Primary-Care Stock One Medical Is Up 44% on First Trading Day

January 31, 2020

Shares of the primary-care doctor’s office chain One Medical were up 43.8% from their offering price on Friday, January 31 as the stock began trading for the first time.

One Medical, which trades as 1Life Healthcare under the ticker ONEM, set an offering price of $14 per share on Thursday, at the low end of its expected range. The stock began trading at $18 midmorning on Friday, and by 1 p.m. Eastern time was priced at $20.06 per share.

“We are obviously happy where we trade,” said Bjorn Thaler, the company’s chief financial officer, in an interview shortly after the stock began trading . The S&P 500 was down 1.5% midday amid worries over the spreading Wuhan coronavirus.

Backed by high-profile venture capital funds including Carlyle Group and Alphabet subsidiary GV, the company is one of a number of firms seeking to cut healthcare costs for employers by improving the primary- care experience. It is not yet profitable.

Other players in the burgeoning space include telemedicine firm Teladoc (ticker: TDOC), shares of which are up 59.7% over the past 12 months, and a number of still-private primary-care chains that compete more directly with One Medical, including Forward.

For most of its existence, One Medical operated by selling memberships directly to consumers, before starting to sign up employer groups in the past few years. It now has 6,000 employers who pay for memberships for their workers, including Google, which paid $22.6 million to One Medical in 2018 for memberships for some of its employees, according to a One Medical filing with the Securities and Exchange Commission.

“When you look at our history, we really started out as a company that was selling directly to consumers,” Thaler said. “Over the last three to four years, that is when we started to get into the business with employee groups.”

Thaler said that One Medical can cut trips to emergency rooms and to specialists, which are generally pricier than primary care trips.

We have studies that show that we take a lot of those visits to the emergency room and urgent care center out,” he said. “We also save on specialists.”

The company pays its doctors a salary, rather than on a fee-for-service basis, which Thaler said allows them to spend more time with patients, and removes incentives to refer patients to specialists. “This is true primary care the way it’s meant to be,” he said.

In an SEC filing, the company reported a net loss of $34.2 million in the first three quarters of 2019. “We have incurred significant losses in each period since our inception,” the company said.

The company said that the initial public offering would bring gross proceeds of $245 million. At midday, the company had a market capitalization of $2.1 billion.