Q2 2022 Oscar Health Inc Earnings Call
Good afternoon. My name is Christie and I will be your conference operator today at this time I would like to welcome everyone to Oscar helps 2022 second quarter conference call. All lines have been placed on mute to prevent any background noise. 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. Please press star one again thank.
Thank you I would now like to turn the call over to Cornelia Miller, Vice President of corporate development and Investor Relations to begin the conference.
Thank you Christy and good afternoon, everyone. Thank you for joining us for our second quarter 2022 earnings call, where we'll walk through our results and our trajectory for the rest of year, Mario Schlosser, Oscars co founder and Chief Executive Officer, and Scott Blackley, Oscars, Chief Financial Officer will host this afternoon's call, which can also be accessed through our investor.
Relations website at IR Dot Hi, Oscar Dot com.
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 high off your dotcom.
Any remarks that Oscar makes about the future constitute forward looking statements within the meaning of 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 peer.
We'd ended March 31, 2022 filed with the SEC and our other filings with the SEC, including our quarterly report on Form 10-Q for the quarterly period ended June 30th 2022 to be filed 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 the call will also refer to certain non-GAAP measures. A reconciliation of these measures to the most directly comparable GAAP.
Sure. It can be found in the second quarter of 2022 press release, which is available on the company's Investor Relations website, IR Dot hi, Oscar Dot com with that I would like to turn the call over to our co founder and CEO Mario Schlosser.
Thank you Hello, everyone and thank you for joining US today Oscar is serving more members to more clients across the health care ecosystem than ever before.
I'm proud of how our products are making health care more affordable and more accessible for so many.
In the second quarter, we have continued the business momentum this year and we're excited to provide an update from the progress we have made across a number of priorities.
As you know we nearly doubled in size this year in terms of membership and even with this dramatic growth are results from the first half of the year are on track.
We remain confidence in our ability to deliver on our guidance for the full year.
Today, we reported that the Richardson at school policy premiums increased 101% year over year to $1 7 billion for the second quarter of 2022.
Our medical loss ratio was 82, 2% in the quarter, a decrease of 20 basis points year over year.
We are seeing meaningful operating leverage from our scale in our adjusted admin expense ratio, which improved 140 basis points year over year, and we are entering the back half of the year well positioned to deliver on our full year outlook.
Looking first at our individual business as you know we have meaningfully increased the scale of our insurance business and now serve over 1 million members.
Now cover approximately one out of every 13 individual ACD lives or roughly seven 5% of the overall HCA markets.
Any specific regions, where we sell our plants or market share is roughly 16%.
And even with our growth. This year, we continue to see in two leading net promoter scores, particularly in states like Florida, where we have a large membership base any score of 56 net promoter score this past quarter.
In the first half of the year. In addition to supporting the significant increase in upscale the team has been focused on initiatives to reach insurance profitability in 2023.
Have developed an impressive number of product features and platform enhancements with the majority of you focus on lowering the total cost of care for our members and improving operational efficiency I'd.
I'd like to give you a few examples for US let me start with our expanded the use of what we call a care journey.
These are our automated fully digital outreach campaigns designed to improve clinical outcomes.
We use them in our case management, and we use them and not Oscar virtual kits. Each one of those care journeys, which leverages a fully automated.
Our integration from providers about required screening.
As resulted in about 10% higher adherence for three primary cancer screening metrics year over year.
Sure.
Can you also talk about what we are doing to address some common issues that impact managed care organizations in the same <unk> of the process improvements and tech improvements. We've been implementing for example, we have re factored our system to improve the coordination of transit numbers from out of network to in network facilities.
This work is designed to provide members with the holistic supports the needs for longitudinal tier and we have successfully transferred about 60% of all attempt to transfer so far this year.
Finally, a great example for another one of the many issues generally in health care, that's reduce overall medical costs and improve member experience and improve provider satisfaction.
Process that we call the total cost of care process will be constantly to tickets or utilization or.
Overflowing costs.
And that process would be affected recently increased utilization of the treatment of uterine fibroids due to increasing awareness of the issue in a population getting older and we saw that the treatment of <unk> with an opioid treatment protocol.
