Oscar Health, Inc. saw its stock price climb more than 5% in Wednesday morning trading after the insurer reported first-quarter net income that more than doubled from a year earlier, while maintaining its full-year 2026 financial targets. The upbeat results signal that the company's focus on the Affordable Care Act (ACA) individual market is gaining traction after a challenging 2025.
The New York-based health insurer posted net income attributable to Oscar of $679.0 million, or $2.07 per diluted share, sharply higher than the $275.3 million, or 92 cents per share, recorded in the same period last year. Revenue surged 53% to $4.65 billion, up from $3.05 billion, driven by robust membership growth and higher premiums.
Membership reached 3.17 million as of March 31, compared with 2.04 million a year ago, as the company continued to expand its presence on ACA exchanges. The medical loss ratio (MLR), a key metric indicating the percentage of premium dollars spent on medical care, improved to 70.5% from 75.4% in the prior year, reflecting better cost management and a healthier risk pool.
Adjusted EBITDA, a non-GAAP measure closely watched by investors, jumped to $727.1 million from $328.8 million a year earlier. CEO Mark Bertolini emphasized that the company is "on track to significantly expand margins" and achieve "meaningful profitability in 2026." He noted that consumers are increasingly choosing health coverage based on "choice, price, and value," trends that align with Oscar's strategy in the individual market.
Despite the strong quarter, Oscar acknowledged several headwinds that could impact future performance. The company flagged potential swings in medical cost estimates, changes in risk-adjustment mechanisms under the ACA, and the looming expiration of enhanced Advanced Premium Tax Credits, which have helped lower monthly premiums for many enrollees. Additionally, new program-integrity rules could affect operations.
Risk adjustment remains a significant factor, with Oscar reporting larger accruals this quarter that partially offset revenue growth. The ACA's risk-adjustment program redistributes funds among insurers based on the health status of their members, and fluctuations can materially affect earnings.
Looking ahead, Oscar reaffirmed its 2026 revenue outlook of $18.7 billion to $19.0 billion and operating earnings guidance of $250 million to $450 million. The company also maintained its full-year MLR target of 82.4% to 83.4%, noting that MLR typically bottoms out in Q1 and peaks in Q4 due to seasonal utilization patterns.
Shares of Oscar Health were up 5.3% at $18.89 as of 10:46 a.m. ET, after touching an intraday high of $20.35. The broader managed-care sector also saw gains, with Centene rising roughly 1.5% and Molina Healthcare advancing about 2.4%.
Investors will be watching closely whether Oscar can sustain its membership momentum and margin improvements through the remainder of the year, especially as the ACA market faces potential regulatory changes and increased competition.
