Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/oscar-health-inc" target="_blank" data-smartkarma-citation="entities:31499:1" rel="noopener">Oscar Health (OSCR US)</a>  stock continued to trade lower and plunged ~58% from its IPO price of $39 per share. Company will release its second quarter results after market on Thursday, August 12, 2021. Currently, Oscar Health shares trade on multiples lower than its peers, such as <a href="https://www.smartkarma.com/entities/clover-health-investments-corp" target="_blank" data-smartkarma-citation="entities:33060:1" rel="noopener">Clover Health Investments Corp (CLOV US)</a> and <a href="https://www.smartkarma.com/entities/bright-health-group-inc" target="_blank" data-smartkarma-citation="entities:33507:1" rel="noopener">Bright Health Group (BHG US)</a> . Oscar Health completed IPO in March and lock-up agreements will expire on the second trading day immediately following the public release of earnings for the second quarter. Assuming stock price of $16.20 per share, Oscar Health has enterprise value (EV) of ~$1.06 billion and ~$2.3 billion of cash, cash equivalents and marketable securities. Keeping this in mind, company has raised a total of ~$1.6 billion from American leading investment and venture capital firms. We believe that Oscar Health is M&amp;A target and may be acquired by large managed healthcare and insurance corporation.</p>

Oscar Health (OSCR US)  stock continued to trade lower and plunged ~58% from its IPO price of $39 per share. Company will release its second quarter results after market on Thursday, August 12, 2021. Currently, Oscar Health shares trade on multiples lower than its peers, such as Clover Health Investments Corp (CLOV US) and Bright Health Group (BHG US) . Oscar Health completed IPO in March and lock-up agreements will expire on the second trading day immediately following the public release of earnings for the second quarter. Assuming stock price of $16.20 per share, Oscar Health has enterprise value (EV) of ~$1.06 billion and ~$2.3 billion of cash, cash equivalents and marketable securities. Keeping this in mind, company has raised a total of ~$1.6 billion from American leading investment and venture capital firms. We believe that Oscar Health is M&amp;A target and may be acquired by large managed healthcare and insurance corporation.

Is Oscar Health M&A Target After The Shares Plunged More Than 50% Below IPO Price?

Equity Capital Markets

Bright Health Group / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/bright-health-group-inc" target="_blank" data-smartkarma-citation="entities:33507:1" rel="noopener">Bright Health Group (BHG US)</a> , healthcare and technology company integrating financing and care delivery, priced ~51 million shares at $18 per share, below the expected price range of $20-23 per share. Company sells health plans to seniors in MA, individuals, families and employers and has two connected businesses: NeueHealth and Bright HealthCare.</p><p>J.P. Morgan, Goldman Sachs, Morgan Stanley and Barclays are lead underwriters on the IPO. Bright Health has raised ~$1.6 billion in funding over 5 rounds, according to Pitchbook and Crunchbase. Leading VC firms New Enterprise Associates, Bessemer Venture Partners and Greenspring Associates are majority stockholders and own 54% of total shares of common stock.</p>

Bright Health Group (BHG US) , healthcare and technology company integrating financing and care delivery, priced ~51 million shares at $18 per share, below the expected price range of $20-23 per share. Company sells health plans to seniors in MA, individuals, families and employers and has two connected businesses: NeueHealth and Bright HealthCare.J.P. Morgan, Goldman Sachs, Morgan Stanley and Barclays are lead underwriters on the IPO. Bright Health has raised ~$1.6 billion in funding over 5 rounds, according to Pitchbook and Crunchbase. Leading VC firms New Enterprise Associates, Bessemer Venture Partners and Greenspring Associates are majority stockholders and own 54% of total shares of common stock.

Bright Health IPO: Strong M&A Growth Strategy and Limited Upside Potential

<p><a href="https://www.smartkarma.com/entities/oscar-health-inc" target="_blank" data-smartkarma-citation="entities:31499:1" rel="noopener">Oscar Health (OSCR US)</a>  completed its IPO in March and sold to investors ~36.4 million shares of Class A common stock at IPO price of $39.00 per share. Therefore, insurtech unicorn raised net proceeds of $1.3 billion and used a portion of funds to repay ~$153 million of borrowings under the Term Loan Facility. However, Oscar Health shares fell ~43% since IPO and could find the bottom near $22.00 per share. We believe that upcoming IPO of insurtech competitor Bright Health and strong financial results for 1Q CY21 may drive valuation of Oscar Health higher. Company plans to deliver revenue growth and expects direct and assumed policy premiums will be ~$3.1 billion at midpoint for CY21.</p>

Oscar Health (OSCR US)  completed its IPO in March and sold to investors ~36.4 million shares of Class A common stock at IPO price of $39.00 per share. Therefore, insurtech unicorn raised net proceeds of $1.3 billion and used a portion of funds to repay ~$153 million of borrowings under the Term Loan Facility. However, Oscar Health shares fell ~43% since IPO and could find the bottom near $22.00 per share. We believe that upcoming IPO of insurtech competitor Bright Health and strong financial results for 1Q CY21 may drive valuation of Oscar Health higher. Company plans to deliver revenue growth and expects direct and assumed policy premiums will be ~$3.1 billion at midpoint for CY21.

