Oscar Health, Inc. (OSCR)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Annual Report on Form 10-K for the year ended December 31, 2025 that was filed with the SEC on February 13, 2026. Unless the context otherwise requires, references in this MD&A to “we,” “us,” “our,” “Oscar,” “Oscar Health, Inc,” and the “Company” mean the business and operations of Oscar Health, Inc. and its consolidated subsidiaries.

Index to this MD&A

Management's discussion and analysis of financial condition and results of operations is comprised of the following sections:

Overview

Oscar is a leading healthcare technology company built around a full stack technology platform and a relentless focus on member experience. We have been challenging the status quo in the healthcare system since our founding in 2012, and are dedicated to making a healthier life accessible and affordable for all. Oscar serves individuals, families, and employees through the Patient Protection and Affordable Care Act (“ACA”).

Our technology drives better choice, deeper engagement, and connection to high-value clinical care for our members. We serve approximately 3.0 million effectuated members (“members”) as of June 30, 2026, which represents an approximately 46% increase compared to June 30, 2025. Effectuated members are those who are actively enrolled in one of the Company’s plans and whose required premium payments have either been made or are within the payment grace period. Refer to “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations-Recent Developments, Trends and Other Key Factors Impacting Performance-Members” and “Note 3 - Revenue Recognition” for further discussion.

The Company also wholly owns three businesses operating in the individual market (collectively, the “Marketplace Subsidiaries”): Lucie, Inc. (formerly known as INSXCloud, Inc.), a cloud-based enrollment platform for consumers, employers and brokers; Trove Group Inc. (formerly known as IHC Specialty Benefits, Inc.), an insurance agency that sells individual medical and supplemental health products, and HealthInsurance.org, LLC, a lead generation website providing educational content to help consumers navigate health insurance as well as the ACA, Medicare, and Medicaid marketplaces.

We regularly review our total revenue, medical loss ratio (“MLR”), selling, general, and administrative expense ratio (“SG&A expense ratio”), earnings from operations, and net income attributable to Oscar Health, Inc. to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions.

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Total Revenue

Total revenue includes premium revenue (net of risk adjustment transfers), investment income, and other revenues. We believe total revenue is an important metric to assess the growth of our business, as well as the earnings potential of our investment portfolio.

MLR

MLR is a metric used to calculate medical expenses as a percentage of net premiums before ceded quota share reinsurance. The impact of the federal risk adjustment program is included in the denominator of our MLR. We believe MLR is an important metric to demonstrate the ratio of our costs to pay for the healthcare of our members to the net premium before ceded quota share reinsurance.

SG&A Expense Ratio

The SG&A expense ratio reflects the Company’s selling, general, and administrative expenses, as a percentage of total revenue (net of risk adjustment transfers). We believe the SG&A expense ratio is useful to evaluate our ability to manage our overall selling, general, and administrative cost base.

Earnings (Loss) from Operations

Earnings (loss) from operations is the Company's total revenue less total operating expenses. We believe earnings (loss) from operations is an important metric for assessing operating performance.

Net Income (Loss) Attributable to Oscar Health, Inc.

Net income (loss) attributable to Oscar Health, Inc. is net earnings (loss) allocated to the Company after net income (loss) attributable to noncontrolling interests. It is a key indicator of the Company’s profitability and operational efficiency, allowing management to evaluate performance and make informed decisions on strategic planning, cost management, and resource allocation.

Recent Developments, Trends, and Other Key Factors Impacting Performance

Regulatory Update

Our operations are subject to comprehensive and detailed federal, state, and local laws and regulations, which continue to rapidly evolve and change. The following regulatory developments have impacted our operations during the periods presented in the financial statements contained elsewhere in this Quarterly Report on Form 10-Q, or are expected to impact our results of operations in future periods.

The ACA

•The enhanced Advanced Premium Tax Credits (“eAPTCs”) that were in place from 2021 until the end of 2025 contributed to increases in the population of the health insurance marketplaces established by the ACA and operated by the federal government, as well as other marketplaces operated by individual states (collectively, “Health Insurance Marketplaces”) and, as a result, our membership. These eAPTCs expired at the end of 2025, which we believe caused coverage to become unaffordable for some individuals, reducing both the overall participation in the Health Insurance Marketplaces and the Company’s membership since the end of the 2026 open enrollment period (“OEP”).

