Q2 2024 Oscar Health Inc Earnings Call

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Ellie: My name is Ellie, and that will be your conference operator for today. At this time, I would like to welcome everyone to the Oscar Health's second quarter, 2024 earnings conference call. Please note that this call is being recorded.

Ellie: As you're right now, everyone is joined on mute, so we can avoid background noise. Thank you.

Chris Potochar: I will now turn the conference over to Chris Potochar, Vice President of Treasury and Investor Relations. You may now begin.

Chris Potochar: Good morning, everyone. Thank you for joining us for our second quarter, 2024 earnings call. Mark Bertolini, Oster's chief executive officer, and Scott Blackley, Oster's chief financial officer, will host this morning's call. This call can also be accessed through our Investor Relations website at ir.hyoster.com. 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.hyoster.com.

Speaker Change: Good morning, everyone. Thank you for joining us for our second quarter 2024 earnings call Mark Bertolini, After as Chief Executive Officer, and Scott Blackley, Astor's Chief Financial Officer will host this morning's call. This call can also be accessed through our Investor Relations website at IR Dot high Oster Dot com.

Chris Potochar: This call can also be accessed through our investor relations website at ir.hioscar.com. 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 period ended March 31, 2024, filed with the Securities and Exchange Commission, and other filings with the SEC, including our quarterly report on Form 10-Q for the quarterly period ended June 30, 2024, to be filed with the SEC.

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 Dot com.

Chris Potochar: Any remarks that Oster 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 period ended March 31, 2024, filed with the Securities and Exchange Commission, and other filings with the SEC, including our quarterly report on Form 10-Q for the quarterly period ended June 30, 2024, to be filed with the SEC. Such forward-looking statements are based on current expectations as of today.

Speaker Change: 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 1095.

Speaker Change: 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 period ended March 31, 2024 filed with Securities and Exchange Commission and other filings with the SEC, including our quarterly report on Form 10-Q4.

The quarterly period ended June 32024 to be filed with the SEC.

Chris Potochar: Such forward-looking statements are based on current expectations as of today, but 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 measures can be found in the second quarter earnings press release available on the company's investor relations website at ir.hioscar.com. With that, I would like to turn the call over to our CEO, Mark Bertolini.

Speaker Change: Such forward looking statements are based on current expectations as of today.

Chris Potochar: Oster 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 display any obligation to do so.

Speaker Change: 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.

Chris Potochar: 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 the second-quarter earnings press release, available on the company's Investor Relations website at ir.hyoster.com.

Mark Bertolini: 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 second quarter earnings press release 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 Mark Bertolini.

Mark Bertolini: With that, I would like to turn the call over to our CEO, Mark Bertolini. Good morning. Thank you, Chris, and thank you all for joining us. This morning asked a report in strong second-quarter results, delivering solid performance to the first half of the year. Our positive results are driven by robust membership growth, solid in consistent execution, and improved bottom line performance. Underlying our second-quarter results, we reported total revenue of 2.2 billion in the quarter, an increase of 46% year over year. We improved our medical loss ratio by 90 basis points year over year to 79%.

Mark Bertolini: Good morning. Thank you, Chris, and thank you all for joining us. Delivering solid performance in the first half of the year, solid and consistent execution, and improved bottom line performance. Underlying our second quarter results, we reported total revenue of $2.2 billion in the quarter, an increase of 46% year-over-year. Based on our outperformance in the first half of the year, today we raised our full-year 2024 revenue guidance by $700 million to a range of $9 billion to $9.1 billion and adjusted EBITDA guidance. First, I will share key business highlights that demonstrate strong momentum against the strategic plan we shared with you at our investor conference in June. In June, we outlined our strategy to achieve at least a 20% revenue CAGR and 5% operating margin by 2027

Mark Bertolini: Good morning, Thank you, Chris and thank you all for joining us.

Speaker Change: This morning, <unk> reported strong second quarter results delivering solid performance through the first half of the year.

Speaker Change: Our positive results were driven by robust membership growth.

Speaker Change: Solid and consistent execution.

Speaker Change: An improved bottom line performance.

Speaker Change: Underlying our second quarter results, we reported total revenue of $2 2 billion in the quarter, an increase of 46% year over year.

Speaker Change: We improved our medical loss ratio by 90 basis points year over year to 79%.

Mark Bertolini: We achieved total company adjusted even though of $104.1 million, a nearly $69 million improvement versus the prior year. In addition, our first half adjusted even though was $323 million, a significant year over year of improvement of $237 million.

Speaker Change: We achieved total company adjusted EBITDA of $104 $1 million.

Speaker Change: Nearly $69 million improvement versus the prior year.

Speaker Change: In addition, our first half adjusted EBITDA was $323 million, a significant year over year or improvement of $237 million.

Mark Bertolini: The first half of 2024 is the best six months in Oscar's history. Based on our out performance in the first half of the year, today we raised our full year 2024 revenue. Guidance by $700 million to a range of $9 billion to $9.1 billion, and adjusted EBITDA guidance to a range of $160 to $210 million. In a few moments, Scott will provide a detailed review of our second quarter results and updated 2024 guidance.

Speaker Change: The first half of 'twenty 'twenty four is the best six months in <unk> history.

Speaker Change: Based on our outperformance in the first half of the year today, we raised our full year 2020 for revenue guidance by $700 million.

Speaker Change: To a range of $9 to $9 1 billion and adjusted EBITDA.

Speaker Change: EBITA guidance.

Speaker Change: To a range of $160 million to $210 million.

Speaker Change: In a few moments Scott will provide a detailed review of our second quarter results and updated 2020 for guidance.

Mark Bertolini: First, I will share key business highlights that demonstrate strong momentum against the strategic plan we shared with you at our Investor Day. In June, we outlined our strategy to achieve at least 20% revenue CAGR and 5% operating margin by 2027. We shared our plan to double our footprint in Oscar Insurance, significantly growing our addressable ACA opportunity through existing and new market expansion. We also doubled down on our commitment to introduce innovative products to meet the needs of our increasingly diverse member base. We declared our path to diversify Oscar's growth beyond the traditional ACA by building a leading Iqra business.

Scott Blackley: First I will share key business highlights that demonstrate strong momentum against the strategic plan, we shared with you at our Investor day.

Scott Blackley: In June we outlined our strategy to achieve at least 20% revenue CAGR and 5% operating margin by 2027.

Mark Bertolini: We shared our plan to double our footprint in Oscar Insurance, significantly growing our addressable ACA opportunity through existing and new market expansion. We also doubled down on our commitment to introduce innovative products that meet the needs of our increasingly diverse member base. We declared our path to diversify Oscar's growth beyond the traditional ACA by building a leading ICHRA business. We closed the quarter with approximately 1.6 million members, a 63% increase year over year.

Scott Blackley: We shared our plan to double our footprint in escrow insurance significantly growing our addressable opportunity through existing and new market expansion.

Scott Blackley: We also doubled down on our commitment to introduce innovative products that meet the needs of our increasingly diverse member base.

Scott Blackley: We declared our path to diversify Oscars growth beyond their traditional ACI by building, a leading <unk> business.