Will Bright Health Upcoming IPO Drive Valuation of Oscar Health Higher?

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<div><p><a href="https://www.smartkarma.com/entities/waterdrop-inc" target="_blank" data-smartkarma-citation="entities:33018:1" rel="noopener">Waterdrop Inc (WDH US)</a> is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/swiss-re-ag-1f83dcbc-730e-46fa-82f2-bfe7e8e361a1" target="_blank" data-smartkarma-citation="entities:27914:1" rel="noopener">Swiss Re AG (SREN SW)</a> and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>.</p></div><div><p>At the mid-point of the proposed IPO price range of $10.00-12.00 per ADS, Waterdrop will have a market cap of $4.3 billion. At the mid-point of the IPO price range, the net proceeds are $301.6 million. New and existing shareholders have indicated on $210 million of the IPO, including Boyu Capital ($100 million), HOPU Investments (at least $80 million), and Kevin Sunny Holding ($30 million). The indications of interest represent 63.6% of the ADSs on offer at the mid-point of the IPO price range.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/waterdrop-ipo-initiation-going-for-brokers" target="_blank" data-smartkarma-citation="insights:50610" rel="noopener">Waterdrop IPO Initiation: Going for Brokers</a>, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. Our analysis suggests that the IPO price range is full at the high-end but has some upside at the low-end. </p></div></div></div>

Waterdrop Inc (WDH US) is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by Tencent Holdings (700 HK), Swiss Re AG (SREN SW) and Meituan (3690 HK).At the mid-point of the proposed IPO price range of $10.00-12.00 per ADS, Waterdrop will have a market cap of $4.3 billion. At the mid-point of the IPO price range, the net proceeds are $301.6 million. New and existing shareholders have indicated on $210 million of the IPO, including Boyu Capital ($100 million), HOPU Investments (at least $80 million), and Kevin Sunny Holding ($30 million). The indications of interest represent 63.6% of the ADSs on offer at the mid-point of the IPO price range.In Waterdrop IPO Initiation: Going for Brokers, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. Our analysis suggests that the IPO price range is full at the high-end but has some upside at the low-end. 

<p><a href="https://www.smartkarma.com/entities/oscar-health-inc" target="_blank" data-smartkarma-citation="entities:31499:1" rel="noopener">Oscar Health (OSCR US)</a> is technology-driven and consumer-focused health insurer with the best-in-class in-house built technology and customer service. VC-backed insurtech unicorn wants to disrupt and transform health insurance through engagement technology. <a href="https://www.smartkarma.com/entities/oscar-health-inc" target="_blank" data-smartkarma-citation="entities:31499:1" rel="noopener">Oscar Health (OSCR US)</a>  helps to save money and optimize spending for its members using the personalized data to drive real-time actionable insights and recommendations.</p><p>Morgan Stanley, Goldman Sachs and Allen &amp; Company are lead underwriters on the IPO. <a href="https://www.smartkarma.com/entities/oscar-health-inc" target="_blank" data-smartkarma-citation="entities:31499:1" rel="noopener">Oscar Health (OSCR US)</a>  raised ~$1.6 billion in funding over 10 rounds, according to Pitchbook and Crunchbase. The expected price range on the IPO of 31 million shares was raised to $36-38 per share and today Oscar Health sold shares at IPO price of $39 per share implying valuation of ~$8 billion.</p>

Oscar Health (OSCR US) is technology-driven and consumer-focused health insurer with the best-in-class in-house built technology and customer service. VC-backed insurtech unicorn wants to disrupt and transform health insurance through engagement technology. Oscar Health (OSCR US)  helps to save money and optimize spending for its members using the personalized data to drive real-time actionable insights and recommendations.Morgan Stanley, Goldman Sachs and Allen &amp; Company are lead underwriters on the IPO. Oscar Health (OSCR US)  raised ~$1.6 billion in funding over 10 rounds, according to Pitchbook and Crunchbase. The expected price range on the IPO of 31 million shares was raised to $36-38 per share and today Oscar Health sold shares at IPO price of $39 per share implying valuation of ~$8 billion.

Oscar Health IPO. Reinventing Health Insurance

United States

Trupanion, Inc. provides pet health insurance. The Company offers pet medical insurance for dogs and cats in Canada, Puerto Rico, and the United States.

Perrigo Company PLC is a global healthcare supplier that develops, manufactures, and distributes OTC and generic prescription pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients and pharmaceutical and medical diagnostic products. The Company's primary markets and locations of manufacturing and logistics operations are the US, UK, Mexico, and Australia.

LivaNova PLC operates as a medical technology company. The Company focuses on neuromodulation, as well as cardiac surgery and rhythm management. LivaNova develops medical solutions for the treatment of cardiovascular diseases.

TG Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on the acquisition, development and commercialization of innovative pharmaceutical products for the treatment of cancer and other underserved therapeutic needs. Currently, the company is developing two therapies targeting hematological malignancies, specifically, relapsed and refractory non-Hodgkins lymphoma.

