New York: 1Life Healthcare Inc., a provider of tech-driven primary care clinics under the One Medical brand, closed its first day of trading up 58 per cent after raising $245 million in an initial public offering.
The shares closed Friday at $22.07, giving the company a value of $2.7 billion. The company priced them Thursday at the bottom of the $14 to $16 target range.
“I’m obviously very happy with the share price reaction,” Chief Financial Officer Bjorn Thaler said in an interview. “Being a green dog in the sea of red is making me feel pretty good.”
He said the company is isn’t wrapped up in day-to-day market dynamics and is instead focused on execution of what it sees as modernising doctors’ offices.
“What we are trying to do is bring your doctor’s office into the 21st century, this is not the clipboard you have to fill out every time,” Thaler said.
1Life Healthcare’s listing could signal renewed investor interest in listings by money-losing growth companies. It debuted on the same day as Reynolds Consumer Products Inc., the profitable maker of the eponymous aluminium foil and Hefty trash bags. Reynolds, which raised $1.23 billion in an offering priced within its marketed range, climbed 9.8 per cent in its debut.
San Francisco-based 1Life Healthcare, with almost 400,000 members as of October, operates more than 70 clinics in nine markets including Boston and Seattle. Its customers are charged subscription fee for access to a roster of physicians and annual membership grants patients 24/7 access to digital health services through its proprietary platform.
Thaler said the company plans to expand this year to Atlanta, Orange County in California and Portland, Oregon.
Venture capital investors poured $7.4 billion into digital health start-ups in 2019, according data from venture fund Rock Health. Many are betting that start-ups can eliminate some of the inefficiency in the US health care system.
Established health-care giants and tech companies are among potential competitors seeking to use technology to improve delivery of medical care.
While primary care is crucial in preventing disease, it’s considered one of the least profitable specialities in the US
1Life Healthcare’s losses increased with its revenue for the nine months ended Sept. 30, according to its filings. It lost $34 million on revenue of $199 million, compared with $26 million on $155 million in revenue during the same period in 2018.
After the IPO, Carlyle Group Inc. funds will remain the largest owners of 1Life Healthcare, with a stake of almost 30 per cent, according to the filings. Other investors include Benchmark Capital Partners and Alphabet Inc.’s Google Ventures. Alphabet is also one of One Medical’s largest clients, accounting for 10 per cent of the company’s revenue.
The offering was led by JPMorgan Chase & Co. and Morgan Stanley. The shares are trading on the Nasdaq Global Select Market under the symbol ONEM.