OSCAR HEALTH, INC. – 10-K – Management report and analysis of the financial situation and operating results.

You should read the following discussion and analysis of our financial condition
and results of operations together with our audited consolidated financial
statements and related notes included elsewhere in this Annual Report on Form
10-K. This discussion contains forward-looking statements based upon current
plans, expectations and beliefs involving risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth under "Risk
Factors" and in other parts of this Annual Report on Form 10-K. A discussion of
the year ended December 31, 2020 compared to the year ended December 31, 2019
has been reported previously in our final prospectus filed pursuant to Rule
424(b)(4) (File No. 333-252809), filed with the SEC on March 4, 2021, under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

Overview

Oscar is the first health insurance company built around a full stack technology
platform and a relentless focus on serving our members. We offer Individual &
Family, Small Group and Medicare Advantage plans. We have 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, we launched
+Oscar, our tech-driven platform designed to help provider and payor clients
drive improved efficiency, growth and superior engagement with their members and
patients. Through +Oscar, we provide services and access to our efficient,
full-stack platform and health plan infrastructure to our clients, including our
health insurance company subsidiaries, Cigna + Oscar and Health First Health
Plans.

Recent Developments, Trends and Other Factors Affecting Performance

Initial public offering

On March 5, 2021, we completed our IPO, in which we issued and sold 36,391,946
shares of Class A common stock at the public offering price of $39.00 per share.
We received aggregate net proceeds of $1.3 billion, after deducting underwriting
discounts and commissions. For additional information, see Note 1 - Organization
to our consolidated financial statements included elsewhere in this Annual
Report on Form 10-K.

Growth Factors
During the year ended December 31, 2021, we experienced significant membership
growth due to expansion in existing and new states and the 2021 Special
Enrollment Periods. This increase was most significant in our Individual and
Cigna + Oscar small group offerings. This growth has continued into 2022. During
the 2022 Open Enrollment period, we entered into three new states and expanded
our membership to over one million members as of January 31, 2022, driven
largely by strong growth in our Individual plans and Cigna + Oscar small group
offering.

Reinsurance

We believe our reinsurance agreements help us achieve important goals for our
business, including risk management, capital efficiency, and greater
predictability in our earnings in the event of unexpected significant
fluctuations in MLR. Specifically, reinsurance is a financial arrangement under
which the reinsurer agrees to cover a portion of our medical claims (ceded
claims) in return for a portion of the premium (premiums ceded). Each quota
share reinsurance agreement includes a ceding commission payment from the
reinsurer to Oscar to cover administrative costs. We currently use quota share
agreements to limit our risk and capital requirements, which has enabled us to
grow while optimizing our use of capital. Premiums for quota share insurance are
based on a percentage of premiums earned before ceded reinsurance. All premiums
and claims ceded under the Company's quota share arrangements are shared
proportionally with the reinsurers. For the year ended December 31, 2021, the
Company was party to quota share reinsurance agreements, primarily with Axa
France Vie. In 2022, we continued our reinsurance agreements with Axa France Vie
and entered into new reinsurance agreements with Canada Life Assurance Company.

To the extent ceded premiums exceed ceded claims and commissions, we typically
receive an experience refund. Reinsurance recoveries are recorded as a reduction
to claims incurred, net. We entered into statutory trust agreements with Axa
France Vie in compliance with the credit for reinsurance laws and regulations of
the state of domicile of each ceding company in connection with reinsurance
ceded to an unauthorized reinsurer. Each trust account is funded at 102% of the
ceding entity's health care costs incurred but not yet reported, or IBNR.
Acceptable assets deposited into the trust accounts include cash, certificates
of deposit, and instruments that are acceptable to the commissioner of the
insurance department of the ceding entity's state of domicile.
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Advertising

The table below presents a summary of the percentage of premiums ceded under
quota-share reinsurance agreements:

                                                        Year Ended December 31,
Reinsurance                                                  2021               2020
Axa France Vie                                                        32  %     32  %
Berkshire Hathaway Specialty Insurance Company                         -  %     45  %
Canada Life Assurance Company(1)                                       2  %      -  %
Total Premiums Ceded                                                  34  %     77  %

(1)In May 2021we terminated our 2021 quota share agreements with Canada Life
Insurance company
effective from April 1, 2021.

Because reinsurers are entitled to a portion of our premiums under our quota
share reinsurance arrangements, changes in the amount of premiums ceded under
these arrangements affect our revenue. Furthermore, reductions in the amount of
premiums ceded under quota share reinsurance arrangements may result in an
increase to our minimum capital and surplus requirements, and an increase in
corresponding capital contributions to our health insurance subsidiaries. Refer
to "Liquidity and Capital Resources" for more information.

We also use excess of loss ("XOL") reinsurance to limit our exposure to large
catastrophic risk from individual claims. Under our 2020 and 2021 XOL
reinsurance contracts, the reinsurer is paid to cover claims related losses over
a $500,000 and $750,000 attachment point, respectively. Our reinsurance treaties
do not relieve us of our primary medical claims incurred obligations.

Risk Adjustment
The risk adjustment programs in the Individual, Small Group, and Medicare
Advantage markets we serve are administered federally by CMS and are designed to
mitigate the potential impact of adverse selection and provide stability for
health insurers. Under this program, each plan is assigned a risk score based
upon demographic information and current year claims information related to its
members. Plans with lower than average risk scores relative to the estimated
market average risk score, when applied to the statewide average premium, will
have a risk adjustment payable into the pool. Inversely, plans with higher than
average risk scores relative to the estimated market average risk score, when
applied to the statewide average premium, will have a risk adjustment receivable
from the pool. We reevaluate our risk transfer estimates as new information and
market data becomes available until we receive the final report from CMS in June
of the following year.

Our risk transfer estimates are subject to a high degree of estimation and
variability, and are affected by the relative risk of our members to that of
other insurers. In the Individual and Small Group lines, there is a higher
degree of uncertainty associated with estimates of risk transfers at the
beginning of the policy year resulting from composition of the risk score being
based on concurrent claim data. Furthermore, there is additional uncertainty for
blocks of business that experience high growth compounded by the lack of
credible experience data on the newly enrolling population. Actual risk
adjustment calculations and transfers could materially differ from our
assumptions.