Mark Bertolini: Finally, we reinforced our investment in Oscar's key asset, our technology, which continues to drive superior member experiences, operational efficiencies, and affordability. Our second quarter results increased our confidence in achieving these long-term goals. We closed the quarter with approximately 1.6 million members, a 63% increase year over year. Key drivers included strong retention, new membership in existing expansion markets, and SCP member additions as Medicaid re-determinations continued. Overall utilization was in line with our expectations. We expect SCP member additions to continue into the second half of the year at a decelerated rate, as the Medicaid re-determination process is now complete in almost all of Oscar states.

Scott Blackley: Finally, we reinforced our investment in astra's key asset our technology, which continues to drive superior member experiences operational efficiencies at affordability.

Scott Blackley: Our second quarter results increased our confidence in achieving these long term goals.

Scott Blackley: We closed the quarter with approximately $1 6 million members, a 63% increase year over year.

Scott Blackley: Key drivers included strong retention.

Scott Blackley: New membership in existing expansion markets NFC team member additions as Medicaid Redetermination continue.

Unknown Executive: NSCP member additions as Medicaid redeterminations continue. Our strong growth this year lays a solid foundation for 2025 as SEP members that renew become a tailwind to our results. We drove more individuals to affordable, culturally competent plans based on our deep understanding of the ACA consumer and our ability to personalize engagement through our technology. For example, we introduced several campaigns that guided members to Oscar's virtual urgent care business. Our models track member search terms and records to identify individuals in need of immediate care.

Scott Blackley: Overall utilization was in line with our expectations we.

Scott Blackley: We expect SCP member additions to continue into the second half of the year at a decelerated rate.

Scott Blackley: The Medicaid Redetermination process is now complete and will almost all of Oscar States are strong growth. This year lays a solid foundation for 2025, SCP members that renew become a tailwind to our results.

Mark Bertolini: Our strong growth this year lays a solid foundation for 2025, as SCP members that renew become a tailwind to our results. Oscar continues to deepen our market presence. We grew in approximately 80% of our states year over year. We captured more market share by leveraging our deep provider and distribution relationships and winning on experience. We drove more individuals to affordable, culturally competent plans based on our deep understanding of the ACA consumer and our ability to personalize engagement through our technology. Our powerful technology engine continues to give Oscar Insurance a unique market edge while creating strong outcomes for provider and health plan clients.

Scott Blackley: Oscar continues to deepen our market presence.

Scott Blackley: Drew and approximately 80% of our states year over year, we captured more market share by leveraging our deep provider distribution relationships and winning on experience.

Scott Blackley: We drove more individuals to affordable culturally competent plans based on our deep understanding of the ACA consumer and our ability to personalized engagement through our technology.

Scott Blackley: Our powerful technology engine continues to give Oscar insurance, a unique market edge, while creating strong outcomes for provider and health plan clients.

Mark Bertolini: For example, we introduced several campaigns that guided members to Oscar's virtual urgent care business. Our models tracked member search terms and records to identifying individuals in need of immediate care. The campaigns drove interventions to divert care from ER settings and brick-and-mortar urgent care, lowering member costs and driving close to $18 million worth of value to Oscar insurance this year. In addition, we launched engagement campaigns for our I-plus Oscar client that helped drive an 18% year-over-year increase in annual wellness visits among individuals with chronic conditions.

Scott Blackley: For example, we introduced several campaigns that guided members to Oscars virtual urgent care business.

Scott Blackley: Our models track members search terms and records to identify individuals in need of immediate care.

Unknown Executive: The campaigns drove interventions to divert care from ER settings and brick-and-mortar urgent care, lowering member costs and driving close to $18 million worth of value to Oscar Insurance this year. In addition, we launched engagement campaigns for our iPlusOscar client that helped drive an 18% year-over-year increase in annual wellness visits among individuals with chronic conditions. Turning to ICRA, we continue to execute against our strategy. Small and mid-sized businesses are struggling to offer health insurance at a reasonable cost.

Scott Blackley: The campaigns drove interventions to avert care from ear settings, and brick and mortar urgent care lowering member costs and driving close to $18 million worth of value to Oscar insurance this year.

Scott Blackley: In addition, we launched engagement campaigns for our <unk> plus Oscar clients that helped drive an 18% year over year increase in annual wellness visits among individuals with chronic conditions.

Mark Bertolini: Communications. Turning to Ikra, we continue to execute against our strategy. Small and mid-sized businesses are struggling to offer health insurance at reasonable costs. We are working with Ikra platforms to meet these unmet needs and make Oscar a preferred carrier of choice throughout our innovative products. The Ikra value proposition is resonating in the market and at state policy levels. States including Indiana and Texas are enacting laws and considering legislation to make it easier for small businesses to adopt Ikra. We expect other states will follow suit. State momentum keeps us bullish on Ikra as a key solution to give consumers more choice and employers a more sustainable cost structure.

Unknown Executive: We are working with ICRA platforms to meet these unmet needs and make Oscar a preferred carrier of choice throughout our innovative products. States including Indiana and Texas are enacting laws and considering legislation to make it easier for small businesses to adopt ICRA. We expect other states will follow suit. State momentum keeps us bullish on ICRA as a key solution to give consumers more choice and employers a more sustainable cost structure. Before I transition to Scott, I wanted to address the heightened attention on the ACA given the upcoming presidential election.

Speaker Change: Turning to aircraft, we continue to execute against our strategy.

Speaker Change: Mall and mid sized businesses are struggling to offer health insurance at reasonable costs.

Speaker Change: We are working with each of our platforms to meet these unmet needs and make Oscar a preferred carrier of choice throughout our innovative products.

<unk> value proposition is resonating in the market and its state policy levels.

Speaker Change: States, including Indiana, Texas are enacting laws and considering legislation to make it easier for small businesses to adapt aircraft.

Speaker Change: We expect other states will follow suit state momentum keeps us bullish on aircraft as a key solution to give consumers more choice and employers a more sustainable cost structure.

Mark Bertolini: Before I transition to Scott, I wanted to address the heightened attention on the ACA given the upcoming presidential election. The ACA is the fastest growing market in health insurance and has created the largest risk pool in the industry, resulting in a significantly lower cost trend than conventional employer-sponsored coverage. The market serves nearly 22 million lives and has lowered the uninsured rate for small businesses from 25% to 16%, and to 7% overall. The ACA fills a critical gap in the insurance market and has proven its value across states. We are seeing a notable shift in sentiment from federal and state policymakers.

Speaker Change: Before I transition to Scott I wanted to address the heightened attention on the HCA given the upcoming presidential election.

Unknown Executive: The ACA is the fastest growing market in health insurance and has created the largest risk pool in the industry, resulting in a significantly lower cost trend than conventional employer-sponsored coverage. We are seeing a notable shift in sentiment from federal and state policymakers. They are moving beyond repeal and replace to creating constructive solutions that position their marketplaces to better serve more Americans. Now, I want to put a finer point on enhanced subsidies.

Speaker Change: The HCA is the fastest growing market in health insurance and has created the largest risk pool and the industry, resulting in a significantly lower cost trend than conventional employers' sponsor curl coverage.

Speaker Change: The market serves nearly 22 million lives and has lowered the uninsured rate for small businesses from 25% to 16% and to 7% overall.