It was recently FDA approval of a new less invasive procedure to treat this condition and so we were able to quickly modify everything from claims logic to provider companions to remember companions and communication, including how this all shows up in our digital products in order to focus utilization improve clinical outcomes and drive down the total cost of care for these members to be able to.
Do something like that quickly is a great example for the wholesome impacts a protective insurance company.
We are also pushing ahead on administer the efficiency projects, including continued improvements to our claims system to improve payment accuracy.
The strategic placement of some vendors.
As we look ahead to 2023 years, we are prioritizing margin expansion in our individual business.
Pricing submitted for 2023 plants, we expect an average rate increase in the high single digits.
We have assumed that the AC Aegean hand subsidies are extended.
It's been now about 10 years. So we're in those markets and we think we understand the market very well, including the local nature of many of these individual rating areas.
So our pricing is nuanced and focused on margin expansion.
While maintaining a competitive market position in key markets for 2023.
<unk>, our small co products, we have had a particularly strong first half of the year with respect to growth.
Recently, we reached the 50000 member milestone, which is up 10 X year over year.
We continue to hear positive feedback from the markets about the unique product. We have developed there and we are excited to announce that we plan to expand into the Philadelphia markets. Starting on 112023, and we look forward to building on our collectively strong.
Presence there.
We also look forward to growing our virtual primary care offering for 2023 across the book and into more markets.
In fact, expanding further on our technology platform plus Oscar let me provide an updates on how we are prioritizing our resources.
First as I said earlier, we have been focusing substantial resources on enhancing our infrastructure to serve the dramatic increase in membership we achieved during open enrollment and most importantly to drive the insurance company towards profitability in 2023.
Seconds, we have devoted potential resources to the health first implementation and the resolution of post launch challenges that we are experiencing due to the complexity of a comprehensive integration at this scale.
Now given these two demands on our resources, we will not pursue full service plus Oscar deals for implementation in the next 18 months.
We certainly remain committed to the plus Oscar business, our ongoing engagements with a market reinforces our decision to deliver our offering increasingly a software as a service and to deliver a more modularized offerings.
Not only do these offerings typically involve issued a sales cycle, but we are also hearing that plus also can deliver meaningful value to providers and other players looking to take on more risk and that these organizations see value in more modular solutions.
So we are actively moving forward with the development and sale of campaign bidder or first plus Oscar modular products.
Our conversations with prospective clients are progressing well.
As the team prepares the technology for Externalization. We are also adding important features builds based on market feedback specifically, we recently launched a next best action feature which surfaces only the highest priority messages at any given time to members to improve conversion rates since.
Since the features launch almost 51% of Oscar members have engaged in a campaign with engagement rates of 55% and we expect our our campaign builder clients will benefit similarly from the new feature.
Now before I turn the call over to Scott I'd like to spend a moment talking about the regulatory and legislative landscape that could impact the total addressable market size in individual for 2023.
With regard to subsidies, we are pleased to see the Senate passed the inflation production and as you know that include an extension to the enhanced <unk> subsidies through 2025 weeks.
We expect that the package was passed in the house as well and that the enhanced subsidies will continue for the next few years.
With regards to Medicaid determinations, regardless of whether the public health emergency has extended in October or beyond October we predict that the majority of eliminations will occur in 2023.
Fortunately, we have included an assumption for Medicaid Leo terminations in our 2020 for your pricing.
We believe these items in combination with the potential for addressing the family glitch should be a tailwind to an expanding ACI markets next year.
With that I'll turn the call over to Scott.
Thank you Mario and good afternoon, everyone.
Our second quarter results show.
Execution across our businesses we have.
Delivered against our 'twenty two plan through the first half of the year and we are reiterating our full year guidance.
We ended the second quarter with approximately 1 million members, an increase of 84% year over year driven by growth predominantly in our individual and C plus a small groups group books of business.
Our net churn through the first six months is trending positively compared to our historical experience.
In the quarter, our lapse rates were favorable and we had modest special enrollment member adds.
Second quarter direct and assumed policy premiums increased 101% year over year to $1 7 billion, driven by higher membership and business mix shifts towards higher premium silver plans.
Yes.
Turning to medical costs.
Our medical loss ratio was 82, 2% in the quarter.
<unk> of roughly 20 basis points year over year.
