Q2 2026 Oscar Health Inc Earnings Call

August 6, 2026

Speaker #1: Good morning . My name is Genie and I will be your conference operator today At this time , I would like to welcome everyone to Oscar Health, Inc. second quarter 2020 Earnings Conference Call All lines have been placed on mute to prevent any background noise After the speakers are marked , there will be a question and answer session .

Operator: Good morning. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to Oscar Health's Second Quarter 2026 Earnings 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, press star one again. Today, we do ask you to limit yourself to one question and one follow-up. Thank you. I will now turn the call over to Chris Potochar, Vice President of Treasury and Investor Relations.

Speaker #1: If you would like to ask a question during this time , simply press star followed by the number one on your telephone keypad .

Speaker #1: If you would like to withdraw your question , press star one again . Today we do ask you to limit yourself to one question and one follow up .

Operator: Today, we do ask you to limit yourself to one question and one follow-up. Thank you. I will now turn the call over to Chris Potochar, Vice President of Treasury and Investor Relations.

Speaker #1: Thank you. I will now turn the call over to Chris Potochar, President of Treasury and Investor Relations.

Speaker #2: Good morning everyone . Thank you for joining us for our second quarter 2020 earnings call . Oscar Health, Inc. Chief Executive Officer And Scott Blakely , Oscar Health, Inc. Mark Bertolini Financial Officer , will host this Chief morning's call .

Chris Potochar: Good morning, everyone. Thank you for joining us for our Q2 2026 earnings call. Mark Bertolini, Oscar Health's Chief Executive Officer, and Scott Blackley, Oscar Health's Chief Financial Officer, will host this morning's call. This call can also be accessed through our investor relations website at ir.hioscar.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.hioscar.com. 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.

Speaker #2: This call can also be accessed through our Investor Relations website at ir dot oscar.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 dot oscar.com .

Speaker #2: Any remarks that Oscar makes about the future constitute forward-looking statements within the meaning of the safe harbor under the Private Securities Litigation Reform Act of 1995.

Chris Potochar: 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.

Speaker #2: 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 annual Report on Form 10-K for the period ended December 31st , 2025 and the Quarterly Report on Form 10-q for the period ended March 31st , 2026 , each as filed with the Securities and Exchange Commission and other filings with the SEC , including our Quarterly Report on Form 10-q for the period ended June 30th , 2026 , to be filed with the SEC .

Chris Potochar: 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 annual report on Form 10-K for the period ended 31 December 2025, and the quarterly report on Form 10-Q for the period ended 31 March 2026, each as filed with the Securities and Exchange Commission, and other filings with the SEC, including our quarterly report on Form 10-Q for the period ended 30 June 2026, to be filed with the SEC. Such forward-looking statements are based on our 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.

Speaker #2: Such forward looking statements are based on our current expectations . As of today , Oscar anticipates that subsequent events and developments may cause estimates to change .

Chris Potochar: Such forward-looking statements are based on our 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.

Speaker #2: While the company may elect to update these forward looking statements at some point in the future , we specifically disclaim any obligation to do so .

Speaker #2: 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 dot oscar.com .

Chris Potochar: A reconciliation of these measures to the most directly comparable GAAP measures can be found in the Q2 earnings press release, available on the company's investor relations website at ir.hioscar.com. We have not provided a quantitative reconciliation of estimated full-year 2026 adjusted EBITDA as described on this call to GAAP net income because Oscar is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. With that, I will turn the call over to our CEO, Mark Bertolini.

Speaker #2: We have not provided a quantitative reconciliation of estimated full year 2026 adjusted EBITDA , as described on this call to GAAP net income .

Speaker #2: Because Oscar is unable , without making unreasonable efforts to calculate certain reconciling items with confidence With that , I will turn the call over to our CEO , Mark Bertolini Good morning .

Mark Bertolini: Good morning. Thank you, Chris, and thank you all for joining us. Today, Oscar Health announced strong Q2 2026 results with significant year-over-year improvement across all core metrics. Oscar delivered record profitability for the H1 2026, generating $1.1 billion in earnings from operations, then $1 billion in net income. In the Q2, revenue grew 70% year-over-year to $4.9 billion. MLR improved 12 points to 79.2% year-over-year, with utilization moderately favorable to our expectations. Our SG&A expense ratio improved 450 basis points to a record low of 14.2%, reflecting disciplined expense management, technology-driven efficiencies, and continuing operating leverage. Earnings from operations increased by $619 million year-over-year to $389 million. Our performance demonstrates superior execution against the fundamentals of our strategy. Disciplined pricing, differentiated consumer products, and a scalable technology platform work together to fuel individual market growth.

Speaker #3: Thank you , Chris , and thank you all for joining us today . Oscar Health announced strong second quarter 2020 results with significant year over year improvement across all core metrics Oscar delivered record profitability for the first half of 2026 , generating $1.1 billion in earnings from operations , then $1 billion in net income in the second quarter .

Speaker #3: Revenue grew 70% year over year to 4.9 billion . MLR improved 12 points to 79.2% year over year , with utilization moderately favorable to our expectations Our energy and expense ratio improved 450 basis points to a record low of 14.2% , reflecting disciplined expense management , technology driven efficiencies and continuing operating leverage Earnings from operations increased by $619 million year over year to $389 million .

Mark Bertolini: Our SG&A expense ratio improved 450 basis points to a record low of 14.2%, reflecting disciplined expense management, technology-driven efficiencies, and continuing operating leverage. Earnings from operations increased by $619 million year-over-year to $389 million. Our performance demonstrates superior execution against the fundamentals of our strategy. Disciplined pricing, differentiated consumer products, and a scalable technology platform work together to fuel individual market growth.

Speaker #3: Our performance demonstrates superior execution against the fundamentals of our strategy . Disciplined pricing , differentiated consumer products , and a scalable technology platform work together to fuel individual market growth .

Speaker #3: We are raising our full-year 2026 outlook based on the strength of our operating performance and our model built for long-term profitable growth.

Mark Bertolini: We are raising our full-year 2026 outlook based on the strength of our operating performance and our model built for long-term profitable growth. Now I will share our view on trends in the individual market, then I'll dive into our business highlights. The individual market is vital to our nation's economy and was built for the labor market now taking shape. The market is expanding coverage for people outside of traditional employer plans, including a growing number of entrepreneurs, gig workers, part-time employees, and early retirees. Over the past decade, the market drove down the uninsured rate and prevented billions in uncompensated care. Over the next decade, its role will only grow as people move between full-time jobs, contract work, and retirement at twice the rate of prior generations AI will accelerate that shift.

Speaker #3: Now I will share our view on trends in the individual market . Then I dive into our business highlights the individual market is vital to our nation's economy and was built for the labor market .

Speaker #3: Now taking shape . The market is expanding coverage for people outside of traditional employer plans , including a growing number of entrepreneurs . Gig workers , part time employees and early retirees Over the past decade , the market drove down the uninsured rate and prevented billions in uncompensated care Over the next decade , its role will only grow as people move between full time jobs , contract work and retirement at twice the rate of prior generations AI will accelerate that shift .

Mark Bertolini: Over the past decade, the market drove down the uninsured rate and prevented billions in uncompensated care. Over the next decade, its role will only grow as people move between full-time jobs, contract work, and retirement at twice the rate of prior generations AI will accelerate that shift. Our nation's leaders should promote policies that put the next generation of American workers in charge of choosing their healthcare.

Speaker #3: Our nation's leaders should promote policies that put the next generation of American workers in charge of choosing their health care . Oscar is leading the charge with portable coverage and experiences that meet the expectations of the people powering our economy .

Mark Bertolini: Our nation's leaders should promote policies that put the next generation of American workers in charge of choosing their healthcare. Oscar is leading the charge with portable coverage and experiences that meet the expectations of the people powering our economy. The future of American healthcare depends on a durable individual market, and 2026 trends reinforce our conviction in its long-term strength. Total ACA membership stands at 19.2 million, down 12% year-over-year, tracking favorable to our pricing assumptions and reflecting continued consumer demand. Wakely's first claim-based report of 2026 market morbidity is also favorable to our expectations, suggesting potential upside to our outlook. We expect further market contraction and remain cautious with only four months of morbidity data. We expect both trends to remain favorable to our pricing assumptions. Looking ahead to 2027, we anticipate a rational pricing environment with rates that reflect the effects of CMS's program integrity efforts.

Mark Bertolini: Oscar is leading the charge with portable coverage and experiences that meet the expectations of the people powering our economy. The future of American healthcare depends on a durable individual market, and 2026 trends reinforce our conviction in its long-term strength. Total ACA membership stands at 19.2 million, down 12% year-over-year, tracking favorable to our pricing assumptions and reflecting continued consumer demand.

Speaker #3: The future of American health care depends on a durable individual market , and 2026 trends reinforce our conviction in its long term strength Total ACA membership stands at 19.2 million , down 12% year over year , tracking favorable to our pricing assumptions and reflecting continued consumer demand .

Mark Bertolini: Wakely's first claim-based report of 2026 market morbidity is also favorable to our expectations, suggesting potential upside to our outlook. We expect further market contraction and remain cautious with only four months of morbidity data. We expect both trends to remain favorable to our pricing assumptions. Looking ahead to 2027, we anticipate a rational pricing environment with rates that reflect the effects of CMS's program integrity efforts.

Mark Bertolini: Now I will review our business highlights. Oscar ended Q2 with 2.96 million members, up 46% year-over-year. Membership reflects above-market open enrollment growth and solid retention. Our consumer products designed around clinical, lifestyle, and cultural needs are driving higher member satisfaction. We continue to launch features that help members find high-value care and manage costs. We are also building momentum in ICHRA, with steady growth and demand from small businesses in the healthcare and professional services industries. Our technology continues to differentiate the member experience. This quarter, we piloted a radiology program with our Oswel agent. Oswel uses our members' claims history and clinical interactions to initiate their next step for care. It confirms coverage, guides members to high-quality providers based on cost, location, and availability, and shows estimated savings from switching facilities.

