us year over year.

90% and our latest coupon that plus Oscar Medicare advantage plan, staying with us year over year.

Speaker 3: Our fourth quarter 2021 net promoter score reached 42 and remains meaningfully higher than the industry average of three.

Our fourth quarter 2021 net promoter score reached 42.

Remains meaningfully higher than the industry average of three.

So as we see it a resulting grow with two more than 1 million members is driven by our strong brands our member experience and.

Speaker 3: So as we see it, our resulting growth to more than 1 million members is driven by our strong brands, by our member experience, and by our innovation in planning.

And borrower innovation and plan design and product offerings.

Speaker 3: Let me just give you a couple of examples for these product offerings. We now have 40% of our members on a plan offering our virtual primary care, which has made the Oscar Medical Group the number one or number two primary care group in every market where it is available.

Let me just give you a couple of examples for these product offerings. We now have 40% of our members on a plan offering our virtual primary care, which has made the Oscar Medical group number one number two primary care group in every market where it is available.

Speaker 3: We also recently updated our Cost Estimator tool, which can price claims in real time and empowers the member with control and choice when it comes to their care decisions.

You also recently updated our cost us meet or two well, which can price claims in real time and empowers the member with control and choice when it comes to their care decisions.

It's these kind of offerings that enable us to price to achieve growth and improve margins for 2022.

Speaker 3: that enable us to price to achieve growth and improve margins for 2022 where we in fact increased our premium rates at the overall book level.

Where are we in fact increased our premium rates at the overall book level.

Speaker 3: In this past open Roman period, so for 2022, only 16% of all of our new initiations came from markets where we had the lowest price plan offering.

In this past open enrollment periods, so for 2022 .

Only 16% of all of our new initiations came from markets, where we had the lowest price plan offering.

And if you look at where membership is now only 13% of our total individual membership is in markets, where Oscar is the lowest priced offering.

Speaker 3: And if you look at where membership is now, only 13% of our total individual membership is in markets where Oscar is the lowest priced offering.

Now, we'll also successfully bringing our unique model two plus Oscar clients and the platform. We have is delivering clear business results for them.

Speaker 3: Now, we're also successfully bringing our unique model to Plus Oscar clients. And the platform we have is delivering clear business results for them. Take C++0, for example. We pointed the platform at a different market segment, a small group segment. And in one year, we have had 9x growth to now more than 30,000 members.

Takes the plethora of for example, you pointed the platform at a different market segments small group segments and then one year, we have had nine X growth to now more than 30000 members.

Actually doubling from the U N number of 16500 members.

Speaker 3: actually doubling from the year-end number of 16,500 members.

Speaker 3: And our broker NPS score in the small business segment is 66.

Hence our broker NPS score in the small business segment is 66.

Speaker 3: highlights the value our other stakeholders find in our frictionless technology.

Which highlights the value our other stakeholders find in our frictionless technology.

Speaker 3: We continue to build out this kind of plus-Oscar business, and we expect, as Scott said, plus-Oscar generates $65 to $70 million of revenue in 2022.

We continue to build out this kind of class Oscar business, and we expect as Scott said, plus Oscar generates $65 million to $70 million of revenue in 2020 tool.

Speaker 3: Our platform has key applications across the healthcare system. For example, one of our clients realized administrative savings of 20% by leveraging CloudSource.

Our platform has key applications across the health care system. For example of one of our clients realized at munis is savings of 20% by leveraging plus Oscar.

Speaker 3: We are encouraged by our negotiations with prospective clients and look forward to sharing more details on this during the upcoming investor day.

We are encouraged by our negotiations with perspective clients and look forward to sharing more details on this during our upcoming Investor day.

Speaker 3: Now, to me, the best illustration of our path forward is the following. When we look across all of our markets, we generally see that the lower the medical loss ratio, the higher the promoter score.

Now to me the best illustration of our path forward is the following when we look across all of our markets. We generally see that the lower the medical loss ratio the higher the net promoter score.

Speaker 3: In my view, there couldn't be a better illustration of where a more consumerized healthcare system is going and of how Oscar is going to deliver on our mission of making healthcare accessible and affordable.

And in my view, they couldnt be a better illustration of where a more consumer based health care system is going in of how Oscar is going to deliberate and ambition of making health care accessible and affordable.

Speaker 3: Because that mission motivates us to deliver our business model of consumerizing healthcare profitably.

Is that mission motivates us to deliver our business model of consumer rising health care profitably.

Speaker 3: Our growth today provides scale and operating leverage that we will harness to drive improved efficiency in our administrative costs and medical loss ratio.

Our growth today provides scale and operating leverage we will harness to drive improved efficiency and I've been sort of costs and medical loss ratio.

Speaker 3: A good early sign, by the way, is that despite our nearly 2x membership growth, we have swiftly met the demands from new members and are seeing higher member satisfaction scores year over year. That said, we still have plenty of ways to operate more efficiently and to leverage our provider and member engagement initiatives to reduce healthcare costs and that's what we are focused on.

Good early sign by the way is that despite our nearly two X membership growth. We have swiftly meets the demands of new members and are seeing higher member satisfaction scores year over year that says, we still have plenty of ways to operate more efficiently and to leverage our provider and member engagement initiatives to reduce health care costs and that's what we are focused on.

In many ways.

Speaker 3: We are still a young company with meaningful improvement opportunities ahead.

We are still a young company with meaningful improvement opportunities ahead.

Speaker 3: So that ends over the last several years. We have added experienced healthcare executives to our bench, including most recently, former Chief Legal Officer at Eversite Health and career-long healthcare executive Ramali Rupetia as EVP and Chief Legal Officer, and former Aetna CEO Mark Vodolini as Strategic Advisor.

So that ends over the last several years, we have added experienced health care executives to our bench, including most recently former chief legal officer ever said health and career long health Executive O'malley, a pizza as EVP and Chief legal officer and.

And former Aetna CEO , Mark with Alenia, a strategic advisor.

Before I close I want to reiterate our strategic priorities for 2022 and 'twenty 'twenty for you first we will continue to drive meaningful growth across our business.

