UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________

Commission File Number: 001-40154

____________________________________________________________

Oscar Health, Inc.

(Exact name of registrant as specified in its charter)

____________________________________________________________

Delaware			46-1315570
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
			Identification No.)
75 Varick Street, 5th Floor	New York,	NY	10013
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (646) 403-3677

Former name, former address and former fiscal year, if changed since last report: N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.00001 par value per share	OSCR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒
Smaller reporting company	☐	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 30, 2021, 172,555,951 shares of the registrant's Class A common stock, par value $0.00001 per share, and 35,115,807 shares of the registrant's Class B Common Stock, par value $0.00001 per share, were outstanding.

Oscar Health, Inc.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		Page number
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheet	8
	Consolidated Statement of Operations	9
	Consolidated Comprehensive Income	10
	Consolidated Statement of Convertible Preferred Stock and Stockholders' Equity (Deficit)	11
	Consolidated Statement of Cash Flows	13
	Notes to Consolidated Financial Statements
	Note 1 - Organization	15
	Note 2 - Recent Accounting Pronouncements	16
	Note 3 - Premiums Earned	16
	Note 4 - Reinsurance	18
	Note 5 - Restricted Cash and Restricted Deposits	19
	Note 6 - Investments	19
	Note 7 - Fair Value	21
	Note 8 - Benefits Payable	23
	Note 9 - Debt and Warrants	25
	Note 10 - Convertible Preferred Stock	26
	Note 11 - Stockholders' Equity	27
	Note 12 - Stock-Based Compensation	29
	Note 13 - Earnings (Loss) per Share	31
	Note 14 - Variable Interest Entities	32
	Note 15 - Commitments and Contingencies	32
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	52
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	84
Item 3.	Defaults Upon Senior Securities	85
Item 4.	Mine Safety Disclosures	85
Item 5.	Other Information	85
Item 6.	Exhibits	85
SIGNATURES		87

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding our future results of operations and financial position, risk adjustment payments, industry and business trends, stock compensation, business strategy, plans and plan mix, membership and market growth and our objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following:

•the impact of COVID-19 on global markets, economic conditions, the healthcare industry and our results of operations, and the response by governments and other third parties;

•our ability to retain and expand our member base;

•our ability to execute our growth strategy;

•our ability to maintain or enter into new partnerships or collaborations with healthcare industry participants;

•negative publicity, unfavorable shifts in perception of our digital platform or other member service channels;

•our ability to achieve and/or maintain profitability in the future;

•changes in federal or state laws or regulations, including changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended (collectively, the “ACA”) and any regulations enacted thereunder;

•our ability to accurately estimate our incurred claims expenses or effectively manage our claims costs or related administrative costs, including as a result of fluctuations in medical utilization rates due to the impact of COVID-19;

•our ability to comply with ongoing regulatory requirements and applicable performance standards, including as a result of our participation in government-sponsored programs, such as Medicare;

•changes or developments in the health insurance markets in the United States, including passage and implementation of a law to create a single-payer or government-run health insurance program;

•our ability to comply with applicable privacy, security, and data laws, regulations, and standards;

•our ability to maintain key in-network providers and good relations with the physicians, hospitals, and other providers within and outside our provider networks, or to arrange for the delivery of quality care;

•unfavorable or otherwise costly outcomes of lawsuits and claims that arise from the extensive laws and regulations to which we are subject;

•unanticipated results of risk adjustment programs;

•delays in our receipt of premiums;

•disruptions or challenges to our relationship with the Oscar Medical Group;

•cyber-security breaches of our and our partners’ information and technology systems;

•unanticipated changes in population morbidity and large-scale changes in health care utilization; and

•the other important factors discussed in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q.

The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

BASIS OF PRESENTATION

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:

•“we,” “us,” “our,” “our business,” the “Company,” “Oscar,” and similar references refer to Oscar Health, Inc., formerly known as Mulberry Health Inc., and its subsidiaries.

•“Holdco” refers only to Oscar Health, Inc. and not any of its subsidiaries.

•“ACA” refers to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended.

•“Annual Election Period” refers to the yearly period when beneficiaries can enroll or disenroll in an Original Medicare or Medicare Advantage health plan. The Annual Election Period starts on October 15 and ends on December 7 of each year.

•“APTC” refers to advanced premium tax credits.

•“Co-Founders” refers to Joshua Kushner and Mario Schlosser.

•“direct policy premium” refers to monthly premiums collected from our members and/or from the federal government during the period indicated, before risk adjustment and reinsurance.

