10-Q 1 oscr-20220331.htm 10-Q oscr-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________
Commission File Number: 001-40154
____________________________________________________________
Oscar Health, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________
Delaware46-1315570
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
75 Varick Street, 5th FloorNew York, NY10013
  (Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (646) 403-3677
Former name, former address and former fiscal year, if changed since last report: N/A
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.00001 par value per shareOSCRNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer Accelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Class of StockShares Outstanding as of April 30, 2022
Class A Common Stock, par value $0.00001 per share175,891,348 
Class B Common Stock, par value $0.00001 per share35,115,807 


Oscar Health, Inc.
TABLE OF CONTENTS

Page
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements (unaudited)
Item 2.
Item 3.
Item 4.
PART II - OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding our future results of operations and financial position, risk adjustment payments, industry and business trends, stock compensation, business strategy, plans and plan mix, membership and market growth and our objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following:

the impact of COVID-19 on global markets, economic conditions, the healthcare industry and our results of operations, and the response by governments and other third parties;
our ability to retain and expand our member base;
our ability to execute our growth strategy and scale our operations;
our ability to maintain or enter into new partnerships or collaborations with healthcare industry participants;
negative publicity, unfavorable shifts in perception of our digital platform or other member service channels;
our ability to achieve and/or maintain profitability in the future;
changes in federal or state laws or regulations, including changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended and any regulations enacted thereunder;
our ability to accurately estimate our incurred claims expenses or effectively manage our claims costs or related administrative costs, including as a result of fluctuations in medical utilization rates due to the impact of COVID-19;
our ability to comply with ongoing regulatory requirements and applicable performance standards, including as a result of our participation in government-sponsored programs, such as Medicare, and as a result of changing regulatory requirements;
changes or developments in the health insurance markets in the United States, including passage and implementation of a law to create a single-payer or government-run health insurance program;
our ability to comply with applicable privacy, security, and data laws, regulations, and standards;
our ability to maintain key in-network providers and good relations with the physicians, hospitals, and other providers within and outside our provider networks, or to arrange for the delivery of quality care;
unfavorable or otherwise costly outcomes of lawsuits, regulatory investigations and audits, and claims that arise from the extensive laws and regulations to which we are subject;
unanticipated results of risk adjustment programs;
delays in our receipt of premiums;
disruptions or challenges to our relationship with the Oscar Medical Group;
cyber-security breaches of our and our partners’ information and technology systems;
unanticipated changes in population morbidity and large-scale changes in health care utilization; and
The factors described under the sections “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.



The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.