Speaker 3: Before I close, I want to reiterate our strategic priorities for 2022 and 2023.

Speaker 3: First, we will continue to drive meaningful growth across our business, both for the insurance company and for the private sector.

Both for the insurance company and four plus Oscar.

Speaker 3: Second, we continue to target profitability for our insurance company in 2023 and we are committed to becoming profitable at the overall company level over time as our businesses are reaching scale and we gain more efficiencies from our technology.

Second we continue to target profitability for insurance company 2023 years, and we are committed to becoming profitable at the overall company level over time as our businesses are reaching scale and we gained more efficiencies from a technology.

Finally, I want to thank the Oscar team for working so tirelessly during our first year as a public company to serve our members and work toward our mission of making a healthier life affordability assessment for all.

Speaker 3: And finally, I want to thank the OSCQR team for working so tirelessly during our first year as a public company to serve our members and work toward our mission of making a healthier life affordable and accessible for all. As we say here at OSCQR, we're powered by our people, and I continue to be inspired by the creativity, the tenacity, and the dedication OSCQR team members show every day, and I'm very, very proud of what we can accomplish when we come together as a team. With that, I'll turn the call over to

As we say he had oscar with powered by our people and I continue to be inspired by the creativity of the tenacity and the dedication Oscar team members show everyday you I'm very very proud of what we can accomplish when we come together as a team.

With that I'll turn the call over to the operator for questions.

Speaker 1: Thank you. As a reminder, to ask a question, you will need to press star and then the number one on your telephone keypad. And to withdraw your question, just press the pound key. Given time constraints, please limit yourself to one question and one follow-up. Thank you. Please stand by while we compile the Q&A.

Thank you as a reminder to ask a question you will need to fresh star and then the number one on your telephone keypad to withdraw your question just press the pound key.

Time constraints, please limit yourself to one question and one follow up. Thank you. Please standby, while we compile the Q&A roster.

Your first question comes from the line of Ricky Goldwasser with Morgan Stanley Sir Your line is open.

Speaker 1: Your first question comes from the line of Ricky Goldwasser with Morgan Stanley . Sir, your line is open.

Speaker 1: My question is on the exchange enrollment that you have seen, I mean clearly phenomenal results, significantly surpassed your expectations and ours. Can you just give us some color on sort of any...

Yeah, Hi, good afternoon, Marianne Scott. So my question is on the exchange enrollment that you're seeing I mean, clearly phenomenal results significantly.

Surpassed our expectations and on an hours can.

Can you just give us some color on.

Instead, if any.

Speaker 1: that you had from marketing or sales channels and how that helped you sort of achieve this milestone growth. And then also, as we look ahead to 2023, do you expect to see continued scaling or do you believe that now you have the scale that you need and from now on you're going to focus on that kind of like margin expansion and MLR improvement opportunity?

The contribution that you had from a marketing or sales channels and how that's helped you sort of have achieved this milestone of growth and then also as we look ahead to 2023 do you do you expect to see continued scaling or do you believe that now you have the scale that you need and from now on you're going to focus on that kind of like.

Our margin expansion in MLR improvement opportunity.

Yeah, Great questions, let me hit.

Speaker 3: Yeah Ricky, great questions. Let me hit on both and then have Scott come in on the second question there as well.

<unk> hit on both of them have Scott comment on the second question there as well.

So.

In terms of channels of members come through them.

Speaker 3: channels that members come through, I see we see a couple of different things. Generally, we grow in markets where we've got kind of the perfect mix of product design being right, networks being built well, and deep provider partnerships.

I see we see a couple of different things.

Generally we grow in markets, where we've got kind of the perfect mix of product design being right networks being built well and deeper better partnerships.

Speaker 3: and ideally word-of-mouth and a brand as well, so that's where it works best. Now, the other piece to this is the distribution as well. We have worked quite a bit with the broker channel in particular, and I mentioned earlier the NPS the brokers have when they work with us in our small group business, for example, because we're able to deliver fast turnaround times there, we're able to help them deliver pictures to their members when they enroll, and that also helps us grow in these markets.

Ideally word of mouth, and the Brown <unk> brown as well.

So that's would work space now and the other piece to this is the distribution as well we have worked quite a bit with the broker channel in particular and I mentioned earlier the NPS the brokers have them when they work with us in our small group business for example.

As we're able to deliver fast turnaround times. They are we're able to help them deliver pictures appear to their members when they enroll and that also helps us.

Grow in these markets and really all of our market segments.

Speaker 3: So that's been where the focus has been. But you really can't take any of these elements out of the equation I would say. It's got to be the mix of products, network, brands and distribution. And that then works best.

So that's really been that's been where the focus has been.

But you really can't take any of these elements out of the equation I would say, it's got to be the mix of products network brands and distribution.

And that then workspace.

Now in terms of where we are as a company and what our focus will be here I really want to reaffirm. This Tuesday goes we have put 2022 or one is continue.

Speaker 3: as a company and what our focus will be. I really want to reaffirm these two strategic goals we have for 2022. One is to continue the growth in insurance company and in Plus Oscar and we think we have a lot of runway ahead of us there. We're only in half the markets in the affordable care markets right now. We're only in eight states for the C++0 product.

The growth in insurance company, and then plus Oscar and we think we have a lot of runway ahead of US there we're only in half the markets for the in the Affordable Care Act markets right now.

We're only in eight states for us for the <unk> products.

Speaker 3: And we have a ton of more runway ahead of us in delivering MA growth through blood Oscar partnerships as well And so we're going to keep doing

And we have a ton of more runway ahead of us in delivering a growth kubla husker partnerships as well.

So we're going to keep doing that.

Speaker 3: However, we have a great focus on making sure we target profitability insurance company next year, and as I said, profitability in the overall company over time surely as well.

Ever we have a great focus on making sure we target profitability insurance company next year and as I said profitability of the overall company over time.

I'm truly as well.