Mark Bertolini: We are also building momentum in ICHRA, with steady growth and demand from small businesses in the healthcare and professional services industries. Our technology continues to differentiate the member experience. This quarter, we piloted a radiology program with our Oswel agent. Oswel uses our members' claims history and clinical interactions to initiate their next step for care.

Mark Bertolini: It confirms coverage, guides members to high-quality providers based on cost, location, and availability, and shows estimated savings from switching facilities. One in four members choose Oswel's recommended site of care and saves $75 on average per appointment. We will expand this capability to additional procedures using care standards from leading centers of excellence. AI is powering operations across benefits, billing, claims, clinical care, and member support.

Mark Bertolini: One in four members choose Oswel's recommended site of care and saves $75 on average per appointment. We will expand this capability to additional procedures using care standards from leading centers of excellence. AI is powering operations across benefits, billing, claims, clinical care, and member support. Our claims platform delivers 98.7% first-pass accuracy and processes most claims in under 48 hours. We are also deploying AI and medical economics programs to identify cost signals early and act before they become trends. Pharmacy is a clear example. Our models analyze pharmacy activity alongside utilization, provider, broker, and member data to flag outliers. Root cause analysis identifies the drivers. Our teams respond with precision. We expect these capabilities to generate tens of millions of dollars in annual savings. Oscar's technology is transforming the economics of the business.

Mark Bertolini: Our claims platform delivers 98.7% first-pass accuracy and processes most claims in under 48 hours. We are also deploying AI and medical economics programs to identify cost signals early and act before they become trends. Pharmacy is a clear example. Our models analyze pharmacy activity alongside utilization, provider, broker, and member data to flag outliers. Root cause analysis identifies the drivers. Our teams respond with precision. We expect these capabilities to generate tens of millions of dollars in annual savings.

Mark Bertolini: Oscar's technology is transforming the economics of the business. The team is embedding intelligence into all core workflows across our platform, making it smarter and more efficient with every deployment. As membership grows, we can serve more members without adding headcount at the same rate. That scale fuels operating leverage, expands margins, and bends the medical cost trend for us and for our members. In summary, Oscar delivered a strong Q2 and record profitability in H1 2026. The fundamentals of the business are strong.

Mark Bertolini: The team is embedding intelligence into all core workflows across our platform, making it smarter and more efficient with every deployment. As membership grows, we can serve more members without adding headcount at the same rate. That scale fuels operating leverage, expands margins, and bends the medical cost trend for us and for our members. In summary, Oscar delivered a strong Q2 and record profitability in H1 2026. The fundamentals of the business are strong. Our performance is favorable to plan. Our improved 2026 outlook reflects that momentum. We are entering H2 of the year from a position of strength with the technology, scale, and operating discipline to deliver profitable growth. The ACA is the only healthcare market where private insurers compete directly for the consumer. Our job is to give consumers real choices, real price transparency, and reward what they value.

Mark Bertolini: Our performance is favorable to plan. Our improved 2026 outlook reflects that momentum. We are entering H2 of the year from a position of strength with the technology, scale, and operating discipline to deliver profitable growth. The ACA is the only healthcare market where private insurers compete directly for the consumer. Our job is to give consumers real choices, real price transparency, and reward what they value. When that happens, the competitive market does what it does best.

Mark Bertolini: When that happens, the competitive market does what it does best. It drives out inefficiency, accelerates innovation, and lowers costs. Oscar is defining that future. We are replacing one-size-fits-all coverage with solutions that make healthcare as easy to use as any other consumer product. Our results reflect the team's focused execution across our products, platform, and strategy. We will outline how we translate that performance into durable growth and long-term value at our Investor Day on 16 September. I will now turn the call over to Scott. Scott?

Mark Bertolini: It drives out inefficiency, accelerates innovation, and lowers costs. Oscar is defining that future. We are replacing one-size-fits-all coverage with solutions that make healthcare as easy to use as any other consumer product. Our results reflect the team's focused execution across our products, platform, and strategy. We will outline how we translate that performance into durable growth and long-term value at our Investor Day on 16 September. I will now turn the call over to Scott. Scott?

Scott Blackley: Thank you, Mark, and good morning, everyone. This morning, we reported strong Q2 results, and we are raising our full year 2026 outlook to reflect our operating performance. Through H1 of the year, we delivered record profitability of approximately $1 billion of net income, or $3.16 per diluted share. The fundamentals of the business are strong, and our results are favorable to our plan. Let me now turn to details on Q2 performance. We ended Q2 with 2.96 million effectuated members, an increase of 46% year-over-year, driven by above-market growth during open enrollment and solid retention. Total revenue was $4.9 billion, an increase of 70% year-over-year, driven by higher membership and rate increases, partially offset by higher risk adjustment payable accrual. The Q2 medical loss ratio was 79.2%, an improvement of nearly 12 points year-over-year.

Scott Blackley: We ended Q2 with 2.96 million effectuated members, an increase of 46% year-over-year, driven by above-market growth during open enrollment and solid retention. Total revenue was $4.9 billion, an increase of 70% year-over-year, driven by higher membership and rate increases, partially offset by higher risk adjustment payable accrual. The Q2 medical loss ratio was 79.2%, an improvement of nearly 12 points year-over-year.

Scott Blackley: Recall that in the prior year period, we recorded the entire H1 impact of the 2025 risk adjustment true-up in Q2. The year-over-year MLR improvement was driven by our disciplined pricing strategy and a strong current year performance compared to the market reset experienced a year ago. We also benefited from favorable prior period reserve development in the quarter. Now I'll spend a moment on risk adjustment. In Q2, we received the final 2025 CMS risk adjustment report, which was approximately $160 million favorable to our Q1 accruals and fully recognized in the quarter. We also received the first risk adjustment report for 2026, covering claims through April, which showed market morbidity tracking quite favorable to both our pricing and Q1 accruals.

Total revenue was 4.9 billion and increase of 70% year-over-year driven by higher membership and rate increases partially offset by higher risk, adjustment payable approval. The second quarter, medical loss ratio was 79.2% and Improvement of nearly 12 points, year-over-year recall. That in the prior year period. We recorded the entire first half impact of the 2025 risk adjustment true up in the second quarter.

Scott Blackley: Now I'll spend a moment on risk adjustment. In Q2, we received the final 2025 CMS risk adjustment report, which was approximately $160 million favorable to our Q1 accruals and fully recognized in the quarter. We also received the first risk adjustment report for 2026, covering claims through April, which showed market morbidity tracking quite favorable to both our pricing and Q1 accruals.

The year-over-year mlr Improvement was driven by our discipline pricing strategy and a strong current year performance compared to the market reset. Experienced a year ago. We also benefited from favorable prior period Reserve development in the quarter.

Now, I'll spend a moment on risk adjustment. In the second quarter, we received the the final 2025 CMS risk adjustment report, which was approximately 160 million favorable to our first quarter across and fully recognized in the quarter.

Scott Blackley: With only four months of claims in the data, we recognized only a small portion of that favorability, which we believe is appropriate at this stage in the year. Through H1 of the year, risk adjustment as a percentage of direct premiums was approximately 20%, consistent with our expectations for the full year. Overall year-to-date utilization was moderately favorable to our expectations. By category, inpatient, professional, and pharmacy utilization were favorable, while outpatient was elevated through H1 of the year. On administrative expenses, we delivered another record low SG&A expense ratio. The Q2 SG&A expense ratio was 14.2%, a 450 basis point year-over-year improvement, and the lowest in the company's history. The improvement was primarily driven by disciplined expense management, including an increasing impact from technology and AI initiatives, fixed cost leverage, and lower risk adjustment as a percentage of premium.

We also received the first risk adjustment report for 2026 covering claims through April which showed Market morbidity. Tracking, quite favorable to both our pricing and first quarter approvals

With only 4 months of claims in the data, we recognized only a small portion of that favorability, which we believe is appropriate at this stage in the year.

For the first six months of the year, risk adjustment as a percentage of direct premiums was approximately 20%, consistent with our expectations for the full year.

Overall year to date utilization was moderately favorable to our expectations.

Scott Blackley: On administrative expenses, we delivered another record low SG&A expense ratio. The Q2 SG&A expense ratio was 14.2%, a 450 basis point year-over-year improvement, and the lowest in the company's history. The improvement was primarily driven by disciplined expense management, including an increasing impact from technology and AI initiatives, fixed cost leverage, and lower risk adjustment as a percentage of premium. We reported earnings from operations of $389 million in Q2, a $619 million year-over-year improvement.

By category—inpatient, professional, and pharmacy—utilization was favorable, while outpatient was elevated through the first six months of the year.

on administrative expenses, we delivered another record, low sg&a, expense ratio

The second quarter sg&a, expense ratio was 14.2%, a 450 basis point year-over-year, Improvement and the lowest in the company's history.

Scott Blackley: We reported earnings from operations of $389 million in Q2, a $619 million year-over-year improvement. Operating margin was 8%, a 16 point improvement year-over-year. Net income was $362 million, a $590 million increase year-over-year. Adjusted EBITDA was $415 million in the quarter, an increase of $615 million year-over-year. Through H1 of 2026, our results reflect disciplined execution and strong year-over-year improvement across all key metrics. Shifting to the balance sheet, our capital position remains very strong. We ended Q2 with approximately $10.2 billion of cash and investments, including $462 million of cash and investments at the parent. As of 30 June 2026, our insurance subsidiaries had approximately $1.9 billion of capital and surplus, including $994 million of excess capital, which was driven by our strong operating performance.

