The hot healthcare startup Oak Street surged to a $9.5 billion valuation in its IPO. Here are the investors and execs who stand to make the most.
The primary care startup Oak Street Health started trading on Thursday after pricing its shares at $21 apiece. Shares closed up 90% at $40 each. The company will raise a little over $328 million after offering 15.6 million shares. The founders of the company and its backers including General Atlantic hold stakes worth hundreds of millions after the initial public offering. Visit Business Insider's homepage for more stories.
The primary-care startup Oak Street Health just surged in its IPO, delivering a windfall to the company's founders and backers. The stock climbed 90% to $40 in its first day of trading, after Oak Street priced the offering at $21. Oak Street raised roughly $328 million, based on the 15.6 million shares it planned to sell. The open pricing sets Oak Street's valuation at $5 billion, and that had nearly doubled to $9.5 billion by the close on Thursday. Founded in 2012, Oak Street has 260 primary care doctors in its 54 centers, managing the health of 85,000 patients. The IPO exposes a hot upstart that aims to transform healthcare to the scrutiny of public markets. It follows clinic operator One Medical, which went public in January, and has surged since its stock-market debut. In its filing, Oak Street listed the top shareholders in the company and their stakes:
General Atlantic, a private equity firm, owns 34% of Oak Street or 76.4 million shares going into the IPO. At close, that stake was worth nearly $3.1 billion. Newlight Partners, a private investment firm, owns 23% of Oak Street, or 50.4 million shares going into the IPO. That stake is now worth $2 billion. Humana, the health insurer, owns 5.7% of Oak Street. Its 12.7 million shares are now worth $508 million. Mike Pykosz, 38, is a cofounder and the CEO and chairman of Oak Street. He owns 9.4 million shares of Oak Street, or 4.2% going into the IPO, a stake worth $377 million. Geoff Price, 38, a cofounder and the chief operating officer, owns 7.8 million shares of Oak Street, or 3.5% going into the IPO. Price's stake is worth $313 million. Dr. Griffin Myers, 39, a cofounder and the chief medical officer, owns 6.5 million shares of Oak Street, a 2.9% stake going into the IPO. His shares are worth $260 million.
Investors are betting big on primary care Oak Street's IPO adds to an eventful year for privately held primary-care companies. In February, Medicare Advantage-focused Iora Health raised an additional $126 million from investors. In July, Walgreens made a $1 billion bet on primary care company VillageMD, with plans to open 500-700 doctors offices at Walgreens' pharmacies over the next three years. The intense interest in primary care comes as the coronavirus pandemic creates massive challenges for every part of the healthcare industry. Healthcare workers are facing layoffs, furloughs, and reassignments, even as hospitals were overwhelmed by COVID-19 patients. Primary care practices that are paid based on the number of patients they see in a given day have seen heavy financial losses, while those that are working to get paid a large fixed sum each month to take care of all of a patient's health needs haven't seen the same hit. Chicago-based Oak Street is aiming to be in the latter group, striking contracts with health insurers to provide primary care to seniors, in particular those who are eligible for both Medicare and Medicaid. It works with Medicare Advantage health plans and those on traditional Medicare to get paid to manage the health of members, by driving them to and from appointments, and offering them social events and more time with their doctors. Oak Street made $201.8 million in revenue in the first quarter of 2020, up from the $117.4 million it brought in between January and March 2019. For the full year 2019, Oak Street's revenue was $556.6 million, up from $317.9 million in 2018. The company's net losses deepened as the company grew, the filing shows. From 2018 to 2019, losses widened from $79.5 million to $107.9 million. In the first quarter of 2020, Oak Street's net loss was $15 million. This article has been updated with Oak Street's closing stock price on Thursday.Join the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship
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Summary List PlacementJust one year after it launched its first health clinic, Walmart Health announced its plan to establish 22...Summary List PlacementJust one year after it launched its first health clinic, Walmart Health announced its plan to establish 22 more retail clinic locations in Georgia, Florida, and Arkansas by the end of 2021—adding to its 13 existing clinics spanning these states and Texas. The clinics grant patients access to a range of healthcare services, including on-site lab testing, imaging, dental and vision services, psychiatric care, and access to health and wellness programs. Along with a clinic expansion strategy, Walmart is also diversifying its healthcare offerings. In June of this year, the retail