This improvement was driven by pricing actions lower COVID-19 net costs and initiatives targeted at reducing the total cost of care.
We also had some offsets from a lower amount of favorable prior period development compared to the prior year.
Which was 42 million favorable this quarter versus $54 million favorable last year.
Key drivers of the PPD. This quarter include significant favorable current year development related to the first quarter, which was partially offset by net unfavorable development related to 2021 risk adjustment.
On a year to date basis.
We have had negative prior year development of approximately $42 million.
Which was related to 2021, and 2020 and which we believe are driven by issues that are specific to those periods.
Turning to utilization, we saw direct COVID-19 costs that were down year over year and quarter over quarter.
Importantly, based on what we're seeing in our data we believe the current Covid wave has peaked.
Regarding non COVID-19 utilization it was slightly below baseline in the quarter, which effectively offset our COVID-19 costs.
I also want to note that as we expected the MLR performance of our 2021 STP members, who we retained in 2022 has thus far been consistent with other members from open enrollment.
<unk> to 2020, one we anticipate lower new members via the special enrollment period in the second half of this year, which we expect to be a tailwind to our year over year MLR performance.
Switching to administrative costs, our second quarter 'twenty to insurance company administrative expense ratio was 19, 5% an improvement of 30 basis points year over year, driven by fixed cost leverage and variable cost efficiencies.
We saw even greater operating leverage from our scale and our adjusted administrative expense ratio, which improved 140 basis points year over year.
This improvement is notable given the fact that we continue to make investments to meet the increased scale of the business. Importantly, we are focused on tightly managing our controllable costs in the second half of the year to ensure our expense base going into 2023 is aligned with our profit targets.
Our overall combined ratio, which is the sum of our medical loss ratio in the insurance company administrative expense ratio was 101, 7% in the quarter, an improvement of 50 basis points year over year, driven roughly equally by the MLR and the insurance company to administrative expense ratio improvements that I previously mentioned.
On a year to date basis, our combined ratio is 99, 6%, reflecting a consolidated profit across our insurance companies.
Our second quarter 'twenty to adjusted EBITDA loss was $76 million.
Which was $25 million higher year over year, but as a percentage of premiums before ceded reinsurance improved by 130 basis points from last year.
Turning to the balance sheet, we ended the quarter with over $3 6 billion, and total company cash and investments, including $611 million of cash and investments at the parent and another $3 billion of cash and investments at our insurance subsidiaries.
At the end of the quarter, we had $670 million of statutory capital Darche at our subsidiaries, including $150 million of excess capital.
At this point, we believe we are well capitalized for the next couple of years under our plan.
Based on the results to date and our forecast for the second half we are reaffirming our guidance across all of our metrics for 2022.
Our second quarter and year to date results are in line with our plans and we believe lay the groundwork for us to achieve insurance company profitability in 2023.
That when it may turn it back to Mario.
Thanks, Scott and thanks to all of you for joining our call today I'd like to close by reiterating a few key points.
We are drafting off the strong momentum in our first two quarters and I mean seating our full year guidance. We are on track with our plan to achieve profitability in insurance business in 2023, driven by our disciplined pricing strategy by our admin efficiency work and by our medical cost management initiatives. This year.
And that has been due to a lot of very very hard and focused work. So I would like to thank all the Oscar employees its dedication and tenacity that makes this possible now.
With that we'll turn it over to the operator for the Q&A portion of the call.
Thank you you would like to ask a question at this time. Please press Star then the number one on your telephone keypad again Nexstar Wang and your first question comes from the line of Michael Hall with Morgan Stanley . Your line is open.
Hey, Thank you guys.
First question.
Any update on how 2021 on a risk adjustment payable settled out and also giving you kind of narrow speed your wafer the risk adjustment report.
State your 'twenty two risk adjustment assumption that I noticed your risk adjustment transferred payables went up about 400 mill. This quarter curious how much did it impact your MLR performance. Thanks.
Sure.
Yes, let me let me just give you an overview of what happened.
With PPD in risk adjustments so in the quarter. We received both the final CMS report for 2021, and we also got the first quarter we.
We got the 2020 to report from Wakely and so those two things came into the quarter, which were the primary drivers of a lot of our adjustments.
