Oscar Health, Inc. (NYSE:OSCR) Q4 2022 Earnings Call Transcript

Kevin Fischbeck: Great. Thanks. I just wanted to make sure I understood what you were trying to say about investment income. It sounds like that’s a bigger tailwind than you thought it was going to be. Is that €“ are you saying that that’s part of how you’re getting to breakeven this year? Or like even excluding that you would’ve been comfortable with the breakeven dynamic or is that always part of the calculus, it’s just something you think the Street didn’t catch onto?

Sid Sankaran: Well, I think I’d reiterate a couple of points. As we think about our core underwriting profit, we’re targeting combined ratio less than a 100. So at the core, that’s what we really want to use as the metric to measure the business. We were making a second subtle point is obviously externally analyst investors try and do pure comparisons of ultimately gross margins, net margins and how that compares to peers. Our investment income over the years, given are being a startup has been effectively been de minimis while our competitors have effectively had 3% investment yields. So now the interest rates have in some ways normalized, you’re now going to be able to include investment income in your model for Oscar, similar to what you would use at other competitors.

And we’ve given you a little bit of an indication. We think that’ll be about 3.5% this year in our base case, anywhere from 3% to 4%. And so that’s obviously structurally with the ability to extend duration and look more like other €“ what I would call normal insurance companies, I think that is a great kind of normalizer for us now when we look at our results versus other people in this guidance.

Kevin Fischbeck: All right. Great. And then I guess you guys mentioned a $20 million size for the exchanges over time. That’s a still a pretty big growth rate from where we are this year. But this year membership is flat when the industry grew quite well because of all the actions you mentioned earlier. Are we done with those actions? Should we start to think about you guys growing in line or faster than the industry or to make that transition to the final profitability? Are there still things we should think about that say, yes, you won’t grow quite as fast as the industry for another year or two?

Mario Schlosser: Hey Kevin, so you thought say once we have a long-term goal for growth and we’re not moving away from that. So I mean I think that there is a lot of growth power stored up in the company. That would’ve even come through more in last of enrollment, have you not taken some of the actions we talked about. I think the overall market will have the savings we talked about as well, and I really do think that that’s our long-term growth target would mean €“ we would outgrow the markets and that’s €“ that’ll continue to be our goal. And we are already in the process of thinking through and actually working through and things like service area expansions for next year. So we’ll €“ we’re back in the playbook essentially of figuring out where we can best grow with the best unit costs with the best responsible sustainable margin profile because we’re not going to go back to prior years of margin profiles we can sustain in.