Why It Matters: The insurance tech market is starting to heat up. Last year, both Lemonade and Root IPO’d and just last month Clover Health hit the public markets after merging with one of Chamath Palihapitiya’s SPACs. In addition to Oscar, Hippo could also finalize plans to go public soon too. It is in discussions to merge with a SPAC led by Reid Hoffman and Mark Pincus.
- Like any SPAC deal, the discussions are still in progress and talks could break down.
Numbers To Consider:
- Oscar generated roughly $1.7 billion in 2020, a 62% improvement.
- It was co-founded by Joshua Kushner, the brother of Trump administration adviser and son-in-law Jared, and was last valued at $3.2 billion in 2018.
- That same year, Alphabet took around a 10% stake in Oscar for $375 million.
Some Numbers On Hippo:
- Hippo was valued at $1.5 billion last July and is aiming for a $5 billion valuation this time around.
- The SPAC it’s rumored to merge with, Reinvent Technology Partners, grossed $690 million in a September IPO.
- “A premium just over seven times the size of the SPAC IPO ensures the deal won’t be too dilutive to investors. Most SPAC mergers aim to be at least three to four times the size of the amount of cash raised by the SPAC to avoid dilution to shareholders.”
Oscar Health and Clover Health are frequently discussed in the same conversation, as they both represent a “modern, tech-enabled to buy health insurance”. While they do compete and overlap, Clover is more focused on Medicare and Medicare Advantage plans, while Oscar offers direct-to-consumer plans for individuals, families, businesses, as well as Medicare ones.
Given how dominant the incumbent industry is (think employer-sponsored plans from United, Humana, Blue Cross Blue Shield, etc.), I don’t necessarily think that they’re success is mutually exclusive.