Backed by Alphabet and Fidelity
The business said it sold 37 million shares at $39 per share on Tuesday to raise $1.4 billion. The completed IPO took Oscar Health’s business valuation to around $7.9 billion, based on the outstanding shares listed in its filings. The startup first marketed 31 million shares for $36 to $38 per share — a range that was already elevated from the previous range of $32 to $34 per share.
The health insurance startup was co-founded by John Kushner, a brother of one-time advisor to the former US President Donald Trump, Jared Kushner. John Kushner is the managing director of the venture firm Thrive Capital, a private equity firm that will retain the control of Oscar Health post-IPO.
According to a filing with the US Security and Exchange Commission (SEC), John Kushner and his venture firm will control most of the voting power after the IPO. The health insurance company’s Class A shares are entitled to one vote, while Class B shares will have 20.
Oscar Health’s other shareholders include Google’s owner Alphabet, Fidelity Management, Founders Fund, General Catalyst, and Khosla Ventures. The tech health insurance company is expected to make its public debut on the New York Stock exchange on Wednesday, with a ticker symbol “OSCR.”
In 2018, the startup company secured $165 million in a funding round led by Founders Fund, including the participation from Alphabet. The health insurance company’s business model, which focuses on customer service and technology, will help it compete with large insurance companies such as UnitedHealth and Aetna.
The startup holds a high focus on servicing individual insurance buyers rather than company insurance plans. The tech health insurance company also charges high premiums and provides the so-called “narrower network,” through which customers can access a carefully selected list of high-quality medical providers.
Oscar Health also collaborates with health systems like Cleveland Clinic, providing it with better control over costs by negotiating more competitive pricing with hospitals.
In 2017, Oscar Health said it reached “gross margin profitability,” which means it made more money from premiums than it spent for members’ medical claims. Back then, the company said it intends to expand at a measured rate of four to five cities annually.
The healthcare analytics business is growing at a compound annual growth rate (CAGR) of 23.55% and is expected to reach a business valuation of $40.8 billion by 2025.
John Kushner’s tech health insurance startup Oscar Health expanded its IPO pricing to raise $1.4 billion after selling 37 million shares for $39 per share.