Oscar Health Corp., a health insurer, began selling stock to the public this morning through an initial public offering. Shares of the New York-based company’s stock trade on the New York Stock Exchange, under the symbol OSCR. Oscar originally predicted, in an offering registration statement posted Feb. 22, that the IPO stock price might be from $32 to $34, that it might end up with about 167 million shares of stock outstanding, and that total offering proceeds might amount to $1.2 billion.
Oscar said Tuesday, in a Form S-1/A registration statement filed with the U.S. Securities and Exchange Commission Tuesday, that it and its investors could sell a total of as many as 35.65 million shares, with a share price range of $36 to $38, for a total deal value of about $1.36 billion for Oscar, its investors and the deal underwriters.
Oscar later said, in a Form S-1MEF filed later, and a separate press release, that the offering could lead to the sale of a total of 42.6 million shares — by itself, Oscar investors and the offering underwriters — at a price of $39 each, producing about $1.7 billion in proceeds.
Oscar ended up using $39 as the initial share price.The price fell to $34.80 — below the IPO price, but above the $32 to $34 range described in the Feb. 22 filing. Excluding the shares that might be sold by the deal underwriters, the offering will produce about $1.44 billion in revenue, according to the New York Stock Exchange.
The underwriters’ offering could increase the total to about $1.7 billion. The company’s market capitalization closed Wednesday at about $7 billion, or about $14,000 per health coverage enrollee.
Oscar came to life in 2014 and now has about 529,000 enrollees. The company is starting to enter the Medicare Advantage plan and small employer markets, but most of its enrollees have individual and family major medical insurance policies. The company emphasizes use of telehealth services and other high-tech services, and an active approach to care management.
Oscar says several times in the registration statements that its success will depend partly on its ability to build relationships with insurance brokers. Although Oscar is an insurance company, it could be seen as a packager and distributor of insurance itself: Oscar passes about 77% of the premiums it collects to reinsurance affiliates of AXA S.A. and Berkshire Hathaway Inc. through quota share reinsurance arrangements.
If Oscar does poorly, investors may see it as just another one of many new health insurers that have fizzled out. It Oscar does well, its stock performance and quarterly earnings statements could draw attention to the value of agents and brokers operating in the individual major medical insurance market.
Some of the other public companies now drawing attention to the role of intermediaries in the retail insurance market include eHealth Inc., GoHealth Inc. and Benefytt Technologies Inc. Future beneficiaries of success at Oscar, and companies like eHealth and GoHealth, could include many web-based insurance issuers and distributors, such as Bestow, Haven Life and HealthCare Inc.
Success at Oscar could also help more traditional distribution organizations, such as AmeriLife Group LLC and Integrity Marketing Group LLC, and individual agency owners who hope to sell their agencies to AmeriLife, Integrity Marketing or similar buyers.