General Atlantic-backed primary care startup Oak Street Health is listing on the New York Stock Exchange, aiming to raise close to USD328 million.
Oak Street Health, a network of primary care centres for adults on Medicare, priced its IPO of 15,625,000 shares of its common stock to the public at USD 21.00 per share.
The shares are expected to begin trading on the New York Stock Exchange under the symbol “OSH” on 6 August, 2020, and the offering is expected to close on 10 August , 2020.
In addition, Oak Street has granted the underwriters a 30-day option to purchase up to an additional 2,343,750 shares of common stock at the IPO price.
“We expect to use approximately USD86.2 million of the net proceeds of this offering to repay outstanding borrowings, including fees and expenses, under our Loan Agreement, under which USD80.0 million in principal amount was outstanding and which had an interest rate of 9.75 percent as of 31 March, 2020, and the remainder of such net proceeds will be used for general corporate purposes,” Oak Street declared in its regulatory filing.
JP Morgan, Goldman Sachs & Co LLC, Morgan Stanley, William Blair and Piper Sandler are acting as joint book running managers for the offering. Baird and Trust Securities, formerly known as SunTrust Robinson Humphrey, are acting as co-managers.
Founded in 2012, Oak Street Health operates a healthcare model focused on quality of care over volume of services, and assumes the full financial risk of its patients, according to the company.
Oak Street Health operates more than 50 centres across Illinois, Michigan, Indiana, Pennsylvania, Ohio, Rhode Island, North Carolina, Tennessee and Texas, with plans to continue its geographic expansion, including into New York and Mississippi, in 2020.
The US market for Medicare Advantage is advancing toward 70 per cent penetration rate among seniors by 2040, according to a 2017 LEK Consulting market research report.
Oak Street Health management is led by co-founder and chief executive officer Mike Pykosz, who was previously principal at the Boston Consulting Group. The company has received at least USD545 million from investors as of July 2020. They include private equity firms General Atlantic, Newlight and Humana.
General Atlantic made a significant minority investment in Oak Street Health in late 2015, and then several follow-on investment rounds. The firm will hold a 32.5 per cent stake in the company following the IPO.
GA is a global growth equity firm with USD34 billion in AUM and over 120 portfolio companies within the consumer, financial services, healthcare, and tech sectors.
“We are thrilled to be long-term partners to Mike and the Oak Street Health team,” said Robbert Vorhoff, global head of healthcare at General Atlantic.
“Today marks an exciting milestone for the company on its journey to leverage its patient-focused, technology-enabled model to meaningfully improve the quality of care for the most at-risk patients. We look forward to Oak Street Health’s future in continuing to reimagine healthcare,” he added.