UPDATE: Aug. 7, 2020: Oak Street's IPO priced at $21 a share, but rose almost 90.5% in its first day of market trading Thursday, closing at $43.47 and signaling strong investor confidence. The Chicago-based primary care operator raised $328 million by offering 15.6 million shares, putting its market value around $5 billion, according to IPO advisor Renaissance Capital.
- Oak Street Health, which operates primary care centers for the Medicare-eligible population, filed an initial public offering Friday of up to $100 million with the Securities and Exchange Commission. It plans to be listed as OSH on the New York Stock Exchange.
- Pricing terms were not disclosed, but the company said in the S-1 its total revenues for the first quarter of this year were just above $200 million, up 72% year over year, and it sees an annual total addressable market size of about $325 billion.
- Oak Street operates 54 centers across eight states and currently serves about 85,000 patients. Most of those are under capitation arrangements. The company contracts with Medicare Advantage payers on a per-patient, per-month basis.
Chicago-based Oak Street was founded in 2012 and has recently embarked on a relatively aggressive growth strategy. In February it pursued national expansion by entering the Texas and Tennessee markets while expanding footprints in Cleveland, Detroit and Greensboro, North Carolina.
It plans to continue to expand in new and existing markets, according to the IPO.
The retail-like centers are branded as consumer-centric and are staffed by interdisciplinary care teams. They are also technology-focused, using the internally developed software Canopy.
Oak Street has raised more than $100 million across four funding rounds, mostly from private equity investments, according to Crunchbase.
The filing follows another primary care IPO earlier this year from One Medical. Telehealth giant Amwell is also reportedly planning to go public soon. Last year, chronic disease management startup Livongo, data analytics platform Health Catalyst and patient software maker Phreesia all went public.
Oak Street notes in its filing the COVID-19 pandemic is a major unknown for the company and the country's healthcare industry in general.
The disease is particularly dangerous to older people, meaning Oak Street patients are especially vulnerable to related ongoing health costs. Other issues are the inability for outreach teams to host community events, inventory shortages and the potential for sick employees.
The company estimates 3% of its at-risk patients had symptoms that suggested possible COVID-19 infection.
It also notes, however, potential benefits as a result of the pandemic.
"We believe one of the effects of COVID-19 has been increased focus on health and wellbeing across all patients and therefore there is still strong demand for the type of quality care we deliver and a desire to receive that care in our centers," according to the IPO. "In light of that, we have developed, and continue to develop, new methods of outreach that we believe will be effective in the current environment."
Other risks Oak Street lists in its S-1 include its history of net losses and accumulated debt of nearly $370 million, its limited operating history, dependence on a limited number of payers and the aggressive growth strategy.
Underwriters include J.P. Morgan, Goldman Sachs, Morgan Stanley, William Blair and Piper Sandler.
Rebecca Pifer contributed reporting.