Oscar Health (OSCR) risk factors, FY2024 10-K

Other

1. 01Our business, financial condition, and results of operations may be harmed if we fail to execute our strategy and manage our growth effectively
2. 02Our strategy includes, without limitation, acquiring new members and retaining existing members, introducing new products and plans, expanding into new markets and lines of business, and monetizing our technology through our +Oscar platform
3. 03impact our financial condition or require a change in our operating strategies. As a result of these factors, entering new markets or introducing new health plans may decrease our profitability
4. 04Failure to accurately estimate our incurred medical expenses or effectively manage our medical costs or related administrative costs could negatively affect our financial position, results of operations, and cash flows
5. 05We have a history of losses, and we may not maintain profitability in the future
6. 06Any changes to the ACA and its regulations could materially and adversely affect our business, results of operations, and financial condition

Risks Related to the Regulatory Framework that Governs Us

1. 07We operate in a highly regulated industry and we must comply with numerous and complex state and federal laws and regulations to operate our business, including requirements to maintain or renew our regulatory approvals or obtain new regulatory approvals to sell insurance and to sell specific health plans
2. 08Changes 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, could materially and adversely harm our business and operating results
3. 09Changes to government policies (including those not specifically targeted to the healthcare industry), such as a change in tax laws and the corporate tax rate, premium tax rate, or government spending cuts, could have significant impacts on our business, results of operations, financial condition and liquidity
4. 10We are subject to extensive fraud, waste, and abuse laws that may require us to take remedial measures or give rise to lawsuits, audits, investigations and claims against us, the outcome of which may have a material adverse effect on our business, financial condition, cash flows, or results of operations
5. 11knew, or it is determined that we should have known, that information we provided to form the basis for a claim for government payment was false or fraudulent, or that we were out of compliance with program requirements considered material to the government’s payment decision
6. 12Health insurers are required to maintain compliance programs to prevent, detect and remediate fraud, waste, and abuse, and are often the subject of fraud, waste, and abuse investigations and audits

Risks Related to our Business

1. 13The result of risk adjustment programs may impact our revenue, add operational complexity, and introduce additional uncertainties that have a material adverse effect on our results of operations, financial condition, and cash flows
2. 14If state regulators do not approve payments of dividends and distributions by our health insurance subsidiaries to us, or do not approve other capital efficiency structures we may pursue, we may not have sufficient funds to implement our business strategy
3. 15We need liquidity to pay our operating expenses, make payments on our indebtedness, if any, and pay capital expenditures. The principal sources of our cash receipts are premiums, administrative fees, investment income, proceeds from borrowings and proceeds from the issuance of capital stock
4. 16We are subject to risks associated with our geographic concentration
5. 17We are subject to risks associated with outsourcing services and functions to third parties
6. 18From time to time, we may become involved in costly and time-consuming litigation and regulatory audits and actions, which require significant attention from our management
7. 19We rely on the experience and expertise of our Chief Executive Officer, Co-Founders, senior management team, highly-specialized technology and insurance experts, key technical employees, and other highly skilled personnel
8. 20number of highly-specialized insurance experts, the loss of any one of whom could also have a disproportionate impact on our business. We face significant competition for personnel across all areas of our business, and we may not be able to replace key personnel in a timely manner or at all
9. 21If we are unable to integrate and manage our information systems effectively, our operations could be disrupted
10. 22Real or perceived errors, failures, vulnerabilities, or bugs in our systems, website, or app could impair our operations, damage our reputation and brand, and harm our business and operating results
11. 23We are subject to risks associated with public health crises arising from large-scale medical emergencies, pandemics, natural disasters and other extreme events, which have had, and could in the future have, an adverse effect on our business, results of operations, financial condition and financial performance
12. 24We may not be able to utilize our net operating loss carryforwards (“NOLs”), to offset future taxable income for U.S. federal and state income tax purposes, which could adversely affect our cash flows
13. 25Our limited operating history in an evolving industry makes it difficult to evaluate our current business performance, implementation of our business model, and our future prospects
14. 26We are a public reporting company subject to the rules and regulations established by the SEC and the New York Stock Exchange (“NYSE”). These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting
15. 27Significant delays in our receipt of direct policy premiums, including as a result of regulatory restrictions on policy cancellations and non-renewals, could have a material adverse effect on our business, operations, cash flows, or earnings
16. 28We make virtual healthcare services available to our members through Oscar Medical Group, in which we do not own any equity or voting interest, and our virtual care availability may be disrupted if our arrangements with providers like the Oscar Medical Group become subject to legal challenges
17. 29Failure to secure, protect, or enforce our intellectual property rights could harm our business, results of operations, and financial condition
18. 30We may be subject to claims by others that we are infringing on their intellectual property rights
19. 31We may face risks associated with our utilization of certain artificial intelligence and machine learning models
20. 32Increasing scrutiny and changing expectations with respect to sustainability and environmental, social and governance (“ESG”) matters may impose additional costs on us, impact our access to capital, or expose us to new or additional risks

Risks Related to our Indebtedness

1. 33Restrictions imposed by our Revolving Credit Facility may materially limit our ability to operate our business and finance our future operations or capital needs
2. 34Our debt obligations contain restrictions that impact our business and expose us to risks that could materially adversely affect our liquidity and financial condition
3. 35Provisions in the Revolving Credit Facility or the Indenture governing the 2031 Notes could delay or prevent an otherwise beneficial takeover of us

Risks Related to Ownership of Our Class A Common Stock

1. 36Because Thrive Capital and our Co-Founders’ interests may differ from those of our other stockholders, actions that Thrive Capital and our Co-Founders take with respect to us, as significant stockholders, may not be favorable to our other stockholders, including holders of our Class A common stock
2. 37We cannot predict the effect our dual class structure may have on the market price of our Class A common stock
3. 38We are a “controlled company” within the meaning of the rules of NYSE and, as a result, we may rely on exemptions from certain corporate governance requirements and, if we chose to do so, you will not have the same protections afforded to stockholders of companies that are not exempt from such requirements
4. 39We do not intend to pay dividends on our Class A common stock for the foreseeable future
5. 40We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock
6. 41Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of the Company more difficult, limit attempts by our stockholders to replace or remove our current management, and depress the market price of our Class A common stock
7. 42The obligations associated with being a public company require significant resources and management attention
8. 43If our operating and financial performance in any given period does not meet the guidance that we provide to the public, the market price of our Class A common stock may decline