giant expanded its digital health footprint by acquiring CareZone's prescription management platform to offer medication management and delivery services to its customers. And, earlier this month, it struck a deal with Medicare-focused primary care company Oak Street Health to incorporate the firm's primary care services at three major supercenters—a strategic move, especially as it wades into senior care. By providing these integrated health solutions, Walmart primes itself as a force to be reckoned with in the healthcare space, and it wouldn't be surprising to see it expand to include telehealth options that complement its digital medication platform and in-person offerings. As Walmart Health plants its roots as a one-stop-shop for healthcare with a competitive pricing model, we think it's in pole position to poach patients from more traditional healthcare providers. With around 3,600 supercenters and 195 million weekly customers, Walmart already has the brick-and-mortar infrastructure and loyal consumer base to grow its clinics. And with the pandemic causing traditional health clinics to suffer severe financial losses, the company can use its substantial capital to disrupt the primary care space with its innovative model and full suite of health services to take the place of failing clinics. Further, Walmart flaunts affordability—a primary care appointment costs $40 for adults and $20 for children at Walmart without insurance, which is a fraction of the US average of $106 for a primary care visit. That combined with its brand recognition and the convenience factor of providing comprehensive care at its Walmart supercenter locations may help boost customer acquisition. Want to read more stories like this one? Here's how you can gain access: Join other Insider Intelligence clients who receive this Briefing, along with other Digital Health forecasts, briefings, charts, and research reports to their inboxes each day. >> Become a Client Explore related topics more in depth. >> Browse Our Coverage Are you a current Insider Intelligence client? Log in here.Join the conversation about this story »
American Well is looking to raise $488.5 million as it goes public. We pored over the 196-page filing to find 5 crucial details about the telehealth giant's plans to change how you get healthcare.
Summary List Placement American Well, a telehealth giant and rival to Teladoc, filed to go public...Summary List Placement American Well, a telehealth giant and rival to Teladoc, filed to go public on August 24. On Tuesday, the company said it's setting its public offering price between $14 and $16 per share. That values Amwell at $3.3 billion based on outstanding shares. As part of the IPO, Google's cloud division is investing $100 million. We read the 196-page filing and spoke with Google Cloud's head of healthcare sales to find 5 critical details about the companies' plans. Visit Business Insider's homepage for more stories. Telehealth company American Well on August 24 filed to go public in what's become a huge year for companies that deliver healthcare over the internet. Amwell said in a Tuesday update to its filing that it's looking to set its public offering price between $14 and $16. At the midpoint of that range, they're looking to raise $488.5 million, according to the company, which values Amwell at $3.3 billion, based on Amwell's outstanding shares. Lockdowns in the wake of the coronavirus pandemic have made Amwell's services newly relevant to people who need mental healthcare, physical therapy, prescriptions, and a whole host of other medical needs from the safety of their homes. It comes on the heels of rival Teladoc making an $18.5 billion bid for Livongo, a chronic care company, the biggest deal that digital health has ever seen. It's sending ripple effects through a market that insiders are saying is ripe for more huge deals and initial public offerings. As part of Amwell's IPO, Google is making a $100 million investment in Amwell at the IPO price. Through the arrangement, Google's cloud business will host Amwell's technology and partner with the company in all-things-healthcare. It's not typical for Google Cloud to make investments of this nature, according to the company. But Chris Sakalosky, its head of healthcare sales, said telehealth's rapid growth during the pandemic set off a "light bulb moment" that has Google reimagining its work in the $3.6 trillion healthcare industry. The two companies have plans to make the disconnected healthcare industry more connected through devices in people's homes, data analytics, and machine learning to lighten doctors' adminsitrative loads, he told Business Insider. They're also going to market each other's services to their respective client bases. Founded in 2006, the Boston-based Amwell works with 55 health plans, which support 36,000 employers and include more than 80 million people, as well as 150 of the nation's largest health systems. It's paid primarily through subscription fees and set-up costs when providers and health systems pay to use Amwell's technology to run their own virtual shops. Amwell also