Impact of COVID-19
The COVID-19 pandemic, including its effect on the macroeconomic environment,
and the response of our local, state, and federal governments to contain and
manage the virus, continues to have an impact on our business. In addition,
continued COVID-19 care, testing and vaccine administration, and the risk of new
COVID-19 variants (which may be more contagious or severe, or less responsive to
treatment or vaccines) may also result in increased future medical costs and
drive changes in the way members utilize healthcare.

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To date, we have experienced and may continue to experience changes in the
utilization patterns of our members, as the pandemic continues to affect the
United States, and our members continue to change the way they utilize care. We
experienced depressed non-COVID-19 related medical costs as a result of the
pandemic and as vaccination rates have increased nationally, members began to
resume their utilization of healthcare including care that was deferred,
resulting in increased medical claims expenses. However, this trend may reverse
if vaccination rates stall, COVID-19 variants continue to proliferate, or
COVID-19 vaccines are not effective against new strains or become less effective
over time. During 2021, we also experienced, and may continue to experience,
increased COVID-19 testing and treatment costs. We will be monitoring external
trends closely as these dynamics result in increased uncertainties around our
expectations of both COVID-19 and non-COVID-19 related medical costs. We cannot
accurately estimate the future net potential impact, positive or negative, to
our medical claims expenses at this time.

Overall measures to contain the COVID-19 outbreak may remain in place for a
significant period of time, as certain geographic regions have experienced a
resurgence of COVID-19 infections and new variants of COVID-19 that appear to be
more transmissible have emerged. Although the number of people who have been
vaccinated has been increasing, the duration and severity of this pandemic is
unknown and the extent of the business disruption and financial impact depends
on factors beyond our knowledge and control.


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Summary of Financial Results and Key Operational and Non-GAAP Financial Metrics

We regularly review a number of metrics, including the following key operating
and non-GAAP financial metrics, to evaluate our business, measure our
performance, identify trends in our business, prepare financial projections, and
make strategic decisions. We believe these operational and financial measures
are useful in evaluating our performance, in addition to our financial results
prepared in accordance with GAAP.

                      Financial Results Summary

                                           Year Ended December 31,
                                            2021             2020
                                              (in thousands)
Premiums before ceded reinsurance      $  2,712,988      $ 1,672,339
Reinsurance premiums ceded                 (881,968)      (1,217,304)
Premiums earned                        $  1,831,020      $   455,035
Total revenue                          $  1,838,715      $   462,801
Total operating expenses               $  2,383,196      $   865,067
Net loss                               $   (571,426)     $  (406,825)



                  Key Operating and Non-GAAP Financial Metrics

                       As of December 31,
                   2021                  2020
Members         598,169               402,044



                                                 Year Ended December 31,
                                                  2021              2020

Direct and assumed premiums (in thousands) $3,436,626 $2,287,618
Medical loss rate

                                  88.9  %           84.7  %
InsuranceCo Administrative Expense Ratio            21.8  %           26.1  %
InsuranceCo Combined Ratio                         110.7  %          110.8  %
Adjusted Administrative Expense Ratio               28.9  %           34.3  %
Adjusted EBITDA(1) (in thousands)            $  (429,826)      $  (402,447)


(1) Adjusted EBITDA is a non-GAAP measure. See “Adjusted EBITDA” below for a
reconciliation with net loss, the most directly comparable we GAAP measure,
and for information regarding our use of Adjusted EBITDA.

Members

Members are defined as any individual covered by a health plan that we offer
directly or through a co-branded arrangement. We view the number of members
enrolled in our health plans as an important metric to help evaluate and
estimate revenue and market share. Additionally, the more members we enroll, the
more data we have, which allows us to improve the functionality of our platform.

Membership increased 49% to 598,169 as of December 31, 2021, from 402,044 as of
December 31, 2020. The increase is attributable to growth in Florida and
Arizona, expansion into new markets, and growth within the Cigna+Oscar plan.
Membership growth was also driven by the American Rescue Plan, which allowed for
the creation of the 2021 Special Enrollment Periods, expanded APTC eligibility
and increased APTC subsidies.
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Direct and assumed policy premiums

Direct Policy Premiums are defined as the premiums collected from our members or
from the federal government during the period indicated, before risk adjustment
and reinsurance. These premiums include APTC, or premium subsidies, which are
available to individuals and families with certain annual incomes.

Policy premiums assumed are the premiums we receive primarily as part of our
reinsurance agreements as part of our Cigna+Oscar small group plan offering.

We previously presented Direct Policy Premiums as a key operating metric for the
year ended December 31, 2020, and for each of the quarterly and year-to-date
periods ended March 31, June 30 and September 30 during our 2021 fiscal year and
the corresponding periods in our 2020 fiscal year, as we had received only
insignificant Assumed Policy Premiums prior to the launch of our Cigna+Oscar
small group plan offering for the 2021 plan year. We believe Direct and Assumed
Policy Premiums is an important metric to assess the growth of our individual
and small group plan offerings going forward. Management also views Direct and
Assumed Policy Premiums as a key operating metric because each of our MLR,
InsuranceCo Administrative Expense Ratio, InsuranceCo Combined Ratio and
Adjusted Administrative Expense Ratio are calculated on the basis of Direct and
Assumed Policy Premiums.

                                      Year Ended December 31,
                                         2021             2020
                                           (in thousands)
Direct policy premiums               $ 3,420,328      $ 2,287,319
Assumed premiums                          16,298              299
Direct and assumed premiums          $ 3,436,626      $ 2,287,618



Direct and Assumed Policy Premiums increased for the year ended December 31,
2021 as compared to the year ended December 31, 2020. The increase in Direct
Policy Premiums was primarily attributable to the growth in our membership in
existing and new states and by a shift towards higher premium plans.
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Medical loss rate

Medical loss ratio is calculated as set forth in the table below. Medical claims
are total medical expenses incurred by members in order to utilize health care
services less any member cost sharing. These services include inpatient,
outpatient, pharmacy, and physician costs. Medical claims also include risk
sharing arrangements with certain of our providers. The impact of the federal
risk adjustment program is included in the denominator of our MLR. We believe
MLR is an important metric to demonstrate the ratio of our costs to pay for
health care of our members to the premiums before ceded reinsurance. MLRs in our
existing products are subject to various federal and state minimum requirements.
Below is a calculation of our MLR for the periods indicated.