BASIS OF PRESENTATION

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:
“we,” “us,” “our,” “our business,” the “Company,” “Oscar,” and similar references refer to Oscar Health, Inc., formerly known as Mulberry Health Inc., and its subsidiaries.
“Holdco” refers to Oscar Health, Inc. and its consolidated subsidiaries excluding its regulated insurance subsidiaries.
“ACA” refers to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended.
“Annual Election Period” refers to the yearly period when beneficiaries can enroll or disenroll in an Original Medicare or Medicare Advantage health plan. The Annual Election Period starts on October 15 and ends on December 7 of each year.
“APTC” refers to advanced premium tax credits.
“Co-Founders” refers to Joshua Kushner and Mario Schlosser.
“direct policy premium” refers to monthly premiums collected from our members and/or from the federal government during the period indicated, before risk adjustment and reinsurance.
“Assumed Policy Premiums” are premiums received primarily as part of our reinsurance arrangements under the Cigna+Oscar small group plan offering.
“full stack technology platform” refers to our cloud-based end-to-end technology solution, which powers our differentiated member experience engine. Our platform connects our member-facing features, including our mobile application, which we refer to as our app, website, and virtual care solutions with our back-office tools that span all critical health care insurance and technology domains, including member and provider data, utilization management, claims management, billing, and benefits.
“Health Insurance Marketplaces” refers to the health insurance marketplaces established per the ACA and operated by the federal government for most states and other marketplaces operated by individual states, for individuals and small employers to purchase health insurance coverage in the Individual and Small Group markets that include minimum levels of benefits, restrictions on coverage limitations and premium rates, and APTC.
“health insurance subsidiary” refers to any subsidiary of Oscar Health, Inc. that has applied for or received a license, certification or authorization to sell health plans by any state Department of Insurance, Department of Financial Services, Department of Health, or comparable regulatory authority. As of March 31, 2022, Oscar Health, Inc. had 15 health insurance subsidiaries.
“health plans” refers to the health insurance plans that Oscar sells in the Individual and Small Group markets and the Medicare Advantage Plans that Oscar sells in the Medicare Advantage market. The term includes co-branded health plans sold directly by our health insurance subsidiaries, in the case of our Cleveland Clinic +Oscar, Montefiore +Oscar, and Oscar + Holy Cross + Memorial Health plans, and co-branded plans sold directly by our partner and partially-reinsured by a health insurance subsidiary, in the case of the Cigna + Oscar plan.
“InsuranceCo Administrative Expense Ratio” is defined as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating and Non-GAAP Financial Metrics—InsuranceCo Administrative Expense Ratio.”
“InsuranceCo Combined Ratio” is defined as the sum of MLR and InsuranceCo Administrative Expense Ratio.
“Medical Loss Ratio” or “MLR” is defined as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating and Non-GAAP Financial Metrics—Medical Loss Ratio.”
“Adjusted Administrative Expense Ratio” is defined as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating and Non-GAAP Financial Metrics—Adjusted Administrative Expense Ratio.”
“member” refers to any individual covered by any health plans that we offer directly or through a co-branded arrangement. A member covered under more than one of our health plans counts as a single member for the purposes of this metric. Our membership is measured as of a particular point in time and may be affected by enrollment changes, including retroactive disenrollments.
“Open Enrollment Period” refers to the yearly period when individuals and families can enroll in a health plan or make changes to an existing health plan. In most states, the 2022 Open Enrollment Period for the Individual market


typically starts on November 1 and lasts through January 15. The 2022 Open Enrollment Period for the Individual market was extended in certain states in which Oscar does business due to the ongoing COVID-19 pandemic emergency; see “2022 Special Enrollment Periods” below for additional information. The Medicare Advantage Open Enrollment Period, which permits switching between Medicare Advantage plans, started on January 1, 2022 and ended on March 31, 2022.
“PMPM” refers to per member per month.
“Special Enrollment Period” refers to a period outside the Open Enrollment Period or Annual Election Period when an eligible person can enroll in a health plan or make changes to an existing health plan. A person is generally eligible to participate in a Special Enrollment Period if certain qualifying life events occur, such as losing certain health coverage, moving, getting married, having a baby, or adopting a child.
“2022 Special Enrollment Periods” refers to a period outside the 2022 Open Enrollment Period when an eligible person was able to enroll in an Individual market health plan or make changes to an existing Individual market health plan, due to the ongoing COVID-19 public health emergency (PHE) or the passage of the American Rescue Plan Act of 2021 (the “American Rescue Plan”). In 2022, this included extensions of the Open Enrollment Period in New York for the duration of the PHE, and a Special Enrollment Period in California also tied to the duration of the PHE. A new Special Enrollment Period tied to the American Rescue Plan enhanced subsidies also allows individuals with up to 150% of the federal poverty level (FPL) to enroll in on-exchange Individual market plans at any time beginning in March through the end of 2022, unless extended by Congress. Several state-based exchanges have implemented similar low-income Special Enrollment Periods including California, Colorado, New Jersey and Pennsylvania.
“Thrive Capital” refers to Thrive Capital Management, LLC, a Delaware limited liability company, and the investment funds affiliated with or advised by Thrive Capital Management, LLC.
“Thrive General Partners” refers to Thrive Partners II GP, LLC, Thrive Partners III GP, LLC, Thrive Partners V GP, LLC, Thrive Partners VI GP, LLC, Thrive Partners VII GP, LLC, and Thrive Partners VII Growth GP, LLC, each of which is a general partner of a Thrive Capital-affiliated fund.
Certain monetary amounts, percentages, and other figures included in this Quarterly Report on Form 10-Q have been subject to rounding adjustments. Percentage amounts included in this Quarterly Report on Form 10-Q have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report on Form 10-Q may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Certain other amounts that appear in this Quarterly Report on Form 10-Q may not sum due to rounding.




PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Oscar Health, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
March 31, 2022December 31, 2021
Assets:
Current Assets:
Cash and cash equivalents
$2,068,632 $1,103,995 
Short-term investments
810,002 587,086 
Premiums and accounts receivable
157,298 138,414 
Risk adjustment transfer receivable
50,615 40,659 
Accrued investment income
2,584 3,782 
Reinsurance recoverable
585,688 431,990 
Total current assets
3,674,819 2,305,926 
Property, equipment, and capitalized software, net
48,607 46,611 
Long-term investments
502,149 844,476 
Restricted deposits
27,198 28,085 
Other assets
97,153 95,957 
Net deferred tax asset
595 595 
Total assets
$4,350,521 $3,321,650 
Liabilities and Stockholders' Equity
Current Liabilities:
Benefits payable
$761,329 $513,582 
Risk adjustment transfer payable
1,166,059 794,398 
Premium deficiency reserve
26,041 29,246 
Unearned premiums
74,700 75,044 
Accounts payable and other liabilities
220,516 234,788 
Reinsurance payable
392,235 205,231 
Total current liabilities
2,640,880 1,852,289 
Long-term debt297,416  
Other liabilities77,058 76,839 
Total liabilities3,015,354 1,929,128 
Commitments and contingencies (Note 13)
Stockholders' Equity
Preferred stock, $0.00001 par value; 82,500,000 shares authorized, none issued or outstanding as of March 31, 2022 and December 31, 2021
  
Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 175,808,779 shares issued and outstanding as of March 31, 2022 and 175,212,223 shares issued and outstanding as of December 31, 2021
2 2 
Class B common stock, $0.00001 par value; 82,500,000 shares authorized, 35,115,807 shares issued and outstanding as of March 31, 2022 and December 31, 2021
  
Treasury stock (314,600 shares as of March 31, 2022 and December 31, 2021)
(2,923)(2,923)
Additional paid-in capital
3,422,033 3,393,533 
Accumulated deficit
(2,074,864)(1,999,712)
Accumulated other comprehensive income (loss)
(12,206)(3,671)
Total Oscar Health, Inc. stockholders' equity1,332,042 1,387,229 
Noncontrolling interests3,125 5,293 
Total stockholders’ equity
1,335,167 1,392,522 
Total liabilities and stockholders' equity
$4,350,521 $3,321,650 
See the accompanying Notes to Consolidated Financial Statements
7


Oscar Health, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended March 31,
20222021
Revenue
Premiums before ceded reinsurance
$1,315,064 $610,099 
Reinsurance premiums ceded(359,663)(241,562)
Premiums earned955,401 368,537 
Administrative services revenue18,493 341 
Investment income (loss) and other revenue(1,129)510 
Total revenue
972,765 369,388 
Operating Expenses
Claims incurred, net
734,566 268,048 
Other insurance costs165,402 79,837 
General and administrative expenses
74,664 64,572 
Federal and state assessments
69,867 30,515 
Premium deficiency reserve release(3,205)(9,543)
Total operating expenses
1,041,294 433,429 
Loss from operations
(68,529)(64,041)
Interest expense
4,221 3,697 
Other expenses3,053  
Loss on extinguishment of debt 20,178 
Loss before income taxes
(75,803)(87,916)
Income tax provision
1,517 965 
Net loss
(77,320)(88,881)
Less: Net loss attributable to noncontrolling interests(2,168) 
Net loss attributable to Oscar Health, Inc.$(75,152)$(88,881)
Earnings (Loss) per Share
Net loss per share attributable to Oscar Health, Inc., basic and diluted
$(0.36)$(1.00)
Weighted average common shares outstanding, basic and diluted
210,547,696 88,865,726 

See the accompanying Notes to Consolidated Financial Statements

8


Oscar Health, Inc.
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)

Three Months Ended March 31,
20222021
Net loss$(77,320)$(88,881)
Other comprehensive income (loss), net of tax:
   Net unrealized losses on securities available for sale(8,535)(275)
Comprehensive loss$(85,855)(89,156)
Comprehensive income (loss) attributable to noncontrolling interests$(2,168) 
Comprehensive loss attributable to Oscar Health, Inc.$(83,687)$(89,156)