Speaker 3: And that is where, right now, a lot of our internal focus really is going, both MLR improvements and efficiency improvements as well. Scott, do you want to add more? No, Ricky, I think that on that point, we'll be sharing more information about...

That is where right now a lot of our internal focus really escalating both MLR improvements in Minnesota.

We should see improvement as well Scott do you want to add more no Ricky I think that on that point, we'll be sharing more information about.

Speaker 4: future plans at our investor day in March. So I won't.

Future plans at our Investor day in March So I won't I won't jump out of that.

Speaker 1: Okay, and as a follow-up, if you think about PlusOscar, Amar, you talked to the pipeline and the negotiations that you're having, can you maybe kind of like talk a little bit about what's sort of the profile of the companies in the PlusOscar pipeline?

Okay, and then as a follow up if you think about glass Oscar I'm are you talk to the pipeline and the negotiations that you're having can you maybe kind of like talk a little bit about what's sort of the profile of the companies in India in the Plaza ask our pipeline.

Speaker 3: It really is the three major segments we've talked about before. Which is health systems who want to add more risk and go deeper into the risk markets. Where we've seen quite a bit more people pick up their heads even just in the last 12 months.

Yeah.

Really is the kind of three major segments, we've talked about before which is.

Health systems, who wants to add more risk and go deeper into the into the risk markets.

Where we've seen quite a bit more people pick up the heads even just in the last 12 months and the second segment is and we have several of those examples in the pipeline right now. The second segment is health systems, who already have a plan already in the risk business and in this example, so that the pipeline as well in the third segment is sort of mid sized <unk>.

Speaker 3: And the second segment is, and we have several of those examples in the pipeline right now, the second segment is health systems who already have a plan, already in the risk business, and there's examples of that in the pipeline as well. And the third segment is sort of mid-size insurance companies who are realizing that, as I said in my prepared remarks here, the healthcare system is inevitably going to demand a more frictionless provider experience, and where we can really help both take the costs out.

<unk> companies who are realizing.

That's as I said in my prepared remarks here that because system is inevitably go into what it demands a more frictionless and brakes and provider experience and where we can really help both take a minute to cost outs and.

Speaker 3: and enable them to put more innovative plant designs out there. All three of these are from the pipeline right now. We are excited about both where that will go in the next couple of years. How we can turn this increasingly from a business process as a service model towards a software as a service model as well and also where we are for this year.

And enable them to put more innovative plan designs out there and so all three of these open the pipeline right now and we're excited about both where that will go in the next couple of years and.

And how we can serve them this increasing from a business process as a service model towards a software as a service model as well and also where we are for this year.

Okay.

Thank you. The next question comes from the line of Kevin Fischbeck with Bank of America. Your line is open.

Speaker 1: Thank you. The next question comes from the line of Kevin Fischbach with Bank of America. Your line is open.

Hey.

Speaker 5: Hey, thanks for the question. This is Adam Ronan for Kevin. We were a little surprised by the fact that you weren't getting more SG&A leverage. I know we talked about this last time with the 2022 guidance, given that you grew revenue and membership at such a rapid pace. And so, from here, would you expect most of the cost leverage that you're underwriting going forward to come from higher revenue on the same SG&A base, or is there actually a chance that, you know, on a dollar basis, it could actually decline?

Thanks for the question. This is Adam <unk> on for Kevin.

We were a little surprised by the fact that you were getting more SG&A leverage I know, we talked about this last time with a 2022 guidance.

Given that you grew revenues and membership it's such a rapid pace.

And so from here would you expect most of the cost leverage that we're underwriting going forward to come from higher revenue on the same SG&A base or is there actually a chance that.

On a dollar basis it could actually decline.

Yeah.

Speaker 4: Adam, thanks for the question. So I'll start off by saying that I think that our greater scale that we're seeing in 2022 is going to help us to achieve better cost leverage on our fixed costs and our variable costs going forward.

Adam Thanks for the question, so I'll start off by saying that I think that our greater scale that were seen in 2022 is going to help us to achieve better cost leverage on our fixed costs in our variable costs going forward, we can negotiate better costs with vendors, we have an opportunity to continue.

Speaker 4: we can negotiate better costs with vendors, we have an opportunity to continue to optimize our operations and the opportunity for even further fixed cost leverage as we head into next year.

To optimize our operations and.

The opportunity for even further fixed cost leverage as we head into next year. So we certainly see opportunities on the cost side beyond just what are what's available from increasing revenues into the future.

Speaker 4: So, you know, we certainly see opportunities on the cost side beyond just what's available from increasing revenue.

Alright.

Speaker 5: All right, great. And then on 2023, if exchange subsidies were to end up expiring,

And then on 2023 exchange subsidies were to end up expiring.

Do you think the overall marketplace would shrink and would you be able to grow in that environment.

Speaker 5: Do you think the overall marketplace would shrink, and would you be able to grow in that environment? And if not, would that hurt your ability to drive that SG&A leverage and ultimately achieve insure-co profitability? And also, in that scenario, are there any offsets, like potentially lower membership, meaning better MLR?

Not would that hurt your ability to drive that SG&A leverage and ultimately achieve insurer co profitability and also in that scenario are there any offsets like potentially lower membership meeting better MLR.

Yeah, I'd say a couple of thoughts on this one one is.

Speaker 3: Yeah, Adam, I'd say a couple of thoughts on this one. One is...

We now have several different business lines that are growing I'd see peso plus Oscar deals and so on and so I do think we are.

Speaker 3: We now have several different business lines that are growing, right? C++O plus Oscar deals and so on. So I do think we are diversifying ourselves in a sense there. That helps. The second point.

Diversifying ourselves in a sense the earth that helps the.

The second point the way it starts.

Speaker 3: If you're looking for a company that has maybe had the highest volatility of regulatory environments, it might just be us over the last 10 years. I mean, we have lived through so many cycles of ACA on, ACA off. I can't even count them anymore. What we have generally believed, and I think this proved not to be true, is that a benefit like now ensuring 50 million plus people

If you're looking for a company that has maybe had the highest volatility of regulatory environments. It might just be us.