Arrowhead Pharmaceuticals, Inc. operates as a biotechnology company. The Company develops medicines that treat intractable diseases by silencing the genes. Arrowhead Pharmaceuticals offers its services in the United States.

Haemonetics Corporation designs, manufactures, and markets automated blood processing systems.  The Company's products are for use in surgical blood salvage, blood component collections, and plasma collections.  Haemonetics markets its products worldwide, primarily outside the United States.

Corcept Therapeutics Inc. is a pharmaceutical company that discovers and develops drugs for the treatment of severe metabolic and psychiatric disorders. The Company's lead product modulates the effect of cortisol, also known as the "stress hormone", by selectively blocking the binding of cortisol to one of its two known receptors, the GR-II receptor.

Geron Corporation is a clinical stage biopharmaceutical company developing a first-in-class telomerase inhibitor, imetelstat, in hematologic myeloid malignancies.

Azenta, Inc. provides life sciences solutions. The Company offers cold-chain sample management solutions and genomic services across areas such as drug development, clinical research, and advanced cell therapies. Azenta serves pharmaceutical, biotech, academic, and healthcare institutions worldwide.

ACADIA Pharmaceuticals Inc. is a biopharmaceutical company focused on the discovery, development and commercialization of small molecule drugs for the treatment of central nervous system disorders. The company is currently working on the treatment of induced dysfunction in Parkinson's disease ,schizophrenia, neuropathic pain and glaucoma.

Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd. manufactures and sells Chinese patent medicine. The Company also wholesales, retails, imports, and exports Western and Chinese pharmaceutical products and various medical apparatus.

Guangzhou Baiyunshan Pharmaceutical Holdings (874 HK)

Guangzhou Baiyunshan Pharmaceutical Holdings

Fortis Healthcare Ltd. is a health care provider.  The Company operates multi- specialty hospitals, a boutique-style hospital, and various satellite and heart command centers.

Celltrion Pharm Inc. manufactures and sells pharmaceutical products.  The Company products inclue drugs for for hepatic diseases, digestion, diabetes, cold and fever, anti-inflammatory, and veterinary medical products.  Celltrion also provides pharmaceutical raw materials.

Topchoice Medical Investment Corporation provides dental and oral health care services.

Sam Chun Dang Pharm Co., Ltd. (SCD) develops, manufactures, and markets medicines for human health care.  The Company specializes in producing medical treatment drugs as well as diagnostic drugs.  SCD Pharm's products include antibiotics, respiratory stimulants, pneumonia diagnosis devices, and many others.

Xizang Haisco Pharmaceutical Group Company Limited develops, manufactures and sells drug formulations and active pharmaceutical ingredients. The Company's main products include hepatobiliary disease medication, anti-infective drugs, parenteral nutrition drugs, invert sugar for injection, and other related products.

Xizang Haisco Pharmaceutical Group Co (002653 CH)

Hualan Biological Engineering Inc. produces and markets human serum albumin (HSA), gamma globulin, frozen prothrombin (PCC), and other related biological products.

Hualan Biological Engineering (002007 CH)

China National Medicines Corp. Ltd. wholesales and retails chemical material medicines, western medicine preparations, biochemical medicines, biological products, and Chinese traditional medicines.  Through its subsidiaries, the Company also manufactures pharmaceuticals including injections, capsules, tablets, and other related products under the CNCM brand name.

PT Kalbe Farma Tbk produces and develops pharmaceutical products for human and animal healthcare.  Through its subsidiaries, the Company also operates in the pharmaceutical, health food, and packaging industries.

Shenzhen Salubris Pharmaceuticals Co., Ltd. develops, manufactures, and distributes pharmaceutical and healthcare products such as tablets, capsules, injection formulations and active pharmaceutical ingredients.

Shenzhen Salubris Pharmaceuticals A (002294 CH)

Mulberry Health Inc. provides healthcare services. The Hospital offers short-term rehabilitation, memory care, outpatient therapies, and independent living facilities. Mulberry Health serves patients in the United States.

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Oscar Health (OSCR US)

Is Oscar Health M&A Target After The Shares Plunged More Than 50% Below IPO Price?

We believe that investors underestimate technology component in Oscar Health’s valuation and insurtech may be M&A target for large insurance...

Andrei Zakharov

Bright Health IPO: Strong M&A Growth Strategy and Limited Upside Potential

We have positive view on Bright Health IPO. However, we see limited upside potential for shares of Bright Health and believe that IPO valuation...

Andrei Zakharov

Will Bright Health Upcoming IPO Drive Valuation of Oscar Health Higher?

Oscar Health reduced quota share in 1Q CY21 and we expect GAAP revenue may grow 100%+ y/o/y this year with growing business segments MA, Small...

Andrei Zakharov

Waterdrop IPO: Valuation Insights

Waterdrop has launched its IPO to raise net proceeds of $301.6 million at the mid-point of the price range of $10-12. The price range is full at...

Arun George

Oscar Health IPO. Reinventing Health Insurance

We have positive view on Oscar Health IPO and believe that Oscar Health is a technology company and not traditional insurer making health care more...

Andrei Zakharov

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