Oscar Health will exit the Covered California marketplace at the end of this year after failing to meet performance metrics in the state, executives announced during its first-quarter earnings call Tuesday.
The insurer plans to exit the state — where it said it had expected to have 35,000 members at the end of this year— after consistently recording medical loss ratios over 100%, executives said.
Newly appointed CEO Mark Bertolini said on the call that Oscar would “pause” implementation in California with the intention of reentering the state in the future after reshaping its product offerings and strategy.
Oscar CFO Sid Sankaran said he expected the exit to have a “very modest” impact on the company’s top-line financials.
Last year, Oscar announced it was withdrawing from several markets.
The insurer said it would exit Arkansas and Colorado and end its Medicare Advantage plans in New York and Texas. Executives called the Arkansas and Colorado exits “relatively small” and said at the time that the company planned to reach profitability goals this year.
Bertolini now expects Oscar to hit total profitability on earnings before interest, taxes and depreciation in 2024 and achieve insurance profitability this year. The CEO joined the company last month, bringing with him 16 years of experience at Aetna, including serving as CEO during the insurer’s sale to CVS in 2018 for almost $70 billion.
Oscar reported about 1 million members during the first quarter of 2023, with membership in its individual and Medicare Advantage markets declining 8% and 61% respectively compared to the prior year period, due to its exits last year. However, growth in Cigna + Oscar, the insurer’s co-branded partnership with Cigna, grew 85% to offset losses.
“Oscar is in a very different place than we were a year ago,” Bertolini said on the call. “Today, we are focused on advancing the capabilities and technology to best serve our members and have been able to shift our attention to implementing a series of initiatives aimed at improving the efficiency of our operations.”
The insurer reported a net loss of $39.6 million on revenue of $1.5 billion, compared with a net loss of $77 million in the prior-year period.
Last year, Oscar announced it would allocate resources to reach profitability amid tech falterings and $610 million in net losses for 2022. In August, Oscar lost its first full-service tech partner for information technology platform +Oscar after disclosing that it was struggling with implementation, and said it would pause full-service deals.
On Wednesday’s call, Bertolini announced that the company had secured a “large value-based primary care group” partner for +Oscar that would drive primary care utilization and streamline operations.