•“full stack technology platform” refers to our cloud-based end-to-end technology solution, which powers our differentiated member experience engine. Our platform connects our member-facing features, including our mobile application, which we refer to as our app, website, and virtual care solutions with our back-office tools that span all critical health care insurance and technology domains, including member and provider data, utilization management, claims management, billing, and benefits.

•“Health Insurance Marketplaces” refers to the health insurance marketplaces established per the ACA and operated by the federal government for most states and other marketplaces operated by individual states, for individuals and small employers to purchase health insurance coverage in the Individual and Small Group markets that include minimum levels of benefits, restrictions on coverage limitations and premium rates, and APTC.

•“health insurance subsidiary” refers to any subsidiary of Oscar Health, Inc. that has applied for or received a license, certification or authorization to sell health plans by any state Department of Insurance, Department of Financial Services, Department of Health, or comparable regulatory authority. As of June 30, 2021, Oscar Health, Inc. had 14 health insurance subsidiaries.

•“health plans” refers to the health insurance plans that Oscar sells in the Individual and Small Group markets and the Medicare Advantage Plans that Oscar sells in the Medicare Advantage market. The term includes co-branded health plans sold directly by our health insurance subsidiaries, in the case of our Cleveland Clinic + Oscar, Montefiore + Oscar, and Oscar + Holy Cross + Memorial Health plans, and co-branded plans sold directly by our partner and partially-reinsured by a health insurance subsidiary, in the case of the Cigna + Oscar plan.

•“IBNR” refers to health care costs incurred but not yet reported.

•“InsuranceCo Administrative Expense Ratio” is defined as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating and Non-GAAP Financial Metrics—InsuranceCo Administrative Expense Ratio.”

•“InsuranceCo Combined Ratio” is defined as the sum of MLR and InsuranceCo Administrative Expense Ratio.

•“Medical Loss Ratio” or “MLR” is defined as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating and Non-GAAP Financial Metrics—Medical Loss Ratio.”

•“member” refers to any individual covered by any of our health plans. A member covered under more than one of our health plans counts as a single member for the purposes of this metric. Our membership is measured as of a particular point in time and may decrease over time as individuals disenroll throughout the year before they become effectuated members.

•“Open Enrollment Period” refers to the yearly period when individuals and families can enroll in a health plan or make changes to an existing health plan. In most states, the Open Enrollment Period in the Individual market typically starts on November 1 and lasts through December 15; in certain states in which Oscar does business it can extend through January 31. In most states, the 2021 Open Enrollment Period for the Individual market started on November 1, 2020 and ended on December 15, 2020. It was extended in certain states in which Oscar does business due to the ongoing COVID-19 pandemic emergency; see “2021 Special Enrollment Periods” below for additional information. The Medicare Advantage Open Enrollment Period, which permits switching between Medicare Advantage plans, started on January 1, 2021 and ended on March 31, 2021.

•"PMPM” refers to per member per month.

•“Special Enrollment Period” refers to a period outside the Open Enrollment Period or Annual Election Period when an eligible person can enroll in a health plan or make changes to an existing health plan. A person is generally eligible to participate in a special enrollment period if certain qualifying life events occur, such as losing certain health coverage, moving, getting married, having a baby, or adopting a child.

•“2021 Special Enrollment Periods” refers to a period outside the 2021 Open Enrollment Period when an eligible person can enroll in an Individual market health plan or make changes to an existing Individual market health plan, due to the ongoing COVID-19 pandemic or the passage of the American Rescue Plan Act of 2021 (the “American Rescue Plan”). This includes the extended period from February 15, 2021 through August 15, 2021, for the health insurance marketplace operated by the federal government for most states and similar periods for the state-based marketplaces run by Colorado (starting February 8, 2021 through August 15, 2021), and Pennsylvania (starting February 15, 2021, through August 15, 2021). This also includes the extended Open Enrollment Periods in California, New Jersey and New York, running through November 30, 2021 in New Jersey and December 31, 2021 in California and New York.

•“Thrive Capital” refers to Thrive Capital Management, LLC, a Delaware limited liability company, and the investment funds affiliated with or advised by Thrive Capital Management, LLC.

Certain monetary amounts, percentages, and other figures included in this Quarterly Report on Form 10-Q have been subject to rounding adjustments. Percentage amounts included in this Quarterly Report on Form 10-Q have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report on Form 10-Q may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Certain other amounts that appear in this Quarterly Report on Form 10-Q may not sum due to rounding.

