Digital health-insurance company Oscar Health Inc is all set to raise about $1.05 billion by launching its initial public offering of 31 million shares priced at $32 to $34 each. The underwriters will have a 30-day option to buy an additional 4.65 million shares. The company intends to list its Class A common stock on the New York Stock Exchange under the ticker symbol “OSCR.” The company said that Goldman Sachs & Co. LLC, Morgan Stanley and Allen & Company LLC are acting as lead managing bookrunners for the proposed offering with Wells Fargo Securities as managing bookrunner.
- The New York-headquartered company has a large market opportunity to tap given the US health insurance market accounts for nearly $4 trillion in annual spending, which is 18% of GDP. The ‘digital’ company is poised to benefit from the shift to telehealth that has accelerated during the coronavirus pandemic and saw 62% more telehealth visits per 10,000 members in March 2020 compared with the year-earlier month.
- Even as Oscar goes public, it’s founders are set to keep control of the company. The IPO announcement mentions a dual-class share structure with Class A and Class B stock. Class B stock carries 20 voting rights per share compared with the Class A’s one vote per share. The Class B shares are to be held by co-founders Kushner and Schlosser, and Kushner’s Thrive Capital.
- The Oscar prospectus says the company, which has never made a profit, had an accumulated deficit of $1.427 billion as of December 31, 2020. “We incurred net losses of $261.2 million and $406.8 million in the years ended December 31, 2019, and 2020, respectively,” it adds.
- Details in the prospectus show the company’s massive exposure to the Obama-era Affordable Care Act. The prospectus says plans that are subject to regulation under the ACA accounted for 95% of its revenue in 2020 and 96% in 2019.
- For returns, price gains will be the only way for Oscar shareholders as the company has no plans to pay dividends in the near future.