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•The current presidential administration and the Centers for Medicare & Medicaid Services (“CMS”) are increasingly focused on improving integrity in the Health Insurance Marketplaces’ eligibility and enrollment process, and we expect this focus to continue. For example, on July 4, 2025, the President signed into law the One Big Beautiful Bill Act (the “OBBBA”) which, among other things, requires additional verification procedures to confirm member eligibility for Advanced Premium Tax Credits (“APTCs”), and limits the eligibility of APTCs for certain populations. Similarly, on June 25, 2025, CMS issued the “Program Integrity Rules”, which created stricter eligibility verification requirements for APTCs and processes related to ACA plan enrollment, such as shorter OEPs and the suspension of certain special enrollment periods (“SEPs”). Certain provisions of the Program Integrity Rules were challenged by plaintiffs in the federal district court in Maryland in City of Columbus vs. Kennedy (“Columbus I”). On August 22, 2025, the court issued a nationwide stay on several of the challenged provisions, and these provisions were not in effect during the 2026 OEP. On June 12, 2026, the court issued a final ruling nullifying the stayed provisions as well as certain other provisions of the Program Integrity Rules. Provisions of the Program Integrity Rules unaffected by the stay and nullification became effective on August 25, 2025.

•The nullification of certain provisions of the Program Integrity Rules (subject to any appeal, further rulemaking, or additional guidance from CMS or applicable Health Insurance Marketplaces) will result in certain of the pre-Program Integrity Rules remaining in place for plan year 2027. As a result, the OEP for 2027 will effectively revert back to the historical period of November 1st to January 15th. In addition, certain of the nullified provisions were reintroduced in the Notice of Benefit and Payment Parameters (“NBPP”) for plan year 2027, and are again being challenged by plaintiffs in a new lawsuit (“Columbus II”, discussed below).

•On May 15, 2026, the U.S. Department of Health and Human Services (“HHS”) finalized the NBPP for plan year 2027 (the “2027 NBPP”). The 2027 NBPP reintroduces updated versions of certain of the provisions of the Program Integrity Rules that were nullified in Columbus I. For example, the 2027 NBPP includes stricter income verification rules requiring individuals to submit documents to verify their income when data sources indicate household income is below 100% of the Federal Poverty Line (“FPL”) and removes the option for Health Insurance Marketplaces to accept income attestations from individuals when I.R.S. tax data is unavailable for the household (“Income Verification Rules”). Reintroduced provisions also require Health Insurance Marketplaces to deem a tax filer ineligible for APTCs if the tax filer received APTCs in a prior year but failed to file a federal income tax return to reconcile their eligibility for such APTCs (“1-year FTR Rule”). On June 3, 2026, plaintiffs challenged these, as well as other, provisions of the 2027 NBPP in City of Columbus vs. Kennedy (i.e., “Columbus II”). On July 16, 2026, the court issued a nationwide stay on several provisions of the 2027 NBPP, including the Income Verification Rules and the 1-year FTR Rule (collectively the “Stayed Provisions”), pending a final ruling on the merits of the case. Provisions of the 2027 NBPP unaffected by the stay became effective on July 20, 2026. As a result of the stay, many of the pre-Program Integrity Rules will remain in place for 2027 OEP, unless there is further court action to lift the stay. If the Stayed Provisions are implemented, we expect these provisions to impact APTC eligibility and ACA enrollment processes beginning with the 2027 OEP.

•In connection with CMS’ ongoing focus on the integrity of the Health Insurance Marketplaces, CMS conducts periodic inquiries to verify member eligibility and ensure compliance with applicable program integrity and fraud, waste, and abuse laws and regulations. These inquiries may result in the removal of members by CMS. The Company’s estimate of premium associated with these inquiries and expected to be refunded to CMS is included in Payables to CMS on the Condensed Consolidated Balance Sheets, as further described in “Note 3 - Revenue Recognition”.

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•We believe that the expiration of the eAPTCs, and the implementation of any program integrity requirements (such as the Program Integrity Rules, the 2027 NBPP, and the OBBBA) and any related regulatory inquiries could continue to negatively impact the size of the Health Insurance Marketplaces and our membership in future years. Any resulting market contraction could negatively impact market morbidity. For more information, see Part I, Item 1, “Business– Government Regulation–Ongoing Requirements and Changes to the ACA”, and Part I, Item 1A. “Risk Factors-Most Material Risks to Us-Our success and ability to grow our business depend in part on retaining and expanding our member base. If we fail to add new members or retain current members, or manage our membership growth appropriately to meet our business objectives, our business, revenue, operating results, and financial condition could be harmed,” and “Risk Factors–Most Material Risks to Us–Failure to accurately estimate our incurred medical expenses or overall market morbidity, or effectively manage our medical costs or related administrative costs could negatively affect our financial position, results of operations, and cash flows” in our Annual Report o

