Shares of Oscar Health didn’t cooperate in the way the health insurance company had hoped on its first day of trading Wednesday. In fact, it seems the company should have stuck with its initial IPO range.
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Just before trading began, the New York-based company, trading on the New York Stock Exchange under the symbol OSCR, priced its shares at $39. Trading opened there, but quickly slid to $36 per share. The price continued to dip throughout the day, getting as low as $34 per share before closing at $34.80.
Last week, Oscar set the price range for its shares between $32 and $34. Then yesterday it increased the range to $36 to $38 per share.
Oscar’s health insurance model includes free virtual care appointments and a program for Medicare-eligible adults. The company, which was co-founded by Josh Kushner, founder of Thrive Capital, raised more than $1.6 billion in funding from investors including Founders Fund, Thrive Capital, CapitalG and Fidelity.
The company was offering 31 million shares and raised $1.4 billion in its IPO.
In recent months, we’ve seen companies going public price their shares too low, arguably resulting in them leaving money on the table. For example, DoorDash went public on Dec. 9 after pricing its shares at $102, raising a total of $3.37 billion. However, shares closed that day at $189.51 and closed Dec. 15 at $159.89. If shares had been priced at the Dec. 15 close, the company would have raised $5.24 billion — a difference of about $1.87 billion.
Despite the share slide, Oscar did well compared to other public health insurance companies. Clover Health, a provider of Medicare Advantage health plans to older Americans, merged with Social Capital Hedosophia III, a blank-check acquisition company led by billionaire Chamath Palihapitiya, in January. Its shares, trading on the Nasdaq, closed Wednesday at $8.29, but haven’t gotten higher than $17.45 per share since Social Capital began trading last June.
Meanwhile, GoHealth, also trading on the Nasdaq, began trading in July 2020 at $25 per share and its shares only got as high as $26.25 since then, closing Wednesday at $13.32.
Still, Motley Fool reported stocks focused on health insurance, especially on Medicare and Medicaid, “should have plenty of room to run over the next few years,” as baby boomers age and the demand for that type of insurance increases as a result.
Illustration: Li-Anne Dias
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