                                                            Year Ended December 31,
                                                             2021              2020
                                                                 (in thousands)

Direct claims occurring before ceded reinsurance(1) $2,403,108 $1,364,432
Reinsurance claims covered

                                   21,656         

292

Excess of loss ceded claims (2)                             (12,500)        

(13,633)

State reinsurance (3)                                       (14,655)        

(10,026)

Net claims before quota share reinsurance ceded (A) $2,397,609 $1,341,065

Premiums before ceded reinsurance (4)                   $ 2,712,988       $ 

1,672,339

Excess of loss reinsurance premiums (5)                     (16,266)        

(24,066)

Other non-recurring items (6)                                     -         

(64,538)

Net premiums before ceded quota share reinsurance (B) $2,696,722 $1,583,735
Medical loss ratio (A divided by B)

                            88.9  %      

84.7%

(1)See Note 4 - Reinsurance to our consolidated financial statements included
elsewhere in this Annual Report on Form 10-K for a reconciliation of direct
claims incurred to claims incurred, net appearing on the face of our statement
of operations.
(2)Represents claims ceded to reinsurers pursuant to an excess of loss treaty,
for which such reinsurers are financially liable. We use excess of loss
reinsurance to limit the losses on individual claims of our members.
(3)Represents payments made by certain state-run reinsurance programs
established subject to CMS approval under Section 1332 of the ACA.
(4)See Note 3 - Premiums Earned to our consolidated financial statements
included elsewhere in this Annual Report on Form 10-K for an explanation of
premiums before ceded reinsurance.
(5)Represents excess of loss insurance premiums paid.
(6)Represents adjustments for litigation settlements recognized during the year
ended December 31, 2020 related to risk corridor and risk adjustment programs.
Refer to Note 2 - Summary of Significant Accounting Policies to our consolidated
financial statements included elsewhere in this Annual Report on Form 10-K for
additional information.

MLR increased for the year ended December 31, 2021 as compared to the year ended
December 31, 2020. The increase was primarily driven by lower utilization in
2020 due to the COVID-19 pandemic, higher levels of utilization in 2021
resulting from both COVID-19-related and non-COVID-19-related costs and the
impact of significant SEP membership growth.
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InsuranceCo administrative expense ratio

InsuranceCo Administrative Expense Ratio is calculated as set forth in the table
below. The ratio reflects the costs associated with running our combined
insurance companies. We believe InsuranceCo Administrative Expense Ratio is
useful to evaluate our ability to manage our expenses as a percentage of
premiums before ceded quota share reinsurance. Expenses necessary to run the
insurance company are included in other insurance costs and federal and state
assessments. These expenses include variable expenses paid to vendors and
distribution partners, premium taxes and healthcare exchange fees,
employee-related compensation, benefits, marketing costs, and other
administrative expenses. Below is a calculation of our InsuranceCo
Administrative Expense Ratio for the periods indicated.

                                                                         Year Ended December 31,
                                                                        2021                 2020
                                                                             (in thousands)
Other insurance costs                                              $   410,363          $   216,534
Ceding commissions                                                      82,246              126,840
Stock-based compensation expense                                       (42,295)             (18,299)
Health insurance industry fee                                                -               19,251

Federal and state assessment of health insurance subsidiaries 138,369

               81,199
Other non-recurring items (2)                                      $        

$(12,102)
Adjusted administrative expenses of the health insurance subsidiary (A) $588,683 $413,423

Premiums before ceded reinsurance (1)                              $ 2,712,988          $ 1,672,339
Excess of loss reinsurance premiums                                    (16,266)             (24,066)
Other non-recurring items (2)                                                -              (64,538)
Net premiums before ceded quota share reinsurance (B)              $ 2,696,722          $ 1,583,735
Insurance Co Administrative Expense Ratio (A divided by B)                21.8  %              26.1  %


(1)See Note 3 - Premiums Earned to our consolidated financial statements
included elsewhere in this Annual Report on Form 10-K for an explanation of
premiums before ceded reinsurance.
(2)Represents adjustments for litigation settlements recognized during the year
ended December 31, 2020 related to risk corridor and risk adjustment programs.
Refer to Note 2 - Summary of Significant Accounting Policies to our consolidated
financial statements included elsewhere in this Annual Report on Form 10-K for
additional information.


The InsuranceCo Administrative Expense Ratio decreased for the year ended
December 31, 2021 as compared to the year ended December 31, 2020. The decrease
was primarily driven by operating leverage and the repeal of the health
insurance industry fee, partially offset by an increase in investments for our
Medicare Advantage and our Cigna + Oscar offerings.

InsuranceCo combined ratio

InsuranceCo Combined Ratio is defined as the sum of MLR and InsuranceCo
Administrative Expense Ratio. We believe this ratio best represents the current
overall performance of our insurance business for activities that can be
compared to peers. The InsuranceCo Combined Ratio remained flat for the year
ended December 31, 2021.

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Adjusted administrative expense ratio

The Adjusted Administrative Expense Ratio is an operating ratio that reflects
the Company's total administrative expenses (or "Total Administrative
Expenses"), net of non-cash and non-recurring items (as adjusted, "Adjusted
Administrative Expenses"), as a percentage of total revenue, including quota
share reinsurance premiums ceded and excluding excess of loss reinsurance
premiums ceded and non-recurring items (or "Adjusted Total Revenue"). Total
Administrative Expenses are calculated as Total Operating Expenses, excluding
non-administrative insurance-based expenses and ceding commissions. Adjusted
Administrative Expenses are Total Administrative Expenses, net of non-cash and
non-recurring expense items. We believe Adjusted Administrative Expenses is a
useful measure of our administrative expenses, as it excludes insurance-based
expenses, non-cash expenses and non-recurring expenses. We believe Adjusted
Administrative Expense Ratio is useful to evaluate our ability to manage our
overall administrative expense base. This ratio also provides further clarity
into our overall path to profitability. Below is a calculation of our Adjusted
Administrative Expense Ratio for the periods indicated.