Speaker Change: The HCA fills a critical gap in the insurance market and has proven its value across states.

Speaker Change: We are seeing a notable shift in sentiment from federal and state policymakers, they're moving beyond repeal and replace to creating construction solutions that position their marketplaces to better serve more Americans.

Mark Bertolini: They are moving beyond repeal and replace to creating constructive solutions that position their marketplaces to better serve more Americans. Now I want to put a finer point on enhanced subsidies. As we said at Investor Day, we expect to achieve our 2027 top line revenue and operating margin targets regardless of the outcome on enhanced subsidies. However, the continuation of enhanced subsidies is a critical bipartisan issue. Subsidies have made affordable comprehensive benefits accessible to hardworking Americans. Ensuring individuals do not have to make trade-offs on basic needs like food and housing. Without subsidies, the uninsured rate is expected to rise significantly and will largely affect notable coverage gains in Texas, South Carolina, Mississippi, Louisiana, and Georgia.

Speaker Change: Now I want to put a finer point on enhanced subsidies.

Unknown Executive: As we said at Investor Day, we expect to achieve our 2027 top line revenue and operating margin targets, regardless of the outcome on enhanced subsidies. Any administration, therefore, has a strong incentive to find a permanent solution. Again, we see a continuation of enhanced subsidies as upside to our base. In summary, Oscar continues to execute.

As we said at Investor Day, we expect to achieve our 2027 top line revenue and operating margin targets, regardless of the outcome on enhanced subsidies.

However, the continuation of enhanced subsidies as a critical bipartisan issue.

Speaker Change: Subsidies have made affordable comprehensive benefits accessible to hard working Americans, ensuring individuals do not have to make tradeoffs and basic needs like food and housing.

Speaker Change: Without subsidies the uninsured rate is expected to rise significantly and will largely effect notable coverage gains in Texas, South Carolina, Mississippi, Louisiana and Georgia.

Mark Bertolini: Any administration, therefore, has a strong incentive to find a permanent solution. Again, we see a continuation of enhanced subsidies as upside to our base plan.

Speaker Change: Any administration, therefore has a strong incentive to find a permanent solution.

Speaker Change: Again, we see a continuation of enhanced subsidies as upside to our base plan.

Mark Bertolini: In summary, Oscar continues to execute. The strategy we laid out is working, evidenced by strong revenue growth, improved operating margins, and bottom line performance. Our own performance through the second quarter positions us to achieve our total company adjusted EBITDA profitability target this year. I am confident we have the right team and strategy to achieve our updated 2024 guidance and long-term goals. Oscar has significant runway to grow through geographic expansion, or tech-driven products, and our leadership in ICRA. We have a strong belief in the individual market, and we have proven our ability to innovate in dynamic environments.

Speaker Change: In summary, Oscar continues to execute.

Speaker Change: The strategy, we laid out is working.

Mark Bertolini: This is evidenced by strong revenue growth, improved operating margins, and bottom line performance. Our outperformance through the second quarter positions us to achieve our total company adjusted EBITDA profitability target this year. I am confident we have the right team and strategy to achieve our updated 2024 guidance and long-term goal. We have a strong belief in the individual market, and we have proven our ability to innovate in dynamic environments.

Speaker Change: Evidenced by strong revenue growth improved operating margins and bottom line performance.

Speaker Change: Our outperformance for the second quarter positions us to achieve our total company adjusted EBITDA profitability target this year.

Speaker Change: I am confident we have the right team and strategy to achieve our updated 2020 for guidance and long term goals.

Speaker Change: Oscar has significant runway to grow through geographic expansion.

Speaker Change: Driven products and our leadership in Accra.

Speaker Change: We have a strong belief in the individual market and we have proven our ability to innovate in dynamic environments.

Mark Bertolini: We look forward to continuing to deliver strong results in 2024 to make the individual market the chosen solution for all of us. Americans.

Speaker Change: We look forward to continuing to deliver strong results in 2024 to make the individual market the chosen solution for all Americans.

Mark Bertolini: Before I hand the call to Scott, I want to thank our Oscar team. They're the 18 whose actions and hard work drive our outsized results.

Speaker Change: Before I hand, the call to Scott I want to thank our Oscar team there the 18, whose actions and hard work drive our outsized results.

Scott Blackley: Scott. Thank you, Mark, and good morning, everyone. We've delivered strong financial results for the first half of the year, which positions us well to achieve total company adjustity of a profitability this year. Building on our strong first quarter momentum, we reported approximately 56 million of net income in the second quarter, or 20 cents per diluted share. Total revenue increased 46% year-over-year to 2.2 billion in the second quarter, driven by higher membership and year-over-year rate increases, partially offset by higher risk adjustment as a percentage of premiums. We ended the quarter with approximately 1.6 million members, a strong increase of 63% year-over-year.

Scott Thank.

Scott Blackley: Thank you, Mark. And good morning, everyone.

Scott Blackley: Thank you Mark and good morning, everyone.

Scott Blackley: We delivered strong financial results for the first half of the year, which positions us well to achieve total company adjusted EBITDA profitability. This year.

Scott Blackley: We've delivered strong financial results for the first half of the year, which positions us well to achieve total company adjusted EBITDA profitability this year. Building on our strong first quarter momentum, we reported approximately $56 million of net income in the second quarter, or $0.20 per diluted share. Membership growth was driven by strong retention, above market growth during open enrollment, and SEP member addition. Turning to medical costs, the second quarter medical loss ratio improved by 90 basis points year over year to 79%. Primarily driven by favorable prior period developments, utilization trends were in line with our expectations. I want to spend a moment on special enrollment.

Scott Blackley: Building on our strong first quarter momentum, we reported approximately $56 million of net income in the second quarter or <unk> 20 per diluted share.

Scott Blackley: Total revenue increased 46% year over year to $2 2 billion in the second quarter, driven by higher membership and year over year rate increases, partially offset by higher risk adjustment as a percentage of premiums.

Scott Blackley: We ended the quarter with approximately $1 6 million members, a strong increase of 63% year over year.

Scott Blackley: Membership growth was driven by strong retention, above-market growth during open enrollment, and SEP member additions. During the medical costs, the second quarter medical loss ratio improved by 90 basis points year-over-year to 79%. Primarily driven by favorable prior period development. Overall, utilization trends were in line with our expectations.

Scott Blackley: Membership growth was driven by strong retention above market growth during open enrollment and CP member additions.

Scott Blackley: Turning to medical costs, our second quarter medical loss ratio improved by 90 basis points year over year to 79%.

Scott Blackley: Primarily driven by favorable prior period development.

Overall utilization trends were in line with our expectations.

Scott Blackley: I want to spend a moment on Special Enrollment. We saw significant membership growth in the second quarter. SEP member additions peaked in May and decelerated in June and July. The economics for these members have been in line with our expectations thus far. As a reminder, SEP members added in the second half of the year carry an in-year MLR headland due to partial year risk adjustment, and dynamics, and the short window for utilization and risk going to occur. We expect that the strong growth in SEP membership will be a tailwind in next year. Historically, we've had a good track record of retaining SEP members, and their MLR performance in the following year has been similar to other open enrollment members.

Scott Blackley: I want to spend a moment on special enrollment.