In total we ended up with approximately as I said $42 million of favorable prior period development and there are really two things that drove the quarter first off we had positive development on claims estimates that were primarily related to some of our newer markets and in those markets. We use the proxies for them.
Other markets to build our estimates and what we saw there is that actual performance came in much better and so that was favorable to the tune of about $68 million.
And then the second factor hitting the quarter was unfavorable 2021.
Risk adjustment development.
Your question.
And we think that that is mainly attributable to market deterioration that happened in the back half of last year, where it looks like that the market got a big a bit sicker really versus our book and that's probably really likely related to some S&P growth dynamics and that was about $26 million of adverse development.
And we think that that dynamic is really pretty specific to 2021 and then there were some other offsetting smaller items that were puts and takes in there and then just to kind of pull up on a year to date basis, I mentioned that we had about $42 million spend favorable development and two thirds of that is related to 2021 risk adjustment and then a third of it is related.
2020.
And.
Big picture.
Risk adjustment estimates is very challenging but overall, we were pretty consistent with the reporting that we got from Wakely, we didn't have.
Too many significant adjustments on 'twenty to slightly positive there.
With risk adjustment you really have to focus on executing your processes in a pretty consistent competent way youre, having to make adjustments and estimates for what the market is doing so.
The volatility that we see in this area, we actually think confirms that we have a pretty good process.
Got it thanks, Scott that's really helpful. And then one more as you think about the plus Oscar pipeline I think in the past you've mentioned about one to two deals a year, but given you are no longer pursuing full chair bit past yields for the next 18 months, but you are also rolling out new SaaS modulate Jason effort, just curious how does that <unk>.
<unk> original <unk> deal at your targeted how does that change at all.
So yes, we talked about at the Investor day in the last.
Quarterly earnings call as well.
<unk> question is really when we have been consistently getting for the past 12 months of being out in the markets.
It's great for us to be out there and actually offering campaign Buda now.
That's getting good reception from what we can see in the market now.
So there we expect a higher number of these we can do over time, it's a shorter sales cycle generally.
And exactly as you say, it's because of the large growth we had because we want to support existing clients in the execution. There. We would have said for the next 18 months.
On shoulder another implementation of a big foodservice CEO now overall.
The trends in the marketplace I think are very much alive and very much on target.
There is the continued shift as we can see from hospitals and health systems towards taking more risks towards kind of re affirming in shoring up their health plans and we think it is still difficult to get a modern day infrastructure. Besides ours, that's helps folks take risk in a good way and connected member engagements.
So very much continue to be out there in the marketplace and negotiating and so I think at this points on these foodservice yields where you're talking about 2025 and beyond.
Got it thank you guys.
Your next question comes from the line of Stephen Baxter with Wells Fargo Securities. Your line is open.
Yeah, Hi, Thanks, I just wanted to follow up on a couple of the.
Plus asked your question there.
I guess first.
I didn't think I encourage you say kind of post launch challenges, but let me assure you expand a little bit on what exactly that means either clarifying what you said if I misheard you are expanding on the issue.
And then just as you talk about the 18 month Horizon I guess why is 18 months. The horizon why is about six months 12 months, what the thought process there just because in the pipeline.
Getting elongated in this deal has taken a long time to consummate in the first place I would feel like that potentially could push whole service revenue outlets too.
Late 2025, maybe even 2026, where we see more of that so just want to understand these issues much better and then maybe I'll follow up thank you.
Let me start with the.
With the economy.
Lon challenges so as we told you last quarter. This fully booked migrations are a complex and challenging.
They are also not done after launch so we're really in the middle of the work of making sure. We support the integration there. We're now seven months in and working through refining implementation.
What we wanted to do there is to we commit additional resources necessary to support the new clients and we're making progress there is a really important priority for us as we talked about we want to make sure it's done right.
As a result of that we're being thoughtful about not over extending ourselves by taking a new full service clients and for the near term now in terms of the 18 months.
We are out there in the marketplace continue to talk about some future of foodservice yields.
That will be at this point, we can start to get into 2025, even in conversations already yet give us though is to give ourselves more time to get the implementation rights and.
That means that we will continue to be in the marketplace.