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Item 7. Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations as of December 31, 2025 and 2024 should be read in conjunction with our audited Consolidated Financial Statements and the related notes included elsewhere in this filing. The discussion contains forward-looking statements that involve known and unknown risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A.“Risk Factors” of this Annual Report on Form 10-K. The following discussion and analysis does not include certain items related to the year ended December 31, 2024, including year-to-year comparisons between the year ended December 31, 2024 and the year ended December 31, 2023. For a comparison of our results of operations for the fiscal years ended December 31, 2024 and December 31, 2023, see Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025.

INDEX TO MD&A

Management's discussion and analysis of financial condition and results of operations is comprised of the following sections:

Overview

Oscar is a leading healthcare technology company built around a full stack technology platform and a relentless focus on member experience. We have been challenging the status quo in the healthcare system since our founding in 2012, and are dedicated to making a healthier life accessible and affordable for all. Oscar serves individuals, families, and employees through the Patient Protection and Affordable Care Act (“ACA”). We also offer health technology solutions that power the healthcare industry through +Oscar.

Our technology drives superior experiences, deep engagement, and high-value clinical care, earning us the trust of approximately 2.0 million effectuated members (“members”) as of December 31, 2025. Effectuated members are those who are actively enrolled in one of the Company’s plans and whose required premium payments have either been made or are within the payment grace period.

In 2025, we also acquired early-stage businesses with capabilities to help us power Individual Coverage Health Reimbursement Arrangements (“ICHRA”) and further diversify the Company. These assets include Lucie, Inc., a direct enrollment technology platform; IHC Specialty Benefits, Inc., an individual market brokerage; and Healthinsurance.org, LLC, a consumer education website.

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We regularly review our Total revenue, Medical Loss Ratio (“MLR”), Selling, general, and administrative expense ratio (“SG&A expense ratio”), Earnings (loss) from operations, and Net income (loss) attributable to Oscar Health, Inc. to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions.

Total Revenue

Total revenue includes Premium revenue (net of risk adjustment transfers), Investment income, and Other revenues. We believe Total revenue is an important metric to assess the growth of our business, as well as the earnings potential of our investment portfolio.

MLR

MLR is a metric used to calculate medical expenses as a percentage of net premiums before ceded quota share reinsurance. The impact of the federal risk adjustment program is included in the denominator of our MLR. We believe MLR is an important metric to demonstrate the ratio of our costs to pay for the healthcare of our members to the net premium before ceded quota share reinsurance.

SG&A Expense Ratio

The SG&A expense ratio reflects the Company’s selling, general, and administrative expenses, as a percentage of Total revenue (net of risk adjustment transfers). We believe the SG&A expense ratio is useful to evaluate our ability to manage our overall selling, general, and administrative cost base.

Earnings (Loss) from Operations

Earnings (loss) from operations is the Company's Total revenue less Total operating expenses. We believe Earnings (loss) from operations is an important primary metric for assessing operating performance.

Net Income (Loss) Attributable to Oscar Health, Inc.

Net income (loss) attributable to Oscar Health, Inc. is Net earnings (loss) allocated to the Company after net income (loss) attributable to noncontrolling interests. It is a key indicator of the Company’s profitability and operational efficiency, allowing management to evaluate performance and make informed decisions on strategic planning, cost management, and resource allocation.

Recent Developments, Trends and Other Key Factors Impacting Performance

Regulatory Update

Our operations are subject to comprehensive and detailed federal, state, and local laws and regulations, which continue to rapidly evolve and change. During the periods presented in the financial statements contained elsewhere in this Annual Report on Form 10-K, certain regulatory developments have impacted, and are expected to continue to impact, our results of operations.

The ACA

•The enhanced Advanced Premium Tax Credits (“eAPTCs”) that were previously in place since 2021 contributed to increases in the population of the health insurance marketplaces established by the ACA and operated by the federal government, as well as other marketplaces operated by individual states (collectively, “Health Insurance Marketplaces”), as well as increases in our membership. These eAPTCs expired at the end of 2025 and if they are not renewed in 2026, coverage could become unaffordable to some individuals and thereby reduce overall participation in the Health Insurance Marketplaces and our future membership.