The Improvement was primarily driven by disciplined expense management including an increasing impact from technology and AI initiatives fixed cost leverage and lower risk adjustment as a percentage of Premium.

Scott Blackley: Operating margin was 8%, a 16 point improvement year-over-year. Net income was $362 million, a $590 million increase year-over-year. Adjusted EBITDA was $415 million in the quarter, an increase of $615 million year-over-year. Through H1 of 2026, our results reflect disciplined execution and strong year-over-year improvement across all key metrics. Shifting to the balance sheet, our capital position remains very strong.

We reported earnings from operations of 389 million. In the second quarter, a 619 million year year Improvement.

Operating margin was 8%. A 16-point Improvement, year-over-year.

in the quarter, an increase of 615 million year-over-year,

For 6 months of 2026, our results, reflect disciplined execution, and strong year-over-year Improvement, across all key metrics.

Shifting to the balance sheet.

Scott Blackley: We ended Q2 with approximately $10.2 billion of cash and investments, including $462 million of cash and investments at the parent. As of 30 June 2026, our insurance subsidiaries had approximately $1.9 billion of capital and surplus, including $994 million of excess capital, which was driven by our strong operating performance. Let me now turn to updates on our 2026 full year guidance.

Our Capital position remains very strong.

We ended the second quarter with approximately 10.2 billion of cash Investments, including 462 million of cash Investments at the parent.

Scott Blackley: Let me now turn to updates on our 2026 full year guidance. Based on our H1 performance, we are raising our full year earnings from operations guidance to a range of $500 million to $700 million, an increase of $250 million from our prior outlook. We continue to expect total revenues of $18.7 billion to $19 billion. We now expect full year MLR in the range of 81.5% to 82.5%, an improvement of 90 basis points at the midpoint from our prior outlook. On administrative expenses, we now expect our SG&A expense ratio to be in the range of 15.6% to 16.1%, an improvement of 20 basis points at the midpoint. We continue to expect adjusted EBITDA to run roughly $115 million above earnings from operations.

As of June 30th 2026, our insurance subsidiaries had approximately 1.9 billion of capital and surplus including 994 million of excess Capital, which was driven by our strong operating performance.

Scott Blackley: Based on our H1 performance, we are raising our full year earnings from operations guidance to a range of $500 million to $700 million, an increase of $250 million from our prior outlook. We continue to expect total revenues of $18.7 billion to $19 billion. We now expect full year MLR in the range of 81.5% to 82.5%, an improvement of 90 basis points at the midpoint from our prior outlook. On administrative expenses, we now expect our SG&A expense ratio to be in the range of 15.6% to 16.1%, an improvement of 20 basis points at the midpoint.

Let me now turn to updates on our 2026 full year guidance.

Based on our first half performance. We are raising our full year. Earnings from operations, guidance, to a range of 500 million to 700 million. An increase of 250 million, from our prior Outlook.

We continue to expect total revenues of 18.7 billion to 19 billion.

Scott Blackley: We continue to expect adjusted EBITDA to run roughly $115 million above earnings from operations. Our improved outlook reflects our strong H1 performance, including favorable prior period development and market morbidity trends, an expectation of increasing membership churn in the H2 of the year as CMS program integrity processes continue. As I mentioned, the market morbidity data that we received for claims through April was quite favorable to our expectations.

Scott Blackley: Our improved outlook reflects our strong H1 performance, including favorable prior period development and market morbidity trends, an expectation of increasing membership churn in the H2 of the year as CMS program integrity processes continue. As I mentioned, the market morbidity data that we received for claims through April was quite favorable to our expectations. Given this early stage in the year, we have not taken full credit for that favorability in our outlook. If the favorability holds as claims develop, that could present a tailwind to our full year outlook. In closing, our disciplined execution drove strong operating results and record profitability through the H1 of the year. We are confident in our improved 2026 outlook and are on track to deliver our strongest performance to date. With that, let's turn the call over to the operator for the Q&A portion of our call.

We now expect fully your mlr in the range of 81.5% to 82.5% and Improvement of 90 basis points at the midpoint from our, prior outlook, on administrative expenses. We now expect our sgna expense ratio to be in the range of 15.6% to 16.1% and Improvement of 20 basis points. At the midpoint, we continue to expect adjusted evida to run roughly 115 million above earnings from operations.

Our improved outlook reflects our strong first half performance, including favorable prior period development and market morbidity trends, and an expectation of increasing membership churn in the back half of the year as CMS program integrity processes continue.

Scott Blackley: Given this early stage in the year, we have not taken full credit for that favorability in our outlook. If the favorability holds as claims develop, that could present a tailwind to our full year outlook. In closing, our disciplined execution drove strong operating results and record profitability through the H1 of the year. We are confident in our improved 2026 outlook and are on track to deliver our strongest performance to date. With that, let's turn the call over to the operator for the Q&A portion of our call.

Expectations. Given this early stage in the year. We have not taken full credit for that favorability in our Outlook. If the favorability holds as claims develop, that could present a Tailwind to our full year outlook.

In closing, our disciplined execution drove strong operating results and record profitability through the first half of the year. We are confident in our improved 2026 outlook, and are on track to deliver our strongest performance to date.

With that, let's turn the call over to the operator for the Q&A portion of our call.

Operator: At this time, I would like to remind everyone, in order to ask one question, one follow-up, press star then the number 1 on your telephone keypad. Your first question comes from Andrew Mok with Barclays. Please go ahead.

At this time, I would like to remind everyone.

what question 1, follow up, follow up press star, then the number 1 on your telephone keypad,

And your first question comes from, Andrew mop with Berkeley's, please go ahead.

Andrew Mok: Hi. Good morning. On utilization trends, you noted inpatient professional and pharmacy was favorable, outpatient was elevated. Can you elaborate a bit on what you saw there, particularly on the outpatient side, and how you're thinking about the pace of utilization for the balance of the year? Thanks.

Hi, good morning. On utilization trends, you noted inpatient, professional, and pharmacy were favorable, but outpatient was elevated. Can you elaborate a bit on what you saw there, particularly on the outpatient side, and how you're thinking about the pace of utilization for the balance of the year? Thanks.

Scott Blackley: Yep. Good morning, Andrew. In outpatient, I would say that there are a handful of areas that we're paying attention to. Honestly, none of them is particularly outsized, and what I think is most important there is that we're seeing stability in these trends. While outpatient is a bit elevated, as you mentioned, we're seeing the other categories running favorable. At this point, the trends are stable, and so the utilization looks very reasonable and is favorable to what we would expected at this point in the year.

Yep, good morning Andrew. Um,

You know, an outpatient I would say that there are you know a handful of areas that that we're paying attention to. Um, you know, honestly none of them is, is particularly outsized. And what I think is most important there is that we're seeing stability in these Trends. And so, while outpatient is a bit elevated, um,

As you mentioned, you know, we're seeing the other categories uh, running favorable and at this point, you know, the trends are stable. And so you know the utilization it looks looks very reasonable and is um you know, favorable to our uh to what we would expect it at this point in the year.

Andrew Mok: Great. Appreciate all the comments that AI is accelerating the shift to untraditional employment. Would love to hear what you're observing in the market driving that commentary and how that impacts your view of intermediate term growth. Thanks.

Great, and I appreciate all the comments that AI is accelerating the shift to untraditional employment. I would love to hear what you're seeing in the market driving that commentary, and how that impacts your view of intermediate-term growth. Thanks.

Mark Bertolini: A couple of things on AI. First, we don't see the massive unemployment that a lot of other CEOs have painted a very dark picture of. We see a transition to different kind of job groups. Those are in the gig economy, that's in part-time work, that's in multiple part-time jobs, that's in early retirees. In that economy, employer-based insurance doesn't necessarily work well. There are a lot of people who don't have coverage as a result. We are now working with some very large groups around that on part-time employees, people who work in multiple places with multiple part-time jobs. As that market evolves, we see it as a huge opportunity for ICHRA in expanding the total TAM of the marketplace.

um,

Mark Bertolini: We are now working with some very large groups around that on part-time employees, people who work in multiple places with multiple part-time jobs. As that market evolves, we see it as a huge opportunity for ICHRA in expanding the total TAM of the marketplace. In small group and middle market, there's 115 million lives alone that we think will have some impact on employment in growing these other jobs in our economy. As far as AI goes, internally, our investment is not something that we do separately.

a couple of things on AI. Um, first, um, we don't see the mass of unemployment that a lot of other CEOs have painted a very dark picture of. We see a transition, um, to different kind of job groups. And those are in the gig economy that's in part-time work, that's in multiple part-time jobs. That's in early retirees, and in that economy, employer based insurance, doesn't necessarily work. Well, um, there are a lot of people who don't have coverage as a result, and we are now working with some very large groups around that I'm part-time employees people who work in multiple places, um, with multiple part-time jobs,

Mark Bertolini: In small group and middle market, there's 115 million lives alone that we think will have some impact on employment in growing these other jobs in our economy. As far as AI goes, internally, our investment is not something that we do separately. Every business owner has a platform. That platform has engineers, product management, AI, and business people evaluating how we can advance every one of our platforms every day to reduce friction for our members and for the providers we work with. It's through that analysis that we fund those projects with expected returns and expected investments. I note that, and then the press you hear of billions of dollars being spent by our competitors, and I would just make the point that we have one platform, we have one data set.

So as that market evolves, we see it as a huge opportunity for ikura and expanding the total Tam of the marketplace um in small group and Middle Market. There's 115 Million Lives Alone, um, that we think um, have some will have some impact um, on on employment, um, in in, in growing these other jobs in our economy. Um,

Mark Bertolini: Every business owner has a platform. That platform has engineers, product management, AI, and business people evaluating how we can advance every one of our platforms every day to reduce friction for our members and for the providers we work with. It's through that analysis that we fund those projects with expected returns and expected investments. I note that, and then the press you hear of billions of dollars being spent by our competitors, and I would just make the point that we have one platform, we have one data set.