See the accompanying Notes to Consolidated Financial Statements




9

Oscar Health, Inc.
Consolidated Statements of Convertible Preferred Stock and Changes in Equity (Deficit)
(in thousands, except share amounts)
(unaudited)
Class AClass B
SharesAmountSharesAmount
Treasury Stock
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Noncontrolling Interests
Total Stockholders' Equity (Deficit)
December 31, 2021175,212,223 $2 35,115,807 $ $(2,923)$3,393,533 $(1,999,712)$(3,671)$5,293 $1,392,522 
Issuance of common stock from equity incentive plans596,556 — — — — 560 — — — 560 
Stock-based compensation expense— — — — — 27,690 — — — 27,690 
Joint venture contribution— — — — — 250 — — — 250 
Unrealized gains (losses) on investments, net— — — — — — (8,535)— (8,535)
Net loss— — — — — — (75,152)— (2,168)(77,320)
March 31, 2022175,808,779 $2 35,115,807 $ $(2,923)$3,422,033 $(2,074,864)$(12,206)$3,125 $1,335,167 


See the accompanying Notes to Consolidated Financial Statements








10

Oscar Health, Inc.
Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) (continued)
(in thousands, except share amounts)
(unaudited)


Convertible
Preferred Stock
Common Stock
(Series A/Series B)
Class AClass B
Shares
Amount
Shares
Amount
SharesAmountSharesAmount
Treasury Stock
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Total Stockholders' Equity (Deficit)
December 31, 2020400,904,302 $1,744,911 31,409,202 $2  $  $ $(2,923)$133,255 $(1,427,106)$879 $(1,295,893)
Conversion of pre-IPO shares to Class A and Class B common stock(400,904,302)(1,744,911)(31,409,202)(2)130,280,651 1 35,115,807 — — 1,744,911 — — 1,744,910 
Issuance of common stock upon IPO, net of underwriting discount— — — — 36,391,946 1 — — — 1,338,874 — — 1,338,875 
Issuance of common stock upon exercise of warrants and call options— — — — 1,115,973 — — — — 37,071 — — 37,071 
Issuance of common stock from equity incentive plans— — — — 4,272,060 — — — — 29,805 — — 29,805 
Stock-based compensation expense— — — — — — — — — 19,115 — — 19,115 
Unrealized gains (losses) on investments, net— — — — — — — — — — — (275)(275)
Net loss— — — — — — — — — — (88,881)— (88,881)
March 31, 2021 $  $ 172,060,630 $2 35,115,807 $ $(2,923)$3,303,031 $(1,515,987)$604 $1,784,727 




See the accompanying Notes to Consolidated Financial Statements

11

Oscar Health, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net loss
$(77,320)$(88,881)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred taxes
 8 
Net realized gain (loss) on sale of financial instruments
582 (113)
(Gain) loss on fair value of warrant liabilities 12,856 
Depreciation and amortization expense
3,799 3,403 
Amortization of debt issuance costs129 329 
Stock-based compensation expense
27,690 19,115 
Investment amortization, net of accretion
1,922 1,074 
Debt extinguishment loss 20,178 
Changes in assets and liabilities:
(Increase) / decrease in:
Premiums and accounts receivable
(18,884)(10,529)
Risk adjustment transfer receivable
(9,956)(6,608)
Accrued investment income
1,198 417 
Reinsurance recoverable
(153,698)225,397 
Other assets
(743)(6,336)
Increase / (decrease) in:
Benefits payable
247,747 46,152 
Unearned premiums
(344)42 
Premium deficiency reserve
(3,205)(9,542)
Accounts payable and other liabilities
(14,733)(11,712)
Reinsurance payable
187,004 (83,258)
Risk adjustment transfer payable
371,661 205,699 
Net cash provided by operating activities
562,849 317,691 
Cash flows from investing activities:
Purchase of investments
(166,769)(245,694)
Sale of investments
169,374 83,798 
Maturity of investments
105,842 134,199 
Purchase of property, equipment and capitalized software
(6,247)(6,583)
Change in restricted deposits
611  
Net cash provided by (used in) investing activities
102,811 (34,280)
Cash flows from financing activities:
Proceeds from long-term debt305,000  
Payments of debt issuance costs(7,035) 
Proceeds from joint venture contribution250  
Debt prepayment (153,173)
Debt extinguishment costs (12,994)
Proceeds from IPO, net of underwriting discounts 1,348,321 
Offering costs from IPO (9,447)
Proceeds from exercise of warrants and call options 9,191 
Proceeds from exercise of stock options
560 29,652 
Net cash provided by financing activities
298,775 1,211,550 
Increase in cash, cash equivalents and restricted cash equivalents
964,435 1,494,961 
Cash, cash equivalents, restricted cash and cash equivalents—beginning of period
1,125,557 843,105 
Cash, cash equivalents, restricted cash and cash equivalents—end of period
2,089,992 2,338,066 
Cash and cash equivalents
2,068,632 2,321,287 
Restricted cash and cash equivalents included in restricted deposits
21,360 16,779 
Total cash, cash equivalents and restricted cash and cash equivalents
$2,089,992 $2,338,066 

