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Could One Medical Be Looking at a Q1 2020 IPO?


Oct. 9 2019, Published 6:41 p.m. ET

If e-commerce could be so successful, what would happen to the healthcare sector if it could be brought online? Virtual healthcare—or telemedicine—could soon become the next big thing. So far, there haven’t been many such service providers listed on the NYSE or Nasdaq.

One such telemedicine stock is Teladoc Health (TDOC), which has performed reasonably well since its 2015 listing. Notably, TDOC stock has outperformed the S&P 500 Index for most of the year. There have been hints of a telemedicine startup backed by Google (GOOGL) that could soon be listing an IPO. This news has not been officially confirmed by Alphabet.

Over time, there is a good possibility that the telemedicine sector could see a lot more companies joining this space to offer virtual medical assistance.

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One Medical Group: Funding and valuation

Based in San Francisco, One Medical Group was founded by Tom Lee in 2006. In July 2007, Lee raised its early-stage funding from Benchmark Capital. Since then, the startup has expanded its operations to 72 offices throughout the United States.

In its initial funding stages, One Medical Group also raised funds from Alphabet through Google Ventures. At the time, the virtual medical venture raised around $180 million, and its valuation stood at approximately $1 billion.

In its second stage of funding, One Medical had plans to raise about $200 million. However, the startup raised much more than that, as Carlyle Group supported the startup with a $220 million investment. Some sources report that the initial funding by Carlyle Group was in lieu of an equity stake. A secondary investment of $130 million may follow.

Now, there are discussions that One Medical could be planning an IPO. Reports suggest that One Medical is already approaching banks to underwrite the launch. These sources hinted that J.P. Morgan and Morgan Stanley could lead the IPO. The prospectus could be filed sometime in the first quarter of 2020. There have been no official statements regarding such an agreement.

In the last year, One Medical’s valuation was approximately $1.5 billion. Its estimated valuation could touch roughly $2 billion.

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One Medical’s journey

Some prominent names hold stakes in One Medical, including Carlyle Group, Benchmark Capital, and Google Ventures. In 2017, founder Tom Lee handed over the reins of the company to Amir Dan Rubin. Rubin was a former executive with United Health Group.

In its 13-year journey, One Medical has opened 72 offices throughout the country. Plus, it plans to open offices in Atlanta, Orange County, and Portland. One Medical serves individual members as well as groups and corporations. Its corporate clients include Airbnb, Evernote, Instacart, Pinterest, SoulCycle, WeWork, Zendesk, and Pandora.

One Medical’s services

One Medical states that its members wait for an average of two minutes in the lobby, and it claims to have a 98% retention rate. This retention rate is calculated from more than 3,500 member companies. One Medical members have access to onsite care as well as around-the-clock virtual care.

Members can use the company’s app to book an office visit, conduct virtual visits, and access their prescriptions. Plus, members can book appointments for the same day or the next day using the One Medical app. Members can connect to on-demand medical care videos through the app.

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What’s next?

CNBC’s Jim Cramer suggests staying away from IPOs, as the recent stream of IPO raises questions about the primary markets. According to research by Market Research Future, the telemedicine industry has the potential to grow over time. The September 13 report estimates a CAGR (compound annual growth rate) of 16.8% from 2017 to 2023. The industry’s valuation could exceed $56 billion by the end of 2023.

When comparing the telemedicine space to the broader market, Teladoc Health (TDOC) has outperformed the S&P 500 Index most of the year. Likewise, One Medical stock seems to be promising. In my opinion, telemedicine stocks could help reduce the overall portfolio beta. With time, we’ll provide more updates on One Medical before its IPO launch.


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