                                                                Year Ended December 31,
                                                                 2021              2020
                                                                     (in thousands)
Total Operating Expenses                                    $ 2,383,196       $   865,067
Claims incurred, net                                         (1,623,995)         (309,353)
Premium deficiency reserve release                               55,325           (71,816)
Ceding commissions                                               82,246           126,840
Total Administrative Expenses                               $   896,772       $   610,738
Stock-based compensation expense/warrant expense                (99,152)    

(40,970)

Depreciation and amortization                                   (14,605)    

(11,285)

Other non-recurring items (1)(2)                                   (898)    

(12,102)

Adjusted Administrative Expenses (A)                        $   782,117       $   546,381
Total Revenue                                               $ 1,838,715       $   462,801
Reinsurance premiums ceded                                      881,968         1,217,304
Excess of loss reinsurance premiums                             (16,266)          (24,066)
Other non-recurring items (2)                                         -           (64,538)
Adjusted Total Revenue (B)                                  $ 2,704,417       $ 1,591,501
Adjusted Administrative Expense Ratio (A divided by B)             28.9  %  

34.3%

(1)Represents approximately $0.9 million of non-recurring expenses incurred in
connection with the IPO during the year ended December 31, 2021.
(2)Represents adjustments for litigation settlements recognized during the year
ended December 31, 2020 related to risk corridor and risk adjustment programs.
Refer to Note 2 - Summary of Significant Accounting Policies to our consolidated
financial statements included elsewhere in this Annual Report on Form 10-K for
additional information.


Adjusted EBITDA

Adjusted EBITDA is defined as net loss for the Company and its consolidated
subsidiaries before interest expense, income tax (benefit) expense, depreciation
and amortization as further adjusted for stock-based compensation, warrant
contract expense, changes in the fair value of warrant liabilities, and other
non-recurring items as described below. We present Adjusted EBITDA because we
consider it to be an important supplemental measure of our performance and
believe it is frequently used by securities analysts, investors, and other
interested parties in the evaluation of companies in our industry. Adjusted
EBITDA is a non-GAAP measure. Management believes that investors' understanding
of our performance is enhanced by including this non-GAAP financial measure as a
reasonable basis for comparing our ongoing results of operations.

We caution investors that amounts presented in accordance with our definition of
Adjusted EBITDA may not be comparable to similar measures disclosed by our
competitors, because not all companies and analysts calculate Adjusted EBITDA in
the same manner.

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Management uses Adjusted EBITDA:
•as a measurement of operating performance because it assists us in comparing
the operating performance of our business on a consistent basis, as it removes
the impact of items not directly resulting from our core operations;
•for planning purposes, including the preparation of our internal annual
operating budget and financial projections;
•to evaluate the performance and effectiveness of our operational strategies;
and
•to evaluate our capacity to expand our business.

By providing this non-GAAP financial measure, together with a reconciliation to
the most comparable U.S. GAAP measure, we believe we are enhancing investors'
understanding of our business and our results of operations, as well as
assisting investors in evaluating how well we are executing our strategic
initiatives. Adjusted EBITDA has limitations as an analytical tool, and should
not be considered in isolation, or as an alternative to, or a substitute for net
loss or other financial statement data presented in our consolidated financial
statements as indicators of financial performance.

                                                    Year Ended December 31,
                                                     2021              2020
                                                        (in thousands)
Net loss                                        $    (571,426)     $ (406,825)
Interest expense                                        4,720           3,514
Other expense                                           1,201               -
Income tax (benefit) expense                              846           1,045
Depreciation and amortization                          14,605          11,285
Stock-based compensation/warrant expense(1)            99,152          

40,970

Other non-recurring items(2)(3)                        21,076         (52,436)
Adjusted EBITDA                                 $    (429,826)     $ (402,447)


(1)Represents (i) non-cash expenses related to equity-based compensation
programs, which vary from period to period depending on various factors
including the timing, number, and the valuation of awards, (ii) warrant contract
expense, and (iii) changes in the fair value of warrant liabilities.
(2)Represents debt extinguishment costs of $20.2 million incurred on the
prepayment of our Term Loan (refer to Note 15 - Debt and Warrants to our
consolidated financial statements included elsewhere in this Annual Report on
Form 10-K) and approximately $0.9 million of non-recurring expenses incurred in
connection with the IPO during the year ended December 31, 2021.
(3)Represents adjustments for litigation settlements recognized during the year
ended December 31, 2020 related to risk corridor and risk adjustment programs.
Refer to Note 2 - Summary of Significant Accounting Policies to our consolidated
financial statements included elsewhere in this Annual Report on Form 10-K for
additional information.

Components of our operating results

Premiums before ceded reinsurance

Premiums before ceded reinsurance primarily consist of premiums received, or to
be received, directly from our members or from CMS as part of the APTC program,
net of the impact of our risk adjustment payable. Premiums before ceded
reinsurance are generally impacted by the amount of risk sharing adjustments,
our ability to acquire new members and retain existing members, and average size
and premium rate of policies.

Reinsurance Premiums Ceded

Reinsurance premiums ceded represent the amount of premiums written that are
ceded to reinsurers either through quota share or XOL reinsurance. We enter into
reinsurance agreements, in part, to limit our exposure to potential losses as
well as to provide additional capacity for growth. Reinsurance premiums ceded
are recognized over the reinsurance contract period in proportion to the period
of risk covered. The volume of our reinsurance premiums ceded is impacted by the
level of our premiums earned and any decision we make to increase or decrease
limits, retention levels, and co-participations.

Investment income and other income

Investment and other income primarily includes interest earned and capital gains
on our investment portfolio, as well as income from the administration
services provided within the framework of the +Oscar platform.

Claims incurred, net

Claims incurred, net primarily consists of both paid and unpaid medical expenses
incurred to provide medical services and products to our members. Medical claims
include fee-for-service claims, pharmacy benefits, capitation payments to
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providers, provider disputed claims and various other medical-related costs.
Under fee-for-service claims arrangements with providers, we retain the
financial responsibility for medical care provided and incur costs based on
actual utilization of hospital and physician services. Medical claims are
recognized in the period health care services are provided. Unpaid medical
expenses include claims reported and in the process of being settled, but that
have not yet been paid, as well as health care costs incurred but not yet
reported to us, which are collectively referred to as benefits payable or claim
reserves. The development of the claim reserve estimate is based on actuarial
methodologies that consider underlying claim payment patterns, medical cost
inflation, historical developments, such as claim inventory levels and claim
receipt patterns, and other relevant factors. The methods for making such
estimates and for establishing the resulting liability are continuously reviewed
and any adjustments are reflected in the period determined. Claims incurred, net
also reflects the net impact of our ceded reinsurance claims.

Other insurance costs

Other insurance costs primarily include distribution costs, wages, benefits,
marketing, rent, costs of software and hardware, unallocated claims adjustment
expenses, and administrative costs associated with functions that are necessary
to support our health insurance business and are net of ceding commissions we
receive from our reinsurance partners. Such functions include, but are not
limited to, member concierge services, claims processing, utilization
management, and related health plan operations, actuarial, compliance and
portions of information systems, legal and finance.