Scott Blackley: We saw significant membership growth in the second quarter, and economics for these members have been in line with our expectations thus far. Turning to Risk Adjustment, the final CMS report for 2023 was largely consistent with our expectations, resulting in only a modest increase to our risk transfer payable. We also received the first weekly report for 2024.

Scott Blackley: We saw significant membership growth in the second quarter.

Scott Blackley: CP member additions peaked in May and accelerated in June and July.

Scott Blackley: The economics for these members have been in line with our expectations thus far.

Scott Blackley: As a reminder, SCP members added in the second half of the year carrying in year MLR headwind due to partial year risk adjustment dynamics, and the short window for utilization and risk scoring to occur.

Scott Blackley: We expect that the strong growth in <unk> membership will be a tailwind to next year.

Scott Blackley: Historically, we've had a good track record of retaining SCP members and their MLR performance in the following year has been similar to other open enrollment members.

Scott Blackley: Turning to risk adjustment, the final CMS report for 2023 was largely consistent with our expectations, resulting in only a modest increase to our risk transfer payable. We also received the first Wakelay report for 2024. For full year 2024, we now expect risk adjustment as a percentage of premiums to be largely consistent year-over-year. With six months of performance behind us, our overall underlying economics are trending well.

Scott Blackley: Turning to risk adjustment the final CMS report for 2023 was largely consistent with our expectations, resulting in only a modest increase to our risk transfer payable.

Scott Blackley: We also received the first weekly report for 2024.

Scott Blackley: For full year 2024, we now expect risk adjustment as a percentage of premiums to be largely consistent year over year. With six months of performance behind us, our overall underwriting economics are trending well. Switching to administrative costs, our strong first half results demonstrate that we are executing well.

For full year 2024, we now expect risk adjustment as a percentage of premiums to be largely consistent year over year.

Scott Blackley: With six months of performance behind Us our overall underwriting economics are trending well.

Scott Blackley: Switching to administrative costs. The second quarter SGNA expense ratio improved by 260 basis points year-over-year to 19.6 percent, driven by higher fixed cost leverage and variable cost efficiencies, which were partially offset by higher risk adjustment as a percentage of premiums. Our strong first half results demonstrate that we are executing well. We delivered significant revenue growth and improved profitability, which drove a substantial year-over-year increase in net income and adjusted EBIT out in the quarter. for the first six months of the year. Second quarter net income of approximately 56 million improved by $72 million over year. Adjusted EBITDA of $104 million increased by $69 million year over year.

Scott Blackley: Switching to administrative costs, the second quarter SG&A expense ratio improved by 260 basis points year over year to 19, 6% driven by higher fixed cost leverage and variable cost efficiencies, which were partially offset by higher risk adjustment as a percentage of premiums.

Scott Blackley: Our strong first half results demonstrate that we are executing well.

Scott Blackley: We delivered significant revenue growth and improve profitability, which drove a substantial year over year increase in net income and adjusted EBITDA in the quarter and for the first six months of the year.

Scott Blackley: Second quarter net income of approximately 56 million improved by $72 million year over year.

Scott Blackley: Adjusted EBITDA of 104 million euros increased by 69 million euros. First half net income of $234 million improved by nearly $289 million year-over-year. And finally, first half adjusted EBITDA of $323 million increased by $237 million year-over-year. We ended the second quarter with approximately $4.1 billion of cash and investments, including $204 million of cash and investments at the parent. As of June 30th, our insurance subsidiaries had approximately $1.1 billion of capital in surplus, including $655 million of excess capital, which was driven by our strong operating performance.

Scott Blackley: Adjusted EBITDA of $104 million increased by $69 million year over year.

Scott Blackley: First half net income of $234 million improved by nearly $289 million year over year. And finally, first half adjusted EBITDA of $323 million increased by $237 million year over year.

Scott Blackley: First half net income of $234 million improved by nearly $289 million year over year, and finally first half adjusted EBITDA of $323 million increased by $237 million year over year.

Scott Blackley: Shifting to the balance sheet, our capital position remains strong. We ended the second quarter with approximately $4.1 billion of cash and investments, including $204 million of cash and investments at the parent. As of June 30th, our insurance subsidiaries had approximately 1.1 billion of capital and surplus, including $655 million of excess capital, which was driven by our strong operating performance.

Scott Blackley: Shifting to the balance sheet, our capital position remains strong.

Scott Blackley: We ended the second quarter with approximately $4 1 billion of cash and investments, including $204 million of cash and investments at the parent.

Scott Blackley: As of June 30th our insurance subsidiaries had approximately $1 1 billion of capital and surplus including $655 million of excess capital, which was driven by our strong operating performance.

Scott Blackley: Let me turn now to updates to our 2024 full-year guidance. We are raising our guidance for total revenue by $700 million to a range of $9 billion to $9.1 billion, reflecting higher membership driven by SAP additions. As Mark mentioned, the Medicaid redeterminations process is largely complete in almost all of our states. We now expect a medical loss ratio in the range of 80.5% to 81.5%, driven primarily by SAP member risk adjustment dynamics that I previously mentioned. Switching to SG&A, we now expect a lower SG&A expense ratio in the range of 19.75% to 20.25%, driven by lower risk adjustment as a percentage of premiums and greater fixed cost leverage.

Scott Blackley: Let me turn now to updates to our 2024 full-year guidance. We are raising our guidance for total revenue by $700 million to a range of $9 billion to $9.1 billion. We continue to expect to achieve total company-adjusted EBITDA profitability this year and are raising our estimate to a range of $160 million to $210 million. We remain confident in our ability to achieve total company-adjusted EBITDA profitability this year, setting a solid foundation for the path toward our long-term targets of at least 20% top-line CAGR and a 5% operating margin by 2027. With that, I will turn the call over to the operator for the Q&A portion of our call.

Scott Blackley: Let me turn now to updates to our 2020 for full year guidance.

Scott Blackley: We are raising our guidance for total revenue by $700 million to a range of $9 billion to $9 1 billion, reflecting higher membership driven by SCP additions.

Scott Blackley: As Mark mentioned Medicaid Redetermination process is largely complete and almost all of our states.

Mark Bertolini: We now expect our medical loss ratio in the range of 85% to 81, 5% driven primarily by SCP member risk adjustment dynamics that I previously mentioned.

Speaker Change: Switching to SG&A, we now expect a lower SG&A expense ratio in the range of 1970, 5% to 20, 25% driven by lower risk adjustment as a percentage of premiums and greater fixed cost leverage.

Scott Blackley: We continue to expect to achieve total company adjusted EBITDA profitability this year and are raising our estimate to a range of $160 million to $210 million.

Speaker Change: We continue to expect to achieve total company adjusted EBITDA profitability. This year and are raising our estimate to a range of $160 million to $210 million.

Scott Blackley: In closing, we've delivered the best six months in Oscar's history. Our strong outperformance in the first half of the year demonstrates that we can achieve strong growth and improve profitability. We remain confident in our ability to achieve total company adjusted EBITDA profitability this year, setting a solid foundation for the path towards our long-term targets of at least 20% top-line CAGR and a 5% operating margin by 2027.

Speaker Change: In closing.

Speaker Change: We've delivered the best six months in Oscar's history.

