Oscar Health, Joshua Kushner’s medical founder, raised more than $ 1 billion in an initial public offering that topped the company’s market price range, in a sign of investor confidence despite political uncertainty about the future of US healthcare.
The New York-based company said on Tuesday it cost $ 39 billion each, raising about $ 1.4 billion. Oscar would have a market capitalization of $ 7.9 billion at that price, based on the total number of outstanding shares.
Oscar said earlier that he expects his listing share price to fluctuate from $ 32 to $ 34 before rising to $ 36- $ 38 on Tuesday. Coatue Management, Dragoneer Investment Group and Tiger Global Management – existing investors in the company – have indicated that they want to buy up to $ 375 million worth of shares in the offer.
The move shows that investors are relatively uncomfortable with potential headwinds for the company. President Joe Biden has vowed to reform the U.S. healthcare system, and the Supreme Court is considering a ruling on the fate of the Affordable Care Act, known as Obamacare, which could both pose significant challenges to Oscar’s business model.
Oscar was co-founded in 2012 by Mario Schlosser and Joshua Kushner, the brother of Jared Kushner, the son-in-law of Donald Trump. Kushner’s venture, Thrive Capital, owned a stake worth $ 1.3 billion at the offer price, giving it 75.9 percent of the company’s voting power.
Oscar, which considers itself the first health insurance company, ‘built around a technological platform’, has more than half a million paying members and offers its insurance plans in 18 US states.
But the company struggled to become profitable. In 2020, it recorded a larger loss of more than $ 400 million on revenue of approximately $ 460 million, a decrease of nearly $ 490 million in revenue the previous year.
Oscar’s IPO has come on the heels of several other debates in the public market for ‘insurtech’ groups over the past year, fueling an already strong number of stock market notations.
Clover Health, which uses data analytics to connect senior citizens with Medicare Advantage plans, has been merged with a special acquisition company, or Spac, sponsored by former Facebook CEO Chamath Palihapitiya, in a $ 3 deal. 75 billion in October. Lemonade, which sells rentals, homeowners and pet health insurance, went public last summer with one of the year’s most successful stock market debuts.
Oscar is extremely sensitive to any changes to Obamacare, which lawmakers have been grappling with since it was written into law in 2010. According to his prospectus, almost all the revenue comes from plans subject to the regulations of the Affordable Care Act.
President Joe Biden’s health care program will leave Obamacare largely intact, but will make adjustments and add a public option for all Americans. Meanwhile, the Supreme Court is expected to announce a ruling on another revision of the Affordable Care Act in the coming months.
Goldman Sachs, Morgan Stanley and Allen & Co led the offer.