Oscar Health : Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

About this update from Oscar Health, Inc.

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: Page Overview 25 Recent Developments, Trends and Other Key Factors Impacting Performance 26 Critical Accounting Policies and Estimates 30 Components of O ur Results of Operations 30 Results of Operations 32 Liquidity and Capital Resources 34 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 better choice, deeper engagement, and connection to high-value clinical care, earning us the trust of approximately 3.2 million effectuated members ("members") as of March 31, 2026, which represents an approximately 56% increase compared to March 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. 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" , for further discussion regarding our members. The Company also wholly owns three businesses operating in the individual market (collectively, the "Marketplace Subsidiaries"): Lucie, Inc. (formerly known as INSXCloud, Inc.), a technology 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 and Medicare 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. 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 from Operations Earnings from operations is the Company's total revenue less total operating expenses. We believe earnings from operations is an important metric for assessing operating performance. Net Income Attributable to Oscar Health, Inc. Net income attributable to Oscar Health, Inc. is net earnings allocated to the Company after net income 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 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, 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"). • 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". 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. 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 the stayed provisions were not in effect during the 2026 OEP, and it is unclear at this time whether the stay will be lifted during 2026. Provisions of the Program Integrity Rules unaffected by the stay became effective on August 25, 2025. On February 11, 2026, the U.S. Department of Health and Human Services ("HHS") published the proposed Notice of Benefit and Payment Parameters ("NBPP") for policy year 2027. The NBPP, which has not been made final as of the date of this filing, reintroduces updated versions of certain of the stayed provisions of the Program Integrity Rules, to be effective beginning in policy year 2027. For example, CMS has reintroduced 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 removing the option for Health Insurance Marketplaces to accept income attestations from individuals when I.R.S. tax data is unavailable for the household. Furthermore, beginning in policy year 2027 for Health Insurance Marketplaces operated by the federal government and 2028 for Health Insurance Marketplaces operated by individual states, the marketplaces will be required 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 the APTCs. We expect these provisions, if enacted, to impact enrollment processes and APTC eligibility during the 2027, as well as future, OEPs. • We expect that the expiration of the eAPTCs, and the implementation of the Program Integrity Rules and the OBBBA 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 on Form 10-K for the year ended December 31, 2025. 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. For example, on April 2, 2026, the Trump administration issued a proclamation under Section 232 of the Trade Expansion Act imposing 100% tariffs on patented pharmaceuticals and associated pharmaceutical ingredients, imported into the United States, which take effect on July 31, 2026 unless manufacturers agree to specific government drug pricing deals or commit to shifting production and research and development of patented pharmaceuticals and pharmaceutical ingredients domestically. While this action may pressure drug manufacturers to reduce list prices, there could also be a corresponding, or even disproportionate, decrease in the pharmaceutical rebates that we negotiate and typically receive. Since the expectation of these rebates is factored into our premium pricing strategy, a reduction in rebates that outpaces any decline in underlying drug costs could exert financial pressure, potentially leading to an adverse impact on our earnings from operations and an increase in our MLR. Beyond the direct drug pricing mechanism, the imposition of tariffs, coupled with the uncertainty surrounding their implementation and scope, could introduce volatility across our medical cost structure. Potential broad market impacts 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 expenses, which in turn could adversely affect our results of operations and financial position. For additional details, see Part I, Item 1A. "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-Risks Related to the Regulatory Framework That Governs Us-Changes in laws, regulations or rules relating to taxes or tariffs could adversely affect us" in our Annual Report on Form 10-K for the year ended December 31, 2025. Members Our membership