In many cases, we have a chance of actually launching campaign implementations that might then leads to follow on implementations that become bigger and bigger and Thats, where the full focus is right now because we just think that that is a prudent thing to do given how much we grew and most importantly, given that we are really doing here is to use the infrastructure we built.
In the past 10 years to show an impact in health care costs member of member experience and we have such an incredible opportunity of getting the insurance company profitability in 2023.
Our now Big book, a book of business that we really want to make sure that that becomes the primary driver of internal efforts and the internal work.
Okay.
Okay.
Darren.
Your next question comes from the line of Jonathan Young with Credit Suisse. Your line is open.
Hi, Thanks for taking our question just a question on your high single digit pricing comment.
This does seem to be a day in line with national averages that have been coming out, but I guess in some of your key markets like Florida. How does this compare and if you did see a large bolus of membership come in in 2023, but there's also the dynamics of you achieving profitability and share count.
Yes.
Jonathan Thanks for the question so.
As we said our 2023 pricing was really laser focused on prioritizing margin expansion and.
As you mentioned the rate increases that we made were on average high single digits, which is which is kind of in the ballpark of what many were doing.
I would also just comment that it really is a nuance picture, where you have to go region by region.
To really understand the competitive landscape there if we just kind of pull back and look at the the market overall, its a very competitive market and from what we've seen we're seeing that.
<unk> experienced players in the market seem to be on the upper end of price increases and then on the other hand.
Theres other players, including some large players who seem to be more aggressive.
And there and so our take is that those with the most experienced appear to be pricing up at this point in the market cycle and then I just think that overall for us we.
Think that we have priced with with a goal of obtaining margin expansion, we are well positioned to deliver that.
Okay, Great and then just on the process.
Your next question comes from the line of Kevin Fischbeck with Bank of America.
Great. Thanks.
I wanted to go back to the plus Oscar thing.
I guess.
A couple of questions.
When you guys first outlined this change in strategy. It seemed like it was an addition, rather than a replacement over the next 18 months. So I guess I understand how you want to focus on the health and profitability, but when we first unveiled that it didn't sound like it was going to stop.
Stop you from making that progress or from doing a full scale launch. It. So it does sound like something is different I just wanted to make sure.
Did I understand that but then also how should we think about since.
Financing is a question I appreciate the two year.
Liquidity comment, but how should we think about this change at all like how much.
Our earnings do not have versus kind of initial models, because you're not selling things for the next 18 months versus the cost of doing this switch just trying to better understand.
The implications of what's going on in the delay.
Yes, let me start by what Hasnt changed.
What hasnt changed with regards to plus Oscar is I think number one our opportunity and our product market fit, particularly in the changing healthcare landscape I mentioned before I think in our conversations the shift towards risk.
Needs to focus on member experience, even the entry of figure typically isn't this these are all trends that I think we call. It a while ago not exactly we remain alive, but you will need and we have product market fit the era.
Second thing Hasnt has not changed is the importance of plus Oscar to a long term strategy.
The critical takeaway here is.
I continue to believe certainly the plaza Escuela survival business and it will be material component of Oscar over time.
Again reinforced in conversations we're in.
Income additions, we continue to be in as well.
I don't think Thats, an item as I mentioned look more competition on what are the infrastructure out there and so we can give ourselves the time and pause on these full service plantations for these 18 months to make sure we focus on scaling the business for the 1 million members and the profitability targets in serving existing clients and that's really it.
The ultimate plus Oscar to me sort of philosophically for segments is about we've got technology rebuilds, we've got infrastructure rebuilds and we want to use that to make health care more affordable memory member experience.
The most exciting proof points, we cannot achieve is next year delivering on insurance co profitability year. That's what's getting you excited and that is also we think is exciting for prospective clients and thats the coupon will be trying to earn here.
And in the meantime, then continue to build our footprint through campaign builder, which just a shorter sales cycle and say lets us unlock additional client sets as well.
Kevin why don't I speak to your question on kind of the impact of these decisions on.
On cash and liquidity and I would just say first of all but we continue to be targeting total company profitability in 2025.
The most important.
Component of deliberate on that is getting the insurance company profitable in 2023, and then more profitable thereafter. So if you think about our resource allocation we're actually.
Putting our resources towards our most important objective and then I would say secondly, as we look to grow.