conducts separate doctors visits through its giant medical group, wherein patients pay for online visits in primary care, mental health, and other areas. Amwell's S-1 filing provides a detailed look at its financials, risks, and vision for the future. Here are five takeaways from the filing. Read more: Telemedicine startups have raised hundreds of millions as the coronavirus puts them to the test. Meet the 12 startups forging a new path for healthcare. Amwell is riding a coronavirus wave that won't last forever With the recent surge in telehealth visits around the globe, many are wondering how long it can last after doctors' offices reopen and lockdowns ease. Amwell conducted a record 912,000 medical visits in April, with daily visits increasing 1,279% since the same time last year, the filing said. But monthly visit volume has already dropped since then, hitting 540,000 in June, though that number was still a 592.3% increase year to date. When Teladoc reported earnings last month, CEO Jason Gorevic told Business Insider that volume growth stabilized in late May at roughly 40% higher than it was before outbreaks, even in states where coronavirus is relatively under control. Amwell didn't provide estimates like that in the filing, but said it's expecting a similar trend. Prior to coronavirus, Amwell's revenue was increasing steadily — from $113.9 million in 2018 to $148.9 million in 2019. Amwell's revenue for the first six months of 2020 was $122.3 million, up from $69 million over the same period in 2019. Amwell's losses deepened in the first half of 2020 to $113.4 million, compared to $41.6 million in the second half of 2019. "While the COVID-19 crisis is a unique event, we believe that utilization of the Amwell Platform will remain at higher levels after the crisis versus levels previously forecasted before the crisis," the S-1 said. Read more: 6 reasons why the telehealth boom is here to stay, according to the CEO of $16 billion Teladoc Amwell's customers are conducting significantly more visits in 2020 In February of 2020, right before the pandemic hit the US, the majority of Amwell's visits —roughly 57% — were run by Amwell's medical group, a huge network of contracted doctors that can see patients directly over the site or take them from hospitals that are too busy to use their own staff, according to the S-1. Now, visits run by the medical group have dropped off to roughly 22% in June, and the vast majority of total active providers don't work for Amwell, but rather the health systems or health plans that Amwell contracts with. It's a significant transition in the company's core business towards partnering with providers to build their own telehealth solutions, rather than essentially taking away appointments and the reimbursement that accompanies them. It's opening up the doors to a $12.4 billion business among health plans and providers, per Amwell's estimates. Institutional customers also pay subscription fees to use Amwell's tech, creating a steady revenue stream that's less dependent on temporary circumstances like coronavirus. But large clients are a longer and more complicated play than routine, independent visits, in some ways. Amwell said that most of its revenue comes from customers, such as hospitals, that purchase access to the telehealth platform. Those contracts are typically three-year deals and require a lot of upfront investment on Amwell's part, the filing said. So the company needs its providers to stay customers for a while in order to win back its initial costs. Read more: 10 healthcare startups that could be M&A targets after Teladoc's record-breaking $18.5 billion deal for Livongo More than 20% of Amwell's business comes from Anthem Amwell derives a lot of its business from a small group of clients, the S-1 said. Its largest, Anthem, accounted for 22% of its revenue in the first half of 2020. In 2018 and 2019, its 10 biggest customers by revenue accounted for 48% and 44% of Amwell's total, respectively. That means there's a big risk to Amwell's business if they lose any number of top buyers, particularly Anthem. Google Cloud Sakalowsky told Business Insider it intends to market their services to current cloud customers, and new ones in pitches. Notably, Amwell's business from health systems accounts for a smaller chunk of its revenue, despite working with 150 health systems that represent 2,000 hospitals. In the first half of 2020, subscription fees from health systems clients accounted for 19.3% of Amwell's total revenue, down from first half of 2019, when health systems accounted for 25% of the company's total revenue. Regulatory risks remain Amid the pandemic, regulators did away with a lot of rules that telehealth providers normally had to follow and increased their reimbursement from Medicare and Medicaid. While people in Washington seem on board with telehealth, these temporary measures still aren't written into law, Amwell said in its S-1. "Although the COVID-19 pandemic has led to the relaxation of certain regulatory and reimbursement barriers, it is uncertain how long the relaxed policies will remain in