Reclassification and Reverse Stock Split

In connection with its initial public offering (the “IPO”), on March 3, 2021, the Company filed an amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) with the Secretary of State of the State of Delaware, which effected a reclassification of the Company’s issued and outstanding share capital and a one-for-three reverse stock split. Upon conversion of all outstanding shares of convertible preferred stock, and upon filing of the Company’s Amended and Restated Certificate of Incorporation, all outstanding shares of each series of the Company’s convertible preferred stock and common stock issued and outstanding prior to the IPO converted and/or were reclassified into an aggregate of 132,760,639 shares of Class A common stock, par value $0.00001 per share (the “Class A common stock”) and 35,335,579 shares of Class B common stock, par value $0.00001 per share (the “Class B common stock.”), and 943,800 shares of common stock held in treasury were reclassified into an aggregate of 314,600 shares of Class A common stock. In accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), all shares of common stock and per share data that are presented in this Quarterly Report on Form 10-Q have been adjusted to reflect the reclassification and reverse stock split on a retroactive basis for all periods presented. Shares of convertible preferred stock presented in this Quarterly Report on Form 10-Q have not been adjusted for the reclassification or reverse stock split. For additional information, see Note 11 - Stockholders’ Equity.

SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our Class A common stock. The principal risks and uncertainties affecting our business include the following:

•our ability to retain and expand our member base;

•our ability to execute our growth strategy;

•our ability to achieve or maintain profitability in the future;

•changes in federal or state laws or regulations, including changes with respect to the ACA and any regulations enacted thereunder;

•our ability to accurately estimate our incurred medical expenses or effectively manage our medical costs or related administrative costs;

•our ability to comply with ongoing regulatory requirements and applicable performance standards;

•changes or developments in the health insurance markets in the United States, including passage and implementation of a law to create a single-payer or government-run health insurance program;

•our ability to comply with applicable privacy, security, and data laws, regulations, and standards, including as a result of our participation in government-sponsored programs, such as Medicare;

•incurrence of cyber-security breaches of our and our partners’ information and technology systems;

•our ability to arrange for the delivery of quality care and maintain good relations with the physicians, hospitals, and other providers within and outside our provider networks;

•unfavorable or otherwise costly outcomes of lawsuits and claims that arise from the extensive laws and regulations to which we are subject; and

•adverse publicity or other adverse consequences related to our dual class structure or “controlled company” status.

Before you invest in our Class A common stock, you should carefully consider all of the information in this Quarterly Report on Form 10-Q, including matters set forth under the heading “Risk Factors.”

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Oscar Health, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

	June 30, 2021		December 31, 2020
Assets:
Current Assets:
Cash and cash equivalents	$	1,671,540	$	826,326
Short-term investments	614,979		366,387
Premium and other receivables	85,629		65,322
Risk adjustment transfer receivable	39,917		31,157
Accrued investment income	3,794		1,862
Balances due from reinsurance programs	400,174		579,393
Total current assets	2,816,033		1,870,447
Property, equipment, and capitalized software, net	40,874		35,812
Long-term investments	803,289		325,740
Restricted deposits	26,455		26,478
Other assets	19,368		13,136
Net deferred tax asset	467		493
Total Assets	$	3,706,486	$	2,272,106
Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)
Current Liabilities:
Benefits payable	$	407,322	$	311,914
Risk adjustment transfer payable	1,043,863		716,370
Premium deficiency reserve	74,107		84,571
Unearned premiums	63,882		71,904
Accounts payable and accrued liabilities	135,339		137,524
Reinsurance payable	248,142		343,313
Total current liabilities	1,972,655		1,665,596
Long-term debt	—		142,487
Warrant liabilities	—		15,005
Total liabilities	$	1,972,655	$	1,823,088
Commitments and contingencies (Note 15)
Convertible Preferred Stock, $0.00001 par value; 407,156,831 shares authorized; 400,904,302 shares issued and outstanding as of December 31, 2020	—		1,744,911
Stockholders' Equity (Deficit)
Preferred stock, $0.00001 par value; 82,500,000 shares authorized, none issued or outstanding as of June 30, 2021	—		—
Class A common stock, $0.00001 par value; 825,000,000 shares authorized, 172,454,211 shares issued and outstanding as of June 30, 2021	2		—
Class B common stock, $0.00001 par value; 82,500,000 shares authorized, 35,115,807 shares issued and outstanding as of June 30, 2021	—		—
Series A common stock, $0.00001 par value, 680,000,000 shares authorized; 8,291,917 issued and outstanding as of December 31, 2020; Series B common stock, $0.00001 par value, 69,487,963 shares authorized; 23,162,654 shares issued and outstanding as of December 31, 2020; Series C common stock, $0.00001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2020	—		2
Treasury stock (314,600 shares as of June 30, 2021 and December 31, 2020)	(2,923)		(2,923)
Additional paid-in capital	3,324,337		133,255
Accumulated deficit	(1,587,545)		(1,427,106)
Accumulated other comprehensive income (loss)	(40)		879
Total Stockholders’ Equity (Deficit)	1,733,831		(1,295,893)
Total Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)	$	3,706,486	$	2,272,106

