Last week, Oscar Health Inc. (NYSE:OSCR) reported second-quarter revenue of approximately $2.86 billion, compared to $2.2 billion in the same period the previous year, missing the consensus estimate of $2.91 billion.
The sales increase was primarily driven by higher membership, partially offset by an increase in net risk adjustment transfer accrual.
The healthcare technology company reported a loss of 89 cents per share, missing the consensus estimate of 86 cents.
The medical loss ratio was 91.1% for the second quarter of 2025, compared to 79.0% for the same quarter in 2024, primarily driven by an increase in average market morbidity that led to a higher net risk adjustment transfer accrual.
Guidance: Oscar Health reaffirms its fiscal 2025 sales guidance of $12 billion to $12.2 billion, compared to the Wall Street estimate of $11.32 billion.
Also Read: Oscar Health Well-Positioned To Manage Market Reset, Eyes Profitability In 2026
The company expects a 2025 medical loss ratio of 86%-87%.
Piper Sandler notes that the revised CY25 guidance assumes a risk adjustment as a percentage of direct and assumed policy premiums in the mid-teens range, consistent with previous years. Analyst Jessica Tassan says the assumption has been somewhat confounding for investors and Piper.
Piper maintains a Neutral rating for Oscar, lowering the price forecast from $14 to $13, based on an unchanged multiple of lower CY27E adjusted EPS of $.92 (prior $1.06).
While this does represent a year-over-year increase from Piper's estimate of about 8.4% of direct and assumed policy premiums, it matches the risk adjustment guidance given during Oscar Health's fourth-quarter 2024 earnings call.
At that time, the company stated that risk transfers for calendar year 2024 were approximately 14.5% of premiums and were expected to remain similar year over year. For 2025, Oscar initially expected mid-teen percentages, then lowered that outlook to the high single digits after the first-quarter results, before returning to a mid-teen estimate in the second quarter. This shift makes the forecast somewhat uncertain.
Data from the second-quarter 2025 earnings season suggest risk adjustment as a share of premiums could rise for a population with similar health needs as last year. That's because overall healthcare use is running higher than expected, and 2025 premiums may not be enough to fully cover cost trends.
The analyst also has questions about Oscar Health’s anticipated return to profitability in CY26 and the sufficiency of the balance sheet if this assumption does not play out as planned.
Price Action: OSCR stock is down 1.98% at $14.64 at the last check on Thursday.
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