effect," the S-1 said. "And there can be no guarantee that once the COVID-19 pandemic is over that such restrictions will not be reinstated or changed in a way that adversely affects our business," it said. The silver lining for Amwell in the event that regulations are reinstated is that its HIPAA-compliant and its medical group doesn't perform Medicare consultations, according to the document. That means a return to the status quo could technically benefit Amwell insofar as less secure telehealth platforms are edged out of the marketplace, sending more customers to Amwell, it said. Amwell is working with Google to go beyond video visits Google and Amwell's partnership extends beyond a normal cloud contract. Amwell is pushing into home care through some of its hardware, like TV Carepoint, that allows patients to access healthcare at home or in their hospital rooms. The company is also investing in remote patient monitoring, advanced analytics, lab services, drug delivery, and various applications of machine learning, the S-1 said. Part of the idea is that Amwell has to make more technologies if it wants to stay ahead of the curve in telehealth, a market where rapid change and "short product lifecycles" can make services irrelevant almost instantaneously, Amwell said in the document. That's where Google comes in. Working with patients in their homes opens up doors to increase access to care as well as the types of care that providers can deliver, like managing chronic conditions. Google's tech, like Healthcare API, can connect devices and data together to accomplish things like this. "To meet patients in their homes, to meet patients when they're remote and to work across that fusion of the digital and the physical, we think that's the area where bringing our technologies together will come to the forefront quite quickly," Google Cloud's Sakalosky said.Join the conversation about this story » NOW WATCH: What it takes to become a backup dancer for Beyoncé
Warren Buffett's Berkshire Hathaway has scored an $80 billion gain on Apple — more than the famed investor's entire net worth
Warren Buffett's gain on his Apple investment exceeds his personal fortune. The billionaire investor's Berkshire Hathaway...Warren Buffett's gain on his Apple investment exceeds his personal fortune. The billionaire investor's Berkshire Hathaway conglomerate spent about $35 billion to buy 245 million Apple shares that are now worth about $118 billion, representing a gain of more than $80 billion. Buffett's net worth has sunk by $11 billion this year to $78 billion, reflecting a decline in Berkshire's share price and his philanthropy. Berkshire's Apple stake is worth more than four times as much as its Bank of America position, the second-largest holding in its portfolio. Visit Business Insider's homepage for more stories. Warren Buffett's Berkshire Hathaway has made more money on Apple than Buffett himself is currently worth. The famed investor's conglomerate spent about $35 billion to amass roughly 245 million Apple shares between 2016 and 2018. Apple's stock price has skyrocketed since then, boosting the value of Berkshire's 5.7% stake to about $118 billion — an investment gain of more than $80 billion. Meanwhile, Buffett's net worth has dropped by $11 billion this year to about $78 billion, according to the Bloomberg Billionaires Index. Read more: MORGAN STANLEY: Buy these 22 stocks that are slashing costs as sales take a hit from COVID-19 — putting them in position to smash the market as the economic recovery continues Apple shares have soared 58% this year, lifting the iPhone maker's market capitalization past the $2 trillion mark for the first time ever this week. Investors are betting the coronavirus pandemic will lead to people relying more on Apple devices and services to inform and entertain themselves and stay in touch with others. Buffett's shrinking fortune primarily reflects a 10% slump in Berkshire's stock price this year, which has slashed the value of his 15.5% stake in the company. The investor also donated $2.9 billion of his Berkshire stock to philanthropic causes in July, bringing his total contributions to $37 billion over the past 14 years. Read more: JPMorgan pinpoints the triggers for a bond sell-off that can cause unusually large losses in everything from stocks to gold — and lays out how to be ready for it Apple's surging valuation has made it a disproportionately large part of Berkshire's business. For example, Berkshire's Apple stake is worth more than four times as much the second-biggest holding in its stock portfolio, a $26 billion position in Bank of America. Apple now makes up about 50% of the portfolio's entire value, finance professor David Kass tweeted on Friday. Moreover, Berkshire's $118 billion of Apple stock represents just over 25% of the conglomerate's $492 billion market capitalization. Buffett's company also had $147 billion in cash at the last count, meaning its Apple shares and cash are together worth more than 50% of its market cap.Join the conversation about this story » NOW WATCH: Epidemiologists debunk 13 coronavirus myths