Health insurer Oscar has filed paperwork for an initial public offering (IPO).
Health insurance platform Oscar is disclosing that it has confidentially filed for an initial public offering, becoming the latest InsurTech to look at going public following Lemonade’s hugely successful IPO in July.
“At Oscar, our mission is to make a healthier life accessible and affordable for all. We create experiences that reflect the kind of health care company we would want for ourselves — one that behaves like a doctor in the family, helping us navigate the health care system in our moments of greatest need,” the company said in announcing an IPO filing with the U.S. Securities and Exchange Commission.
Oscar, which is technically known as “Mulberry Health Inc., d/b/a Oscar,” was co-founded in 2012 by Josh Kushner, brother of President Donald Trump’s son-in-law and adviser Jared Kushner.
The company specializes in selling health insurance directly to consumers. It’s the first health-insurance-focused InsurTech to move toward an IPO as newcomers try to disrupt the massive medical coverage industry by using technology.
“The underlying healthcare system is broken and data systems are a bit disparate,” Brett Lotito, Oscar’s vice president of insurance operations, told PYMNTS earlier this year.
Oscar said it has yet to determine the IPO’s size and price range. As for timing, the company said the IPO “is expected to commence after the completion of the SEC review process, subject to market and other conditions.”
Last week, Oscar announced that it had raised $140 million in a funding round led by Tiger Global Management, with participation from Dragoneer, Baillie Gifford, Coatue, Founders Fund, Khosla, Lakestar and Reinvent. Bloomberg last estimated the company’s valuation at $3.2 billion as of 2018.
Lemonade’s Hot IPO Started A Stampede To Market
InsurTechs of all sorts are lining up to go public following the huge IPO that Lemonade saw after staging an IPO in July.
Lemonade, which specializes in homeowners’ and renters’ insurance, initially estimated its shares would price between $23 to $26, then boosted that to a $26-to-$28 range before ultimately finalizing the offer at $29 a share, raising $1.6 billion.
That fell below the company’s pre-IPO estimated market valuation of $2 billion, but the $29-a-share price turned out to vastly underestimate Lemonade’s true value to investors. The stock soared 139 percent on its first trading day to close at $69.41, giving Lemonade about a $3.8 billion market cap.
But even that played down the company’s actual value to the investing public, as Lemonade has since soared another 63 percent since its first day’s close to reach $113.19 as of midday Tuesday (Dec. 22). That gives the company a roughly $6.5 billion market valuation.
Lemonade Chief Financial Officer Tim Bixby told Karen Webster shortly after the IPO that the insurance industry is ripe for disruption.
“You’ve got an industry that’s one of the biggest sectors on the planet in terms of dollar flow, but you’ve got players who face the pretty classic innovator’s dilemma: They’re led by smart people who want to embrace new technologies, but they’re really hamstrung by legacy systems,” he said.
Lemonade’s strong IPO performance has other InsurTechs rushing toward their own IPOs, including:
Metromile
Auto-coverage InsurTech Metromile — which allows consumers to track their mileage and pay insurance premiums based on how much they actually drive — last month announced plans to go public through a special purpose acquisition company (SPAC).
Metromile intends to merge with a Nasdaq-listed SPAC called INSU II, receiving $872 million in cash and stock, plus an additional 10 million shares of Class A shares if the combined company meets certain price targets over time. The deal will value the combined entity at about $1.3 billion.
Metromile CEO Dan Preston told Karen Webster earlier this year, “I think it’s really exciting how you can build an insurance company from the ground up, with sensors now being applied as opposed to everything being manual.”
“You start to think about how a company could service their customers differently,” he said. “I think we’ve become much more of a digital insurance company [that is] building an entirely different kind of way of doing business.”
Hippo
Meanwhile, InsurTech Hippo Enterprises Inc., which specializes in InsurTech, recently raised a $150 million financing round as the company moves toward an IPO.
“In 2021, we’ll be ready to go public,” CEO Assaf Wand told Bloomberg.
The news outlet said Hippo’s latest fundraising valued the company at about $1.5 billion and new investors Dragoneer and Ribbit Capital, in addition to existing backers like Felicis Ventures and Iconiq Capital.
Wand recently told Karen Webster that Hippo wants to reimagine the home-insurance business, moving beyond just dealing with claims and into things like helping property owners find good contractors. He said Hippo “wants to be a 1-800 number for everything in your home.”
InsurTechs Have Raised $5 Billion In 2020 Pre-IPO Money
Industrywide, Willis Towers Watson recently reported that InsurTechs raised $2.5 billion during Q3. That brings 2020’s total to about $5 billion for the year’s first nine months.
“With the huge amount of capital being deployed and the rate at which it is being deployed, one can quite easily see this quarter as clear validation of investors (industry and non-industry) being prepared to put their money where their mouths are as it relates to the pursuit of digital operations — both for pure investment returns and also for securing digital capabilities,” Willis wrote in its latest quarterly report. “What is particularly interesting, is that a handful of well-established InsurTechs have raised an enormous amount of capital, [but] brand new entrants with very limited track records have also been successful in raising capital.”
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