Um, as far as AI goes, uh, internally, our investment, um, is not something that we do separately.

Um, every business owner has a platform, um, that platform has Engineers product management. Um, AI. Um and and and business people evaluating how we can advance every 1 of our platforms every day to reduce friction for our members. And for the providers we work with

And it's through those that that analysis that we fund those projects with expected returns and expected Investments.

Um, I note that there and then the price you hear of billions of dollars being spent, um, by our competitors. And I would just make the point that we have 1 platform.

Mark Bertolini: As a result, we start with a huge advantage in being able to use AI at scale without having to make the investments in platform integration and data rationalization that a lot of our competitors do. That is why we are so far ahead in deploying AI at scale in the organization.

We have 1 data set. Um, as a result, we start with a huge Advantage. Um, and being able to use AI at scale without having to make the investments in platform integration.

And data, um, rationalization that a lot of our competitors do, and that has been, why that is why we are so far ahead in deploying AI at scale in the organization.

Operator: Your next question comes from the line of Jessica Tassan with Piper Sandler. Please go ahead.

Jessica Tassan: Hi, guys. Thank you for taking the question, and congrats. First question is just can you clarify that the 2025 reconciliation accounts for about 80 basis points of the 90 basis point MLR revision at the midpoint? Then just, do you mind helping us kind of understand what you're seeing? You helped a little bit on utilization or a lot on utilization for this year, but just how do we get comfortable that you all have visibility into utilization, just despite kind of the potentially deterrent effect of higher deductibles? How do we get comfortable essentially with the reiterated or the slightly raised core MLR guide? Thank you.

Your next question comes from the line of Jessica Tan with Piper Sandler. Please go ahead.

Jessica Tassan: You helped a little bit on utilization or a lot on utilization for this year, but just how do we get comfortable that you all have visibility into utilization, just despite kind of the potentially deterrent effect of higher deductibles? How do we get comfortable essentially with the reiterated or the slightly raised core MLR guide? Thank you.

Despite kind of the potentially deterrent effect of higher deductibles. Um how do we get comfortable essentially with the reiterated or the uh the the slightly raised core MBR guide, thank you.

Scott Blackley: Yeah. Jess, starting off with MLR and the impacts from PPD. I would say that MLR, excluding PPD in Q1, was a little bit over 82%. MLR is impacted by two components of prior year development. There's the piece that impacts risk adjustment, which we talked about, getting the final CMS report, and that was roughly $160 million. There's also favorable development around claims. When you look at all those things, I consider those core parts of the business, and they give us confidence that the reserves that we're booking, our pricing, we're headed in the right direction. Everything there looks appropriate and stable. Turning to your question on utilization and our confidence in the back half, I would just make a couple observations.

Yeah, Jess. Um, starting off with uh, with mlr and the impacts from PPD um,

you know, I would say that mlr excluding PPD in the first quarter was a little bit over 82% um and

Scott Blackley: When you look at all those things, I consider those core parts of the business, and they give us confidence that the reserves that we're booking, our pricing, we're headed in the right direction. Everything there looks appropriate and stable. Turning to your question on utilization and our confidence in the back half, I would just make a couple observations. One, at this point in the year, we've had enough time to have a pretty good sense of the risk of the membership that we've got. I would say that it is consistent with our expectations.

You know, mlr comes, uh, is is impacted. Um, by 2 components of Prior year development. There's the piece that impacts risk adjustment which we talked about uh getting the final CMS report and that was, you know, roughly 160 million dollars. There's also um, you know, favorable uh development around claims. Um and so you know, when you look at all those things, I consider those core parts of the business and, and

You know, they give us confidence that the reserves that we're booking. Our pricing, you know, we're headed in the right direction. So you know, everything there, uh, looks appropriate and stable

Scott Blackley: One, at this point in the year, we've had enough time to have a pretty good sense of the risk of the membership that we've got. I would say that it is consistent with our expectations. As I talked about with utilization, we're seeing trends that are stable. We're not seeing anything that looks to be kind of pushing and running from us. When I step back and look at all of the components of our operations and our business, I am pleased with the stability and with the clarity and visibility that we have into our current book.

Scott Blackley: As I talked about with utilization, we're seeing trends that are stable. We're not seeing anything that looks to be kind of pushing and running from us. When I step back and look at all of the components of our operations and our business, I am pleased with the stability and with the clarity and visibility that we have into our current book.

Turning to your question on utilization and and our confidence in the back half, I would just you know make a couple observations 1 at this point in the year, we've had enough you know time to to have a pretty good sense of um the risk of the membership that we've got. I would say that it is consistent with our expectations. As I talked about with utilization, we're seeing trends that are are state.

Um, we're not seeing anything that, you know, looks to be, um, you know, kind of pushing and running from us. So, you know, when I step back and look at all of the components of our operations and our business, you know, I am—

Scott Blackley: With the Wakely report that we got in Q1, it confirms a lot of what we thought was going to be shaping up for this year in terms of, I would characterize it as the reduction in membership that we had all planned for looks like that's coming in a bit lighter. That results in morbidity in the marketplace that's likely going to be less than what we priced for and could present a tailwind to our full-year outlook.

Mark Bertolini: I would add one more thing, Jess. In our management process and the way we operate the business, in our operating plans, we actually create targets for affordability and reducing the actual trend we put into pricing. We measure the results of our programs that we're developing, including some of the things we talked about with AI today, that go against those targets. We're constantly measuring the opportunity, and what we call flares, where we see hotspots in the utilization, making sure we go after those immediately, that we're acting quickly and with precision and moving that utilization back to where we expect it to be.

Mark Bertolini: We're constantly measuring the opportunity, and what we call flares, where we see hotspots in the utilization, making sure we go after those immediately, that we're acting quickly and with precision and moving that utilization back to where we expect it to be.

Um, pleased with the stability and what the clarity and visibility that we have into our current book and, you know, with the with the weekly report that we got in the first quarter, it uh, it confirms a lot of what we thought was going to be shaping up for this year. In terms of, you know, I would characterize it as, um, the reduction in membership that, that, uh, that we had all planned for. Looks like that's coming in a bit lighter, that results in, um, you know, morbidity in the marketplace. That's, that's likely going to be less than what we priced for and, and could present a Tailwind to our full year outlook. And, and I would add 1 more thing just in our management process and the way we operate the business in our operating plans, we actually create targets, um, for affordability and reducing the actual Trend, we put into pricing, um, and we measure the results of our, um, programs that were developing including some of the things we talked about with AI today, um, that, um, um, that go against those targets. And so, we're constantly,

Jessica Tassan: Thanks.

Constantly measuring the opportunity. Um, um, and what we call flares, where we see hotspots in the, in the utilization, making sure we go after those immediately that we're acting quickly with precision. And and moving, um, that utilization back to where we expected to be.

Um, thank you.

Operator: Your next question comes from the line of Parker Snure with Raymond James. Please go ahead.

Parker Snure: Hi. Good morning. Just curious on how you guys are thinking about the 2027 rate cycle. We're seeing some of the preliminary rate filings beginning to roll through. Just generally, how are you thinking about positioning of your rates within the market and baking in conservatism for all things that could happen?

With Raymond James, please go ahead.

Hi. Good morning. Uh, just curious on how you guys are thinking about the 2027 rate cycle. We're seeing some of the preliminary rate filings beginning to roll through but just generally

How are you thinking about positioning of your rates within the market and baking in conservatism for all things that could happen?

Mark Bertolini: Parker, thanks for the question. We believe the market so far has been rational. Again, we price by market, so we look at opportunities by market. Comparing the overall rate filings is probably not a good way of measuring it. Just take a look at what happened in 2026, based on our overall rate filings versus our competitors. We've done quite well in spite of what people thought was underpricing. I would suggest so far rational. We still have another bite at the apple as we go forward, and as we look at what could happen with the MBPP or the stay, which we probably don't think will be released at all this year. In the event it does, we have an opportunity to change product and pricing should we need to do that. We have more time. We're on it every day.

Mark Bertolini: We still have another bite at the apple as we go forward, and as we look at what could happen with the MBPP or the stay, which we probably don't think will be released at all this year. In the event it does, we have an opportunity to change product and pricing should we need to do that. We have more time. We're on it every day. We already have plans in place on how to do changes if we need to make them. We're pretty confident that we're in a good place.

Um, Parker. Thanks for the question. We believe, the pro the market so far has been rational. Um, and again, we price by market. So, um, we look at opportunities by market. Um, and, and so comparing the overall rate filings, um, is probably not a good way of measuring it. Just take a look at what happened in in 26. Um, based on our overall rate filings versus our competitors. Um, we've done quite well in spite of what people thought was underpricing, um, and so I would suggest so far. Rational, we still have another bite at the Apple, um, as we go forward and as we look at what could happen with the mvpp, um, or the

Mark Bertolini: We already have plans in place on how to do changes if we need to make them. We're pretty confident that we're in a good place.

Say which we probably don't think will be released at all, um, this year. But in event, it does we have an opportunity to change product and pricing, should we need to do that? Um, so we have more time. We're on it every day. We already have plans in place on how to do changes if we need to make them. Um, so we're pretty confident that we're in a good place.

Parker Snure: If I can just get a follow-up. I know it's early, but how are you thinking about the overall ACA market enrollment in 2027 at this point in time? I know there's still some unknowns, but do you think it's relatively flat, or you see some more declines, or just some general thoughts there?

