Oscar Health Raises $ 1.4 Billion Through Its Stock Exchange Listing
Oscar Health, the health insurance company co-founded by Joshua Kushner, raised more than $ 1 billion in an initial public offering that exceeded the company’s marketed price range, a sign of investor confidence despite political uncertainty over the future of health care in the United States.
The New York-based company valued its shares at $ 39 each on Tuesday, according to a statement, raising about $ 1.4 billion. Oscar would have a market cap of $ 7.9 billion at this price, based on the total number of shares outstanding.
Oscar previously said he expected his share price to be between $ 32 and $ 34 before increasing the range to $ 36- $ 38 on Tuesday. Coatue Management, Dragoneer Investment Group and Tiger Global Management – existing investors in the company – had indicated their interest in purchasing up to $ 375 million in shares as part of the offer.
This decision demonstrated that investors are relatively unfazed by potential headwinds for the company. President Joe Biden has sworn to reform the U.S. healthcare system and the Supreme Court are considering a ruling on the fate of the Affordable Care Act, known as Obamacare, both of which could 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, Donald Trump’s son-in-law. Kushner’s venture capital firm, Thrive Capital, held a stake worth $ 1.3 billion at the offer price and would give it 75.9% of the company’s voting rights.
Oscar, which touts itself as the first health insurance company “built around a comprehensive technology platform,” has over half a million paying members and offers insurance plans in 18 US states.
But the company struggled to become profitable. In 2020, it recorded growing losses of over $ 400 million on revenue of around $ 460 million, down from nearly $ 490 million in revenue the previous year.
Oscar’s IPO came on the heels of several other public market debuts for “insurtech” groups over the past year, which fueled an already strong streak of stock market listings.
Clover Health, which uses data analytics to connect seniors to Medicare Advantage plans, merged with a special purpose acquisition company, or Spac, sponsored by former Facebook executive Chamath Palihapitiya in a $ 3.75 billion deal in October. Limonade, which sells rentals, owners, and pet health insurance, became public last summer in what turned out to be one of the most successful stock market debuts of the year.
Oscar is very sensitive to everything changes to Obamacare, which lawmakers have grappled with since it was enacted into law in 2010. Almost all of the company’s income comes from plans subject to the Affordable Care Act regulations, according to its prospectus.
President Joe Biden’s healthcare plan would leave Obamacare largely untouched, but make some adjustments and add a public option for all Americans. The Supreme Court, meanwhile, is expected to announce a decision on another review of the affordable care law in the coming months.
Goldman Sachs, Morgan Stanley and Allen & Co led the offer.