is measured as of a particular point in time. Membership may vary throughout the year due to disenrollments, SEP, and other market dynamics that are in effect. Member disenrollments typically result from voluntary termination by members, non-payment of premiums beyond the member's grace period, or removal by CMS for failure to meet program integrity requirements or in accordance with fraud, waste and abuse laws and regulations. In accordance with federal regulations, members receiving APTC subsidies are entitled to a 90-day grace period for the non-payment of premiums. For all other member enrollees, the grace period is typically 30 days, subject to specific state requirements. Market dynamics may include but are not limited to enhancements, extensions, reductions or eliminations of APTCs; other legislative or regulatory actions, such as recent Congressional and CMS initiatives to improve the integrity in the ACA eligibility and enrollment process and pre-enrollment verification procedures; Medicaid redeterminations; or other factors that may cause the overall market to grow or decline. Risk Adjustment The risk adjustment programs in the markets we serve are administered federally by CMS and are designed to mitigate the potential impact of adverse selection and provide stability for Health Insurance Entities. Under these programs, each plan is assigned a risk score based upon demographic information and current year claims information related to its members. The risk score is used to adjust plan revenue to reflect the relative risk of the plan's enrolled population. We reevaluate our risk adjustment transfer estimates as new information and market data becomes available, until we receive the final reporting from CMS in later periods, up to twelve months in arrears. The Company records a receivable or payable as an adjustment to its premium revenues to reflect the year-to-date impact of the risk adjustment based on its best estimate. For the three months ended March 31, 2026, risk adjustment transfer payables were approximately 24% of direct policy premium revenue, up 13% compared to the same period in 2025. The three months ended March 31, 2026, reflected lower claims per member with an assumption of higher offsetting risk adjustment payables, as compared to the three months ended March 31, 2025. Our risk transfer estimates are subject to a high degree of estimation and variability, and are affected by the relative risk of our members, and in the case of the ACA, that of other insurers. The data we rely upon to calculate these estimates includes data received from independent third parties. In addition, the data may be incomplete, can vary considerably from period to period, requires considerable judgment in interpretation, lacks context, and provides limited insight. Moreover, our risk transfer estimates are subject to change due to factors outside of our control, such as changes in legislation, regulations, regulatory enforcement, enrollment in government health plans, inflation, market size, market morbidity, the actions of our competitors, and other uncertainties. There is a higher degree of uncertainty associated with estimates of risk adjustment transfers earlier in the policy year or, in the case of SEP driven enrollment, throughout the policy year, resulting from the fact that risk scores are based on lagged claim data. There is additional uncertainty for both markets and blocks of business that experience outsized growth, compounded by the lack of credible experience data on the newly enrolling population, including SEP driven enrollees and new members moving from one government program to another. Furthermore, there is also uncertainty associated with changes in other carriers' operations, which may impact the ultimate degree of market-level risk. Actual risk adjustment calculations and transfers have in the past materially differed, and could materially differ in the future, from our assumptions. Claims Incurred Our medical expenses are impacted by unit costs and utilization, as well as seasonal effects on medical costs, as members pay their contractual claims portion of claims responsibility, meeting their deductibles and out-of-pocket maximums over the course of the policy year, which shift more costs to us in the second half of the year as we pay a higher proportion of covered claims costs. Our medical expenses are also impacted by the number of days and holidays in a given period. Our medical and pharmacy costs can also exhibit seasonality depending on selection effects or changes in the risk profile of our membership and the proportion of our membership that is new in the calendar year. The emergence of medical and pharmacy claims is influenced by the aforementioned drivers, and further mix shifts may continue to alter claims incurred patterns in future periods. Seasonality Our business is generally affected by the seasonal patterns of our member enrollment, medical expenses, and health plan mix shift and product design. SEP or other market dynamics that drive enrollment and/or mix changes throughout the year may impact the per member levels of premiums, claims, and/or risk adjustment