Mark Bertolini: We think that based on what's already in place through regulation, because we are reacting to a few program integrity efforts through CMS that are coming through in regulation and review, that absent any dramatic changes to the MBPP, which again, we don't think will happen, that a lot of the program integrity efforts have been built into the marketplace. We think we're through all the enhanced premium tax credits impact from 2026. We think that the market has opportunity in it. Obviously, we're not resting on our laurels, and we're looking at things like ICHRA and other markets to grow our total available market. We believe there's still opportunity for the market to remain stable or grow and for us to take share.

Mark Bertolini: Obviously, we're not resting on our laurels, and we're looking at things like ICHRA and other markets to grow our total available market. We believe there's still opportunity for the market to remain stable or grow and for us to take share.

Place through regulation, um, because we are reacting some to a few, um, uh, program Integrity efforts through CMS that are coming through in, in regulation and review. Um, that, um, absent any dramatic changes to the nbpp, which again, we don't think will happen, um, that the market, um, that a lot of them of the program Integrity efforts have been built into the marketplace. Um, we think we're through all the um, enhanced premium tax credits impact, from from 2026. So we think that the market has opportunity in it. Um, obviously, we're not resting on our Laurels and we're looking at things like ikra and other markets to grow our total available Market, but we believe there's still opportunity for the market to remain stable or grow. And for us to take share

Operator: Your next question comes from the line of Stephen Baxter with Wells Fargo. Please go ahead.

Stephen Baxter: Hey, thanks for the question. I wanted to follow up on utilization. It looks like medical expense was up 17% quarter-over-quarter, and I think probably 20% on a PMPM basis. Could you give us some color on what's driving that? It seems like a much sharper increase than what you might normally expect, but obviously, there's a lot of unusual dynamics this year. How should we think about either the upward sloping of MLR or maybe medical cost expense PMPM as we move through the balance of the year? I have a follow-up. Thank you.

Your next question comes from the line of Stephen Baxter with Wells Fargo. Please go ahead.

Scott Blackley: Yeah. Thanks, Steve. I think that in utilization, we're really seeing, and translating that into MLR and PMPMs, we're really just seeing the seasonal pattern of the membership that we have this year. As we've talked about, we saw some transition in our book from silver into higher deductible bronze plans. We also have more gold membership. I do think that the seasonality that we're expecting is emerging. I would expect that that's going to continue to pick up into the H2 as members burn through their deductibles. MLR from H1, I would expect it to continue to trend higher quarterly. The seasonal patterns will look, I think, pretty similar to what we've seen historically.

Hey, thanks for the question. Uh, I wanted to follow up on utilization. It looks like the medical expense. I was up, 17% quarter over quarter and I think probably 20% on a pmpm basis. Could you give us some color on what's driving that it seems like a much sharper increase than what you might normally expect. But obviously, there's a lot of unusual Dynamics this year. And then how should we think about kind of either the upward sloping of mlr or maybe medical cost expense pmpm? As we move through the balance of the year and then I have a follow-up. Thank you.

Yeah, thanks Steve. Um you know I think that in utilization we're really seeing um and and translating that into mlr and pmpm we're really just seeing

The.

Scott Blackley: MLR from H1, I would expect it to continue to trend higher quarterly. The seasonal patterns will look, I think, pretty similar to what we've seen historically.

Stephen Baxter: Got it. Okay. Just to follow up on that, you have obviously a lot of new members this year. You also have a lot of new members and new products. Can you speak at all to the performance of new members and some of the new products that you rolled out this year, like the new bronze and the new gold that you're speaking to? Thanks.

Seasonal pattern of the membership that we have this year. And so, you know, as we've talked about, we saw some transition in our book from Silver into higher deductible bronze plans. We also have more gold membership. So, you know, I do think that, uh, that the seasonality that we're expecting is emerging, I would expect that that's going to continue to pick up into the second half as you know members burn through their deductibles. So you know mlr from from the first 6 months I would expect it to continue to Trend you know higher quarterly uh and the seasonal patterns will will look I think pretty similar to what we've seen historically.

Scott Blackley: Yeah. I would say that when I look across the book, we're really pretty pleased with the performance overall of the new products membership behaving, as I talked about pretty consistently with our expectations. The risk in the book looks very much with what we would have expected. We're not really seeing any deviations in any particular metal. It is an interesting situation where bronze now has a lot of members that moved out of silver and moved into bronze. Gold has members that moved out of silver and are now in gold. You can't really look at these metals in the same way historically. We do a lot of trying to refactor how these metals are going to perform, and against those adjusted expectations, I would say things are performing consistent or favorable to our plan.

Got it, okay? And then just to follow up on that, you know, you have obviously a lot of new members this year and you also have like a lot of new members in, in new products, can you speak at all to the performance of new members? And some of the new products that you rolled out this year, like the new bronze and the new gold that you're speaking to. Thanks.

Scott Blackley: Gold has members that moved out of silver and are now in gold. You can't really look at these metals in the same way historically. We do a lot of trying to refactor how these metals are going to perform, and against those adjusted expectations, I would say things are performing consistent or favorable to our plan.

Yeah, I would say that, um, when I look at the book, uh, you know, we're really pretty pleased with the performance overall of, you know, the new products, um, membership behaving as I talked about pretty consistently with our expectations, the risk in the book, um, looks looks very much, uh, with with what we would have expected. So, you know, we're not really seeing any deviations, um, in any particular metal, uh, it is an interesting, um, you know, situation where bronze now has a lot of of members that moved out of silver and moved into bronze.

Gold has members that moved out of silver and now in Gold. So you know, you can't really look at these um, Metals in the same way, historically. So we do a lot of, you know, trying to refactor how these metals are going to perform and against those, you know, adjusted expectations. I would say things are are performing, you know, consistent or favorable to our plan.

Operator: Your next question comes from the line of Scott Fidel with Goldman Sachs. Please go ahead.

Scott Fidel: Hi. Thanks. Good morning. First question, just hoping you could maybe just decompress the SG&A performance was quite strong in the quarter. Maybe walk us through that, were there any timing dynamics in terms of expenses that maybe sort of played out in other quarters? Maybe just talk about, as you look towards the rest of this year, how you're thinking about investment spending that may be in SG&A as well.

Your next question comes from the line of Scott Fidel with Goldman Sachs. Please go ahead.

Hi, thanks. Good morning. Uh, first question, just hoping you can, uh, maybe just, uh, decompress, uh, our uh, the STNA performance was quite strong. Um, in the quarter. Uh, maybe walk us through that. Um, and then were there any timing dynamics that, uh, in terms of expenses that may be sort of, uh, you know, uh, played out in other quarters. And then also, maybe just

Scott Blackley: Yep, sure. Good morning. SG&A, I would just say that, as Mark talked about, we've really made tremendous progress in SG&A, both in the quarter and in H1. I don't think I would call out anything that is driving the trend. What I observe there is that there are higher taxes this year, exchange fees that we're experiencing. We're basically offsetting that by efficiencies in our variable costs that are really being driven by a lot of the AI and other technology innovations that we've been putting into place.

Talk about, you know, as you look look, uh, towards the the rest of this year, uh, how you're thinking about um, investment spending, uh, that that may be an sgna as well.

Uh, yep sure. Um, good morning.

so sgna, I would just say that is Mark talked about, we've really made tremendous progress in sgna and

in the

Scott Blackley: taxes this year, exchange fees that we're experiencing. We're basically offsetting that by efficiencies in our variable costs that are really being driven by a lot of the AI and other technology innovations that we've been putting into place. I would characterize our SG&A as being, what you've seen in H1 is a good indication of the rest of the year. I do think that we'll see Q4 will be the highest SG&A ratio on a % basis. That is typically the pattern for us, and that really reflects our investments in future growth and getting ready for 2027 enrollment. From here, pretty stable Q3 and then an increase in Q4.

Scott Blackley: I would characterize our SG&A as being, what you've seen in H1 is a good indication of the rest of the year. I do think that we'll see Q4 will be the highest SG&A ratio on a % basis. That is typically the pattern for us, and that really reflects our investments in future growth and getting ready for 2027 enrollment. From here, pretty stable Q3 and then an increase in Q4.

Our variable costs that are really being driven by a lot of the AI and other technology innovations that we've been putting into place. So, I would, uh, I would characterize our, um,

STNA as being, you know, what you've seen in. The first 6 months is a good indication of of the rest of the year. I do think that we'll see the fourth quarter will be the highest sgna, you know, ratio on a percentage basis, um, that is typically the pattern for us and that that really reflects our investments in future growth and getting ready for, you know, 27 enrollments. So, you know, from here, uh, you know, pretty stable, um, third quarter and then an increase in the fourth quarter.

Scott Fidel: Okay. Just wanted to ask about, just with some of the shifts that you have in the metal mix and with the shift to more bronze, how that affects the risk adjustment accruals that you're making. Clearly, it seems like utilization is coming in favorable, but at the same time, you also have the metal mix shift, I guess, and now that you've had the Wakely report. If I could just layer into the metal mix question, because it's interesting you guys have that perspective, I guess, because obviously there's a big focus on seasonality in the exchanges with the market mix shift to bronze from silver. But you have the perspective of having both the bronze and the gold.

Scott Fidel: If I could just layer into the metal mix question, because it's interesting you guys have that perspective, I guess, because obviously there's a big focus on seasonality in the exchanges with the market mix shift to bronze from silver. But you have the perspective of having both the bronze and the gold. How was that seasonality playing out so far this year in terms of, did you see what would be expected in terms of different types of seasonality around the higher cost-sharing bronze and sort of lower utilization as a result of that in H1 compared to gold?