Over the last 10 years I mean, we have lived through so many cycles of ECA on ACI off I can't even count them anymore.

What we have generally.

I believe and I think that's proved out to be true is that a benefits like now insuring 50 million plus people.

Speaker 3: is very very unlikely to get the clock turned back on. And so in some shape or form I would very strongly believe that these subsidies will remain in place or will be replaced by similar subsidies under a different name perhaps. That's sort of like generally what we're what we're assuming they are. However we have also lived through Saika.

It's very very unlikely to get the clock turned back on.

And so in some shape or form I would very strongly believe that the subsidies will remain in place or will be replaced by similar subsidies.

For a different day and perhaps.

That's sort of like generally would where it would where what we're assuming the euro. However, we have also lived through cycles plenty of them, where you know silver loading happens in some CSR subsidies were repealed and things like that and we have a fall through them and always improve throughout these cycles.

Speaker 3: plenty of them where, you know, silver loading happens and some CSR subsidies were repealed and things like that. And we have fought through them and always improved throughout these cycles, which makes me very confident that if somehow we had to deal with some upheaval there, we certainly could. And so I think the final...

Which makes me very confident that if somehow we had to deal with.

Some upheaval there we certainly codes.

I'd say the final point there is that we.

We've been building our platform internally, partly because we want to be able to react quickly. If there was a regulatory change like for example, more testing reimbursements that we can flip a couple of switches and very quickly react to it.

Speaker 3: We've been building our platform internally, partly because we want to be able to react quickly if there is a regulatory change, like, for example, more testing reimbursements, that we can flip a couple of switches and very quickly react to it and thrive through it really. And I think that's the same applies here, you know, there's no regulation will adapt to it quickly. The kind of inevitable march of the healthcare system towards more consumerization. I don't think will be stopped by any of what what might come away there.

And thrive through it really is and I think that's just at the same applies here theres, new regulation will adapt to it quickly and the kind of inevitable March of the health care system towards more consumer Ization I don't think it would be stopped by any of what might come our way there.

Just to pile on to your questions about efficiency and scale I would just say this so one.

Speaker 4: Just to pile on to your questions about efficiency and scale, I would just say this, so one.

We continue to think that the company is built to be able to grow.

Speaker 4: You know, we continue to think that the company is built to be able to grow. But regardless of what we see on the growth side, we still think that there are opportunities to create additional leverage in our model. And so that means that we see opportunities of improving both fixed costs as well as variable.

But regardless of what we see on the growth side we.

We still think that there are opportunities to create additional leverage in our model and so that means that we see opportunities of improving both fixed cost as well as variable costs and at the scale that we're seeing in 'twenty two I'm anticipating that we will be able to as I mentioned in another question I am expecting that we're going to be able to do.

Speaker 4: And at the scale that we're seeing at 22, you know, I'm anticipating that we will be able to, as I.

Speaker 4: question. I am expecting that we're going to be able to drive down vendor costs, that we are going to be able to continue to optimize our operations against that larger base, and that is going to, you know, even with in 22, we're starting to see, you know, significant fixed cost leverage, and I would anticipate

<unk> down vendor cost that we are going to be able to continue to optimize our operations against that larger base and that is going to even with in 'twenty. Two we're starting to see a significant fixed cost leverage and I would anticipate that we're going to be able to continue to deliver that.

Great. Thanks.

Your next question comes from the line of Stephen Baxter with Wells Fargo. Your line is open.

Speaker 1: Your next question comes from the line of Steven Baxter with Wells Fargo. Your line is open.

Yeah, Hi, thank you.

Speaker 4: Can you talk a little bit about how your breakout of metal tiers for the exchanges is kind of shaping up? I'd love to hear a reminder on where you ended up for 2021 in terms of your bronze and your silver mix and then how that is shaping up for 2022. Any specifics there would be.

Can you talk a little bit about how your breakout metal tiers for the exchanges are shaping up I'd love to hear you get a reminder, on where you ended up for 2021 in terms of your broad and Youre still Carmax and then how that is shaping up for twice might do any specifics there would be very helpful and I would also like to hear a little bit.

Speaker 5: Very helpful. And I would also like to hear a little bit more about how you're thinking about your risk adjustment position as you move from 2021 to 2022 and how that's impacted by any of your uh your product and changes or just how you guys are thinking about things. Thanks.

More about how youre thinking about your risk adjustment position as you move from 2021 as 2022 and how that's impacted by any of your.

The product mix changes or just how you guys are thinking about thanks.

Yeah, Steve Let me start with a middle tier mix and then Scott you can talk a bit about risk adjustment.

Speaker 3: Yeah, see, let me start with a middle tier mix and then Scott, you can talk a bit about risk adjustments.

Speaker 3: We talked about this in the IPO and even before that, but we were off the market average for quite some time with a higher book of bronze membership.

We talked about this in the in the IPO and even before that but we were off the market average for quite some time with a higher book a Bronx membership.

Speaker 3: lower PMPM, therefore, a higher risk of payout as well as the result. And part of our march towards profitability has been to really turn that dial towards higher PMPM membership, actually more chronically ill members as well, and older members, and more silver membership. And I think we've done this really very successfully. If you trace just the last...

Lower P. M. P. M. Therefore, a higher risk of them pay out as well as a result in part of our March towards profitability has been that we turned the dial towards higher P. M. P. A membership.

Actually more chronically ill members as well in the older members.

And most of the membership and I think we've done this very successfully is if you'd trace just the last three O. E's. We went from 37% silver in 20 years to 50% silver in OE 'twenty, one to now 65% silver.

Speaker 3: We went from 37% silver in OE20 to 50% silver in OE21 to now 65% silver in OE22. So we had a very nice shift there really towards these higher PMPM silver plans.

<unk> <unk> 22 was we had a very nice shift there we need to watch these higher P. M. P. M silver plans and that's again a mix of the same kind of factors I gave Ricky earlier, which is work with the distribution at different plan designs branding will be put into these lines and so on so that's been a really important shift there for us you'll see this also.

Speaker 3: That's again a mix of the same kind of factors I gave Ricky earlier which is...