General and administrative expenses

General and administrative expenses primarily include wages, benefits, costs of
software and hardware, and administrative costs for our corporate and technology
functions. Such functions include, but are not limited to executive management,
and portions of legal, finance and information systems, including product
management and development.

Federal and state assessments

Federal and state assessments represent non-income tax charges from federal and
state governments, including but not limited to healthcare exchange user fees,
premium taxes, franchise taxes, and other state and local non-premium related
taxes.

Health Insurance Industry Fee

The ACA includes an annual, nondeductible insurance industry tax that was levied
proportionally across the insurance industry for risk-based health insurance
products, which we were subject to in 2020. Beginning in 2021, the HIF has been
permanently repealed.

Premium Deficiency Reserve Release
Premium deficiency reserve release is the year over year change in the premium
deficiency reserve liability. Premium deficiency reserve liabilities are
established when it is probable that expected future claims and maintenance
expenses will exceed future premium and reinsurance recoveries on existing
medical insurance contracts without consideration of investment income.

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Results of Operations

Year ended December 31, 2021 compared to the year ended December 31, 2020

The following table sets forth our results of operations for the periods
indicated:


                                                         Year Ended December 31,
                                          2021             2020           $ Change        % Change
                                                             (in thousands)
Revenue
Premiums before ceded reinsurance     $ 2,712,988      $ 1,672,339      $ 1,040,649           62  %
Reinsurance premiums ceded               (881,968)      (1,217,304)         335,336          (28) %
Premiums earned                         1,831,020          455,035        1,375,985          302  %
Investment income and other revenue         7,695            7,766              (71)          (1) %
Total revenue                           1,838,715          462,801        1,375,914          297  %
Operating Expenses:
Claims incurred, net                    1,623,995          309,353        1,314,642          425  %
Other insurance costs                     410,363          216,534          193,829           90  %

General and administrative expenses 265,078 166,655

 98,423           59  %
Federal and state assessments             139,085           81,458           57,627           71  %
Health insurance industry fee                   -           19,251          (19,251)        (100) %
Premium deficiency reserve release        (55,325)          71,816         (127,141)        (177) %

Total operating expenses                2,383,196          865,067        1,518,129          175  %
Loss from operations                     (544,481)        (402,266)        (142,215)          35  %
Interest expense                            4,720            3,514            1,206           34  %
Other expense                               1,201                -            1,201         *NM
Loss on extinguishment of debt             20,178                -           20,178         *NM
Loss before income taxes                 (570,580)        (405,780)        (164,800)          41  %
Income tax (benefit) provision                846            1,045             (199)         (19) %
Net loss                              $  (571,426)     $  (406,825)     $  (164,601)          40  %


*NM - not meaningful

Premiums before ceded reinsurance

Premiums before ceded reinsurance increased by $1,040.6 million, or 62%, to
$2,713.0 million for the year ended December 31, 2021, from $1,672.3 million for
the year ended December 31, 2020. This increase was primarily driven by an
increase in direct and assumed premiums due to higher membership in existing
markets driven by growth in the Open Enrollment Period and as a result of the
creation of the 2021 Special Enrollment Periods, expansion into new markets, and
a mix shift towards higher premium plans. Premiums before ceded reinsurance
incorporates our estimated risk adjustment payable required under the ACA
program, which represents approximately 21% and 27% of direct and assumed policy
premiums for the years ended December 31, 2021 and 2020, respectively.

Ceded reinsurance premiums

Reinsurance premiums ceded decreased $335.3 million, or 28%, to $882.0 million
for the year ended December 31, 2021, from $1,217.3 million for the year ended
December 31, 2020. The decrease was primarily driven by a decrease in average
quota share cession rates from 77% for the year ended December 31, 2020 to 34%
for the year ended December 31, 2021.

Claims incurred, net

Claims incurred, net, increased $1,314.6 million, or 425%, to $1,624.0 million
for the year ended December 31, 2021, from $309.4 million for the year ended
December 31, 2020, which was primarily due to higher claims volume from
increases in membership compared to the prior year, increased COVID-19 costs,
increased non-COVID-19 healthcare costs as a result of lower utilization in 2020
due to the COVID-19 pandemic, and a decrease in quota share reinsurance.

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Other Insurance Costs

Other insurance costs increased $193.8 million, or 90%, to $410.4 million for
the year ended December 31, 2021, from $216.5 million for the year ended
December 31, 2020. The increase was primarily attributable to distribution fees
including broker commissions and exchange fees, vendor costs, and the
introduction of the Cigna + Oscar business, which began in the fourth quarter of
2020. A decrease in reinsurance commissions resulting from a decrease in quota
share reinsurance also contributed to higher other insurance costs.
Additionally, stock-based compensation expense contributed to the increase due
to the issuance of new equity incentive awards with higher valuations.

General and administrative expenses

General and administrative expenses increased $98.4 million, or 59%, to $265.1
million for the year ended December 31, 2021, from $166.7 million for the year
ended December 31, 2020. The increase was attributable to headcount-related
growth to support strategic partnerships, platform technologies and costs to
support requirements to operate as a public company. Stock-based compensation
expense also contributed to the increase due to the issuance of new equity
incentive awards with higher valuations.

Federal and state assessments

Federal and state assessments increased $57.6 million, or 71%, to $139.1 million
for the year ended December 31, 2021, from $81.5 million for the year ended
December 31, 2020, which was primarily due to higher healthcare exchange fees
and premium taxes driven by membership and premium increases.

Health insurance industry fees

Health insurance industry fees were repealed in 2021. The fees incurred
for the year ended December 31, 2020 has been $19.3 million.

Release of premium shortfall reserve

Premium deficiency reserve release decreased $127.1 million, for the year ended
December 31, 2021, from a net expense of $71.8 million for the year ended
December 31, 2020. The improvement was driven by a higher premium deficiency
reserve balance at December 31, 2020, resulting in higher amortization.


Cash and capital resources

Overview

We maintain liquidity at two levels of our corporate structure, through our
health insurance subsidiaries and through holdcoour consolidated subsidiaries
excluding our regulated insurance subsidiaries.