Okay. Uh, and then just wanted to ask about, um, you know, just with with some of the shifts that you have and, and the metal necks and uh, with the shift from uh, to to more bronze, um, how that affects uh, the risk adjustment across that you're making, you know, clearly seems like utilization, you know, is is coming in favorable, but at the same time you also have this, the, the the metal mix shift, I guess. Uh, and and now that you've had the weekly report. And if I could just layer into that, um, into the metal, uh, mixed question. Um, you know, because it's interesting, you guys have that perspective, I, I guess, I, because obviously there's a big focus on seasonality in the exchanges with the, with the market, mix shift uh uh to bronze from Silver. But you have the, the prospective of having both,

Scott Fidel: How was that seasonality playing out so far this year in terms of, did you see what would be expected in terms of different types of seasonality around the higher cost-sharing bronze and sort of lower utilization as a result of that in H1 compared to gold? Or were there any other observations that you found interesting there?

Scott Fidel: Or were there any other observations that you found interesting there?

Scott Blackley: Yeah, I would say that on the metals, against our refactored expectations, again, recognizing that a lot of our members that were historically silver are now in different metals. The performance there is coming in in line to favorable with our expectation, and the risk is as we would have expected to slightly favorable. Just a comment about risk adjustment. In general, we're a risk adjustment payer because our members skew younger. They're healthier. We tend to be more urban than the overall market, and that is particularly the case as we grow. Risk adjustment really is driven by morbidity, not necessarily plan design. I've talked about this in the past, but the risk adjustment formula is intended to neutralize the impacts of the different benefit designs by different metals. That's always not a perfect exact science in terms of how those algorithms work there.

The bronze. Um, and the gold, how is that? How was that seasonality playing out so far this year, in terms of, you know, did you see, you know, what would be expected in terms of different type, type of seasonality um, around the higher cost sharing bronze and and sort of lower utilization as a result of that in the first half compared to gold, or was there any, um, you know, any other observations that that you found interesting there?

Yeah, I would say that, um, on the metals, you know, against our, um, refactored expectations again, uh, recognizing that a lot of our members that were historically, silver are now in different Metals. The performance. There is, is coming in in, you know, in line to favorable with our expectation. And the risk is uh is as we would have expected to slightly favorable.

Scott Blackley: Risk adjustment really is driven by morbidity, not necessarily plan design. I've talked about this in the past, but the risk adjustment formula is intended to neutralize the impacts of the different benefit designs by different metals. That's always not a perfect exact science in terms of how those algorithms work there. What we are seeing is we're getting what we would expect in terms of claims activity and the risk adjustment benefits from that.

Just a comment about risk adjustments. So, in general, we're a risk adjustment payer because our members skew younger, they're healthier, and we tend to be more urban than the overall market. That is particularly the case as we grow. Um,

Risk. Adjustment really is driven by morbidity. Not necessarily planned design. I've talked about this in the past but you know, the risk adjustment formula is intended to neutralize the impacts of, um, you know, the different benefits designs by different Metals. Um, that's always not a perfect, uh, you know,

Scott Blackley: What we are seeing is we're getting what we would expect in terms of claims activity and the risk adjustment benefits from that. At this point in the year, which we do have now, we're six months into the year, so we've got some visibility into this and all things are looking like they're running as we would have expected.

Scott Blackley: At this point in the year, which we do have now, we're six months into the year, so we've got some visibility into this and all things are looking like they're running as we would have expected.

Exact science in terms of how that those those algorithms work there. But what we are seeing is we're getting what we would expect in terms of claims that, you know, activity and the risk adjustment benefits from that. So, you know, at this point in the year, um, which we do have now, you know, we're 6 months into the year. So we've got some visibility into this and all things are looking, uh, like they're running as we would have expected.

Operator: Your next question comes from the line of Raj Kumar with Stephens Inc. Please go ahead.

Raj Kumar: Hey, good morning. Maybe kind of focusing on ICHRA and I guess yesterday's announcement with a partnership that you are undergoing with ICHRA X. Curious on what type of capabilities that offers to your current platform and kind of how should we be thinking about the kind of pace going into 2027 for that offering.

Your next question comes from the line of Rajkumar with Stevens Inc. Please go ahead.

Scott Blackley: ICHRA X is an EDE that we built off of an ACA-approved, CMS-approved electronic data exchange that we purchased last year. We mentioned it in, I think, the Q3 or Q4 call last year. That EDE has a lower cost structure than current ACA alternatives, as well as agreements to have all of our competitors as part of that platform. We now have the rails upon which to run ICHRA, which has not been the case in the past. How do we convert members from a defined benefit to a defined contribution? How does the employer step aside and allow these people to sign up? What happens is because network's always an issue for employers, because they have to have wide area networks at higher costs, by the way, than we do in the ACA with narrow networks.

Mark Bertolini: ICHRA X is an EDE that we built off of an ACA-approved, CMS-approved electronic data exchange that we purchased last year. We mentioned it in, I think, the Q3 or Q4 call last year. That EDE has a lower cost structure than current ACA alternatives, as well as agreements to have all of our competitors as part of that platform. We now have the rails upon which to run ICHRA, which has not been the case in the past. How do we convert members from a defined benefit to a defined contribution?

Hey, good morning. Uh, maybe he's kind of focusing on uh, ikra and I guess, you know, yesterday is announcement uh with the a partnership that you are undergoing with ikra X. So curious on, you know what type of capabilities that offers uh, to your current platform and kind of, how should we be thinking about, kind of the, the kind of pace going into 2027 for that for that offering?

So ikra X um is an ed that we built off of an Acca approved CMS approved. Um electronic data exchange that we purchased last year. Um we mentioned it and I think the third or fourth quarter call us here

Mark Bertolini: How does the employer step aside and allow these people to sign up? What happens is because network's always an issue for employers, because they have to have wide area networks at higher costs, by the way, than we do in the ACA with narrow networks. Those employers want to know how we can get member coverage. What we tell them is that we have all of our competitors on the platform, and the members can select whatever competitor they want that has the network they need.

Scott Blackley: Those employers want to know how we can get member coverage. What we tell them is that we have all of our competitors on the platform, and the members can select whatever competitor they want that has the network they need. All of a sudden, we have the largest PPO network in the nation at narrow network rates. What that allows those employers to do is to stand down on the issue of is there enough network coverage. Couple that with benefit selection tools that we're using with brokers to get people into the right plan design allows savings as high as 26% of the employer's cost versus what the employee would need to pay by following this option. That EDE, that ICHRA X, invites all of our competitors to the table. They've all joined. We all get access to all those members as they convert.

Mark Bertolini: All of a sudden, we have the largest PPO network in the nation at narrow network rates. What that allows those employers to do is to stand down on the issue of is there enough network coverage. Couple that with benefit selection tools that we're using with brokers to get people into the right plan design allows savings as high as 26% of the employer's cost versus what the employee would need to pay by following this option. That EDE, that ICHRA X, invites all of our competitors to the table.

By the way, then we do in the ACA with narrow networks. Um, those employers want to know how we can get the member coverage. And what we tell them is that we have all of our competitors on the platform, and the members can select whatever competitor they want that has the network they need.

Mark Bertolini: They've all joined. We all get access to all those members as they convert. The real opportunity is on the front end of the conversion with the employer, where they spend sizable sums to convert from defined benefit to defined contribution, where the revenue is not regulated like insurance revenue, doesn't require reserves, and has higher margins. That will allow for competition in that market. ICHRA X is then connected to Lucie, where we are now starting to have Allstate Health. We have Aflac.

Scott Blackley: The real opportunity is on the front end of the conversion with the employer, where they spend sizable sums

Mark Bertolini: To convert from defined benefit to defined contribution, where the revenue is not regulated like insurance revenue, doesn't require reserves, and has higher margins. That will allow for competition in that market. ICHRA X is then connected to Lucie, where we are now starting to have Allstate Health. We have Aflac. We have a lot of retailers that want to get access to our members. Mark Cuban is talking to us about coming on board. Other organizations that want to join us to be able to offer retail opportunities to our members once they have to shop for their out-of-pocket costs as members in the program.

So all of a sudden, we have a PE the largest PPO Network in the nation and neuro Network rights. Um, and what that allows those employers to do is to stand down on the issue of is there enough network coverage, couple that with Benefits selection tools that we're using with Brokers to get people into the right. Plan design, allows savings as high as 26% of the employer's cost versus what the employee would need to pay by following this option. So that Ed, that ikra X invites all of our competitors to the table. They've all joined, we all get access to all those members as they convert. Um, and then the real opportunity is on the front end of the, of the conversion with the employer, where they spend sizable sums to convert from defined, benefit to defined contribution. Um, where the where the, where the revenue is not regulated. Like Insurance Revenue doesn't require reserves and has higher margins and so that will allow for competition in that

Market, the era X is then connected to Lucy where we are now starting to have, we have, um, um,

Mark Bertolini: We have a lot of retailers that want to get access to our members. Mark Cuban is talking to us about coming on board. Other organizations that want to join us to be able to offer retail opportunities to our members once they have to shop for their out-of-pocket costs as members in the program.

Raj Kumar: Got it. Then maybe as a follow-up, just more on the technical side, I guess, looking at your short-term investments that increased quite a bit quarter-over-quarter. Curious on that underlying dynamic, given just the cash being pretty steady quarter-over-quarter. Any color on that would be helpful.

All State Health, we have uh, Aflac, we have um, a lot of um retailers that want to get access to our Members, Mark Cuban is talking to us about coming on board other organizations that want to join us, um, to be able to offer retail opportunities to our members. Once they have to shop for their out-of-pocket costs, um, as members of the program.

Mark Bertolini: The investment is to get the platform ready. It's not sizable. It's not a big number. It's a pretty easy-to-use platform and easy-to-change platform.

Got it. Uh, and then maybe as a follow-up, just kind of more on the technical side, I guess kind of looking at, you know, your short-term Investments, That kind of increased uh quite a bit uh, quarter of a quarter. So curious on kind of that underlying Dynamic given just the cash kind of being pretty steady quarter of a quarter. So any color on, that would be helpful. I'm I'm in the investment is to get the platform ready.