transfers. Claims utilization and risk adjustment seasonality may be affected by new member enrollment levels and plan mix in 2026, as newer members tend to take time to engage with their benefits, and the shift to higher deductible plans could concentrate a higher portion of total costs to the second half of the year. Reinsurance We believe our reinsurance agreements help us achieve important goals for our business, including risk management and capital efficiency. Our reinsurance agreements are contracted under two different types of arrangements: quota share reinsurance contracts and excess of loss ("XOL") reinsurance contracts. In quota share reinsurance, the reinsurer agrees to assume a specified percentage of the ceding company's losses in exchange for a corresponding percentage of premiums. In XOL reinsurance, the reinsurer agrees to assume all or a portion of the ceding company's losses in excess of a specified amount. Under XOL reinsurance, the premium payable to the reinsurer is negotiated by the parties based on losses on an individual member in a given calendar year and their assessment of the amount of risk being ceded to the reinsurer. In the case of federal and state-run reinsurance programs, no reinsurance premiums are paid. The reinsurance agreements do not relieve us of our primary medical claims incurred obligations. Refer to "Note 10 - Reinsurance" included elsewhere in this Quarterly Report on Form 10-Q for a description of the accounting methods used to record our quota share reinsurance arrangements. Critical Accounting Policies and Estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. A summary of the Company's significant accounting policies is included in "Note 2 - Summary of Significant Accounting Policies," in our Annual Report on Form 10-K for the year ended December 31, 2025. Certain of our accounting policies are considered critical, as these policies require significant, difficult, or complex judgments by management, often requiring the use of estimates about the effects of matters that are inherently uncertain. As of March 31, 2026, there were no significant changes to our critical accounting estimates from what was reported in our Annual Report on Form 10-K for the year ended December 31, 2025. Components of Our Results of Operations Premium Premium revenue includes premium subsidies received from the federal government, policy premiums collected directly from our members, and assumed policy premiums earned as part of the reinsurance arrangement under the Cigna+Oscar Small Group plan previously offered, net of risk adjustment transfers and ceded premium from reinsurance contracts accounted for under reinsurance accounting. The Company receives a fixed premium per member per month and recognizes premium revenue during the period in which it is obligated to provide services to its members. For direct policy premiums, revenue is recognized based on membership and eligibility criteria provided by CMS and is subject to monthly retroactive adjustment. Premium revenue is recorded net of adjustment for premium expected to be returned to CMS as a result of expected member disenrollments. These adjustments typically result from non-payment of premiums or the removal of members by CMS in connection with program integrity requirements and fraud, waste and abuse laws and regulations. The Company did not renew the Cigna+Oscar Small Group arrangement after the expiration of the initial term on December 31, 2024. Investment Income Investment income includes investment income, interest earned, and gains (losses) on our investment portfolio. Other Revenues Other revenues include revenue earned through our Marketplace Subsidiaries, fees for services performed via the +Oscar platform, revenue sharing from virtual credit card rebates, and sublease income. Medical Medical expense consists of both paid and unpaid medical expenses incurred to provide medical services and products to our members. Medical claims include fee-for-service claims, pharmacy benefits, capitation payments to providers, disputed provider claims, and various other medical-related costs. Under fee-for-service claims arrangements with providers, we retain the financial responsibility for medical care provided and incur costs based on actual utilization of hospital and physician services. Medical claims are recognized in the period healthcare services are provided. Unpaid medical expenses include claims reported and in the process of being settled, but that have not yet been paid, as well as healthcare costs incurred but not yet reported to us, which are collectively referred to as benefits payable or claim reserves. The development of the claim reserve estimate is based on actuarial methodologies that consider underlying claim payment patterns, medical cost inflation, historical developments, such as claim inventory levels and claim receipt patterns, and other relevant factors. The methods for making such estimates and for establishing the resulting liability are continuously reviewed and any adjustments are reflected in the period determined. Medical expense also reflects the net impact of our ceded reinsurance claims from reinsurance