See the accompanying Notes to Consolidated Financial Statements

8

Oscar Health, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue
Premiums before ceded reinsurance	$	723,927	$	393,540	$	1,334,026	$	817,988
Reinsurance premiums ceded	(195,768)		(279,784)		(437,330)		(619,013)
Premiums earned	528,159		113,756		896,696		198,975
Investment income and other revenue	1,122		1,569		1,973		4,453
Total revenue	529,281		115,325		898,669		203,428
Operating Expenses
Claims incurred, net	419,879		55,512		687,927		139,728
Other insurance costs	94,790		39,644		174,627		80,548
General and administrative expenses	50,911		35,994		113,973		67,833
Federal and state assessments	36,873		18,958		67,388		41,255
Health insurance industry fee	—		4,812		—		9,625
Premium deficiency reserve release	(921)		(244)		(10,464)		(262)
Total operating expenses	601,532		154,676		1,033,451		338,727
Loss from operations	(72,251)		(39,351)		(134,782)		(135,299)
Interest expense	228		—		3,925		—
Loss on extinguishment of debt	—		—		20,178		—
Loss before income taxes	(72,479)		(39,351)		(158,885)		(135,299)
Income tax provision	589		1,593		1,554		2,524
Net loss	$	(73,068)	$	(40,944)	$	(160,439)	$	(137,823)
Earnings (Loss) per Share
Net loss per share, basic and diluted	$	(0.35)	$	(1.42)	$	(1.08)	$	(4.77)
Weighted average common shares outstanding, basic and diluted	207,478,268		28,905,083		148,505,273		28,889,801

See the accompanying Notes to Consolidated Financial Statements

9

Oscar Health, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net loss	$	(73,068)	$	(40,944)	$	(160,439)	$	(137,823)
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities available for sale	(644)		692		(919)		2,221
Comprehensive loss	$	(73,712)	$	(40,252)	$	(161,358)	$	(135,602)

See the accompanying Notes to Consolidated Financial Statements

10

Oscar Health, Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)

(in thousands, except share amounts)

(unaudited)

	Convertible Preferred Stock		Common Stock (Series A/Series B)		Class A		Class B
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total Stockholders' Equity (Deficit)
December 31, 2020	400,904,302	1,744,911	31,409,202	2	—	—	—	—	(2,923)	133,255	(1,427,106)	879	(1,295,893)
Conversion of pre-IPO shares to Class A and Class B common stock	(400,904,302)	(1,744,911)	(31,409,202)	(2)	130,280,651	1	35,115,807	—	—	1,744,911	—	—	1,744,910
Issuance of common stock upon IPO, net of underwriting discount	—	—	—	—	36,391,946	1	—	—	—	1,338,874	—	—	1,338,875
Issuance of common stock upon exercise of warrants and call options	—	—	—	—	1,115,973	—	—	—	—	37,071	—	—	37,071
Issuance of common stock upon exercise of options	—	—	—	—	4,272,060	—	—	—	—	29,805	—	—	29,805
Stock-based compensation expense	—	—	—	—	—	—	—	—	—	19,115	—	—	19,115
Unrealized gains (losses) on investments, net	—	—	—	—	—	—	—	—	—	—	—	(275)	(275)
Net loss	—	—	—	—	—	—	—	—	—	—	(87,371)	—	(87,371)
March 31, 2021	—	—	—	—	172,060,630	2	35,115,807	—	(2,923)	3,303,031	(1,514,477)	604	1,786,237
Issuance of common stock upon exercise of options	—	—	—	—	393,581	—	—	—	—	3,033	—	—	3,033
Stock-based compensation expense	—	—	—	—	—	—	—	—	—	18,273	—	—	18,273
Unrealized gains (losses) on investments, net	—	—	—	—	—	—	—	—	—	—	—	(644)	(644)
Net loss	—	—	—	—	—	—	—	—	—	—	(73,068)	—	(73,068)
June 30, 2021	—	—	—	—	172,454,211	2	35,115,807	—	(2,923)	3,324,337	(1,587,545)	(40)	1,733,831

