Oscar Health stock rocketed near a profit-taking zone Tuesday after the health insurer crushed forecasts in its first-ever quarter of profitability.
During the March quarter, Oscar Health earned 62 cents per share, easily beating expectations for a gain of 27 cents. In the year-earlier period, the health insurance company had a loss of 18 cents a share.
Sales also topped projections at $2.14 billion. That included $2.09 billion in monthly premiums Oscar Health collects from its members. Analysts expected just $1.99 billion in premium revenue. The balance of Oscar Health's sales came from investment income and services.
Chief Executive Mark Bertolini says the first-quarter results set Oscar Health up to reach his next goal for the company: total company adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — profitability this year.
"We remain on a path to sustainable growth and look forward to sharing details of our long-term strategic plan at our investor day in June," he said in a written statement.
Oscar Health stock rose 4.3% to 19.77. That put shares below a profit-taking zone which runs from 22.26 to 23.19. Shares on Monday just topped a buy point at 18.55 out of a cup base, according to MarketSurge.
The move sent Oscar Health stock to its best level since mid-2021. Shares have a nearly perfect Relative Strength Rating of 98, putting their 12-month performance in the leading 2% of all stocks. Oscar Health stock also ranks on the IBD 50 list of elite growth stocks.
Oscar Health Stock: MLR Hits Record Low
Notably, Oscar Health's medical loss ratio continued declining in the quarter, hitting 74.2% vs. Street views for 75.7%, according to FactSet. The medical loss ratio, or MLR, is the share of total health care premiums spent on medical claims and improving the quality of care. A lower MLR means an insurer has lower expenses.
This was Oscar Health's lowest-ever quarterly MLR. The company cited its "disciplined pricing strategy and total cost of care initiatives," in its news release.
The health insurer also affirmed its outlook for the year, and still expects total revenue to come in at $8.3 billion to $8.4 billion, with an MLR of 81.2% and adjusted EBITDA of $175 million. In comparison, revenue was $5.86 billion in 2023 and the company achieved an MLR of 81.6%. But Oscar Health had an adjusted EBITDA loss of $45.2 million.
For the year, analysts following Oscar Health stock predict $8.34 billion in sales, an MLR of 80.7% and $164 million in EBITDA.
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