The majority of the assets held by our health insurance subsidiaries are in the
form of cash and cash equivalents and investments. As of December 31, 2021 and
December 31, 2020, total cash and cash equivalents and investments held by our
health insurance subsidiaries was $1.8 billion and $1.3 billion, respectively,
of which $17.0 million and $16.8 million, respectively, was on deposit with
regulators as required for statutory licensing purposes and are classified as
restricted deposits on the balance sheet.

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Our health insurance subsidiaries' states of domicile have statutory minimum
capital requirements that are intended to measure capital adequacy, taking into
account the risk characteristics of an insurer's investments and products. The
combined statutory capital and surplus of our health insurance subsidiaries was
$474.8 million and $199.1 million at December 31, 2021 and December 31, 2020,
respectively, which was in compliance with and in excess of the minimum capital
requirements for each period. The health insurance subsidiaries historically
have required capital contributions from Holdco to maintain minimum levels. Our
health insurance subsidiaries also utilize quota share reinsurance arrangements
to manage our risk, which reduces our minimum capital and surplus requirements,
enabling us to efficiently deploy capital to fund our growth. During the year
ended December 31, 2021 and 2020, Holdco made $540.9 million and $366.2 million
of capital contributions, respectively, to the health insurance subsidiaries. We
estimate that had we not had any quota share reinsurance arrangements in place,
the insurance subsidiaries would have been required to hold approximately $147.9
million of additional capital as of December 31, 2021, which Holdco would have
been required to fund. The actual amount of any required capital contributions
to our insurance subsidiaries may differ at any given time depending on each
insurance subsidiary's capital adequacy. For additional information on our
capital contributions, see "Risk Factors-Risks Related to Our Business-If state
regulators do not approve payments of dividends and distributions by our
subsidiaries to us, we may not have sufficient funds to implement our business
strategy."

Short-Term Cash Requirements
The majority of the assets held by Holdco are in the form of cash and cash
equivalents and investments. As of December 31, 2021 and December 31, 2020,
total cash and cash equivalents and investments held by Holdco was $738.6
million and $273.7 million, respectively, of which $11.0 million and $9.7
million was restricted for 2021 and 2020, respectively. We believe the cash, and
cash equivalents and investments held by Holdco, not including restricted cash,
will be sufficient to fund our operating requirements for no less than the next
twelve months.

Our cash flows used in operations may differ substantially from our net loss due
to non-cash charges or due to changes in balance sheet accounts. The timing of
our cash flows from operating activities can also vary among periods due to the
timing of payments made or received. Some of our payments and receipts,
including risk adjustment and subsequent reinsurance receipts, can be
significant. For example, during the third quarter of 2021, our insurance
subsidiaries made payments of $461.8 million into the risk adjustment program
for the 2020 policy year. Therefore, their timing can influence cash flows from
operating activities in any given period which would have a negative impact on
our operating cash flows.

The Company's cash requirements within the next twelve months include subsidiary
capital infusions, Holdco expenses, and interest expenses. Payments into the
risk adjustment program are made annually in the third quarter. We expect the
cash required to meet these obligations to be primarily funded by cash available
for general corporate use, funds primarily generated through equity or debt
financing transactions, cash flows from current operations, and the realization
of current assets, such as accounts receivable.

Long-Term Cash Requirements
Our long-term cash requirements under our various contractual obligations and
commitments include:

•Operating leases. See Note 13 of the Notes to the consolidated financial
statements included elsewhere in this Annual Report on Form 10-K for further
detail of our obligations and the timing of expected future payments.
•Noncontrolling interests. See Note 5 of the Notes to the consolidated financial
statements included elsewhere in this Annual Report on Form 10-K for further
detail. We do not have any material required redemptions in the next twelve
months.

We expect the cash required to meet our long-term obligations to be primarily
generated through future cash flows from operations. However, we also have the
ability to generate cash to satisfy both our current and long-term requirements
through increased commitments under the Revolving Credit Facility. We believe
our capital resources are sufficient to meet future short-term and long-term
liquidity needs.

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Term Loan Facility

On October 30, 2020, we entered into the term loan credit agreement with HPS
Investment Partners, LLC, as administrative agent, and certain other lenders for
the term loan facility (the "Term Loan Facility"), in the aggregate principal
amount of $150 million. In connection with the IPO, we repaid in full
outstanding borrowings, including fees and expenses, under our Term Loan
Facility, including a prepayment premium equal to 6.50% of the principal amount
of the Term Loan Facility plus accrued and unpaid interest through the six-month
anniversary of the closing date of the Term Loan Facility. For additional
information regarding the Term Loan Facility, see Note 15 - Debt and Warrants of
our consolidated financial statements included elsewhere in this Annual Report
on Form 10-K.

Revolving Credit Facility

On February 21, 2021, we entered into a senior secured credit agreement, with
Wells Fargo Bank, National Association as administrative agent, and certain
other lenders for a revolving loan credit facility (the "Revolving Credit
Facility") in the aggregate principal amount of $200 million. The Revolving
Credit Facility is guaranteed by Oscar Management Corporation (formerly Mulberry
Management Corporation), a wholly owned subsidiary of Oscar, and all of our
future direct and indirect subsidiaries (subject to certain permitted
exceptions, including exceptions for guarantees that would require material
governmental consents or in respect of joint venture) (the "Guarantors"). Our
Revolving Credit Facility is secured by a lien on substantially all of our and
the Guarantors' assets (subject to certain exceptions). Proceeds are to be used
solely for general corporate purposes of the Company. The Revolving Credit
Facility is available until February 2024, provided we are in compliance with
all covenants.

The Revolving Credit Facility permits us to increase commitments under the
Revolving Credit Facility by an aggregate amount not to exceed $50 million. The
incurrence of any such incremental Revolving Credit Facility will be subject to
the following conditions measured at the time of incurrence of such commitments:
(i) no default or event of default, (ii) all representations and warranties must
be true and correct in all material respects immediately prior to, and after
giving effect to, the incurrence of such incremental Revolving Credit Facility
and (iii) and any such conditions as agreed between the Borrower and the lender
providing such incremental commitment.

From December 31, 2021there was no outstanding loan under the
Revolving credit facility.