See the accompanying Notes to Consolidated Financial Statements

11

	Convertible Preferred Stock		Common Stock (Series A/Series B)
	Shares	Amount	Shares	Amount	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total Stockholders' Equity (Deficit)
December 31, 2019	335,625,349	1,295,744	28,840,849	2	(2,923)	70,673	(1,012,863)	(27)	(945,138)
Issuance of common stock upon exercise of options	—	—	55,226	—	—	443	—	—	443
Stock-based compensation expense	—	—	—	—	—	8,096	—	—	8,096
Unrealized gains (losses) on investments, net	—	—	—	—	—	—	—	1,529	1,529
Net loss	—	—	—	—	—	—	(96,879)	—	(96,879)
March 31, 2020	335,625,349	1,295,744	28,896,075	2	(2,923)	79,212	(1,109,742)	1,502	(1,031,949)
Issuance of common stock upon exercise of options	—	—	41,972	—	—	322	—	—	322
Stock-based compensation expense	—	—	—	—	—	6,601	—	—	6,601
Stock Issued	37,287,281	210,943	—	—	—	—	—	—	—
Unrealized gains (losses) on investments, net	—	—	—	—	—	—	—	692	692
Net loss	—	—	—	—	—	—	(40,944)	—	(40,944)
June 30, 2020	372,912,630	1,506,687	28,938,047	2	(2,923)	86,135	(1,150,686)	2,194	(1,065,278)

See the accompanying Notes to Consolidated Financial Statements

12

Oscar Health, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(160,439)	$	(137,823)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred taxes	26		125
Net realized gain on sale of financial instruments	(248)		(456)
Loss on fair value of warrant liabilities	12,856		548
Depreciation and amortization expense	6,990		5,065
Amortization of debt issuance costs	329		—
Stock-based compensation expense	37,388		14,697
Investment amortization, net of accretion	3,029		480
Debt extinguishment loss	20,178		—
Changes in assets and liabilities:
(Increase) / decrease in:
Premium and other receivables	(20,307)		(25,353)
Risk adjustment transfer receivable	(8,759)		(20,344)
Accrued investment income	(1,932)		(31)
Balances due from reinsurance programs	179,219		82,895
Other assets	(5,748)		(4,286)
Increase / (decrease) in:
Benefits payable	95,408		85,055
Unearned premiums	(8,022)		(8,865)
Premium deficiency reserve	(10,464)		(262)
Accounts payable and accrued liabilities	1,202		26,943
Reinsurance payable	(95,171)		(20,583)
Risk adjustment transfer payable	327,493		354,867
Net cash provided by operating activities	373,028		352,672
Cash flows from investing activities:
Purchase of investments	(1,198,325)		(167,738)
Sale of investments	287,440		196,130
Maturity of investments	181,102		54,271
Purchase of property, equipment and capitalized software	(12,531)		(7,866)
Change in restricted deposits	—		(1,010)
Net cash (used in) provided by investing activities	(742,314)		73,787
Cash flows from financing activities:
Debt prepayment	(153,173)		—
Debt extinguishment costs	(12,994)		—
Proceeds from IPO, net of underwriting discounts	1,348,321		—
Offering costs from IPO	(9,447)		—
Convertible preferred stock and call option issuances	—		224,431
Proceeds from exercise of warrants and call options	9,191		—
Proceeds from exercise of stock options	32,640		765
Net cash provided by financing activities	1,214,538		225,196
Increase in cash, cash equivalents and restricted cash equivalents	845,252		651,655
Cash, cash equivalents, restricted cash and cash equivalents—Beginning of period	843,105		353,380
Cash, cash equivalents, restricted cash and cash equivalents—end of period	1,688,357		1,005,035
Cash and cash equivalents	1,671,540		988,530
Restricted cash and cash equivalents included in restricted deposits	16,817		16,505
Total cash, cash equivalents and restricted cash and cash equivalents	$	1,688,357	$	1,005,035

13

Oscar Health, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited) (Continued)

Supplemental Disclosures:
Interest payments	$	3,742	$	—
Income tax payments	$	814	$	351
Non-cash investing and financing activities:
Conversion of redeemable convertible preferred stock to common stock upon initial public offering	$	1,744,914	$	—
Net exercise of preferred stock warrants to preferred stock upon initial public offering	$	28,248	$	—
Adjustment to fair value of preferred stock warrant liability upon initial public offering	$	13,243	$	—

See accompanying the Notes to Consolidated Financial Statements

14

Oscar Health, Inc.