Speaker Change: Our strong outperformance in the first half of the year demonstrates that we can achieve strong growth and improved profitability. We remain confident in our ability to achieve total company adjusted EBITDA profitability. This year setting a solid foundation for the path towards our long term targets of at least 20% top line CAGR and a 5% opera.

Speaker Change: <unk> margin by 2027.

Unknown Executive: With that, I will turn the call over to the operator for the Q&A portion of our call. Thank you. We are now opening the floor for questions, and if you'd like to ask a question, please press star one. Again, that's star one.

Speaker Change: With that I will turn the call over to the operator for the Q&A portion of our call.

Operator: Thank you. We are now opening the floor to questions and answers. If you'd like to ask a question, please press star 1. Again, that's star 1. Our first question comes from Steve Baxter from Wells Fargo. Your line is now open.

Speaker Change: Thank you. Thank you we are now opening the floor for a question and answer session. If you'd like to ask a question. Please press star one again Thats Star one our first question comes from Stephen Baxter from Wells Fargo. Your line is now open.

Stephen Baxter: Our first question comes from Steve Baxter from Wolf Fargo. Your line is now open.

Stephen Baxter: Hi, good morning. Thanks for the question. So just wanted to ask about the improved guidance. We raised the EBITDA guidance by $35 million. I think you said at the investor days, as of April, you were running about $40 million above plan. I'm trying to square those two numbers in one period that you've now adopted. A provisioning guidance around the SEP membership dynamically discussed at the Investor Day.

Stephen Baxter: Hi, Good morning. Thanks for the question. So just wanted to ask about the improved guidance you raised the guidance by.

Stephen Baxter: $35 million I think you said at the Investor day that the April you were running about $40 million above plan.

Speaker Change: Square those two numbers and wondering if you have now adopted.

Speaker Change: Revision in guidance around the S&P membership dynamics, we discussed at the Investor day. Thanks.

Stephen Baxter: Thanks.

Stephen Baxter: Yes. Thanks for the question. So, as we, you know, did the full forecast for the year, the biggest in driver of the difference between where we were 40 million ahead at the investor day and the guidance midpoint is just SEP. And so, I think the answer you're going to hear to most questions about what's driving the full year today is going to be SEP grow. And as you may remember, the SEP growth comes with in-year MLR headwind due to the partial, you know, year risk adjustment dynamics. You know, so we're excited about the growth that we're seeing there.

Speaker Change: Yes.

Unknown Executive: Hey Steve, thanks for the question. So As we did the full forecast for the year, the biggest driver of the difference between where we were 40 million ahead at investor day and the guidance midpoint is just SEP. And so I think the answer you're going to hear to most questions about what's driving the whole year today is going to be SEP growth. As you may remember, SEP growth comes with an in-year MLR headwind due to the partial year risk adjustment dynamics.

Steve: Hey, Steve.

Speaker Change: Thanks for the question.

Speaker Change: So.

Speaker Change: As we.

Speaker Change: Did the full forecast for the year the biggest driver.

Speaker Change: The difference between where we were at $40 million ahead at the Investor day in the guidance.

Speaker Change: Midpoint is just SCP and so I think the answer youre going to hear to most questions about what's driving the full year today is going to be SCP grill.

Speaker Change: As you May remember D S.

Speaker Change: S&P growth comes with it.

Speaker Change: <unk> MLR headwind due to the partial year risk adjustment dynamics.

Unknown Executive: You know, we're excited about the growth that we're seeing there. We're excited that we can continue to have strong performance this year and that those SEP members are actually going to be a tailwind for us as we go into 2025, as we would expect to retain a significant portion of them.

Speaker Change: So we're excited about the growth that we're seeing there. We're excited that we can continue to have strong performance. This year and that those FCP members are actually going to be a tailwind for us as we go into 2025, as we would expect to be able to retain a significant portion of them.

Stephen Baxter: We're excited that we can continue to have strong performance this year and that those SEP members are actually going to be a tailwind for us as we go into 2025, as we would expect to be able to retain a significant portion of them. Got it. And you would discuss, I think, you know, potentially a 40 million dollar headwind if SEP membership ads exceeded, you know, what you would have vetted in your initial guidance. Is there a sense you could give us on whether the full 40 million dollars is now embedded inside the SEP dial out?

Speaker Change: Got it and you had discussed I think potentially a $40 million headwind if S&P membership adds exceeded what you had embedded in your initial guidance is there a sense you could give us on whether the full $40 million is now embedded inside the EBITDA outlook or whether it's some portion of that.

Stephen Baxter: Look, or whether it's some portion of that. Thanks. Yep.

Speaker Change: Yes.

Stephen Baxter: The I want to try to unmix the paint, if you will. But I think that the point here is we've now embedded our expectations for, you know, we've seen strong SEP growth in the second quarter, and we're now expecting to see continued growth in membership through the rest of the year, but at a slower pace than what we saw at the second quarter.

Speaker Change: The I won't try to unmixed the pain, if you will but I think that the point here is we've now embedded to our expectations for we've seen strong SCP growth in the second quarter and we're now expecting to see continued growth in membership through the rest of the year, but at a slower pace than what we.

The second quarter.

Jessica Tassan: Our next question comes from Jessica Towson from Piper Sandler. Your line is now open. Hi, thank you guys for taking the question, and congrats on the good results.

Operator: Our next question comes from Jessica Towson on behalf of Piper Sadler. Your line is now open.

Jessica <unk>: Our next question comes from Jessica <unk> from Piper Sandler Your line is now open.

Unknown Executive: Hi, thank you guys for taking the question and congrats on the good results. I was hoping you could maybe talk a little bit about the 2025 rate requests and kind of help us understand, you know, some of the divergence in the requested rate increases. States like Georgia look like they're up or the request is up about 13.5% versus Texas, and Missouri, 2% or 1% respectively. So, just interested if you could comment at all on the 2025 requests and then also on the divergence and what seems like, you know, one geographic area of the country. Thanks.

Jessica <unk>: Hi, Thank you guys for taking my question and congrats on the good results Okay.

Jessica Tassan: I was hoping you could, you could maybe talk a little bit about the 2025 rate request and kind of help us understand, you know, some of the divergence in the requested rate increases. States like Georgia look like they're up or requested up about 13 and a half percent versus Texas, Missouri 2 or 1 percent respectively. So just interested if you could comment at all on the 2025 request and then also on the divergence in what seems like, you know, one geographic area of the country. Thanks. Jessica, how are you? Appreciate the question. So look, I think that on rate requests, obviously, those are very much driven by the local, you know, geographies, what we see in performance in market by market.

Jessica <unk>: Thank you could you could maybe talk a little bit about the 2025.

Jessica <unk>: Rate requests and kind of help us understand.

Speaker Change: Some of the divergence in the requested rate increases at states like Georgia look like they're up or requested up about 13, 5% versus Texas, Missouri, two 1%, respectively. So just interested if you could comment at all on the 2025 requests.

Speaker Change: And then also on the divergence in what seems like.

Speaker Change: One geographic area that's okay. Thanks.

Unknown Executive: Jessica, how are you? I appreciate the question. So look, I think that on rate requests, obviously, those are very much driven by the local, you know, geographies, what we see in performance market by market. So you know, we would expect that they're always going to have differences and divergence. With respect to you know, you asked about Georgia specifically, I would just say that I think that's reflective of the overall market there.

