Oscar Health Q2 2026 earnings: A lower medical loss ratio drives a profit swing

Oscar Health (NYSE: OSCR) reported Q2 2026 revenue of $4.88 billion, up 70.4% from $2.86 billion a year earlier, while diluted EPS swung to $1.10 from a loss of $0.89. Higher membership and rate increases supported revenue, while disciplined pricing, $164 million of favorable prior-period reserve development, and better expense leverage moved the company back to operating and net profitability.

Core Financial Results

The quarter marked a shift from losses to profits across both GAAP and adjusted measures. Revenue increased faster than medical and administrative expenses, although the year-over-year comparison also reflects risk-adjustment effects and favorable reserve development.

Adjusted EBITDA is a non-GAAP measure. The company reconciles it to GAAP net income by adjusting for interest, taxes, depreciation, amortization, stock-based compensation, and certain other items.

Membership and Revenue Drivers

Effectuated membership reached 2,963,002 as of June 30, 2026, up approximately 46.2% from 2,027,148 a year earlier. The company attributed revenue growth to this larger membership base and rate increases, partially offset by a higher net risk-adjustment transfer accrual.

The comparison includes changes in Oscar’s product mix. The 2025 membership figure included 10,090 members from the former Cigna+Oscar arrangement, which was not renewed after December 31, 2024. Oscar also stopped offering small-group plans effective December 15, 2024, while its membership reporting continues to include Individual Coverage Health Reimbursement Arrangement members.

Profitability Improved Through Underwriting and Scale

Premium revenue rose approximately 70.8% to $4.79 billion, while medical expenses increased approximately 48.6% to $3.79 billion. That difference drove the medical loss ratio down to 79.2%. Oscar attributed the improvement primarily to disciplined pricing and $164 million of favorable prior-period reserve development.

The prior-year comparison was also affected by the full first-half impact of a 2025 risk-adjustment true-up related to higher average market morbidity. As a result, the 11.9-percentage-point MLR improvement reflects both current-period underwriting performance and differences in risk-adjustment and reserve items.

SG&A expense increased in absolute terms to $691.1 million from $534.5 million, but its share of revenue fell to 14.2% from 18.7%. Management cited expense discipline, greater fixed-cost leverage, and lower risk adjustment as a percentage of premium.

First-Half Cash Flow Outpaced Earnings as CMS Payables Increased

Cash flow figures were disclosed for the six months ended June 30 rather than Q2 alone. First-half operating cash flow was $4.71 billion, compared with $1.39 billion in the prior-year period and $1.04 billion of first-half net income.

The gap between operating cash flow and earnings was supported materially by working-capital movements. Payables to the Centers for Medicare & Medicaid Services increased by $3.37 billion during the first half, while benefits payable increased by $443.1 million. These liability movements mean the reported cash generation should not be viewed as coming entirely from operating profit.

At June 30, Oscar held $4.08 billion in cash and cash equivalents and $4.48 billion in short-term investments, up from $2.77 billion and $1.22 billion, respectively, at the end of 2025. Payables to CMS also increased to $6.10 billion from $2.73 billion, while long-term debt was broadly stable at $431.6 million.

Full-Year 2026 Guidance

Oscar raised its profitability outlook while leaving projected revenue unchanged. The revised ranges point to better expected underwriting and administrative efficiency rather than an increase in the company’s sales outlook.

Management’s View

CEO Mark Bertolini attributed the first-half profitability to operating execution, disciplined pricing, and the scalability of Oscar’s technology platform. He also argued that movement among full-time employment, part-time work, gig work, and retirement supports longer-term demand for individual health coverage.

Recent Insider Transactions

Over the last six months, the insider data recorded 10,112,756 shares of purchases across 16 transactions and 3,894,323 shares of sales across 16 transactions. That produced reported net purchases of 6,218,433 shares, while total insider holdings were listed at 16.19 million shares. These figures do not establish the motivation behind individual transactions.

Two additional entries for Schlosser lacked a disclosed transaction description or value and are therefore omitted.

Risks Investors Should Monitor

• Reserve development may not recur: Q2’s MLR benefited from $164 million of favorable prior-period reserve development, so the quarter’s margin may not represent a recurring run rate.
• Risk-adjustment estimates remain important: A higher net risk-adjustment transfer accrual partially offset revenue growth, while the prior-year quarter included a significant true-up. Future estimate changes could affect both revenue and underwriting margins.
• Cash flow is sensitive to working capital: The increase in first-half operating cash flow was supported heavily by higher CMS and benefits payables. Changes in these balances could produce substantial cash-flow volatility.
• Individual-market policy changes could affect growth: Oscar identified the expiration of enhanced premium tax credits and new program-integrity rules among the regulatory factors that could influence membership, pricing, and profitability.

Summary

Oscar Health’s Q2 2026 results combined rapid membership and revenue growth with a major improvement in underwriting and administrative efficiency. Disciplined pricing, favorable reserve development, and operating leverage drove the return to profitability and supported higher full-year operating income guidance. The main items to monitor are whether the lower MLR can be sustained without similar reserve benefits, how risk-adjustment estimates develop, and how much of the first-half cash generation persists after working-capital effects.