Notes to Consolidated Financial Statements (unaudited)

(in thousands, except share and per share amounts, or as otherwise stated herein)

1.ORGANIZATION

Oscar Health, Inc. ("Oscar" or the "Company") is the first health insurance company built around a full stack technology platform and a relentless focus on serving its members. Headquartered in New York City, Oscar offers Individual & Family, Small Group and Medicare Advantage plans. The Company operates as one segment to sell insurance to its members directly, as well as through the state-run health care exchanges formed in conjunction with the Patient Protection and Affordable Care Act ("ACA") via its health insurance subsidiaries. The Company provides plans in the Medicare Advantage program to adults who are age 65 and older and eligible for traditional Medicare but who instead select coverage through a private market plan. The Company has also partnered with Cigna through the Cigna + Oscar partnership, which unites Oscar’s highly-differentiated member experience with Cigna’s broad provider networks, to exclusively serve the Small Group employer market. In April 2021, the Company announced the launch of + Oscar, its tech-driven platform offering designed to help healthcare clients drive improved efficiency, growth and superior engagement with their members and patients.

Initial Public Offering

On March 2, 2021, the Company's registration statement on Form S-1 (the “IPO Registration Statement”) related to its initial public offering (“IPO”) was declared effective and the Company’s Class A common stock, par value $0.00001 per share (the “Class A common stock”) began trading on the New York Stock Exchange on March 3, 2021. On March 5, 2021, the Company completed its IPO, in which the Company sold 36,391,946 shares of Class A common stock at a price to the public of $39.00 per share. The Company received aggregate net proceeds of $1.3 billion after deducting underwriting discounts and commissions of $71.0 million. The Company used a portion of the net proceeds of the IPO to repay in full outstanding borrowings, including fees and expenses, under the Term Loan Facility. Refer to Note 9 - Debt and Warrants for more information.

The Company's Class A common stock is traded on the New York Stock Exchange under the symbol "OSCR."

Reclassification and Reverse Stock Split

In connection with its IPO, on March 3, 2021, the Company filed an amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) with the Secretary of State of the State of Delaware, which effected a reclassification of the Company’s issued and outstanding share capital and a one-for-three reverse stock split. Upon conversion of all outstanding shares of convertible preferred stock, and upon filing of the Company’s Amended and Restated Certificate of Incorporation, all outstanding shares of each series of the Company’s convertible preferred stock and common stock issued and outstanding prior to the IPO converted and/or were reclassified into an aggregate of 132,760,639 shares of Class A common stock and 35,335,579 shares of Class B common stock, par value $0.00001 per share (the “Class B common stock”), and 943,800 shares of common stock held in treasury were reclassified into an aggregate of 314,600 shares of Class A common stock. In accordance with accounting principles generally accepted in the United States (“ U.S. GAAP”), all shares of common stock and per share data that are presented in this Quarterly Report on Form 10-Q have been adjusted to reflect the reclassification and reverse stock split on a retroactive basis for all periods presented. Shares of convertible preferred stock presented in this Quarterly Report on Form 10-Q have not been adjusted for the reclassification or reverse stock split, as these shares were converted to common stock prior to the reclassification and reverse stock split. For additional information, see Note 11 - Stockholders’ Equity.

Basis of Presentation

The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. As such, these financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements.

15

These condensed consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the information presented for the periods presented in conformity with U.S. GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2020 included in the prospectus dated March 2, 2021 (File No. 333-252809) (the "Prospectus"), as filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Significant estimates inherent in the preparation of the accompanying unaudited consolidated financial statements include healthcare costs incurred but not yet reported (“IBNR”), reinsurance, premium deficiency reserve (“PDR”), risk adjustment, stock-based compensation, premium receivable allowance and income taxes. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ materially from these estimates.

Additionally, the full extent to which the outbreak of COVID-19 could impact the Company’s business, results of operations and financial condition is still unknown and will depend on future developments, which are highly uncertain and cannot be predicted. However, the Company has made accounting estimates based on the facts and circumstances available as of the reporting date. The Company has not currently experienced significant negative impact to its operations, liquidity or capital resources as a result of the COVID-19 pandemic.

