By: Michael White
One Medical completed its initial public offering recently, pricing 17.5 million shares at $14.00 per share which equates to an equity and enterprise value of $1.7 billion and $1.3 billion, respectively. The offering priced at the bottom end of the range of $14.00 to $16.00 but was well received by investors in its initial trading and closed up 57% on the first full day of trading.
This IPO marks the fifth healthcare information technology (HCIT) or health tech IPO in the last 12 months, following IPOs from Health Catalyst (July 2019), Change Healthcare (June 2019), Livongo Health (July 2019) and Phreesia (July 2019). Each of the previous four IPOs have traded with mixed results in the public markets despite strong initial reception from public market investors. All of the IPOs have broken issuance (traded below the initial offering price) at some point in their trading history. Despite the mixed post-IPO performance, the fact that the public markets are open to health care information technology stories is a marked change from recent history and bodes well for both private funding and valuations.
The ability for private equity and venture capital investors to be able to consider public markets as an exit opportunity rather than relying on mergers and acquisitions as the main source of liquidity will serve to reinforce both early and late-stage funding in the sector. Prior to 2019, the most recent digital health IPOs came in 2016. We view the additional pathway for liquidity as a continued positive factor in valuations in capital raising and exit scenarios for entrepreneurs.
At Founders Advisors, we have provided strategic finance and M&A advisory services to a number of clients in the healthcare information technology and digital health sectors recently. If you are considering capital needs and fundraising, strategic alternatives or an exit for your business, please reach out to our team to discuss what we are seeing in the market and potential implications for your business or sector.