Um, and and and so, you know, um, but it's not sizable, it's not a big big number. Um, it's a pretty, um, pretty easy to use, platform, and easy to change platform.

Operator: Your next question comes from the line of Jonathan Yong with UBS. Please go ahead.

Your next question comes from the line of Jonathan Young with UBS. Please go ahead.

Jonathan Yong: Hey, thanks for taking my question. I guess when you guys think about the pricing that's being put into next year from yourself in the market, do you guys see yourselves getting incrementally better G&A leverage, just given your productivity efforts and the pricing that's going to go into the market? Should it be a little bit more muted relative to the improvement that you're seeing this year?

Hey, thanks for taking a question. I guess when you guys think about the pricing that's being put into next year. Um, from yourself in the market, um, do you guys kind of see that yourselves getting uh, incrementally better GNA leverage, um, just giving kind of your productivity efforts and the pricing that's going to go into the market, or should it be a little bit more muted relative to the Improvement that you're seeing this year?

Scott Blackley: Appreciate the question. Look, I think that we set out some long-term targets. One of those was around SG&A ratio, and we're basically getting there a year ahead of plan. I still think there's opportunity for more leverage. If we grow the top line faster than our cost structure, that's going to be a positive in terms of that ratio. Given everything we're doing with AI and focusing on running the most effective and efficient operation we can, I think there's more opportunity for improvement going forward.

Uh, appreciate the question I look, I think that um,

We set out some long-term targets and 1 of those was around sgna ratio, and we're basically getting there a year ahead of plan. Um, I still think there's opportunity for more leverage, uh, if we grow the Top Line faster than, um, than our cost structure, uh, that's going to be a, you know, a positive in terms of that ratio. So given everything we're doing with

Operator 2: Okay. I think in your prepared remarks, you said there was an expectation of increasing membership churn in the back half of the year. I just wanted to be sure, is that in line with the previous expectation of that one to 2% per month, or is it going to be a little bit more elevated than is typical? Thanks.

Jonathan Yong: Okay. I think in your prepared remarks, you said there was an expectation of increasing membership churn in the back half of the year. I just wanted to be sure, is that in line with the previous expectation of that one to 2% per month, or is it going to be a little bit more elevated than is typical? Thanks.

Ai and focusing on you know running the most effective and efficient uh operation we can I think there's more opportunity for improvement um going forward.

Scott Blackley: Yep. We ended the Q2, as we talked about, with 2.96 million effectuated members, which is basically flat in the Q2. What we saw in that Q2 basically was significantly better than our expectations. Lapse was quite favorable. Some of the lapse that we expected in the Q2 is related to CMS eligibility and data issues that we now expect to happen in the H2. I would expect that churn, we previously thought it was 1% to 2%, it's probably going to be closer to twice that amount. That's really a timing move and doesn't impact revenue. You can see that we reaffirmed our full-year guidance on revenue.

Okay. Um and then I think in your prepared remarks you said there was an expectation of increasing membership sharing in the back half the year, I just want to be sure is that in line with the previous expectation of that 1 2% per month or is it going to be a little bit more elevated than uh is typical? Thanks

Yeah, um, so we ended the second quarter, as we talked about, with 2.96 million effectuated members, which is basically flat in the second quarter, um, and...

Scott Blackley: That's really a timing move and doesn't impact revenue. You can see that we reaffirmed our full-year guidance on revenue. I would characterize that, again, more as just a delay in those members being unenrolled versus anything more fundamental in terms of the ongoing churn that we would expect in the business.

Scott Blackley: I would characterize that, again, more as just a delay in those members being unenrolled versus anything more fundamental in terms of the ongoing churn that we would expect in the business.

A delay in those members being, um, unenrolled versus, uh, anything more, you know, fundamental in terms of the, the ongoing insurance that we would expect in the business.

Operator: Your next question comes from the line of Michael Ha with Baird. Please go ahead.

Michael Ha: Thank you. Another firstly clarification to MLR. Scott, you mentioned Q1 MLR ex-PPD was, I think, a little over 82%. For this quarter, if I exclude the favorable PPD and prior year risk adjustment true-up, I'm getting something around 85.2%. Is that roughly correct? I know you mentioned utilization was moderately favorable. Just wanted to confirm if 85.2% is what you're thinking about as underlying MLR, and if there's anything to note even on monthly cadence. Was the favorability pretty consistent throughout the quarter? Any moderation of trend?

Your next question comes from the line of Michael Hub with beard. Please go ahead.

Michael Ha: Just wanted to confirm if 85.2% is what you're thinking about as underlying MLR, and if there's anything to note even on monthly cadence. Was the favorability pretty consistent throughout the quarter? Any moderation of trend?

I do another firstly, clarification mlr. Scott, you mentioned first quarter mlr xpd was, I think a little over 82% for this quarter. If I exclude the favorable PPD and prior your risk adjustment to it, I'm getting something around like, 85.2% is that roughly correct? I know you mentioned utilization was moderately favorable. If you just wanted to confirm, 852 is uh, what you're thinking about as underlying mlr. And if there's anything to note even on like monthly Cadence, the favorability, pretty consistent throughout the quarter, any moderation of trend?

Scott Blackley: Yeah. As I mentioned, my math says that if you exclude the favorable PPD in the quarter, you do get an MLR that's approximately 82%. We'll have to do some reconciliation with your numbers after the call. I would say that we have seen, again, in total favorable prior period development of $164 million in Q2. Year to date, that's $232 million. Those are the numbers that you should be excluding if you're looking to try to adjust our Q2 or six-month MLRs.

Yeah. Um, as I mentioned, uh, my math says that if you exclude the um,

favorable, PPD in the quarter, you do get a a mlr that's approximately 82%. So um, we'll have to do some reconciliation with with your numbers, uh, after the call. But I would say that, um, you know, we have seen again 100 in total, favorable prior period, development of 164 million, um, in the

Second quarter year to date. That's 232 million. So you know, those are those are the numbers that you should be. Uh excluding if you're looking to try to, you know, adjust um our second quarter or 6-month mlrs.

Michael Ha: Okay. Thank you. A multi-parter on risk adjustment. If I exclude the prior year true-up, I'm getting current year risk adjustment transfers about 17.9% of premiums, a lot better than the 20% expectation. First question, is the implied transfer payable percentage in your updated guide for H2 still 20%? I guess, for full year, what is implied for H2? Mark, you mentioned the June weekly could actually suggest upside to your updated guide. Curious if you could elaborate more on that. What does that layer of possible conservatism look like within the guide? How much confidence do you have in the durability of it through year-end? Also, what types of scenarios in H2 do you think could even pose a threat to full-year expectations when it comes to risk adjustment?

Okay, thank you. And, uh, multi-party on risk adjustment.

Michael Ha: What does that layer of possible conservatism look like within the guide? How much confidence do you have in the durability of it through year-end? Also, what types of scenarios in H2 do you think could even pose a threat to full-year expectations when it comes to risk adjustment? Is it membership attrition running hot or something else? All right. Thank you.

Michael Ha: Is it membership attrition running hot or something else? All right. Thank you.

Scott Blackley: Yeah. On risk adjustment, I would recommend that you look at H1 as the best lens in terms of what's going on with risk adjustment. In H1, risk adjustment was 20%, which continues to be our expectation for the full year. There was modest favorability, as you talked about in Q2, related to the final CMS report that's embedded in the quarter. Overall, again, every quarter, we're doing a year-to-date true-up and what our expectation is around risk adjustment. The fact that we were at 20 for the 6 months and we continue to expect 20 for the full year, I think shows that things are progressing as we expected.

So if I exclude the prior year, true up I'm getting current year risk adjustment transfers about, I think 17.9% of premiums a lot better than the 20% expectation. So first question is the implied transfer payable percentage and your updated guide for back half uh, still 20%. I mean, I guess for full year and what does it apply for back half? And Mark uh you mentioned the June weekly could actually suggest upside to your your updated guide period. So if you could elaborate more on that, what does that layer of possible? Conservatism look like within the guide? How much confidence do you have in the durability of it 3 year end? And and also what types of I guess scenarios in the back half of the year, do you think could even pose you know, a threat to full your expectations when it comes to risk? Adjustment is it membership attrition running hotter or or something else? All right, thank you.

Yeah. Um, so on risk adjustment, I would I would recommend that. Um, you look at the first half as the the best lens in terms of what's going on with risk adjustment. Um, and in the first half risk, adjustment was 20%, uh, which is, you know, continues to be our expectation for the full year. So, you know, there was modest favorability as you talked about in Q2 related to the final CMS report, that's embedded in, in the quarter. But overall again,

Scott Blackley: The fact that we were at 20 for the 6 months and we continue to expect 20 for the full year, I think shows that things are progressing as we expected.

Every quarter, we're doing a, you know, kind of a year-to-date true-up. And what our what our expectation is uh, around risk adjustment. And so um, the fact that we were at 20 for the 6 months and we continue to expect 20. Um, for the full year, I think it shows that things are progressing as we expected

Operator: Your next question comes from the line of David Windley with Jefferies. Please go ahead.

Operator: Your next question comes from the line of Dave Windley with Jefferies. Please go ahead.

David Windley: Hi, thanks for taking my questions. Mark, the company invested a lot in working with your sales channel to navigate members between products for 2026. In your earlier answer, you talked about 2027 being relatively stable. I'm wondering if you also think your tier mix will be relatively stable, or do you see more of that navigation? I think a product like HelloMeno is new to 2026. Do you have any plans of similar sort for 2027? Thanks.