2.    RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements - Recently Adopted

In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement,” (“ASU 2018-13”). The amendments in ASU 2018-13 eliminate, add, and modify certain disclosure requirements for fair value measurements. The amendments are effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for either the entirety of ASU 2018-13 or only the provisions that eliminate or modify disclosure requirements. The Company adopted the standard effective January 1, 2020. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18, “Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606” (“ASU 2018-18”). The amendments in ASU 2018-18 clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account. The amendments under ASU 2018-18 are effective for interim and annual fiscal periods beginning after December 15, 2019, with early adoption permitted. The amendments in ASU 2018-18 should be applied retrospectively to the date of initial application of ASC 606. The Company adopted the standard effective January 1, 2020. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Accounting Pronouncements - Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for

complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

In February 2016, the (FASB) issued (ASU) 2016- 02, “Leases (Topic 842)” (ASU 2016-02). Under ASU 2016-02, an entity will be required to recognize assets and liabilities for the rights and obligations created by leases on the entity’s balance sheet for both finance and operating leases. For leases with a term of 12 months or less, an entity can elect to not recognize lease assets and lease liabilities and expense the lease over a straight-line basis for the term of the lease. ASU 2016-02 will require new disclosures that depict the amount, timing, and uncertainty of cash flows pertaining to an entity’s leases. Companies are required to adopt the new standard using a modified retrospective approach for annual and interim periods beginning after December 15, 2018. In June 2020, the FASB issued guidance extending the effective date for all entities for which these standards were either currently or imminently effective. This guidance is effective for the Company for annual periods beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the effect that the adoption of ASU 2016-02 will have on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)" (“ASU 2016-13”), which requires entities to use a current expected credit loss model, which is a new impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost. The entity's estimate would consider relevant information about past events, current conditions, and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses upon loan origination. In November 2018, the FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” which narrowed the scope and changed the effective date for non-public entities for ASU 2016-13. The FASB subsequently issued supplemental guidance within ASU No. 2019-05, “Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief” (‘‘ASU 2019-05’’). ASU 2019-05 provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”) guidance extending the effective date for all non-public business entities. In May 2019, the FASB issued ASU 2019-05, “Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief.” In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” These updates provide an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost and provide additional clarification and implementation guidance on certain aspects of the previously issued ASU 2016-13 and have the same effective date and transition requirements as ASU 2016-13. The effect of a prospective transition approach is to maintain the same amortized cost basis before and after the date of adoption. ASU 2016-13 is effective for the Company for annual periods beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the effect that the adoption of ASU 2016-13 will have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). The amendments in ASU 2019-12 remove certain exceptions to the general principles in ASC Topic 740. The amendments also clarify and amend existing guidance to improve consistent application. The amendments are effective for the Company’s annual reporting periods beginning after December 15, 2021. Early adoption is permitted. The transition method (retrospective, modified retrospective, or prospective basis) related to the amendments depends on the applicable guidance, and all amendments for which there is no transition guidance specified are to be applied on a prospective basis. The Company is currently evaluating the effects the adoption of ASU 2019-12 will have on its consolidated financial statements.

16

3. PREMIUMS EARNED

Premium revenue includes direct policy premiums collected directly from members and from the Centers for Medicare & Medicaid Services ("CMS") as part of the Advanced Premium Tax Credit Program ("APTC") and Medicare Advantage programs, along with assumed premiums from the Company's reinsurance agreements. Premium revenue is adjusted for the estimated impact of the risk adjustment program required by CMS. Total premiums earned includes the effect of reinsurance premiums ceded as part of the Company's reinsurance agreements. Refer to Note 4 - Reinsurance for more information.

	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(in thousands)
Direct policy premiums	$	838,075	$	580,445	$	1,658,889	$	1,152,456
Assumed premiums	3,185		—		5,596		—
Direct and assumed premiums	841,260		580,445		1,664,485		1,152,456
Risk adjustment	(117,333)		(186,905)		(330,459)		(334,468)
Premiums before ceded reinsurance	723,927		393,540		1,334,026		817,988
Reinsurance premiums ceded	(195,768)		(279,784)		(437,330)		(619,013)
Total premiums earned	$	528,159	$	113,756	$	896,696	$	198,975

The following table summarizes the amounts of direct policy premiums received directly from CMS as part of APTC and Medicare Advantage for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(in thousands)
APTC	$	591,345	$	344,996	$	1,143,688	$	676,792
Medicare Advantage	10,379		4,319		19,503		8,145
Total paid by CMS	$	601,724	$	349,315	$	1,163,191	$	684,937

17

4.REINSURANCE

The Company has entered into quota share reinsurance agreements with reinsurers under which the reinsurer assumes an agreed percentage of the underlying policies being reinsured and shares all premiums and incurred claims accordingly.