Jessica <unk>: Jessica how are you.

Jessica <unk>: Appreciate the question. So look I think that one rate requests obviously those are very much driven by the local.

Jessica <unk>: Geographies, what we see in performance in.

Jessica <unk>: Market by market. So we would expect that there are always going to have differences and divergence with respect to you asked about Georgia, specifically I would just say that I think thats reflective of the overall market there.

Jessica Tassan: So, you know, we would expect that there are always going to have differences and divergence. With respect to, you know, you asked about Georgia specifically, I would just say that I think that's reflective of the overall market there and, you know, is pretty consistent with what we've seen from others as well. So, you know, I would think going forward that we would always expect that our rate actions will be responsive to local economics.

Unknown Executive: And, you know, it's pretty consistent with what we've seen from others as well. So, you know, I would think going forward that we would always expect that our rate actions will be responsive to local economics.

Jessica <unk>: And it's pretty consistent with what we've seen from others as well so.

Jessica <unk>: I would I would think going forward that.

Jessica <unk>: We would always expect that our rate actions will be responsive to local economics.

Jessica <unk>: Okay.

Jessica Tassan: Got it. And then I just had one quick follow-up. And maybe can you talk about whether your risk adjustment assumptions for your initial 2024 members changed at all in the 2Q number, or whether that increased PMPM just entirely reflects the new members added year to date. Thank you. Yep, appreciate the question on risk adjustment, and I would just say that for the full year, a couple drivers, obviously the addition of SCP members actually comes with a higher amount of risk transfer, and that would push the risk transfer up. But on the other hand, and the predominant impact for the full year guidance is that.

Unknown Executive: Got it. And then I just had one quick follow-up. Maybe you could talk about whether your risk adjustment assumptions for your initial 2024 members changed at all in the 2Q number, or whether that increased PMPM just entirely reflects the new members added year to date? Thank you.

Speaker Change: Got it and then.

Speaker Change: Just had one quick follow up and maybe can you talk about whether your risk adjustment assumption for your.

Speaker Change: Your initial 2024 members changed at all in the end in the <unk> number or whether that increase P. M. P. M. Just entirely reflects the new members added year to date. Thank you.

Speaker Change: Yes.

Speaker Change: Appreciate the question on risk adjustment and I would just say that.

Speaker Change: For the full year.

Unknown Executive: a couple of drivers. Obviously, the addition of SEP members actually comes with a higher amount of risk transfer, and that would push the risk transfer up. But on the other hand, and the predominant impact for the full year guidance, we've seen our relative risk actually getting closer to the market average, which is why, for the full year, we now expect to be closer to last year's risk adjustment as a percentage of premiums.

Speaker Change: A couple of drivers obviously.

Speaker Change: The addition of SCP members actually comes with a higher amount of risk transfer and that would push the risk transfer up but on the other hand in the predominant impact for the full year guidance is that.

Jessica Tassan: We've seen our relative risk is actually getting closer to market average, which is why for the full year we now expect to be closer to last year's risk adjustment as a percentage of premiums. I think that the points I would also make there is we look at our underwriting performance, it's right on plan; the weekly results that we got for the first half of the year confirmed kind of where we think we're headed.

Speaker Change: We've seen a relative risk is actually getting closer to market average, which is why for the full year. We now expect.

Speaker Change: To be closer to last year's risk adjustment as a percentage of premiums.

Unknown Executive: You know, I think that the points I would also make there are, we look at our underwriting performance, it's right on plan, the weekly results that we got for the first half of the year confirm kind of where we think we're headed. So, you know, feel like we've got all of those factors built into our full year outlook for mid-teens risk adjustment as a percentage of premiums.

Speaker Change: I think that the points I would also make there as we look at our underwriting performance. It's right on plan. The Wakely results that we got for our.

Speaker Change: In the first for the first half of the year confirm kind of where we think we're headed.

Joshua Raskin: So feel like we've got all of those factors built into our full year outlook of mid-teens risk adjustment as a percentage of premiums. Our next question comes from Joshua Ruskin from Network on Research; your line is now open. Great, thanks.

Speaker Change: So feel like we've got all of those factors built into our full year outlook of mid teens risk adjustment as a percentage of premiums.

Operator: Our next question comes from Joshua Raskin from Nephron Research. Your line is now open.

Speaker Change: Our next question comes from Joshua Raskin from Nephron Research. Your line is now open.

Unknown Executive: Great, thanks. The first question is, how are you thinking about pricing relative to competitors for 2025 now that you've seen a little data? And then can you speak to overall market growth expectations on the exchanges for next year?

Joshua Raskin: Great. Thanks. The first question is how are you thinking about pricing relative to competitors for 2025 now that you've seen a little data and then can you speak to overall market growth expectations on the exchanges for next year.

Joshua Raskin: The first question is how are you thinking about pricing relative to competitors for 2025 now that you've seen a little data, and then can you speak to overall market growth expectations on the exchanges for next year? I would just say starting with kind of overall growth, you know, we previously shared at the Investor Day our expectations for market growth of around 15% in 2025. You know, we think that there's an opportunity to see that level of growth based on what we see today, which is, you know, there'll be some, we believe, lingering effects of Medicaid redetermination, but we also see strong underlying fundamentals in the market, which include strong distribution and the benefit of, you know, having, having a strong enhanced subsidy program.

Speaker Change: I would just say starting with kind of overall growth.

Speaker Change: We previously shared at the Investor day, our expectations for market growth of around 15% in 2025.

Speaker Change: We think that there's an opportunity to see that level of growth based on what we see today, which is.

Unknown Executive: You know, there'll be some lingering effects of Medicaid redetermination, but we also see strong underlying fundamentals in the market, which include strong distribution and the benefit of, you know, having a strong enhanced subsidy program. So all of those factors are kind of where we anticipate the market. Obviously, we'll get through the end of this year and update our full year estimate based on kind of what we see happen in the marketplace this year. But at the moment, that's where we are.

Speaker Change: There'll be some we believe lingering effects of Medicaid redetermination, but we also see strong underlying fundamentals in the market, which include strong distribution and the benefit of.

Speaker Change: Having having a strong enhanced subsidy program. So all of those factors is kind of where we anticipate the market. Obviously, we will get through the end of.

Joshua Raskin: So all of those factors is kind of where we anticipate the market. Obviously, we'll get through the end of this year and update our full year estimate based on kind of the what we see happen in the marketplace this year, but at the moment that's where we are. And our growth expectations, Josh, are built off of not just the overall market growth, but the markets that we are in and any additional markets. And that's why we see our ability to go through the same time.

This year and update our full year estimate based on kind of the what we see happening in the marketplace. This year, but at the moment, that's where we are.

Speaker Change: And our growth expectations, Josh are built up.

Speaker Change: Not just the overall market growth, but the markets that we're in and it's adding additional markets and that's why we see our ability to grow through.

Josh: Three years, thus far Josh when we when we look at other.

Joshua Raskin: That's far, Josh. When we, when we look at other, you know, we're all starting to get a nearly preview of rates for 2025, then, you know, I would characterize them as stable and rational and, you know, which is kind of what we had been expecting. So, you know, nothing unexpected in terms of what we've seen so far. That's helpful.

