Startups, Health Tech

One Medical raises $245M in IPO

One Medical began trading on Nasdaq on Friday. The primary care startup priced its IPO at $14 per share, for roughly $245 million.

One Medical went public on January 31, with its stock listed on Nasdaq as “ONEM.”

Primary Care startup One Medical made its public debut on Friday, raising $245 million in its IPO. The company’s stock began trading on Nasdaq as ONEM, priced at $14 per share, on the lower side of its initial $14 to $16 guidance.

Parent company 1Life Healthcare offered 17.5 million shares for its IPO, with an option for underwriters to buy an additional 2.62 million shares of stock in the next month. By market close, One Medical’s shares had already jumped to $22.

“Today we mark a milestone on One Medical’s journey to transform health care with our public listing on Nasdaq,” One Medical CEO Amir Dan Rubin wrote in a blog post. “Publicly raising funds will allow us to widen our reach and impact. It also creates an opportunity for a broader group of investors to participate in our vision to delight millions of members with better health and better care, while lowering costs.”

In 2018, One Medical raised $350 million from private equity investor the Carlyle Group, valuing the company above $1 billion. In total, One Medical had raised more than $530 million as a private company, with investors including Alphabet’s GV, Benchmark, J.P. Morgan Asset Management and Redmile Group.

Gary Kurtzman, managing director of healthcare at Safeguard Scientifics, said the IPO value was a “modest uptick” to the company’s last private financing round.

“Not knowing the nature of the deal structure, this has the flavor of a financing,” he said. “This is a company that’s going to require more capital to grow.”

The San Francisco-based startup essentially offers concierge primary care services, but at a more modest price. One Medical offers its services at about $200 per year, giving patients access to its offices in most major metros, from Los Angeles to Boston. The company has also been focused on building out its corporate customer base; it currently serves 6,000 employers, Rubin wrote.

The company also has a tech component: it built its own health record and practice management system, as well as a front-facing app that lets patients book appointments and contact their provider.

One Medical had a total of 422,000 members at the end of December, a 22 percent increase from last year, according to an amended prospectus. The company brought in a total of $227.4 million in revenue, up 30 percent from 2018. It also added six new offices in early 2019.

However, the company also saw its costs grow as it continued its rapid expansion. One Medical reported a net loss of $52.45 million, an increase from its $45 million net loss last year. The company’s cost of care increased to $168.6 million, though it represented a slightly smaller chunk of One Medical’s overall revenue, at 61 percent.

One Medical chalked up the costs to the new offices, and salaries and benefits as it grew its workforce and prepared for the IPO.

“I like the direct primary care space. The reason I like it, I think the only way to fundamentally change healthcare is to change the way it’s delivered,” Kurtzman said. “One Medical is what I would call a tech-enabled service. … I’m bullish on that approach. But it costs money. They need bricks and mortar, and they need to pay physician salaries.”

Kurtzman compared One Medical’s IPO to the recent spate of digital health companies going public, such as Livongo, Phreesia and Progyny.

“At some point, these companies are going to have to demonstrate that they can be profitable,” he said. “If there’s a market where these companies can grow and exit, you can have more companies follow.”

J.P. Morgan and Morgan Stanley served as the lead underwriters for the deal. One Medical’s offering is expected to close on February 4.


This story has been updated with comments from Gary Kurtzman

Photo credit: One Medical