Shiny Well being raised $924 million on a valuation of roughly $12 billion throughout its preliminary public providing on Thursday, with the Minneapolis-based insurtech reserving the biggest IPO among the many medical health insurance startups that went public this 12 months.
The corporate’s shares failed to succeed in their estimated worth of $18 through the IPO, which means its valuation fell about $2 billion wanting what traders anticipated. Shiny Well being is the final of the insurtechs anticipated to make an IPO this 12 months, with Alignment Healthcare, Oscar Well being and Clover Well being all going public earlier in 2021.
Shiny Well being is the biggest of those new-age insurance coverage firms and its valuation displays the dimensions of its membership, mentioned Blake Madden, a healthcare analyst at VMG Well being. “Regardless of the possibly just a little little bit of blended evaluations on the IPO, I feel it was like probably the most helpful digital well being IPO in historical past,” he mentioned.
As of April, Shiny Well being served 623,000 particular person, group and Medicare Benefit prospects, in accordance with an S-1 filed with the U.S. Securities and Trade Fee in Might. Oscar Well being reported 542,220 prospects throughout the identical enterprise strains on the finish of the quarter that closed March 31. Clover Well being had 130,000 whole members and Alignment Healthcare coated 83,100 Medicare Benefit enrollees throughout the identical interval, in accordance with monetary filings.
“Shiny Well being is significantly bigger than the opposite new-era well being plans which have IPO’d just lately, and they’re doing one thing very completely different from these organizations, in that they’re buying their technique to development,” mentioned Tom Cassels, president of Rock Well being digital consultancy.
Shiny Well being launched in 2017 as a startup well being plan aimed toward disrupting the medical health insurance exchanges, and was co-founded by former UnitedHealth Group CEO Bob Sheehy. In contrast to Oscar Well being and Clover Well being, which have tried to construct insurtech companies from the ground-up, Shiny Well being has developed primarily by way of acquisition, Cassels mentioned. Shiny Well being just lately bought two Medicare Benefit plans in California for a mixed $600 million. The corporate additionally owns and manages roughly 40 risk-bearing main care clinics and it companions with native suppliers to handle look after sufferers. In April, Shiny Well being paid an undisclosed sum to purchase Zipnosis, a telehealth platform that gives digital care software program to just about 60 well being methods nationwide.
The startup’s purpose of controlling worth by merging well being plan, supplier and provider-enablement platforms is harking back to UnitedHealth Group’s technique, Cassels mentioned.
Shiny Well being’s physician-enablement enterprise is analogous to OptumInsight, a subsidiary of UnitedHealth Group that operates supplier clinics and goals to rework clinicians to value-based contractors by way of quite a lot of digital instruments, he mentioned. The startup’s purpose of utilizing expertise to drive risk-based contracts additionally bears a placing similarity to agilon well being and Privia Well being, physician-enablement instruments that each of which went public by way of outsized IPOs earlier this 12 months.
Cassels expects Shiny Well being to proceed to develop by buying domestically owned Medicare Benefit plans which have sturdy ties with regional medical teams. The corporate’s continued growth will make open enrollment much more aggressive this coming 12 months, he mentioned. In contrast to its nationwide opponents, although, Shiny Well being’s market cap will likely be based mostly on its skill to draw particular person enrollees relatively than employers protecting employees, he mentioned.
“In all probability the most important unknown is: Are shoppers in Medicare Benefit and the alternate markets going to see what they need in these new well being plans versus these sturdy legacy manufacturers?” Cassels mentioned.
Whereas Shiny Well being’s $12 billion valuation may be justified in contrast with different current IPOs by related firms, the central query is whether or not these startups current an acceptable benchmark, mentioned Ari Gottlieb, a healthcare marketing consultant at A2 Technique Corp.
Molina Healthcare has a $15 billion market cap and three.8 million members, as an illustration, greater than six instances as many policyholders as Shiny Well being has, which is valued at round $12 billion. Clover Well being, in the meantime, is value about $5.3 billion because of its meme-stock traders, however has about one-sixth as many policyholders as Shiny Well being.
“You can argue that these insuretech companies, their valuations are fairly out of line with historic norms,” Gottlieb mentioned. “They mirror traders that do not totally perceive the nuances of the enterprise mannequin.”
As proof, Gottlieb famous that Shiny Well being practically doubled its year-over-year losses to $249 million on the finish of 2020, a 12 months when most well being insurers carried out effectively because of shoppers deferring care through the COVID-19 pandemic. The corporate’s challenges mirror the struggles confronted throughout the insurtech trade, with Oscar Well being and Clover Well being likewise are struggling to succeed in profitability by specializing in particular geographic areas, he mentioned.
Like Shiny Well being, each of those firms had disappointing public choices and their share costs have fallen within the months since. At this level, Gottlieb mentioned, particular person markets symbolize a commoditized enterprise the place shoppers primarily depend on worth as a differentiator.
“You need to ask the query, ‘The place’s the 10x issue?'” Gottlieb mentioned. “To me, that is the larger query on Shiny on the Medicare aspect. On the person aspect, the market’s challenged total. So how do they do it?”