Alphabet-Backed One Medical Preps For IPO

Alphabet-backed healthcare chain One Medical has joined forces with JPMorgan and Morgan Stanley for a planned IPO, CNBC reported on Tuesday (Oct. 8).

Sources told CNBC that the $1.5 billion-valued firm will likely file its prospectus by the first quarter of 2020, possibly even sooner.

One Medical is one of many upstart health technology companies forging ahead despite lackluster interest from Wall Street. Profits are historically lean in the healthcare sector and mostly dependent upon the regulations imposed by insurance companies, the article said.

A San Francisco primary care startup specializing in high-quality patient clinics, One Medical Group is backed by Alphabet and was recently valued at more than $2 billion.

The healthcare firm was founded by physician Tom Lee – chief executive officer until 2017 – who was planning to establish a “modern primary care experience.” Amir Rubin, a former UnitedHealth group executive, succeeded Lee.

Rubin told CNBC that One Medical Group has seen “tremendous growth” in partnerships with self-insured employers and has more than 70 nationwide facilities.

“Do they have health services margin, which is single digits or teens, or do they have tech margins?” Farzad Mostashari, CEO of Aledade, a technology company that works with independent primary care groups, said in a statement to CNBC. “And how quickly does it scale?”

One Medical says its providers see at least 35 percent fewer patients daily than their typical counterparts.

Healthcare spending has grown from $75 billion in 1970 to as much as $3.5 trillion in 2018, as measured by Kaiser Family Foundation analysis of National Health Expenditure data. Spending has been growing at double-digit percentages over the past few years, far outpacing economic growth.