12



Oscar Health, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited) (continued)

Supplemental Disclosures:
Interest payments$261 $3,553 
Non-cash investing and financing activities:
Conversion of redeemable convertible preferred stock to common stock upon initial public offering$ $1,744,914 
Net exercise of preferred stock warrants to preferred stock upon initial public offering$ $28,248 
Adjustment to fair value of preferred stock warrant liability upon initial public offering$ $13,243 

See the accompanying Notes to Consolidated Financial Statements
13


Oscar Health, Inc.
Notes to Consolidated Financial Statements (unaudited)
(in thousands, except share and per share amounts, or as otherwise stated herein)


1.ORGANIZATION

Oscar Health, Inc. ("Oscar" or the "Company") is the first health insurance company built around a full stack technology platform and a relentless focus on serving its members. Headquartered in New York City, Oscar offers two complementary products: (1) innovative and consumer-oriented health plans are sold to Individual, Small Group and Medicare Advantage members and (2) via +Oscar, the Company leverages its technology platform to sell services to providers and payers to directly enable their shift to value-based care.

The Company operates as one segment to sell insurance to its members directly and through the state-run health care exchanges formed in conjunction with the Patient Protection and Affordable Care Act via its health insurance subsidiaries and to sell services via its +Oscar offering. Individual plans are offered to individuals and families through Health Insurance Marketplaces. Small Group plans are offered to employees of companies with 50 - 100 full-time workers. Medicare Advantage plans are offered to adults who are age 65 and older and eligible for traditional Medicare but who instead select coverage through a private market plan. The Company has also partnered with Cigna through the Cigna + Oscar partnership, which unites Oscar’s highly-differentiated member experience with Cigna’s broad provider networks, to exclusively serve the Small Group employer market.

The Company's Class A common stock is traded on the New York Stock Exchange under the symbol "OSCR."

Basis of Presentation
The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, and the applicable rules and regulations of the Securities and Exchange Commission for interim financial information. As such, these financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements.

These condensed consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the information presented for the periods presented in conformity with U.S. GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Annual Report on Form 10-K.

Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates inherent in the preparation of the accompanying interim condensed consolidated financial statements include healthcare costs incurred but not yet reported, premium deficiency reserve and risk adjustment. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ materially from these estimates.

14

2.    RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Pronouncements - Recently Adopted
In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). The ASU 2020-06 simplified the accounting for convertible debt instruments by reducing the number of accounting models required under current GAAP. It requires convertible debt instruments to be accounted for under one of the following three models: embedded derivative, substantial premium, or no proceeds allocated (traditional debt) models. It eliminates the cash conversion and beneficial conversion feature models and amends the requirements for a conversion option to be classified in equity. The guidance also simplifies the diluted EPS calculations for certain convertible debt instruments. ASU 2020-06 was adopted on January 1, 2022 and did not have an impact on the Company's consolidated financial statements.

3. REVENUE RECOGNITION

Premiums earned
Premium revenue includes direct policy premiums collected directly from members and from the Centers for Medicare & Medicaid Services ("CMS") as part of the Advanced Premium Tax Credit Program ("APTC") and Medicare Advantage programs, along with assumed premiums from the Company's reinsurance agreements. Premium revenue is adjusted for the estimated impact of the risk adjustment program required by CMS. Total premiums earned includes the effect of reinsurance premiums ceded as part of the Company's reinsurance agreements. Refer to Note 4 - Reinsurance for more information.

Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Direct policy premiums$1,656,421 $820,814 
Assumed premiums24,790 2,411 
Direct and Assumed Policy Premiums1,681,211 823,225 
Risk adjustment(366,147)(213,126)
Premiums before ceded reinsurance1,315,064 610,099 
Reinsurance premiums ceded(359,663)(241,562)
Total premiums earned$955,401 $368,537 

The following table summarizes the amounts of direct policy premiums received directly from CMS as part of APTC and Medicare Advantage for the three months ended March 31, 2022 and 2021:

Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
APTC$1,394,503 $552,342 
Medicare Advantage13,052 9,124 
Total paid by CMS$1,407,555 $561,466 

Administrative services revenue
Administrative services revenue includes revenue earned for services provided under the Company's +Oscar offering. The Company leverages its technology platform to provide administrative services to providers and payers to directly enable their shift to value-based care. Revenue is recognized in the period the contractual performance obligations are satisfied and measured in an amount that reflects the consideration the Company expects to be entitled to in exchange for performing the services. The timing of the Company's revenue recognition may differ from the timing of payment by customers. A receivable is recorded when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, deferred revenue is recognized when payment is received before the performance obligations are satisfied. For the three months ended March 31, 2022 and 2021, administrative services revenue was $18.5 million and $0.3 million, respectively.
15


4.REINSURANCE

The Company enters into reinsurance contracts under two different types of arrangements: quota share reinsurance contracts and excess of loss ("XOL") reinsurance contracts. In quota share reinsurance, the reinsurer assumes an agreed percentage of the underlying policies being reinsured and shares all premiums and incurred claims accordingly. In XOL reinsurance, the reinsurer agrees to assume all or a portion of the ceding company’s losses in excess of a specified amount.

All premiums and claims ceded under the Company's quota share arrangements are shared proportionally with the reinsurers. As part of the agreements, the Company also receives ceding commissions, which are calculated based on a percentage of ceded premiums, and experience refunds (resulting from actual claims experience being lower than a specified threshold).

Reinsurance Contracts Accounted for under Reinsurance Accounting and Deposit Accounting
ASC 944: Financial Services - Insurance requires the substance of all reinsurance arrangements to be evaluated to ensure that significant risk is transferred by the ceding entity to the reinsurer. When significant risk is transferred, reinsurance accounting is required. Reinsurance contracts that do not meet the risk transfer requirements necessary to be accounted for under reinsurance accounting are accounted for under the deposit accounting method. The Company currently has quota share reinsurance arrangements with more than one counterparty with multiple state-level treaties. These arrangements are accounted for under both reinsurance accounting and deposit accounting.

Under reinsurance accounting, premiums paid to the reinsurer are recorded as ceded premiums (a reduction to premium revenue). Expected reimbursements from the reinsurer for claims incurred are recorded as a reduction to claims incurred and a corresponding reinsurance recoverable asset.

Under deposit accounting, a deposit asset or deposit liability is recorded based on the consideration paid or received, irrespective of the experience of the contract. Fees retained by the reinsurer are recognized within other insurance costs on the statement of operations. As a result, premiums earned and claims incurred that would have otherwise been ceded under reinsurance accounting are recorded on a net basis on the consolidated balance sheet as a deposit liability.

The tables below present information for the Company's quota share arrangements accounted for under reinsurance accounting.

The composition of total reinsurance premiums ceded and reinsurance premiums assumed, which are included as components of total premiums earned in the consolidated statement of operations, is as follows:

Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Reinsurance premiums ceded, gross
$(367,111)$(264,787)
Experience refunds
7,448 23,225 
Reinsurance premiums ceded(359,663)(241,562)
Reinsurance premiums assumed
24,790 2,411 
Total reinsurance premiums (ceded) and assumed
$(334,873)$(239,151)

The Company records claims expense net of reinsurance recoveries. The following table reconciles the total claims expense to the net claims expense as presented in the consolidated statement of operations:
Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Direct claims incurred
$1,010,035 $457,219 
Ceded reinsurance claims
(299,711)(190,948)
Assumed reinsurance claims
24,242 1,777 
Total claims incurred, net
$734,566 $268,048 

16

The Company records selling, general and administrative expenses net of reinsurance ceding commissions. The following table reconciles total other insurance costs to the amount presented in the consolidated statement of operations:
Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Other insurance costs, gross
$203,713 $99,143 
Reinsurance ceding commissions
(38,311)(19,306)
Other insurance costs, net
$165,402 $79,837 