Speaker 3: work with the distribution, different plan designs, branding, what we put into these plans and so on. So that's been a really important shift there for us.

Speaker 3: You see this also continuously in the numbers in that the PMPM revenue always goes up, and so revenue grows faster than the membership count there. And we're going to continue to pursue that in that same way. Now, we also constantly change our plan designs in other tiers, and are very confident there that those plan designs can also deliver value and have still been focused there as well. So, Scott, you can maybe talk about what that means for us. Yeah, and in terms of the risk adjustment, we've seen strong performance in that line item we've had.

Continuously in the numbers and that the PMT EM revenue always goes up and so revenue grows faster than the than the Miss we had cut membership count there.

And we're going to continue to pursue that swing that same way now we also constantly change of plan designs in other tiers and are very confident that those planned events can also additive of value.

Have still been focused there as well so Scott you can be up but what that means.

And in terms of the risk adjustment we've seen.

<unk> performance in that line item we've had.

Speaker 4: you know, primarily positive adjustments on an ongoing basis. And I would just say in terms of, you know, RA as a

Primarily positive adjustments on an ongoing basis and I would just say in terms of.

<unk> as a percentage of direct and assumed premiums I would expect that with the changing mix towards more silver, we'll see slightly improved as a percentage of that.

Speaker 4: of direct and assumed premiums. I would expect that with the changing mix towards more silver, we'll see slightly improved RA as a...

Speaker 4: And, you know, I would expect to see, we saw some of that in 21, would expect to see.

And I would expect to see we saw some of that in 'twenty, one would expect to see.

The improvement in 'twenty two.

Speaker 6: Got it thanks and then just as a quick follow up or 2nd question, just the, the key based revenue you're expecting in 2022. Um, just any insight into how that's expected to ramp up through the years expected to be more even contribution. And then, as we think about the contribution margin against that incremental revenue, I guess, how should we be thinking about the incremental margin or sort of the cost profile of that revenue as you bring it online? Thanks.

Got it thanks, and then just as a quick follow up your second question just the the fee based revenue you are expecting in 2022.

Just any insight into how that's expected to ramp up through the year is expected to be a more even contribution and then as we think about the contribution margin against that incremental revenue I guess, how should we be thinking about the incremental margin or sort of the cost profile of that revenue would you bring it online. Thanks.

Speaker 4: Yeah, on the fee-based revenue, I would just say on fee-based revenue, we started the health first contract on January 1st. That's going to be relatively stable throughout the year. And then in our C plus O book of business, that's an area where we're hopeful and expect that we'll be able to continue to ramp that up and that'll drive fee-based revenue to increase throughout the year.

On the fee based revenue.

I would just say on fee based revenue we started to help first contract on January one that's that's going to be relatively stable throughout the year and then in our <unk> book of business. You know that that's an area, where we're we're hopeful and expect that we'll be able to continue to ramp that up and that will drive.

Fee based revenue to increase throughout the year. So I would say that in general it's going to be.

Stable, but growing throughout the year.

On margin.

Speaker 4: on margin. Look, I think that I would just say that we're expecting that that fee-based revenue is contributing positive margin to the bottom line starting in the first quarter. And so, you know, we're seeing that business generating positive returns.

Look I think that that I would just say that we're expecting that that fee based revenue is contributing positive margin to the bottom line starting in the first quarter and so where we're seeing the business generating positive returns and positive contribution to adjusted EBITDA.

Thank you very much.

Thank you. The next question comes from the line of Jonathan Young with Credit Suisse. Sir Your line is open.

Speaker 1: Thank you. The next question comes from the line of Jonathan Young with Credit Suisse. Sir, your line is open.

Speaker 7: Thanks for taking a question. So thanks for the details on the percent that's in silver tier. So I guess, is there something structurally difficult within the bronze mix where it's just more difficult to make money there? Obviously one of your peers today called out that they effectively exited the bronze side of the tiers and moved all to silver. So I'm curious from your perspective.

Hi, Thanks for taking our question so when it so thanks for the details on the percent that's in silver tier.

Is there something structurally difficult within the bronze mix, where it's.

It's just more difficult to make money there obviously one of your peers today called out that you know they effectively exited the bronze side of the tiers and moved all selfish I'm curious from your perspective, given you have shifted more to silver.

Speaker 7: given you have shifted more to silver, what's the structural issue there and could you eventually re-expand into bronze or is it really just all a silver game right now?

What what's the structural issue there.

Could you eventually re expand into brown George It really just all of sulfur game right now.

Yeah. So.

We have.

Speaker 3: We have, so let me answer this with facts first. It is, bronze is a bit more structurally difficult to make money in that that part is true as compared to silver for a couple of reasons. One is it is a lower PMPM number generally, right? You're a tier below. The second piece is that it often attracts more members, relatively speaking, who don't really utilize a whole lot.

So let me answer this with facts first.

It is the Bronx is a bit more structurally difficult to make money in that that part is true as compared to silver for a couple of reasons. One is it is a lower P. M. P. M number generally ride you're at you're below.

The second piece is that it.

It often attract more members relatively speaking who don't really utilize a whole lots.

Speaker 3: And that has two effects. One is it actually is worse for risk adjustments, again, relatively speaking, than having members who utilize sort of like average amounts, in a sense. But the other part actually is that those tend to also be members who have higher churn rates. And so there is sort of like a chunk of the ACA marketplace.

And that has two effects one is that actually is worst for risk adjustments again relatively speaking and then having members who utilize sort of like average amounts in a sense, but the other part actually is that those tend to also be members, who have higher churn rates. So there is sort of like a chunk of the E. C. A marketplace that is more.

Speaker 3: that is more easily changing plans from year to year and it's going to chase the lowest price plans. In the past it was maybe 15-20% of the marketplace, so it's probably hard to put a finger on really. And so you have that membership a bit more concentrated in bronze as well.

Easily changing plans from year to year, and he's going to chase the lowest price plans and the possible maybe 15 20 percentages, where the marketplace was hard to put a finger on really.