Josh: We're all starting to get an early preview of rates for 2025.

Josh: I would characterize them as stable and rational.

Josh: And which is.

Josh: Kind of what we had been expecting.

Speaker Change: So nothing unexpected in terms of what we've seen so far.

Unknown Executive: That's helpful. And then can you just provide, I know you mentioned a little in the prepared remarks, just an update on your ICRA-related conversations. Maybe you could start with sort of external vendor progress and then maybe give us a sense of any membership opportunities, perhaps even in 2025.

Speaker Change: That's helpful. And then can you just provide I know you mentioned a little in the prepared remarks, just an update on your aircraft related conversations maybe if you could start with sort of external vendor progress and then maybe give us a sense of any membership opportunities, perhaps even in 2025.

Joshua Raskin: And then can you just provide, I know you mentioned little in a prepare to march, just an update on your ICHRO related conversations, maybe if you could start with sort of external vendor progress and then maybe give us a sense of any membership opportunities, perhaps even in 2025. We will give guidance on membership in 2020-25 when we get there, but not until then. But however, Josh, in the partnerships we've built already, and go to market strategies we deployed, we've already made some changes, as we've learned as we've went along. We've got a lot of interest, a lot of interesting opportunities in front of us, we're driving those to ground, we're really trying to figure out overall distribution and how that will best play out over time, and how we need to look at the two level sale, first the employer, and then through the brokers and getting people into plans. But so far our learnings have been strong, our interest continues to grow in the opportunity here, and by 2025 we believe we'll have some very positive results coming into the year.

Unknown Executive: We will give guidance on membership for 2025 when we get there, but not until then. But, Josh, in the partnerships we've built already and the go-to-market strategies we've deployed, we've already made some changes as we've learned as we've gone along. We've got a lot of interest, a lot of interesting opportunities in front of us. We're driving those to the ground. We're really trying to figure out overall distribution and how that will best play out over time and how we need to look at the two-level sale, first the employer, and then through the brokers and getting people into plans. But so far, our learnings have been strong. Our interest continues to grow in the opportunity here, and by 2025, we believe we'll have some very, very positive results.

Speaker Change: We will give guidance on membership in 'twenty for 2025, when we get there.

Speaker Change: But not until then but however, josh in the partnerships, we've built already and.

Speaker Change: Go to market strategies, we deployed we've already made some changes as we've learned as we went along we've got a lot of interest a lot of interesting opportunities in front of us we're driving those to crowd, we're really trying to figure out overall distribution and how that will best.

Speaker Change: Play out over time, and how we need to look at the two level sale first the employer and then through the brokers and getting people into plans, but so far our earnings have been strong.

Speaker Change: Interest continues to grow and the opportunity here and by 2025, we believe we will have some very very positive results coming into the year.

Adam Ron: Our next question comes from Adam Ron, from Bank of America. Your line is now. Hey, thanks for the question. If I dig into the guidance changes on revenue in MLR, it looks like on the incremental revenue, I'm back here until like 85% MLR versus the 80.7% in the prior guidance, and so if that's all related to SEP, that would be roughly like 400 basis points of difference in MLR on those members versus what you expected to have and coming into the year, versus that delta right in second, how does that compare to in prior cycles, the difference between what you saw in SEP members and returning members, just any color there on how, that SEP members inside of your expectations are trending versus prior periods, thanks.

Speaker Change: Our next question comes from Adam Ron from Bank of America. Your line is now open.

Adam Ron: Hey, Thanks for the question if I dig into the guidance changes on revenue and MLR looks like.

Speaker Change: Incremental revenue and.

Adam Ron: And back in to like 85% MLR versus the 87% in the prior guidance. So if that's all related to FTP that would be roughly 400 basis points of difference that MLR on those members versus what you expected to have in coming into the year versus that Delta right and second how does that compare to prior.

Our cycles the difference between what you saw on FEP members.

Speaker Change: Returning members just any color there on how.

Speaker Change: The FEP members inside of your expectations are trending versus prior periods.

Adam Ron: Yeah, so the additional SEP membership growth that is now embedded in our full year outlook does have higher MLR implications, and so while we anticipate similar shape of seasonality next year or for the rest of this year, it's going to be similar to what we saw last year, probably with a little bit steeper slope. So that's kind of what we would anticipate for MLR for the second half, through respect to performance of SEP members. SEP members that we're getting are, I think it's interesting, they're three to four years on average younger than the overall population.

Speaker Change: Yes so.

Unknown Executive: The additional SEP membership growth that is now embedded in our full-year outlook does have higher MLR implications. And so while we anticipate a similar shape of seasonality next year or for the rest of this year, it's going to be similar to what we saw last year, probably with a little bit steeper slope. So that's kind of what we would anticipate for MLR in the second half, with respect to performance by SEP members.

Speaker Change: The additional membership growth that is now embedded in our full year outlook does have.

Speaker Change: Higher MLR implications and so while we anticipate similar shape of seasonality next year.

For the rest of this year.

Speaker Change: <unk> going to be similar to what we saw last year, probably with a little bit.

Speaker Change: Steeper slope. So that's that's kind of what we would anticipate for MLR for the second half with respect to performance of SCP members.

Speaker Change: The STP.

Speaker Change: STP members that we're getting our I think it's interesting there are three to four years on average younger than the overall population they tend to be healthier.

Adam Ron: They tend to be healthier, which is one of the reasons why when we retain them into the second year and as those members start to engage in getting their PCP and pharmacy benefits all into the system and we're able to risk or those things, they start to look a lot like the open enrollment numbers. With respect to this year's, the performance so far we've really, we anticipated that with more members coming from Medicaid re-determination, they may have higher utilization than what we've seen with SEP members in the past. We have seen some evidence that that is the case.

Speaker Change: Which is one of the reasons why when we retain them into the second year and as those members start to engage in.

Speaker Change: Getting their PCP and pharmacy benefits all.

Speaker Change: Into the system, and we're able to risk or those things they start to look a lot like the open enrollment numbers.

Speaker Change: With respect to this year's performance so far we've really we anticipated that with more members coming from Medicaid Redetermination. They may have higher utilization than what we've seen with S&P members in the past we have seen some evidence that that is the case, we see some higher usage of the ER for example.

Adam Ron: We see some higher usage of the ER, for example, but importantly, the overall economics for those members are right in line with what we had anticipated, and so we're pleased thus far with the performance of the book. I would just add, it's not all medical costs. It's the revenue impact as well, not getting the risk adjusters in, and secondly, the mix. You don't understand the mix through the whole year that have come true in our reporting, so I don't think it's exactly incremental now to come up with. Fair. No, appreciate the color.

Speaker Change: But importantly, the overall economics for those members are right in line with what we had anticipated and so we're pleased thus far with the performance of the book.

Unknown Executive: I would just add it's not all medical costs, it's the revenue impact as well of not getting the risk adjusters in, and secondly, the mix. You don't understand the mix through the whole year that has come through in our reporting. So I don't think it's exactly incremental math to come up with 84.5%.