Campaign builder.
And other modular station services to follow we think Theres an opportunity to deliver profitability of the question is that that might be a little bit slower than what we had originally expected, but we still believe there is there is significant opportunity.
And so.
So that will be one of the levers that will help us to get to profitability and then I would just also say that depending on the trajectory of how profitable. The insurance company is able to move over time will need to be very focused and careful about managing our holding company spend levels.
Those are that's really the the components that I think are going to be able to help us drive getting to insurance kind of our total company profitability in 2025.
Your next question comes from the line of Josh Raskin with Nephron Research. Your line is open.
Hi, Thanks, just wanted to go back to the pricing and expectations for next year. So you talked about the high single digit pricing next year, which you think is overall probably sounds consistent with the market, but I think Scott to your point varies dramatically by market. So I guess trying to figure out more specifically based on the pricing actions that you've taken what is that.
You mean for <unk> competitive positioning and do you think you grow or contract relative to the overall market and I'd be interested to hear your views on your thoughts on the overall market, which I think you guys have been talking about expectations for growth.
Before family Glitched fix and things like that but just with the subsidy is getting finalized et cetera.
Yes, Josh look I appreciate the question I'll, just start off by saying that.
It's too early for us to be giving any guidance on 2023, so I'm not going to give you any type of directional feedback on what we're anticipating for for that period at this point in time and when I just step back from the market and look at what's going on on the one hand, you've got SCP.
Where the extension of some of the.
Programs that we saw really supporting growth in the marketplace.
To date, and so we think thats going to be a continued tailwind Medicare read attainment Redetermination family Glitch. Those are also things that can expand the market. So we think the combination of.
Pricing in a larger market positions us well in terms of where we may see ourselves going into 2023, but we'll come back to you and give you some more updates on our guidance for 2023 at a later date.
Yeah, just you asked about the overall market and pricing and I want to reiterate what Scott said they are.
I think we have been also seeing for a while that we think the increases will be for the overall market in the high single digits. So I think the latest ive seen this across something like 35 States now, including Texas is about eight 3% or so that may need some interpretation because some of that is probably prior to subsidy extension.
Different states have different filing requirements.
<unk>.
So.
Good to see I think that we have not we have an understanding of how the market operates nowadays that we were able to roughly predict where that would go.
What Scott said earlier, what I want to reaffirm is that we see some of the experienced players in this market price up more and we see some of the ones who came back in price more aggressively and if there's one thing we have learned in the last eight years, sometimes painfully ourselves is that we don't want to chase.
When people try to go in certain markets and try to under price or something like that so.
We feel comfortable comfortable how were pricing in certain region as we said.
As the pricing comes out throughout September and October .
You'll see more cards turn over there.
Your next question comes from the line of Lindsay Gillam Goldman Sachs. Your line is open.
Alright. Thanks for the question just to go back to the Hex market again, I'd love to share more about how you're approaching plan design and then just to hear for any areas, where you're making investments. How do you think that might compare to competitors and then just thinking also about the positioning how the more disciplined pricing and maintain markets makes it end of the targeted high teens to mid twenties.
Revenue growth of the web towards profitability. Thank you.
Yes plan design I think it is.
One of the superpower of the insurance company and so it's.
It's been an area for us where every year I wish we could be doing even more creative things.
We are in fact actually next week, we have our first meeting for innovative plan design for 2024, I believe we're not steps will be how early we start the process there.
We have a number of new things we're doing this year I don't want to go too much into detail, just yet because that hasn't come out yet but <unk>.
For example, as I talked about in the prepared remarks, we're taking our virtual primary care plan designs into similar markets. We're rolling some of our kind of specialized plan designs in certain states particular member demographics out in a few places.
<unk>.
We are have all kinds of things around incentives.
And rewards is one that we constantly think about and support and so those are areas, where I think we have done some very interesting work I think that warehouse.
Has had real impact as well both in terms of growth and actually also loss ratio improvements and.
You can expect us to do a lot more they are certainly in the future in the states you Wouldnt Fort worth where we have coped up for 'twenty 'twenty three when the planned events come out in the next couple of weeks.
And then the second question was about.
You mind repeating your second question actually there might've been Scott question.
Yeah.
I wanted to ask how.