Dave Windley: Hi, thanks for taking my questions. Mark, the company invested a lot in working with your sales channel to navigate members between products for 2026. In your earlier answer, you talked about 2027 being relatively stable. I'm wondering if you also think your tier mix will be relatively stable, or do you see more of that navigation? I think a product like HelloMeno is new to 2026. Do you have any plans of similar sort for 2027? Thanks.

Your next question comes from the line of Dave Windley with Jefferies. Please go ahead.

Hi. Thanks for taking my question, mark. You, um, the company invested a lot in working with your sales, channel to navigate members between products for 2026.

Mark Bertolini: Yes, we do have new products rolling out. We continue to innovate and by market. We expect that there will be more opportunity to move people into better plan designs that work for them, and to demonstrate more of our capability of developing these kinds of products. Along with the tools like the radiology tool I talked about in our talking points, which goes alongside the pharmacy tool we talked about in the last quarter. We have more of those coming along so that it assists people. Our whole idea is can we reduce friction at every opportunity when we invest in the platform, thereby reducing barriers for people to get the care they need when they need it. Yes, we have more navigation to do. It's not as significant as the level we did last year with the enhanced premium tax credits.

In your earlier, answer, you talked about 27 being relatively stable, I'm wondering if you also think your tier mix will be relatively stable, or do you see more of that navigation? And then I think a product like heleno is, is new to 206. Do you have any plans of similar sort for 27? Thanks?

Mark Bertolini: Our whole idea is can we reduce friction at every opportunity when we invest in the platform, thereby reducing barriers for people to get the care they need when they need it. Yes, we have more navigation to do. It's not as significant as the level we did last year with the enhanced premium tax credits. It's more about delivering on new products in certain markets.

They need when they need it.

Mark Bertolini: It's more about delivering on new products in certain markets.

Um, so yes, we have more navigation to do. It's not as significant. Um, as the level we did last year with the, uh, with the enhanced premium tax credits, it's more

About delivering on new products in in certain markets.

Operator: Your next question comes from the line of Kevin Fischbeck with Bank of America. Please go ahead.

Please go ahead.

Kevin Fischbeck: Great, thanks. Just want to try to help bridge the increase in guidance. Obviously, with Q1, you didn't change guidance, but you had 164 of PPD this quarter, 68 of PPD in Q1, and then 160 of 2025 risk adjustment this year. Those things all seemed incremental to your original guidance. $392 million, you raised the income guidance by 250. Can you help kind of bridge the delta between those numbers?

Great thanks. Just want to try to help um Bridge the increase in guidance, obviously with q1, you didn't change guidance. Um but uh you had 164 of PPD this quarter 68 of PPD and q1 and then 160 of uh 25 risk adjustment this year. So those things all seemed incremental to your original guidance. So like 392 million but you raised the

Scott Blackley: Yeah. First of all, the 2025 risk adjustment of $160 million is the largest part of the total Q2 favorable prior period development of $164.

Uh, the income guidance by 250. So, can you help kind of bridge the delta between those numbers?

yeah, so um, first of all, the

Kevin Fischbeck: Okay.

Scott Blackley: The RA is a subset of the $164. As I talked about, there's $232 million of total favorable prior period development through the six months, and we raised guidance by $250 million. We think that the core business is running really well. When we got the first 2026 Wakely report, I would say that that was, again, it's quite favorable to our expectations. We know that that report is based on early-stage claims, and there will be some evolution there in terms of how that evolves. We're not banking on all that favorability coming through. That's not part of our guide. I would just say, we feel like there's more tailwinds than headwinds in our outlook, and we're well positioned to have a strong rest of the year.

2025 risk, adjustment of 160 million is the largest part of the total Q2 favorable, prior period, development of 164. So, the RAS is, is a subset of the 164. Um, as I talked about, there's 232 million of total, um, favorable prior period development through the 6 months and, you know, we raised guidance by 200,

Scott Blackley: That's not part of our guide. I would just say, we feel like there's more tailwinds than headwinds in our outlook, and we're well positioned to have a strong rest of the year.

Kevin Fischbeck: Okay, great. I guess one of your competitors talked about the IDR process being a headwind to them, and obviously, that can be a bigger issue that the more narrow the networks are. Just love to hear kind of your thoughts about how the IDR process is working relative to your expectations. Thanks.

50 million. We think that the core business is running, you know, really well. Um, when we got the, the first 26, weekly report, you know, I would say that that was again, it's quite favorable to our expectations. We know that that report is based on early stage claims and there will be some Evolution there in terms of, you know, how how that evolves. And so we're not banking on, you know, all that favorability coming through. That's not part of our guide but I would just say that we feel like there's more, you know, Tailwind than headwinds in our Outlook. And um, you know, we're well positioned to have a strong rest of the year.

Scott Blackley: Yeah, I think IDR is part of the business. I think we support the ultimate goal, which is to protect members from cost surprises. Those are all good things. For us, I would say that IDR is not a trend driver.

Okay great. And then I guess 1 of your competitors talked about the IDR process being you know a headwind to them and and obviously that can be a bigger issue that the more narrow the networks are so just love to hear kind of your thoughts about how the IDR process is working relative to uh your expectations. Thanks.

Yeah, I mean, I think our IDR is, is, is part of the business. Um, I think we support the ultimate goal, which is to protect

Members from cost surprises, those are all good things. Um, but for us, I would say that iDrive is not a trend driver.

Operator: Your next question comes from the line of Justin Lake with Wolfe Research. Please go ahead.

Your next question comes from the line of Justin lake with wolf research. Please go ahead.

Justin Lake: Thanks. Good morning. Mark, Scott, you guys have both mentioned CMS program integrity efforts and the impact on H2 enrollment a few times during the call. I wanted to follow up here. I talked to one of your peers who indicated that in June, CMS sent out a list of 1 million members that they believe might be unauthorized due to a lack of Social Security numbers and 0 claims. Also heard that about 80% of these members are in Florida and Texas, which I know are 2 big states for the company. I know you expect some impact here in H2. Curious if you could share with us how many of these 1 million members were Oscar members? What percentage do you think you can hold on to or save?

Thanks. Good morning. Uh, Mark Scott, you guys have both mentioned, uh, CMS program, Integrity efforts and the impact on second half enrollment a few times during the call. And I'm on the follow-up here. I talked to 1 of your peers who indicated that in June CMS sent out a list of 1 million members, that they believe might be unauthorized due to a lack of social, security number, and zero claims,

Justin Lake: Curious if you could share with us how many of these 1 million members were Oscar members? What percentage do you think you can hold on to or save? What financial impact do you expect the potential loss of the rest of these members might have on your results, given lower utilization of these folks?

Justin Lake: What financial impact do you expect the potential loss of the rest of these members might have on your results, given lower utilization of these folks?

Scott Blackley: Yeah. Appreciate the question. I would just say we continue to see CMS focusing on eligibility verification. That is a topic that they have been really focused on throughout the year. In my comments, I talked about the fact that we expected to see some disenrollments in H2 that we had thought would start happening in really Q2. That is something that we continue to anticipate. With respect to the financial implications, we don't recognize revenue for members that we anticipate are going to be disenrolled. We set up the payments that we receive from CMS as a liability on the balance sheet. All of the impacts of what's going on across the industry with payment integrities is baked into our full year guidance.

And I also heard that about 80% of these numbers are in Florida and Texas, which I know are two big states for the company. So, I know you expect some impact here in the second half. I'm curious if you could share with us how many of these million members were Oscar members, what percentage you think you can hold on to or save, and what financial impact you expect the potential loss of the rest of these members might have on your results, given lower utilization of these folks?

Yeah. Um appreciate the question I would just say we continue to see CMS focusing on eligibility verification and you know that excuse me that is um a topic that they have been you know really focused on throughout the year. Um

Scott Blackley: We set up the payments that we receive from CMS as a liability on the balance sheet. All of the impacts of what's going on across the industry with payment integrities is baked into our full year guidance.

In my comments, I talked about the fact that we expected to see some disenrollment in the second half that that we had thought would start happening, uh, in really Q2. So, you know that is, is uh, something that we continue to anticipate with respect to the financial implications. We don't recognize revenue for members that we uh, anticipate are going to be disenrolled. Um, we set up those the payments that we received from CMS as a liability on the balance sheet, uh, and you know, all of the impacts of, you know, what's going on across the industry with payment Integrity is um, is baked into our our full year guidance.

Justin Lake: Got it. Is there any way you could share how big that assumption is relative to what CMS sent you here in terms of the enrollment that they expect might not be correct?

Got it. Is there any way you could share how big that assumption is relative to what CMS sent you here in terms of the enrollment?

Mark Bertolini: Well, I would put it this way. We're reviewing the file that we received. There are a number of cases where we know that people were authorized appropriately. There are a number of cases where we've actually had contact with people. Their list was based on a set of assumptions that they went through on the file. The actual result will depend on our ability to go through those files. We are going through them actively. The appropriate accommodations for what we might think are being lapsed members are in our guidance that we've shared with you.

You know, might not be uh, correct.

Mark Bertolini: The appropriate accommodations for what we might think are being lapsed members are in our guidance that we've shared with you.

Scott Blackley: Yeah, I think we've got good visibility into that. I don't think this is an area that we see as a risk to the rest of the year.

Well, I I I would put it this way. We're reviewing the file that we received and there are a number of cases where we know that people were authorized appropriately. Their number of cases where we've actually had contact with people. So their list was based on a set of assumptions that they went through. On the file, the actual result will depend on our ability to go through those files. And we are going through them actively um and the appropriate accommodations for what we might think. Uh being lapse members are in our are in our guidance that we provide to share with you. Yeah, and I think we've got good visibility into that. So, you know, I don't think this is an area that we see as a risk to our, uh, to the rest of the year.

Operator: There are no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Q2 2026 Oscar Health Inc Earnings Call

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