What happened
Shares of Oscar Health (OSCR 0.74%) were skyrocketing 23.1% higher as of 11:14 a.m. ET on Friday. The big gain came after the company announced its 2022 full-year and fourth-quarter results following the market close on Thursday.
Oscar Health reported total revenue in the fourth quarter of $995.1 million. The result was roughly double the revenue generated in the prior-year period but fell short of the consensus revenue estimate of $1.18 billion. The technology-focused health insurer posted a Q4 net loss of $226.6 million, or $1.05 per share. This result was better than the net loss of $1.16 expected by analysts.
In addition, Oscar Health provided an outlook for full-year 2023. The company expects direct and assigned policy premiums of between $6.4 billion and $6.6 billion. It projects an InsuranceCo combined ratio (the sum of its medical loss ratio and administrative expense ratio) at or less than 100%. Oscar also thinks that it will deliver a "significantly improved" adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of between $175 million and $75 million.
So what
Investors are especially encouraged that Oscar Health appears to be moving in the right direction toward profitability. The better-than-expected net loss in Q4 and the improved adjusted EBITDA guidance for 2023 are positive signs.
It's also good news, though, that Oscar continues to grow its membership robustly. The company's total membership at the end of 2022 was over 1.15 million, up nearly 93% year over year.
Now what
Perhaps the most important thing to watch with Oscar Health is its combined ratio. The company's medical loss ratio is declining significantly, indicating that the gap between premiums received and members' medical costs is widening. Oscar's administrative expense ratio is also coming down, reflecting improved productivity.