Speaker Change: I would just add it's not all medical cost, it's the revenue impact as well if not getting the risk adjusters in and secondly, the mix you don't understand the mix through the whole year that will come through in our reporting so I don't think its exactly <unk> become obligated for wafers.

Speaker Change: That's fair I appreciate the color and then two clarification questions.

Adam Ron: And then two clarification questions that'll squeeze into one. You mentioned in the release that the MLR increase or decrease your rear primarily due to favorable prior period developments. If you could just explain that in a second on the preliminary rate filings, I think they should all be public now. So, and you might have covered this at the investor day, but can you just go over if there's any new states or geographies in 2025. Thanks. Yeah, with respect to prior period development, we did have favorable claims run out in the quarter. And that that was, you know, a favorable development in terms of the MLR, roughly 36 million in the quarter of favorable ppd.

Speaker Change: Squeeze into one.

Speaker Change: You mentioned in the release that the MLR increase or decrease year over year was primarily due to favorable prior period development. So if you could just explain that and then second on the preliminary rate filings I think they should all be public now so.

Speaker Change: Might have covered this at the Investor day, but can you just go over if there's any new states or geographies in 2025.

Unknown Executive: Yeah, with respect to prior period development, we did have favorable claims run out in the quarter, and that was, you know, a favorable development in terms of the MLR, roughly 36 million in the quarter of favorable PPD. Can you just ask that one more time? I want to make sure I have the right context.

Adam Ron: And with respect to your second question, can you just ask that one more time? I want to make sure I have the right context. Yeah, sorry, just the 2025 rate filing since the preliminary numbers are out that should indicate if you entered any new states. I haven't like done the analysis, but just wondering if you entered any new geographies and how that. You know, I think that I would appreciate the question out of the. I think of this point in the year, we won't go into the geographies and the expansion plans. We'll have more to say about that as we get closer to the end of the year.

Unknown Executive: Ah, I think that I would. I appreciate the question. Now

Unknown Executive: But we have doubled our mark.

Adam Ron: But we have double their markets overall, but not necessarily states. Got it. Alright, appreciate it. Appreciate all the answers.

Speaker Change: But we have doubled our markets.

Speaker Change: Overall, but not necessarily states.

Speaker Change: Got it got it alright appreciate it I appreciate all your answers.

Speaker Change: Oh.

Unknown Executive: Hello, everyone. If you'd like to ask a question, please press star one. Again, that's star one.

Speaker Change: Hello, everyone, if you'd like to ask a question. Please press star one again star one we will pause for a brief moment will be made for the questions to comment.

Unknown Executive: We will pause for a brief moment. We'll be waiting for the questions to come in.

Speaker Change: Okay.

Olivia Miles: We have our next question from Michael Ha from Baird. Your line is now open.

Operator: We have our next question from Michael Ha from Baird. Your line is now open.

Speaker Change: We have our next question from Michael Hall from Baird. Your line is now open.

Olivia Miles: Hi, this is Olivia Miles on for Michael Ha. Thanks for taking my question. So I am first interested in hearing more color on Icra, specifically the long-term opportunity and over the next few years. In the investor day, you mentioned it sits in the 12 to 14% new market and product revenue growth bucket. And given the components, we backed into a roughly 100,000 Icra live is making up about 20% of that new market growth over the next three years. Is that number roughly in the ballpark? What's embedded in your expectations? And is that consistent with the 75 million TAM opportunity?

Olivia Myles: Hi, This is Olivia Myles on for Michael Hi, Thanks for taking my question. So I wouldn't first interested in hearing more color on aircraft specifically the long term opportunity and over the next three years and the Investor Day, you mentioned it sits within the 12% to 14% new market and product revenue growth bucket.

Speaker Change: And given the components, we backed into a roughly 100000 acre lives, making up about 20% of that new market growth over the next three years is that number roughly in the ballpark of what's embedded in your expectations and is that consistent with the 75 million Tam opportunity what is the cadence of the ramp over the next three years any color you can provide on that would be.

Olivia Miles: What is the cadence of the ramp over the next three years? Any color you can provide on that would be helpful.

Speaker Change: Helpful.

Speaker Change: Olivia.

Olivia Miles: Olivia, I think that we would prefer to, you know, focus on the quarter in this call and refer you back to the Investor Day for that. We're happy to have, you know, an offline conversation about the details. But we have no updates to the ICRA outlook in terms of, you know, CAM and opportunity. We continue to be bullish on that, and the work we've done, you know, this year has just made us even more excited about what the opportunity is there. So feel free to give the IR team a call after they can walk through the details of the IR game material.

Speaker Change: I think that we would prefer to focus on the quarter in this call and refer you back to the Investor day for that were happy to have an offline conversation about the details.

Speaker Change: But we have no updates to the <unk> outlook in terms of.

Speaker Change: Tam opportunity, we continue to be bullish on that and the work we've done.

Speaker Change: This year has just made us even more excited about what the opportunity is there so.

Speaker Change: Feel free to give the IR team a call after they can walk through the details of the IR day materials.

Olivia Miles: Thanks.

Speaker Change: Thanks, and if I can ask a follow up as we think about potential deployable capital over the next three years.

Olivia Miles: And if I can ask a follow-up, as we think about potential deployable capital over the next three years, I believe your implied target is around $3.1 billion. And so if I were to back out statutory capital to about 50% and a 50% quota share, seeming minimal capex, I'm getting around $1.5 billion of deployable capital. Is that roughly in the ballpark, and how should we expect quota share to toggle down every time? Yeah, I won't comment specifically. Specifically on the amount of excess capital that we're projecting, but I do think that the company with positive earnings trajectory is going to be able to generate significant excess capital over the, you know, through 2027. Our expectations of how we would use that capital are, first of all, you know, we want to lean into organic growth wherever possible and use excess excess capital to fund organic growth. Scale is great for us.

Speaker Change: I believe your implied target is around $3 $1 billion and so if I were to back out statutory capital to about a 50% and 50% quota share assuming minimal capex I'm getting around $5 billion of deployable capital is that roughly in the ballpark and how should we expect quota share to toggle down overtime.

Speaker Change: Yes.

Speaker Change: Wont comment specifically on the.

Speaker Change: The amount of excess capital that we're projecting but I do think that the company.

Speaker Change: With positive earnings trajectory is going to be able to generate significant excess capital over the the.

Olivia Miles: It creates fixed cost leverage. It gives us the continuing ability to get into new markets and expand our business. So that's the first point that we would look for. And then, with respect to quota share, you know, we would expect that if we have excess capital. We will rely less on quota share over time. We'll see how that plays out in terms of when we optimize around there, and, you know, quota share is a very efficient way for us to help fund the growth of this business. We appreciate the partnership that we have with our reinsurance partners.

Olivia Miles: So, you know, we think that's an enduring part of how we can fund the business. Thank you.

Unknown Executive: We have reached the end of our Q&A session.

Unknown Executive: We would like to thank everyone for attending today's conference call. And we hope you have a wonderful day.

Unknown Executive: You may now disconnect. Please wait.

Operator: Thank you. We have reached the end of our Q&A session. We would like to thank everyone for attending today's conference call, and we hope you have a wonderful day. You may now disconnect. Please wait; the conference will begin shortly.

Unknown Executive: The conference will begin shortly. Thank you.

Operator: Thanks for watching!