An Overview of Disruptive Payers That Filed for an IPO in 2021
Both Oscar Health and Alignment Healthcare have been disruptive payers in the health insurance world for their use of technology.
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- Two disruptive payers—Oscar Health and Alignment Healthcare—filed for an initial public offering (IPO) in order to go public in 2021.
There are numerous reasons why a company would choose to go public, according to the US Securities and Exchange Commission (SEC). For example, a business may seek to increase its access to capital, boost its stock’s liquidity, acquire other businesses, or build its company’s brand.
All companies that seek to offer shares of their capital stocks publicly must register with the SEC, with certain exceptions. The entire process can take four to six months.
Oscar Health
Oscar Health began filing to go public in December 2020 and officially filed its registration statement for the proposed initial public offering in February 2021.
Less than a month later, the company announced its initial public offering—the first time the company would offer its stocks to the public. Oscar Health launched its offering with 31,000,000 shares of its Class A common stock, about 649,000 of which were sold by Oscar’s stakeholders.
The initial public offering price for the payer’s stock was projected at $32 to $34 per share.
Ultimately, Oscar Health’s initial public offering was higher in number and in price than the projections.
Over 37,000,000 shares for Oscar Health became available on the New York Stock Exchange on March 3, 2021. Again, slightly over 649,000 of these were sold by Oscar stakeholders. The price was $39 per stock.
“We estimate that we will receive net proceeds from this offering of approximately $936.3 million (or approximately $1.1 billion if the underwriters exercise their option to purchase additional shares of Class A common stock in full), based upon an assumed initial public offering price of $33.00 per share (which is the midpoint of the price range set forth on the cover page of this prospectus) and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us,” the company projected in its SEC filing.
The filing noted that an increase of $1.00 in the initial public offering price would increase net proceeds by around $30.4 million.
The company accrued $2.3 billion in premium dollars alone in 2020, the filing stated, with a medical loss ratio of 84.7 percent.
Oscar Health projected growth opportunities in telemedicine, care concierge, claims management, and population health, totaling approximately $123 billion.
Additionally, the payer indicated that it plans to increase its membership, enter new markets and states, monetize its platform, and create new partnerships and products, and possibly acquire other companies. Going public would be instrumental to all of these goals.
Bloomberg reported that, after raising $1.4 billion in its initial public offering, Oscar Health’s shares fell 11 percent. The company closed its first day of trading with a market value of around $7 billion.
Alignment Health
Alignment Healthcare filed for a proposed initial public offering on March 3, 2021. The number of shares that the company would offer as well as the price per share has yet to be determined. However, the company did specify that these shares would be available on the Nasdaq Global Select Market.
The healthcare company offers Medicare Advantage plans with an emphasis on digital solutions, including a virtual-first Medicare Advantage plan.
The virtual-first health plan employed concierge-style service and its own proprietary system known as Alignment’s Virtual Application (AVA) to deliver virtual care. It officially launched during open enrollment 2021.
The company also offered Medicare Advantage concierge services and social determinants of health benefits starting in 2020 through its ACCESS On-Demand Concierge platform.
“We built the Alignment Healthcare platform to bring tech-enabled, consumer-centric healthcare to all seniors in the United States,” the payer explained in the market opportunity portion of its SEC filing.
“Ultimately, we believe our relentless pursuit of putting the senior first will allow us to capture market share in a sector with significant demographic tailwinds.”