contracts accounted for under reinsurance accounting. Selling, General, and Administrative Expenses Selling, general, and administrative expenses primarily include distribution and servicing costs, premium taxes, exchange fees, other taxes and fees, employee-related expenses, costs of software and hardware, stock-based compensation, the impact of quota share reinsurance, and other administrative costs. Other Expenses (Income) Other expenses (income) consists primarily of miscellaneous expenses or income that are not core to our operations, including profit sharing arrangements with our co-branded health plans and changes in the fair value of financial instruments. Income Tax Expense (Benefit) Income tax expense (benefit) consists of changes to our current and deferred federal and state tax assets and liabilities. Income taxes are recorded as deferred tax assets and deferred tax liabilities based on differences between the book and tax bases of assets and liabilities. Our deferred tax assets and liabilities are calculated by applying the current tax rates and laws to taxable years in which such differences are expected to reverse. Net income (loss) Attributable to Noncontrolling Interests Net income (loss) attributable to noncontrolling interests represents the share of the Company's earnings allocated to the Company's joint venture partner. Results of Operations The following table sets forth our results of operations for the periods indicated: Three Months Ended March 31, (in thousands, except percentages) 2026 2025 Revenue Premium $ 4,580,862 $ 2,995,821 Investment income 60,614 46,112 Other revenues 5,718 4,330 Total revenue 4,647,194 3,046,263 Operating Expenses Medical 3,229,857 2,259,651 Selling, general, and administrative 706,234 482,759 Depreciation and amortization 7,018 6,730 Total operating expenses 3,943,109 2,749,140 Earnings from operations 704,085 297,123 Interest expense 5,383 5,994 Other expenses (income) (71) 2,918 Earnings before income taxes 698,773 288,211 Income tax expense 19,750 12,705 Net income 679,023 275,506 Less: Net income attributable to noncontrolling interests 27 235 Net income attributable to Oscar Health, Inc. $ 678,996 $ 275,271 MLR 70.5 % 75.4 % SG&A expense ratio 15.2 % 15.8 % Premium Premium revenue increased $1,585.0 million, or 53% , for the three months ended March 31, 2026, compared to the same period in 2025. This increase was driven by higher membership and premium rate increases, partially offset by an increase in the net risk adjustment transfer accrual. As of March 31, 2026, membership increased by 1.1 million, or 56% compared to March 31, 2025, primarily driven by above market growth during the 2026 OEP. The following table summarizes the Company's membership by offering: As of March 31, Membership by Offering 2026 2025 Individual and Small Group (1) 3,174,489 2,021,484 Cigna+Oscar (2) - 17,983 Total Members (3) 3,174,489 2,039,467 (1) 2025 membership includes small group members. The Company no longer offers small group plans effective December 15, 2024. (2) Represents total membership for our former co-branded partnership with Cigna. We did not renew the Cigna+Oscar Small Group arrangement after its initial term ended on December 31, 2024. (3) Represents effectuated members. Effectuated members are those who are actively enrolled in one of our plans and whose required premium payments have either been made or are within the payment grace period. A member covered under more than one of our health plans counts as a single member for the purposes of this metric. Investment Income Investment income increased $14.5 million, or 31%, for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher invested assets, offset by lower yield. Medical Expenses and MLR Medical expenses increased $970.2 million, or 43%, for the three months ended March 31, 2026, compared to the same period in 2025. This increase was primarily due to increased membership, partially offset by modestly lower medical cost trend. MLR decreased for the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily due to our disciplined pricing strategy, claims and risk adjustment seasonality from metal and new member mix, and favorable prior period reserve development. Three Months Ended March 31, (in thousands, except percentages) 2026 2025 Net claims before ceded quota share reinsurance (A) $ 3,229,857 $ 2,259,651 Net premiums before ceded quota share reinsurance (B) $ 4,580,862 $ 2,995,821 Medical Loss Ratio (A divided by B) 70.5 % 75.4 % Selling, General, and Administrative Expenses and SG&A Expense Ratio Selling, general, and administrative expenses increased $223.5 million, or 46%, for the three months ended March 31, 2026, compared to the same period in 2025. This increase was driven by higher membership year over year, resulting in higher volume-driven costs such as taxes and fees and broker commissions. The SG&A expense ratio decreased 60 basis points to 15.2% for the three months ended March 31, 2026, compared to 15.8% for the same period in 2025. The decrease was primarily due to greater fixed cost leverage and disciplined cost management, partially offset by the impact of higher risk adjustment as