And so when you have that membership a bit more conservative in bras as well now those effects are not new they've been in place for the past many years and we've found a number of antidotes I would say in these effects. For example, we think that's some of what we're doing in virtual primary care is actually meaningful to build more attractive plan designs.

Speaker 3: Those effects are not new. They've been in place for the past many years and we've found a number of antidotes, I would say, in these effects. For example, we think that some of what we're doing in virtual primary care is actually meaningful to build more attractive plan designs in bronze. And some of what we're doing around certain deductibles and...

In bras and.

So what we're doing around set certain.

Certain deductibles some.

Speaker 3: other plant design elements we have in our bronze plants has helped us shift up the PMPM in the bronze tier. And obviously, I think I mentioned last time that

Although plan design elements, we have in our bronze plans has helped the shift has helped us shift up the P. M. P M at the bronze tier and.

In some obviously I think I mentioned last time, that's generally even when you have a member who is not utilizing healthcare a whole lots.

Speaker 3: Generally, even when you have a member who is not utilizing healthcare whole lots. If we get that member into our

If we get that member into our digital interactions, we get higher retention rates out of them. So about six points in his points higher retention of members engage with us digitally than the kind of the Abbott from the average book of business basically yet that is not any different than the bronze plans either.

Speaker 3: we get higher retention rates out of them. So about six percentage points higher retention members engage with us digitally than the kind of the average book of business, basically. That is not any different in the bronze band either. And with all of these things together, you know, we're comfortable in that here and have creative ideas what else to do in the years going forward.

In sum with all of these things together, we're comfortable in that here.

And some have creative ideas, what else to do within the years going forward.

Great. That's helpful. And then you mentioned that you have an expectation of.

Speaker 7: Great, that's helpful. And then you mentioned that you have an expectation of being at non-COVID utilization. It'll be at baseline levels. I'm assuming this is a bit more gradual over the year. Just want to confirm that. And is there any view of deferred care stepping up as COVID subsides? Thanks.

Being at non Covid utilization it'll be at baseline levels I'm, assuming this is a bit more gradual over the year just want to confirm that and then is there any view of deferred care stepping up as a COVID-19 subsides.

Yeah.

Speaker 4: Yeah, you know, with respect to the the MLR, I would say a few things kind of looking at at 2022. So, you know,

Yeah.

With respect to the MLR.

I would say a few things kind of looking at at 2022. So.

One this year as we've talked about we price for better margins. So we're assuming that that we price to cover cost trends and we've priced for and endemic level of Covid spend so that's going to be.

Speaker 4: One, this year, as we've talked about, we price for better margins. So we're assuming that we've priced to cover cost trends and we've priced for an endemic level of COVID spend. So that's going to be, you know, a positive factor for us. You know, secondly, I would just say that.

A positive factor for us.

Secondly, I would just say that when we think about COVID-19 as we've seen kind of omicron starting to fade.

Speaker 4: When we think about COVID as we've seen, you know, kind of Omicron starting to fade, and some of the effects of that dropping off, we are, you know, based on having an endemic level of COVID in our assumptions, you know, we are expecting that

And some of the effects of that dropping off we are based on having an endemic level of Cabot in our in our assumptions. We are expecting that we will see utilize utilization for non COVID-19 sources normalizing throughout the rest of the year. So at this point you know again I'm anticipating that we're going to have about a year.

Speaker 4: We'll see utilization from non-COVID sources normalizing throughout the rest of the year.

Speaker 4: So at this point, again, I'm anticipating that we're going to have about on a year-over-year basis, between 21 and 22, we'll have about 400 basis points of improvement in the MLR, primarily driven by COVID to a lesser degree, some of the SEP things that we saw. And then we also have opportunities in the MLR.

Over year basis between 'twenty, one 'twenty, two we'll have about 400 basis points.

The improvement in the MLR, primarily driven by Covid to a lesser degree some of the S&P things that we saw and then we also have opportunities in the MLR from some structural advantages of scale and having a larger membership book. We think there are some other opportunities for us to continue to drive improvements as well. So those are kind of.

Speaker 4: structural advantages of scale and having a larger membership book we think there's some other opportunities for us to

Speaker 4: So those are kind of the key points that are going to drive.

The key point there.

We're going to drive the year over year change, yes, maybe I've said to many of the points that I find interesting one is that we.

Speaker 3: Yeah, I'll maybe add two more data points that I find interesting. One is that...

We have not seen a lot of catch up here as I think we talked about in the past as well and if we look at that number of refresh. That's then the metastatic cancer rates for example in Pennsylvania overseas had been very much on the same level in 2019, 2020 , one so theres not a lot of evidence there that somehow disease burdens getting worse, because he has to get.

Speaker 3: We have not seen a lot of catch-up here, as I think we talked about in the past as well.

Speaker 3: If we look at that number refresh that, and then the metastatic cancer rates for example and cancer diagnoses are have been very.

Speaker 3: much on the same level in 2019, 20 and 21. So there's not a lot of evidence there that somehow disease burden is getting worse because care has to get caught up to work. The other point we pointed out last year is that SEP members when they came in last year...

Caught up to work.

The other point, we pointed out last year is that S. E. T members when they come when they came in last year. They tended to have a bit higher yoghurt position early on but hypersensitive CAGR position early on and so you know you can wander the is at a different segment of the market of the market now suddenly coming in there, but without the world and one new data point, we have there is that the retention rate on those is see people.

Speaker 3: they tended to have a bit higher ER utilization early on, a bit higher preventative care utilization early on. And so, you know, you can wonder there's a different segment of the market now suddenly coming in there and what will that do? And one new data point we have there is that

Speaker 3: The retention rate on those SEP forks was actually the same as the retention rate.

<unk> was actually the same as the retention rates into this year of the non ATP folks last year.

Speaker 3: into this year of the non-SCP folks last year. About 80% as we talked about.

About 80% as we talked about and I would say that that is at least a data point that our population is not that different when you just sort of like behaving similar to the year and therefore.

