Oscar Health, Inc.

Investigation
11/11/2021

Initial Lawsuit
05/12/2022

Lawsuit Progression
07/11/2022

Investigation

Public Offering Date
March 3, 2021
Proposed Claim
Securities Violation

Was Oscar experiencing an increase in COVID-19 testing and treatment costs before its IPO? This investigation focuses on statements contained in the initial public offering (IPO) documents filed with the U.S. Securities and Exchange Commission (SEC) amidst a large decline from the offering price of $39 per share. So why did the IPO fail? Numerous factors may have participated to the failed IPO, but the company’s large increases in Medical Loss Ratio (MLR) throughout 2021 did not help. Although the MLR increase is the result of the competitive market, management justified it by pointing to unexpected core use and higher COVID-19 testing and treatment costs. See our factual timeline for additional info & sources.

Main Event

Q3 2021 - MLR Increase

11/10/2021

Company Statement

Oscar reveals its Q3 2021 financial results noting “meaningful growth across its insurance business in the third quarter” and volatility in its Medical Loss Ratio “as short term pressures from COVID, Special Enrollment Period (“SEP”) membership growth and prior year risk adjustments created headwinds in the quarter” said Mario Schlosser, CEO and Co-Founder of Oscar.

Specifically, the company discloses that “the MLR increased 920bps YoY to 99.7% in 3Q21 from 90.5% in 3Q20, primarily driven by higher net COVID costs as compared to the net benefit in 3Q20, an unfavorable prior year Risk Adjustment Data Validation (RADV) result, and the impact of significant SEP membership growth.”

“With respect to 2022, we took a disciplined approach to pricing, balancing growth and margin improvement for our insurance business and are well-positioned heading into Open Enrollment” Schlosser continued.

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close	Previous close	Price variation	Percentage variation
$12.47	$16.52	$-4.05	-24.52%

See more on Factual Timeline

Initial Lawsuit

This is a class action on behalf of persons and entities that purchased or otherwise acquired Oscar class A common stock pursuant and/or traceable to the registration statement and prospectus issued in connection with the company’s March 2021 initial public offering (IPO).

Filing Date
05/12/2022
Public Offering Date
03/03/2021
Transgression
Securities Violation
Filing Firms
Glancy Prongay & Murray LLP
Case Title
Carpenter v. Oscar Health, Inc. et al
Docket Number
1:22-cv-03885
Court
New York Southern District Court
Free File
Complaint

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors that:

(1) Oscar was experiencing growing COVID-19 testing and treatment costs;
(2) Oscar was experiencing growing net COVID costs;
(3) Oscar would be negatively impacted by an unfavorable prior year Risk Adjustment Data Validation (RADV) result relating to 2019 and 2020;
(4) Oscar was on track to be negatively impacted by significant SEP membership growth; and
(5) as a result of the foregoing, defendants’ positive statements about the company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.