a percentage of premium. Liquidity and Capital Resources Overview We maintain liquidity at two levels of our corporate structure, through our health insurance and Health Maintenance Organization subsidiaries (collectively, "Health Insurance Subsidiaries") and through our parent company, Oscar Health, Inc. (on a standalone basis "Parent"), together with subsidiaries excluding our Health Insurance Subsidiaries. The majority of our assets consist of cash and cash equivalents and investments. As of March 31, 2026 and December 31, 2025, total cash and cash equivalents and investments held by our Health Insurance Subsidiaries was $7.8 billion and $5.1 billion, respectively, of which $19.1 million and $18.3 million, respectively, was on deposit with regulators as required for statutory licensing purposes. These amounts are classified as restricted deposits on the balance sheets. As of March 31, 2026 and December 31, 2025, total cash and cash equivalents and investments held by our entities other than the Health Insurance Subsidiaries were $279.2 million and $414.2 million, respectively, of which $9.6 million and $14.7 million was restricted as of March 31, 2026 and December 31, 2025, respectively. Our Health Insurance Subsidiaries' states of domicile have statutory minimum capital requirements that are intended to measure capital adequacy, taking into account the risk characteristics of an insurer's investments and products. The combined statutory capital and surplus of our Health Insurance Subsidiaries was estimated to be approximately $1.7 billion and $1.0 billion as of March 31, 2026 and December 31, 2025, respectively, which was in compliance with and in excess of the minimum capital requirements for each period. The Health Insurance Subsidiaries in aggregate exceeded the minimum statutory risk-based capital ("RBC") requirement by $356 million as of December 31, 2025 and are estimated to have approximately $809 million of excess capital as of March 31, 2026. The Health Insurance Subsidiaries may be subject to additional capital and surplus requirements in the future, as a result of factors such as increasing membership and medical costs or changes in risk adjustment transfer estimates, which the Parent would be required to fund to the extent the applicable Health Insurance Subsidiary did not have excess capital to cover the requirement. In such circumstances we may need to incur additional indebtedness, sell capital stock, or access other sources of funding in order to fund such requirements. During periods of increased volatility, adverse securities and credit markets, including those due to rising interest rates, may exert downward pressure on the availability of liquidity and credit capacity for certain issuers, and any such funding may not be available on favorable terms, or at all. As certain of our Health Insurance Subsidiaries have become profitable and to the extent their levels of statutory capital and surplus exceed applicable minimum regulatory requirements, we may make periodic requests for dividends and distributions from our subsidiaries to fund our operations or seek to enter into transactions or structures that enable us to efficiently deploy this excess capital, which may or may not require approval by our regulators. During the three months ended March 31, 2026, the Parent received approximately $300.0 million in capital distributions from the Health Insurance Subsidiaries. As noted below, these funds were subsequently used to fund a new insurance subsidiary, Oscar Health Maintenance Organization of Florida, Inc. During the three months ended March 31, 2025, the Health Insurance Subsidiaries did not make any loan repayments or capital distributions to the Parent. During the three months ended March 31, 2026, Parent made $425.5 million of capital contributions to the Health Insurance Subsidiaries, including $300 million in funding for a new insurance subsidiary, Oscar Health Maintenance Organization of Florida, Inc. During the three months ended March 31, 2025, Parent made no capital contributions to the Health Insurance Subsidiaries. Our Health Insurance Subsidiaries also utilize quota share reinsurance arrangements to reduce our minimum capital and surplus requirements, which are designed to enable us to efficiently deploy capital to fund our growth. We estimate that had we not had any quota share reinsurance arrangements in place, the Health Insurance Subsidiaries would have been required to hold approximately $1,081.7 million and $683.1 million of additional capital as of March 31, 2026 and December 31, 2025, respectively, which the Parent would have been required to fund to the extent the applicable Health Insurance Subsidiary did not have excess capital to cover the requirement. Short-Term Cash Requirements The Company's cash requirements within the next twelve months include benefits payable, risk adjustment transfer payables, current lease liabilities, interest payable on debt, other current liabilities, and other obligations. We expect the cash required to meet these obligations to be primarily funded by cash available for general corporate use, cash flows from current operations, and/or the realization of current assets, such as accounts receivable. Based on our current forecast, we believe the Company's cash, cash equivalents, and investments, not including restricted cash, will be sufficient to fund our operating requirements for at least the next twelve months. Long-Term Cash Requirements Our long-term cash requirements under our various contractual obligations and commitments include operating leases. We expect the cash required to meet our long-term obligations to be primarily generated through future cash flows from operations. See "Note 13 - Leases" in our Annual Report on Form 10-K for the year ended December 31, 2025 for further detail of our obligations and the timing of expected future payments. 