The Company classifies reinsurance recoverable within current assets on its consolidated balance sheets. The composition of the reinsurance recoverable balance is as follows:

March 31, 2022December 31, 2021
(in thousands)
Ceded reinsurance claim recoverables$527,457 $406,017 
Reinsurance ceding commissions43,878 23,517 
Experience refunds on reinsurance agreements14,353 2,456 
Reinsurance recoverable$585,688 $431,990 

Credit Ratings
The Company regularly evaluates the financial condition of its reinsurers to minimize exposure to significant losses. A key credit quality indicator for reinsurance is the financial strength ratings issued by the credit rating agencies, which provide an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. The Company's reinsurers have most recently been issued financial strength ratings of AA- (Standard & Poor's) and AA- (Fitch).

The creditworthiness of each reinsurer is evaluated in order to assess counterparty credit risk and estimate an allowance for expected credit losses on the Company's reinsurance recoverable balances. As of March 31, 2022, the allowance for credit losses for reinsurance recoverables was not material.

5.BUSINESS ARRANGEMENTS

Holy Cross Health/Memorial Healthcare System Partnership
In 2021, the Company partnered with Holy Cross Health, a top-rated health, teaching and research institution, and Memorial Healthcare System, a leading provider in high-quality healthcare services, to form a joint venture arrangement for its co-branded Medicare Advantage plan in Florida. As part of this arrangement, Holy Cross Health and Memorial Healthcare System jointly own a 50% economic interest in one of the Company's consolidated subsidiaries.
As a result, the following noncontrolling interest amounts are presented on the Company's financial statements:

Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Net loss attributable to noncontrolling interests$(2,168)$ 

March 31, 2022December 31, 2021
(in thousands)
Noncontrolling interests$3,125 $5,293 

17

Variable Interest Entities
In the normal course of business, the Company enters into business arrangements with integrated health systems and several medical professional corporations that employ health care providers to deliver telemedical healthcare services to its covered member population in various states. The financial results of these entities are consolidated into the Company's financial statements.
The following table presents the collective assets and liabilities of the Company's variable interest entities:

March 31, 2022December 31, 2021
(in thousands)
Assets$130,946 $123,524 
Liabilities$71,074 $70,165 

6.RESTRICTED CASH AND RESTRICTED DEPOSITS

The Company maintains cash, cash equivalents and investments on deposit or pledged primarily to various state agencies in connection with its insurance licensure. The restricted cash and cash equivalents and restricted investments presented below are included in “restricted deposits” in the accompanying consolidated balance sheets.

March 31, 2022December 31, 2021
(in thousands)
Restricted cash and cash equivalents$21,360 $21,562 
Restricted investments5,838 6,523 
Restricted Deposits$27,198 $28,085 

7.    INVESTMENTS

The following tables provide summaries of the Company's investments by major security type as of March 31, 2022 and December 31, 2021:
March 31, 2022
Amortized Cost
Unrealized Gains
Unrealized Losses
Fair Value
(in thousands)
U.S. treasury and agency securities
$860,983 $243 $(6,796)$854,430 
Corporate notes
366,231 5 (5,080)361,156 
Municipalities37,312  (511)36,801 
Certificate of deposit
37,924   37,924 
Commercial paper
21,840   21,840 
Total
$1,324,290 $248 $(12,387)$1,312,151 

December 31, 2021
Amortized Cost
Unrealized Gains
Unrealized Losses
Fair Value
(in thousands)
U.S. treasury and agency securities
$895,865 $34 $(1,837)$894,062 
Corporate notes
454,416 2 (1,746)452,672 
Municipalities50,366 10 (140)50,236 
Certificate of deposit
21,370   21,370 
Commercial paper
13,222   13,222 
Total
$1,435,239 $46 $(3,723)$1,431,562 

18


The following table summarizes those available-for-sale investments that have been in a continuous loss position for less than 12 months at March 31, 2022 and December 31, 2021.