Interest rate, Commitment fees

The interest rate applicable to borrowings under our Revolving Credit Facility
is determined as follows, at our option: (a) a rate per annum equal to the
Adjusted LIBO Rate plus an applicable margin of 4.50% (Adjusted London Interbank
Offered Rate, or LIBO rate, is calculated based on one-, three- or six-month
LIBO rates, or such other period as agreed by all relevant Lenders, which is
determined by reference to ICE Benchmark Administration Limited, but not less
than 1.00%), or (b) a rate per annum equal to the Alternate Base Rate plus the
applicable margin of 3.50% (the Alternate Base Rate is equal to the highest of
(i) the prime rate, (ii) the federal funds effective rate plus 0.50%, and (iii)
the Adjusted LIBO Rate based on a one-month interest period, plus 1.00%). A
commitment fee of 0.50% per annum is payable under our Revolving Credit Facility
on the actual daily unused portions of the Revolving Credit Facility. The
Revolving Credit Facility also contains LIBO rate replacement provisions in the
event LIBO rate becomes unavailable during the term of this facility.

The Revolving Credit Facility requires us to comply with certain restrictive
covenants, including but not limited to covenants relating to limitations on
indebtedness, liens, investments, loans and advances, restricted payments and
restrictive agreements, mergers, consolidations, sale of assets and
acquisitions, sale and leaseback transactions and affiliate transactions.

In addition, the Revolving Credit Facility contains financial covenants that
require us to maintain specified levels of direct policy premiums and liquidity
and require compliance with a maximum combined ratio.

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Convertible Senior Notes

On January 27, 2022, we entered into an investment agreement (the "Investment
Agreement") pursuant to which we agreed to issue and sell $305 million in
aggregate principal amount of our 7.25% Convertible Senior Notes due 2031 (the
"2031 Notes") to funds affiliated with or advised by Dragoneer Investment Group,
LLC, Thrive Capital Management, LLC, LionTree Investment Management, LLC and
Tenere Capital LLC (collectively, the "Purchasers"). The transaction
contemplated by the Investment Agreement closed on February 3, 2022 (the
"Closing Date"). In connection with the issuance of the 2031 Notes, on February
3, 2022, we entered into an indenture (the "Indenture") between us and U.S. Bank
National Association, as trustee. The 2031 Notes bear interest at a rate of
7.25% per annum, payable in cash, semi-annually in arrears on June 30 and
December 31 of each year, commencing on June 30, 2022.
The 2031 Notes are our senior, unsecured obligations and are (i) equal in right
of payment with our existing and future senior, unsecured indebtedness; (ii)
senior in right of payment to our existing and future indebtedness that is
expressly subordinated to the 2031 Notes; (iii) effectively subordinated to our
existing and future secured indebtedness, to the extent of the value of the
collateral securing that indebtedness; and (iv) structurally subordinated to all
existing and future indebtedness and other liabilities, including trade
payables, and (to the extent we are not a holder thereof) preferred equity, if
any, of our subsidiaries.
The 2031 Notes may be converted, subject to certain conditions, at an initial
conversion price of approximately $8.32 (subject to customary adjustments),
which reflects a 38% premium to the price of our Class A common stock as of the
close of business on January 26, 2022. Upon conversion, the 2031 Notes will be
settled, at our election, in shares of Class A common stock, cash, or a
combination of cash and shares of Class A common stock, subject to certain
exceptions. The conversion rate and conversion price are subject to customary
adjustments upon the occurrence of certain events. Upon the occurrence of a
fundamental change (as defined in the Indenture), holders of the 2031 Notes have
the right to require us to repurchase all or some of their 2031 Notes for cash,
subject to certain conditions. The repurchase price will be equal to the
principal amount of the notes to be repurchased, plus accrued and unpaid
interest, if any, to, but excluding, the applicable repurchase date. The 2031
Notes have a stated maturity of December 31, 2031, subject to earlier
conversion, redemption or repurchase in accordance with their terms.
Additionally, pursuant to the Investment Agreement, after the fifth anniversary
of the Closing Date, the initial Purchasers of the 2031 Notes have the right to
require the Company to repurchase all of their Notes for cash, on each of June
30, 2027, June 30, 2028, June 30, 2029 and June 30, 2030 (each, a "Repurchase
Date"), subject to certain notice requirements as described in the Investment
Agreement.
We may not redeem the 2031 Notes prior to December 31, 2026. We may redeem all,
but not less than all, of the 2031 Notes, at our option, on or after December
31, 2026 and on or before the 35th scheduled trading day immediately preceding
the maturity date, for a cash purchase price equal to the redemption price, but
only if the last reported sale price per share of Class A common stock exceeds
200% of the conversion price on each of at least 20 trading days (whether or not
consecutive) during the 30 consecutive trading days ending on, and including,
the trading day immediately before the date on which we send the redemption
notice for such redemption. The redemption price will be a cash amount equal to
the principal amount of the 2031 Notes to be redeemed, plus accrued and unpaid
interest, if any, to, but excluding, the redemption date.
The 2031 Notes include customary provisions relating to the occurrence of
"Events of Default" (as defined in the Indenture), as well as customary
covenants for convertible notes of this type, including restrictions on our
ability to refinance our indebtedness and incur additional indebtedness.

Investments

Holdco and our health insurance subsidiaries generally hold investments in U.S.
Treasury and agency securities. Holdco also invests in investment-grade,
marketable debt securities to improve our overall investment return. These
investments are purchased pursuant to board approved investment policies which
conform to applicable state laws and regulations.

Our investment policies are designed to provide liquidity, preserve capital, and
maximize total return on invested assets, all in a manner consistent with state
requirements that prescribe the types of instruments in which our subsidiaries
may invest. These investment policies require that our investments have final
maturities of a maximum of three years from the settlement date. Professional
portfolio managers operating under documented guidelines manage our investments
and a portion of our cash equivalents. Our portfolio managers must obtain our
prior approval before selling investments where the loss position of those
investments exceeds certain levels.

Our restricted investments primarily include cash and cash equivalents and
we Treasury securities; we have the capacity to hold such a restriction
investments until maturity. We maintain cash and cash equivalents and
investments on deposit or

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pledged to various state agencies as a condition for licensure. We classify our
restricted assets as long-term given the requirement to maintain such assets on
deposit with regulators.

Summary of Cash Flows
Our cash flows used in operations may differ substantially from our net loss due
to non-cash charges or due to changes in balance sheet accounts.

The timing of our cash flows from operating activities can also vary among
periods due to the timing of payments made or received. Some of our payments and
receipts, including loss settlements and subsequent reinsurance receipts, can be
significant. Therefore, their timing can influence cash flows from operating
activities in any given period. The potential for a large claim under an
insurance or reinsurance contract means that our health insurance subsidiaries
may need to make substantial payments within relatively short periods of time,
which would have a negative impact on our operating cash flows.

