Oscar Health exiting California's ACA exchange next year
While the plan fell short of Oscar Health's expectations, CEO Bertolini noted that the company did turn a profit in the first quarter.
Photo: Siegfried Layda/Getty Images
Insurtech Oscar Health signaled during an earnings call on Tuesday that it will be exiting California's individual market beginning next year, with CEO Mark Bertolini saying the plan has fallen short of the company's goals.
"We're announcing today that we have decided to pause our participation in the California individual market for planned year 2024 as the plan has not met our internal targets," he said. "We intend to reshape our strategy and product offerings in preparation to re-enter the market in the future."
While the plan fell short of Oscar Health's expectations, Bertolini noted that the company did turn a profit in the first quarter, with a combined ratio of 95% – an improvement of 230 basis points year-over-year.
Revenues in Q1 hit $1.5 billion, far greater than the roughly $973 million in revenue posted in the previous quarter. Company-wide, Oscar posted a $39.7 million net loss, but that was considerably less than the $75.1 million in the prior-year quarter.
Total company adjusted EBITDA of $51 million reflects overall profitability for the quarter, he said.
"While this is a function of seasonality [and] we expect that our adjusted EBITDA results will trend downwards over the course of the year, it is still an important milestone for us," said Bertolini. "Next year, we are targeting for this metric to be profitable for the full calendar year."
With profitability for Q1 now achieved, Oscar Health intends to realize profitability for the full year – which would be a first for the company. A year ago, the focus was on ensuring that operations could handle a sizeable increase in growth; this year, Bertolini said the emphasis will be on advancing technology and other capabilities, and implementing a number of initiatives meant to streamline operational efficiency.
"To achieve total company profitability, we will need to continue to improve the performance and profitability in our insurance business and manage the whole co-spend in line with our profitability targets," said Bertolini.
THE LARGER TREND
Oscar Health said back in November that it would be leaving the Medicare Advantage market, at least for now, to focus on Affordable Care Act plans.
A month later, the company announced it would temporarily stop accepting new members in the state of Florida, a move the company said was based on a strong ACA Open Enrollment performance.
Recently, Oscar Health and Ciox Health announced an expansion of their digital services agreement, which is intended to be a roadmap for how plans can reach new members and contain costs, especially as the public health emergency comes to an end on May 11.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