2031 Convertible Senior Notes In February 2022, the Company issued $305.0 million in aggregate principal amount of convertible senior notes due 2031 (the "2031 Notes") in a private placement to funds affiliated with or advised by Dragoneer Investment Group, LLC, Thrive Capital, LionTree Investment Management, LLC, and Tenere Capital LLC (the "Initial Purchasers"). In connection with the sale and issuance of the 2031 Notes, on January 27, 2022, we entered into an investment agreement with the Initial Purchasers (the "Investment Agreement") and on February 3, 2022, we entered into an indenture with U.S. Bank, as Trustee (the "2031 Indenture"). The 2031 Notes bear interest at a rate of 7.25% per annum, payable in cash, semi-annually in arrears on June 30 and December 31 of each year, commencing on June 30, 2022. The 2031 Notes will mature on December 31, 2031, subject to earlier repurchase, redemption, or conversion, as further discussed in " Note 9 - Debt, " in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. As of March 31, 2026, $35 million aggregate principal amount of the 2031 Notes remained outstanding. For more information on our 2031 Notes, including details relating to repurchase, redemption and conversions of the 2031 Notes, see "Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-2031 Convertible Senior Notes" and "Note 9 - Debt" to our Consolidated Financial Statements, each in our Annual Report on Form 10-K for the year ended December 31, 2025, and, "Note 9 - Debt" to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q. 2030 Convertible Senior Notes On September 18, 2025, the Company issued $410.0 million aggregate principal amount of convertible senior notes due 2030 (the "2030 Notes"). The 2030 Notes were issued pursuant to an indenture (the "2030 Indenture"), dated as of September 18, 2025, between the Company and U.S. Bank Trust Company, National Association, as trustee. The 2030 Notes will accrue interest at a rate of 2.25% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2026. The 2030 Notes will mature on September 1, 2030, unless they are earlier repurchased, redeemed, or converted, as further discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. On September 15, 2025, in connection with the pricing of the offering of 2030 Notes, the Company entered into privately negotiated capped call transactions (the "Base Capped Call Transactions") with certain of the 2030 Notes initial purchasers or their affiliates and certain other financial institutions (the "Option Counterparties"). In addition, on September 16, 2025, in connection with the initial purchasers' exercise of their option to purchase additional 2030 Notes, the Company entered into additional capped call transactions (the "Additional Capped Call Transactions," and, together with the Base Capped Call Transactions, (the "Capped Call Transactions") with each of the Option Counterparties. The Capped Call Transactions cover the aggregate number of shares of the Company's Class A common stock that initially underlie the 2030 Notes (subject to customary anti-dilution adjustments), and are expected to reduce potential dilution to the Company's Class A common stock upon any conversion of 2030 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2030 Notes, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. As discussed above under "-2031 Convertible Senior Notes" , the 2030 Notes were originally subordinated to the 2031 Notes. In connection with the Exchange Agreement and the related transactions, as of November 5, 2025, the 2030 Notes ceased to be subordinated to the 2031 Notes. For more information on our 2030 Notes, including details relating to repurchase, redemption and conversions of the 2030 Notes, and the Capped Call Transactions, see "Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-2030 Convertible Senior Notes" and "Note 9 - Debt" to our Consolidated Financial Statements, each in our Annual Report on Form 10-K for the year ended December 31, 2025, and " Note 9 - Debt " to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q. Revolving Credit Facility On February 6, 2026, we entered into a $475.0 million secured three-year revolving credit facility (the "2026 Revolving Credit Facility"), pursuant to a Credit Agreement (the "2026 Credit Agreement") by and among the Company, certain subsidiaries of the Company, as subsidiary guarantors, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto. For