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•The Centers for Medicare & Medicaid Services (“CMS”) is increasingly focused on improving integrity in the Health Insurance Marketplaces’ eligibility and enrollment process, and we expect this focus to continue. During the second half of 2024, CMS enacted new measures to respond to increases in unauthorized changes in consumer enrollments by agents and brokers and to reduce consumer burdens related to unauthorized enrollments. While these measures are important to prevent unauthorized enrollments, they may also make it more difficult for individuals to complete valid enrollments in new plans, switch from one plan to another, or obtain Advanced Premium Tax Credits (“APTCs”). In addition, on June 25, 2025, CMS issued a rule that created stricter eligibility verification processes for APTCs, as well as other requirements related to ACA plan enrollment, including shorter OEPs and the suspension of certain special enrollment periods (“SEPs”), such rules, the “Program Integrity Rules”. On August 22, 2025, in connection with City of Columbus vs. Kennedy, in which the plaintiffs alleged certain provisions of the Program Integrity Rules are contrary to law, a federal district court in Maryland issued a nationwide stay on several provisions of the Program Integrity Rules pending a final ruling on the merits of the case. The litigation did not conclude before 2026 and CMS confirmed that the stayed provisions were not in effect during the 2026 open enrollment period (“OEP”). Many of the stayed provisions would have otherwise impacted enrollment processes and APTC eligibility during the 2026 OEP. For example, the court stayed the application of a $5 monthly premium to enrollees in $0 premium plans who do not actively reenroll during open enrollment. If the stayed provisions are reinstated in 2026, they are expected to impact enrollment processes and APTC eligibility during the 2027 and other future OEPs. Provisions of the Program Integrity Rules unaffected by the stay became effective on August 25, 2025. Furthermore, on July 4, 2025, the President signed into law the One Big Beautiful Bill Act (the “OBBBA”) which, among other relevant matters, limits the eligibility of APTCs for certain populations, and requires additional verification procedures to confirm member eligibility for APTCs.

•Based on the most recent data from CMS, enrollment in the Health Insurance Marketplaces decreased from the 2025 OEP to the 2026 OEP, which we believe was due to the expiration of the eAPTCs, and the implementation of the Program Integrity Rules and the OBBBA, but such data is preliminary and may be inaccurate or incomplete, and the actual level of enrollment in the Health Insurance Marketplace in 2026 will not be known until later in 2026. We expect that these regulatory and legislative developments could continue to impact the size of the Health Insurance Marketplaces and our membership in future years. Any resulting market contraction could negatively impact market morbidity.

•Medicaid redeterminations began on April 1, 2023 and CMS announced an SEP that began March 31, 2023 and ended November 30, 2024 to facilitate enrollment in the ACA by individuals who lost Medicaid coverage under the redetermination process. Our understanding is that in 2024 most states substantially completed the unwinding-related renewals for beneficiaries enrolled in Medicaid or Children's Health Insurance Program (“CHIP”). We believe these Medicaid redeterminations previously contributed to increases in our membership in 2024; however, we do not believe that we experienced significant growth in our membership from the Medicaid redetermination process in 2025. We believe that members who have enrolled in the ACA through the Medicaid redetermination process have increased the overall morbidity of the Health Insurance Marketplace.

For additional details, see Part I, Item 1, “Business–Government Regulation–Ongoing Requirements and Changes to the ACA”, and Part I, Item 1A. “Risk Factors-Most Material Risks to Us-Our success and ability to grow our business depend in part on retaining and expanding our member base. If we fail to add new members or retain current members, or manage our membership growth appropriately to meet our business objectives, our business, revenue, operating results, and financial condition could be harmed,” and “Risk Factors–Most Material Risks to Us–Failure to accurately estimate our incurred medical expenses or overall market morbidity, or effectively manage our medical costs or related administrative costs could negatively affect our financial position, results of operations, and cash flows” and “Risk Factors–Most Material Risks to Us–Any changes to the ACA and its regulations could materially and adversely affect our business, results of operations, and financial condition” in this Annual Report on Form 10-K.

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Proposed Tariffs

The Trump administration has indicated that new tariffs may be imposed on a variety of products relevant to our business, including certain pharmaceutical products and ingredients and medical devices and supplies imported into the United States. If such tariffs are imposed, the potential impact could include, among other things, higher costs for medical providers and facilities, higher pharmaceutical prices, higher costs of medical devices, and supplies and shortages of certain medicines and medical supplies. Shortages in medicines and supplies may also impact the health of our members, which in turn may result in higher medical costs. The unprecedented nature of these types of tariffs, as well as uncertainty around their implementation, could impact our ability to accurately estimate and effectively manage the impact on our medical expen

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