March 31, 2022
Number of SecuritiesFair ValueGross
Unrealized Losses
(in thousands)
U.S. treasury and agency securities98 $631,329 $(6,796)
Corporate notes393 357,359 (5,078)
Municipalities102 $36,801 (511)
Total593 $1,025,489 $(12,385)

December 31, 2021
Number of SecuritiesFair ValueGross
Unrealized Losses
(in thousands)
U.S. treasury and agency securities108 $894,060 $(1,837)
Corporate notes357 452,672 (1,746)
Municipalities108 50,236 (140)
Total573 $1,396,968 $(3,723)

The available-for-sale securities that have been in a continuous unrealized loss position for longer than twelve months as of March 31, 2022 and December 31, 2021 are immaterial.
The contractual maturities of available-for-sale securities as of March 31, 2022 are as follows:

Amortized Cost
Fair Value
(in thousands)
Due in one year or less$816,712 $810,002 
Due after one year through five years507,578 502,149 
Total
$1,324,290 $1,312,151 

Actual maturities of these securities could differ from their contractual maturities used in the table above because issuers may have the right to call or prepay obligations, with or without penalties.

Net investment income was attributable to the following:
Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Interest income
$697 $1,345 
Investment discount amortization net of premium accretion
(1,919)(1,074)
Net realized gain (loss)
(581)113
Total
$(1,803)$384 

The Company monitors available-for-sale debt securities for credit losses and recognizes an allowance for credit losses when factors indicate a decline in the fair value of a security is credit-related. Certain investments may experience a decline in fair value due to changes in market interest rates, changes in general economic conditions, or a deterioration in the credit worthiness of a security's issuer. The Company has assessed the gross unrealized losses during the period and determined an allowance for credit losses is not necessary because the declines in fair value are believed to be due to market fluctuations and not due to credit-related events.
19




8.    FAIR VALUE
Fair value represents the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. The Company's financial assets and liabilities measured at fair value on a recurring basis are categorized into a three-level fair value hierarchy based on the priority of the inputs used in the fair value valuation technique.
The levels of the fair value hierarchy are as follows:
Level 1: Inputs utilize quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: Inputs utilize other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Inputs utilized that are unobservable but significant to the fair value measurement for the asset or liability. The unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available. They typically reflect management’s own estimates about the assumptions a market participant would use in pricing the asset or liability.

The following tables summarize fair value measurements by level for assets and liabilities measured at fair value on a recurring basis:
March 31, 2022
Level 1
Level 2
Level 3
Total
(in thousands)
Assets
Cash equivalents
$26,219$22,476$$48,695
Investments
U.S. treasury and agency securities
$56,448 $797,982 $ $854,430 
Corporate notes
 361,156  361,156 
Municipalities 21,840  21,840 
Certificates of deposit
 37,924  37,924 
Commercial paper
 36,801  36,801 
Restricted investments
U.S. treasury securities
$ $5,838 $5,838 
Total Assets$82,667 $1,284,017 $ $1,366,684 

December 31, 2021
Level 1
Level 2
Level 3
Total
Assets(in thousands)
Cash Equivalents$45,265 $1,001 $ $46,266 
Investments
U.S. treasury and agency securities
$ $894,062 $ $894,062 
Corporate notes
 452,672  452,672 
Municipalities 50,236  50,236 
Certificates of deposit
 21,370  21,370 
Commercial paper
 13,222  13,222 
Restricted Investments
U.S. treasury securities
$ $6,523 $ $6,523 
Total Assets$45,265 $1,439,086 $ $1,484,351 


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9.    BENEFITS PAYABLE
Reserves for medical claims expenses are estimated using actuarial assumptions and recorded as a benefits payable liability on the consolidated balance sheet. The assumptions for the estimates and for establishing the resulting liability are reviewed, and any adjustments to reserves are reflected in the consolidated statement of operations in the period in which the estimates are updated.
The following table provides a rollforward of the Company’s beginning and ending benefits payable and claims adjustment expenses ("CAE") payable balances for the three months ended March 31, 2022 and 2021:

As of March 31, 2022
Benefits PayableUnallocated Claims
Adjustment Expense
Total
(in thousands)
Benefits payable, beginning of the period$513,582 $9,101 $522,683 
Less: Reinsurance recoverable159,180 — 159,180 
Benefits payable, beginning of the period, net$354,402 $9,101 $363,503 
Claims incurred and CAE
Current year$751,347 $42,018 $793,365