more information, see " Note 9 - Debt " to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q. Investments We generally invest our cash in U.S. Treasury instruments, federal and state agency securities, investment grade corporate bonds, and asset backed securities to improve our overall investment return. These investments are purchased pursuant to board of directors ("Board") approved investment policies that conform to applicable state laws and regulations. Our investment policies are designed to provide liquidity, preserve capital, and optimize the total return on invested assets. These policies also align with the constraints of state regulations governing the types of investments our subsidiaries can hold. These investment policies require that our investments in U.S. corporate bonds and asset backed securities have final maturities of no more than five years from the date of issuance and U.S. federal and state government obligations have final maturities of no more than seven years from the settlement date. Professional portfolio managers operating under documented guidelines manage our investments and a portion of our cash equivalents. Our portfolio managers are directed to obtain our prior approval before selling investments in a loss position. Net investment income on a consolidated basis was $60.6 million and $46.1 million for the three months ended March 31, 2026 and 2025, respectively. Net investment income for our Health Insurance Subsidiaries was $57.2 million and $44.4 million for the three months ended March 31, 2026 and March 31, 2025, respectively. Our restricted investments consist primarily of cash and cash equivalents and U.S. Treasury securities; we have the ability to hold such restricted investments until maturity. The Company maintains cash and cash equivalents and investments on deposit or pledged to various state agencies as a condition for licensure. We classify our restricted deposits as long-term given the requirement to maintain such assets on deposit with regulators. Summary of Cash Flows Our cash flows used in operations may differ substantially from our net income (loss) due to non-cash charges or due to changes in balance sheet accounts. The timing of our cash flows from operating activities can also vary among periods due to the timing of payments made or received. Some of our payments and receipts, including loss settlements, rebates from our pharmacy benefit manager, risk adjustment transfers, and subsequent reinsurance receipts, can be significant. Therefore, their timing can influence cash flows from operating activities in any given period. The potential for a large claim under an insurance or reinsurance contract means that our Health Insurance Subsidiaries may need to make substantial payments within relatively short periods of time, which would have a negative impact on our operating cash flows. Our primary operating cash flow sources are premiums and investment income. Our primary operating cash flow uses are payments for claims, risk adjustment transfers, and operating expenses, including interest expense. For the three months ended March 31, 2026, net cash provided by operating activities was $2.6 billion as compared with $0.9 billion for the same period in 2025. The increase was primarily due to higher premiums received, partially offset by higher claim disbursements. Cash flows from investing activities primarily include the purchase and disposition of financial instruments. For the three months ended March 31, 2026, net cash used in investing activities was $590.3 million as compared to net cash used in investing activities of $174.2 million for the same period in 2025. This increase was primarily driven by higher investment purchases. Cash flows from financing activities may include proceeds from the issuance of debt securities, proceeds from stock option exercises, and tax payments related to the net settlement of share-based awards. For the three months ended March 31, 2026, net cash used in financing activities was $3.6 million as compared to net cash provided of $4.9 million for the same period in 2025. The change was primarily due to new debt issuance costs and lower proceeds from stock option exercises. Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure due to potential changes in interest rates and/or inflation and the resulting impact on investment income and interest expense. We do not hold financial instruments for trading purposes. Interest Rate Risk We are subject to interest rate risk in connection with the fair value of our investment portfolio, which consists of U.S. Treasury and agency securities, corporate notes, asset-backed securities, and certificates of deposit. Our primary market risk exposure is driven by changes to prime rate based interest rates. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors, and other factors beyond our control. Assuming a hypothetical and immediate 1% increase in interest rates on March 31, 2026, the fair value of our investments would decrease by approximately $39 million. Any declines in interest rates over time would reduce our investment income.

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