As of April 1, 2021, the Company is party to reinsurance agreements with one reinsurer.

Under the 2021 agreements, all premiums and claims ceded under the Company's quota share arrangements are shared proportionally with the reinsurers. Under the 2020 agreements, premiums and claims ceded are shared proportionally with the reinsurers, up to a limit specified in each agreement. The limit was removed from the 2021 agreements effective as of January 1, 2021. As part of the 2020 and 2021 agreements, the Company receives ceding commissions, which are calculated based on a percentage of ceded premiums, and experience refunds (resulting from actual claims experience being lower than a specified threshold).

The composition of total reinsurance premiums ceded and reinsurance premiums assumed, which are included as components of total premiums earned in the consolidated statement of operations, is as follows:

	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(in thousands)
Reinsurance premiums ceded, gross	$	(239,253)	$	(306,427)	$	(504,040)	$	(664,137)
Experience refunds	43,485		26,643		66,710		45,124
Reinsurance premiums ceded	(195,768)		(279,784)		(437,330)		(619,013)
Reinsurance premiums assumed	3,185		—		5,596		—
Total reinsurance premiums ceded and assumed	$	(192,583)	$	(279,784)	$	(431,734)	$	(619,013)

The Company records claims expense net of reinsurance recoveries. The following table reconciles the total claims expense to the net claims expense as presented in the consolidated statement of operations:

	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(in thousands)
Direct claims incurred	$	598,904	$	246,109	$	1,056,123	$	591,617
Ceded reinsurance claims	(181,333)		(190,597)		(372,281)		(451,887)
Assumed reinsurance claims	2,308		—		4,085		(2)
Total claims incurred, net	$	419,879	$	55,512	$	687,927	$	139,728

The Company records selling, general and administrative expenses net of ceding commissions. The following table reconciles total other insurance costs to the amount presented in the consolidated statement of operations:

	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(in thousands)
Other insurance costs, gross	$	115,256	$	69,893	$	214,399	$	145,823
Ceding commissions	(20,466)		(30,249)		(39,772)		(65,275)
Other insurance costs, net	$	94,790	$	39,644	$	174,627	$	80,548

18

The Company records reinsurance recoverables as “balances due from reinsurance programs” within current assets on its consolidated balance sheets. The composition of the reinsurance recoverables balance is as follows:

	June 30, 2021		December 31, 2020
	(in thousands)
Ceded reinsurance claim recoverables	$	326,587	$	435,331
Reinsurance ceding commissions	32,051		41,586
Experience refunds on reinsurance agreements	41,536		102,476
Balances due from reinsurance programs	$	400,174	$	579,393

The Company regularly evaluates the financial condition of its reinsurers to minimize exposure to significant losses. A key credit quality indicator for reinsurance is the financial strength ratings issued by the credit rating agencies, which provide an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. As of June 30, 2021, the Company's reinsurer has financial strength ratings of AA- (S&P and Fitch) and Aa3 (Moody's).

5.RESTRICTED CASH AND RESTRICTED DEPOSITS

The Company maintains cash, cash equivalents and investments on deposit or pledged primarily to various state agencies in connection with its insurance licensure. Deposited and pledged cash equivalents and investments are recorded at fair value. States require that deposited investments remain on deposit indefinitely and, therefore, the Company classifies these restricted deposits as long-term regardless of the contractual maturity date of the securities held.

The restricted cash and cash equivalents and restricted investments presented below are included in “restricted deposits” in the accompanying consolidated balance sheets.

	June 30, 2021		December 31, 2020
	(in thousands)
Restricted cash and cash equivalents	$	16,817	$	16,779
Restricted investments	9,638		9,699
Restricted Deposits	$	26,455	$	26,478

6.    INVESTMENTS

The following tables provide summaries of the Company's investments by major security type at June 30, 2021 and December 31, 2020:

<

	June 30, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(in thousands)
U.S. treasury and agency securities	$	890,540	$	318	$	(219)	$	890,639
Corporate notes	428,778		84		(276)		428,586
Certificate of deposit	43,031		—		—		43,031
Commercial paper	42,559		—		—		42,559
Municipalities	13,459		2		(8)		13,453
Total