Speaker 3: And I would say that that is at least a data point that the population is not that different. We sort of like behaving similarly, and therefore, you know, not a lot of evidence there that that will lead to catch-up care either, but we're obviously going to watch that very, very closely. And I think we can do a fair amount on that also with our engagement on the members, with the provider enablements, and so on.

Not a lot of evidence the other tablet catch up here, either obviously going to watch that very very closely I think we can do a fair amount on that also with our engagement with the members with a provider enablement and so on.

Great. Thanks.

Thank you. The next question comes from the line of Josh Raskin with my friend Research. Please go ahead.

Speaker 1: Thank you. The next question comes from the line of Josh Raskin with Nifron Research. Please go ahead.

Thanks, Good evening.

Speaker 8: Thanks, good evening. My question is around consumer engagement, Mario, you were talking about this and I'm specifically interested in the digital engagement on the consumer side.

Questions around consumer engagement Mario you were talking about this and I'm specifically interested in the digital engagement on the consumer side can you give us a sense and I think you gave us some data when you guys were going public but could you give us a sense of differences by demographic and if that's changing at all.

Speaker 8: Can you give us a sense, and I think you gave us some data when you guys were going public, but could you give us a sense on differences by demographic and if that's changing at all or any expectations in 2022? And then are you finding a correlation? I heard the NPS correlation with digital engagement, but is there an MLR?

Any expectations in 2022, and then are you finding a correlation I heard the N P. S correlation with digital engagement, but is there an MLR.

Correlation that you guys are seeing in terms of those that are digitally engaged versus not.

Speaker 8: correlation that you guys are seeing in terms of those that are digitally engaged versus not?

Yeah. So in terms of statistics, we've talked in the past about how <unk> and <unk>.

Speaker 3: Yeah, so in terms of statistics, you know, we've talked in the past about how

Speaker 3: Members who create a digital profile, for example, are 80% in the fourth quarter of last year. That's still been around 75%, and obviously that's probably influenced by SEP, where we need always some time to kind of create that digital engagement for people to come in. We still have, if you look at mobile app downloads of membership base, we still have a much higher mobile app download rate. There were lots of pressures a few weeks ago than pretty much anybody else out there in the health insurance industry, from what we can tell.

Members, who will create a digital profile for examples at 80% in the fourth quarter of last year, and that's still been around 75% and obviously a year, that's probably influenced by a C. P.

What we need always some time to kind of create the digital engagements and for people to come in and we still have a if you look at mobile app downloads of membership base, we still have a much higher mobile app download rate. They will ask the pressures a few weeks ago. Then then pretty much else to anybody else out there in the insurance and the health it within the suite and what we can tell.

Speaker 3: So look at kind of app store numbers and things like that there.

So look at the kind of apps, where our numbers and things like that the error.

Speaker 3: So that's how we drive engagements.

So those that's how we drive engagements.

Where are we.

So in terms of how that looks across the age range is there is an impact. So what you have in the 56 to 64 year old segments, probably about 25% or so lower digital engagement as compared to the.

Speaker 3: So, in terms of how that looks across the age ranges, there is an impact. So, you have in the 56 to 64-year-old segments, probably about 25% or so lower digital engagement as compared to the younger segments there. But if we then look at the overall engagement with Oscar, that tends to be pretty similar because they then end up having more conversations with their consumer streams, for example.

The younger segments, the euro, but we if we then look at the overall engagement with Oscar that tend to be pretty similar because they then end up having more conversations with their consumer themes. For example, the other a nice statistic that I mentioned on the last earnings call I want to reiterate as well is if we look at all of the conversations.

Speaker 3: You know the other a nice statistic that I mentioned the last one is called I want to reiterate as well.

Speaker 3: is if we look at all of the conversations we've had with members since the beginning of this year, right, and this is again obviously double membership and we got a year older on average membership base, shifted more towards silver, chronically ill and so on.

We've had with members since the beginning of this year right and this is again, obviously double membership and we.

We got a year older on average membership base shifted more towards silver chronically ill answer one if you look at all of those conversations with you at the beginning of the year, 40% of those conversations were digital meaning and secure messages between the care guides and the member through the mobile App affected what the website I think also very powerful proof points.

Speaker 3: If you look at all those conversations since the beginning of the year, 40% of those conversations were digital, meaning in secure messages between the care guides and the member through the mobile app effectively or the website. That's, I think, also very powerful.

Speaker 3: Proof point there that even in a new segment, in a sense, or a new membership base, we can right away get some engagement there. Final number that I think is very interesting.

That evening, the new segments in a sense. So in new membership base, we can right away. It gets it gets some engagement they're high number that I think is very interesting is that we just do a lot to outbound and gave them as well.

Speaker 3: We just do a lot to outbound engagement as well. And the latest number I have there for you is that on a weekly basis, there's about 25% of members.

And the.

The latest number I have the Mou was that on a weekly basis, there's about 25% of members who engaged with one of our outbound messages can be email campaigns text messages.

Speaker 3: who engage with one of our outbound messages. Email campaigns, text messages, you know.

Oh.

S GAAP measures on the mobile App and things like that so I think it's all very consistent now the impact on the MLR, we like to really look at in more sort of like nuance detail They era and traces who directly in one piece of data. We have there now is that when you look at the members and virtual primary care a planned design.

Speaker 3: secure measures in the mobile app and things like that. So I think that's all very consistent. Now the impact on the MLR, we like to really look at in more nuanced detail there and trace it through directly. And one piece of data we have there now is that when you look at the members in virtual primary care plan designs, the number I gave I think last time was that about 44% or so of those members

<unk>.

The number I gave I think last time was that about 44% of sold those numbers say.

Speaker 3: say that they didn't have a PCP before, before they came on board with our essentially virtual PCP.

That they didn't have a PCP year before before they came on board with our essentially virtual what he asked me to go virtual P. C. P. C. P. Yet and we are seeing impact the year on the total cost of care on a monthly basis and that is coming through for example by having referral the better more efficient downstream specialists in bi and kind of some other moves in.