Hello can you hear me all right.
Yes, we can.
Just on the progression for 2023 I wanted to ask has suddenly a more disciplined pricing and maintain market fits into your targeted high teens to mid twenties revenue growth as you work towards profitability.
Yes, and I appreciate the question and I know that.
That folks are certainly going to be interested in where do we think the book will be in 2023, and I'm just going to again say that it's it is too early for us to give you an outlook on where 2023 lands but.
But we believe that the pricing that we put in the market is supportive of our path to profitability and that.
The reason that we leaned in on prioritizing margin expansion above all else.
Thank you.
You have a follow up question from Stephen Baxter with Wells Fargo Securities. Your line is open.
Okay.
Yeah, Hey, just a couple of quick follow up on the system. When you say you built the Medicaid Redetermination outlook I guess into your pricing.
That could make the market larger, but it seems like by how much and really when they start to be a meaningful impact in terms of the timing seemed like they're pretty open items. What are you assuming is the impact to the risk pool and I guess, how do you just got comfortable with the range of outcomes the building inside the pricing there.
It's got some puts and takes.
So on the one the two factor the two factors that you got to consider there and that we consider it is on the one hand when this membership come.
The more it comes in the middle of 2023 year. The more it will have some risk adjustment impact in the same way prior to enrollment.
Enrollment has had that impact in a given year of not being able to click risk scores things like that that's one one question is as we said they are right now the public health emergency is scheduled to expire in October .
There is some limitation how quickly states will start moving members Medicaid into the <unk>.
And so therefore.
The early in the year. This happens I think generally the better. It is for this S&P are a phenomenon. The other factor is what is the mobility of that book.
And there's actually different opinions I mean, I've seen at least one study out in the market. So as hey, this is going to be a better morbidity than the AC population.
We have generally built this in as an upward trend in the MLR in pricing. That's the short story, we expect this combination of <unk> and higher morbidity in our view.
We have an upward drift and therefore, that's built into our pricing. It's also different different markets, but that's kind of generally what we what we have done the era now I will say this the fact that we are now.
Six seven months in six months and obviously these results here and Thats, we see the MLR on these members who came in at <unk> last year for this year. The essentially the same in RFS members, who came in any open enrollment periods.
Just underscores this point, we made in prior calls which is.
That those members generally when trends towards similar utilization patterns and can be managed to some utilization and therefore similar cost outcomes and so.
This is a long term good thing that members are coming to this market will support generally.
I think the overall stability of the market, but membership in there and.
When we enroll them next year might have win win whenever it will be we hope that and retain them to make sure that they will continue to be a good MLR in the membership book of business and so thats really how we think about this.
Okay. Thanks, and just one last quick one from me it looks like the <unk>.
Back half implied G&A ratio total company adjusted admin ratio ran.
Ramps up a decent amount I think actually it's a decent amount more than the actual insurance company admin ratio. When we think about the difference between those two trends in the back half of the year, what should we be thinking about is what the drivers are thanks.
Yes I.
I appreciate the question and I guess I would I would maybe start with the insurance company.
And the insurance company, there I would anticipate that.
Well, we'll see.
Less seasonal.
Ramped in the insurance company admin expense, where historically, we would have seen in.
An increase in the third and fourth quarters, I think thats, what we saw last year. This year I would expect that we will see the fourth quarter up but we expect that is going to be up more modestly versus what we would would've seen in the prior year.
And then when.
One of the phenomena there is that.
The ramp that.
We experienced in the fourth quarter, we would expect that well or better positioned for ramp this year versus where we were last year based on our work that we're doing on scale.
And then when I think about.
The what's going on in the.
The Holdco line item there I think that is really just about some of the investments that we're making.
In our infrastructure to support scale and to support kind of what we're doing with with our clients and I think that those are.
Investments that arent necessarily sticky and so we'll look to continue to drive efficiency and holdco overtime.
There are no further questions at this time I would like to turn the call back over to our presenters.
Yes, thanks, so much for the color. Thanks, so much for the good questions and your coverage.
Some work and dedication and we will see you soon thanks again.
This concludes today's Oscar helps 2022 second quarter Conference call you may now disconnect.
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The host has ended this call goodbye nanometer will have a question so it looks.