The following table shows summary cash flows information for the periods
indicated:

                                                                      Year Ended December 31,
                                                            2021                2020              Change
                                                                           (in thousands)
Net cash (used in) provided by operating activities     $ (181,745)         $ 222,732          $ (404,477)
Net cash (used in) provided by investing activities       (774,515)          (344,714)           (429,801)

Net cash (used in) provided by financing activities 1,238,712

   611,707             627,005
Net increase in cash and cash equivalents and
restricted cash equivalents                             $  282,452          

$489,725 ($207,273)

Operational activities

Net cash used in operating activities increased $404.5 million to $181.7 million
for the year ended December 31, 2021, compared to $222.7 million provided by
operating activities for the year ended December 31, 2020, primarily due to an
increase in net loss for the year ended December 31, 2021, as well as cash paid
into the risk adjustment program during the year ended December 31, 2021. Our
risk adjustment transfer payable increased as a result of membership growth and
the health status of our members, who continue to have lower than average risk
scores compared to the health status of other participants in ACA plans.
Additionally, the change in receivables due from reinsurance programs resulting
from decreases in our quota share reinsurance program contributed to the cash
used in operating cash flows.

Investing Activities

Net cash used in investing activities increased to $774.5 million for the year
ended December 31, 2021, compared to $344.7 million for the year ended December
31, 2020, an increase of $429.8 million. The increase was primarily due to the
use of a portion of our IPO proceeds to fund the growth of the investment
portfolio, as increased purchases more than offset sales and maturity of
investments.

Fundraising activities

Net cash provided by financing activities increased to $1.2 billion for the year
ended December 31, 2021, compared to $611.7 million for the year ended December
31, 2020. The increase was primarily due to net proceeds of $1.3 billion from
the sale of common stock during our IPO, a portion of which was used to repay in
full the outstanding balance of the Term Loan.



Critical Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of revenues, expenses, assets, and liabilities and disclosure
of contingent assets and liabilities in our financial statements. We regularly
assess these estimates; however, actual amounts could differ from those
estimates. The most significant items involving management's estimates include
estimates of benefits payable, reinsurance, premium deficiency reserve, risk
adjustment, stock-based compensation, and income taxes. The impact of changes in
estimates is recorded in the period in which they become known.
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Contents

An accounting policy is considered to be critical if the nature of the estimates
or assumptions is material due to the levels of subjectivity and judgment
necessary to account for highly uncertain matters or the susceptibility of such
matters to change, and the effect of the estimates and assumptions on financial
condition, or operating performance. The accounting policies that reflect a
significant level of estimation and that are most likely to have a material
impact on our reported financial results are described below. Other significant
accounting policies such as reinsurance, premium deficiency reserve, risk
adjustment, stock-based compensation, and income taxes do not involve
significant levels of uncertainty and are disclosed in Item 8, Financial
Statements and Supplementary Data in this Annual Report on Form 10-K.

Benefits Payable
Benefits payable includes estimates of our obligations for health care services
that have been rendered on behalf of members, but for which claims have either
not yet been received or processed. Depending on the health care professional
and type of service, the typical billing lag for services can be up to 90 days
from the date of service. Approximately 90% of claims related to health care
services are known and settled within 90 days from the date of service and
substantially all within 12 months from the accepted claims submission.

In each reporting period, our operating results include the effects of more
completely developed benefits payable estimates associated with previously
reported periods. If the revised estimate of prior period health care claims is
less than the previous estimate, we will decrease reported health care claims in
the current period (favorable development). If the revised estimate of prior
period health care claims is more than the previous estimate, we will increase
reported health care costs in the current period (unfavorable development).
Health care costs in the years ended December 31, 2021 and December 31, 2020
included favorable health care claim development related to prior years of $16.0
million (net of reinsurance) and unfavorable development of $1.0 million (net of
reinsurance), respectively.

In developing our benefits payable estimates, we apply different estimation
methods depending on the month for which incurred claims are being estimated.
For example, in recent months, we estimate claim costs incurred by applying
assumed medical cost trends to the PMPM medical costs incurred in prior months
for which more complete claim data is available, supplemented by a review of
near-term completion factors. Additional consideration is also given to settled
claims that may reopen as a result of provider disputes.

Completion Factors

A completion factor is an actuarial estimate, based upon historical experience
and analysis of current trends, of the percentage of incurred claims during a
given period that have been adjudicated by us at the date of estimation.
Completion factors are the most significant factors we use in developing our
benefits payable estimates. For periods prior to the two most recent months,
completion factors include judgments related to claim submissions such as the
time from date of service to claim receipt, claim levels, and processing cycles,
as well as other factors. If actual claims submission rates from providers
(which can be influenced by a number of factors, including provider mix and
electronic versus manual submissions) or our claim processing patterns are
different than estimated, our reserve estimates may be significantly impacted.
For the most recent two months, the completion factors are informed primarily
from forecasted per member per month claims projections developed from our
historical experience and adjusted by emerging experience data in the preceding
months which may include adjustments for known changes in estimates of recent
hospital and drug utilization data, provider contracting changes, changes in
benefit levels, changes in member cost sharing, changes in medical management
processes, product mix, and workday seasonality.

The following table illustrates the sensitivity of the estimated potential
impact on our benefits payable estimates gross of reinsurance, for those periods
as of December 31, 2021 to an increase (decrease) in the underlying completion
factors:

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Changes in Estimates     Increase (Decrease) in Benefits Payable (in thousands)
(1.00)%                 $                                                49,075
(0.75)%                                                                  36,713
(0.50)%                                                                  24,414
(0.25)%                                                                  12,176
0.25%                                                                   (12,116)
0.50%                                                                   (24,171)
0.75%                                                                   (36,167)
1.00%                                                                   (48,103)



Management believes the amount of benefits payable is reasonable and adequate to
cover our liability for unpaid claims as of December 31, 2021; however, actual
claim payments may differ from established estimates as discussed above.
Assuming a hypothetical 1% difference between our December 31, 2021 estimates of
benefits payable and actual benefits payable, excluding any potential offsetting
impact from premium rebates, net earnings for the year ended December 31, 2021
would have increased by approximately $49.1 million or decreased by
approximately $48.1 million.

For more details on our medical expenses, see note 2 – Summary of
Significant accounting policies in our consolidated financial statements
included elsewhere in this Annual Report on Form 10-K.

About John Tuttle

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