Speaker 3: And we are seeing impact there on the total cost of care on a monthly basis. And that is coming through, for example, by having a referral to better, more efficient bouncing specialists and by some other moves in shifting more towards drugs.

In in shifting more towards drugs to them were.

Speaker 3: effective and efficient from a cost point of view as well.

Effective and efficient from a cost point of view as well and that to US suggests also that does we have more of an opportunity of getting that MLR down.

Speaker 3: And that to us suggests also that we have more of an opportunity of getting that MLR down.

Speaker 3: So that's kind of a couple of points for you there. We're going to keep very closely working on that this year and as I mentioned

So that's kind of a couple of airports, where you the Arab we're going to keep very closely working on that this year and as I mentioned.

Speaker 3: We're happy with how we've really grown the membership base in the last couple of years, but at the same time really gotten goodness on the MLR as well. And there really, in our view, is quite a bit of more opportunity of continuing to do that in the next couple of years.

We're happy with how we've really grown membership base in the last couple of years, but at the same time really gotten the goodness on the MLR as well.

They are really in our view was quite a bit of more but you wouldn't be of continue to do that in the next.

A couple of years.

Great that that I think that MLR data would be super helpful to understand yuk agent.

Speaker 8: Right. That, I think that MLR data would be super helpful to understand engagement. And just a quick follow up for Scott. Can you just remind me, and I know I should know this on the accounting side, the PDR was up in 4Q this year versus down last quarter and it felt like

A quick follow up for Scott can you just remind me and I know I should notice on the accounting side. The PDR was up in <unk> this year versus down last quarter and it felt like.

Speaker 8: Is that, was that indicative of any change in expectation for 2022 over the last three months or why, what was the difference there?

Is that was that indicative of any change in expectation for 2022 over the last three months or or why what was the difference there.

Speaker 4: Yeah, so you're right. We built PDR in 2020. You know, obviously that build was related to our expectations for 2021 and then

Yes, so youre right, we built PDR in 2020, obviously that build was related to our expectations for 'twenty, one and then in 'twenty two.

Speaker 4: 21, we had a smaller PDR, so we had a release of reserves. And I would just say, in general.

One.

We had a smaller PDR. So we had a release of reserves and I would just say in general.

Speaker 4: Two things the PDR that we had in 2020 had you know was was kind of split between individual and MA and if I look at the 2021 PDR that's that's really related more towards our non individual businesses

Two things the PDR that we had in 2020 had was.

It was kind of split between individual and MAA and as I look at the 2021 PDR, that's that's really related more towards our non.

Individual businesses.

Speaker 4: And, you know, I think it just really represents the fact that as we are seeing better performance across our book.

And I think it just really represents the fact that as we are seeing better performance across our book.

Speaker 4: You know, we're certainly getting more scale, as we've talked about, that results in, you know, fewer plans that have a deficiency reserve related to them. So that's really the driver of why you see a lower PDR.

We're certainly getting more scale as we've talked about that results in fewer fewer plans that have a deficiency reserve related to them. So that's really the driver of why you see a lower PDR at the end of 2021.

Gotcha. So there's a there's still a PDR accrual. It's just a change in the amount of accrual that got back in fact, that's the way to think you got it.

Speaker 4: Gotcha. So there's a, there's still a PDR accrual. It's just the change in the amount of accrual that got better. That's the way to think. You've got it. Yeah. So again, the, the balance sheet, we had 85 million at the end of 2020. We've got about 29 million now.

Again, the balance sheet, we had $85 million at the end of 2020, we've got about $29 million at the end of 2021.

Okay.

Yeah.

Yeah.

Thank you and this will be our last question and it will be from Nathan Rich Goldman Sachs. Please go ahead.

Speaker 1: Thank you, and this will be our last question and it will be from Nathan Rich with Goldman Sachs. Please go ahead

Hi, good afternoon. Thanks for the question.

Speaker 9: Hi. Good afternoon. Thanks for the question. On the MLR, Mario or Scott, could you update us on what you've seen in the cohort data and how MLR tends to trend in, you know, the second and third years that members are with you? And relatedly, is there a kind of target level of MLR that you feel like the business needs to achieve to reach profitability for the InsureCo?

On the MLR, Mario or Scott could you update us on what you've seen in the cohort data in and how MLR tends to trend in the second and third years of members are with you and Youre Relatedly is there a kind of target level of MLR. The that you feel like the business needs to achieve to reach profitability for the <unk>.

Yeah. So.

Speaker 4: Yeah, so, you know, with respect to the MLR, we certainly have, you know, data about how membership is, you know, how that performs.

With respect to the MLR, we certainly have.

Data about how membership is how that performance at cruise overtime I would say that there's actually not a huge amount of difference in the near term as you as you see members in the first year, there's a little bit of a.

Speaker 4: cruise over time, you know, I would say that there's actually not a huge amount of difference in the near term as you as you see members in the first year, there's a little bit of a.

Speaker 4: a lull as those members are onboarding and getting into their routines with their physicians and pharmaceuticals, etc. And then that starts to stabilize over time. So nothing in the near term there that I would call out.

LOL as those members are onboarding and getting into there.

Teens with their physicians and pharmaceuticals et cetera.

And then that starts to stabilize over time, so nothing in the near term there that I would call out.

Speaker 4: And then, you know, on a broader perspective, you know, if we think about MLR in general with that new population, you know, I think...

And then you know on a broader perspective if.

If we think about MLR in general with that new population.

Think that we feel like this is a population that we have pretty consistently been able to grow and see these kinds of new members coming into the book and we've got good experience. There. So our track record gives us confidence that we're going to be able to continue to bring on these new members and manage that MLR.

Speaker 4: population that we have pretty consistently been able to grow and see these kinds of new numbers come into the book and we've got good experience there so you know our trackers.

Okay.

Okay, great. Thank you.

Thank you and this concludes Oscar how studied tiny one fourth quarter and full year earnings conference call. Thank you for participating you may now disconnect.

Speaker 1: Thank you and this concludes Oscar House 2021 fourth quarter and full year earnings conference call. Thank you for participating. You may now disconnect.

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