Shares of One Medical are worth $19.50 this morning after the venture-backed unicorn priced its IPO at $14 per share last night. The company opened at $18 before rising further, according to Yahoo Finance data. At its current price, One Medical is worth about 40% more than its IPO price, a strong debut for the company.
The result is a boon for One Medical, which raised $532.1 million during its time as a private company. At $14 per share, the company was worth $1.71 billion. At 19.50, One Medical is worth $2.38 billion, a winning result for a company said to be worth around $1.5 billion as a private company.
For investors The Carlyle Group, J.P. Morgan, Redmile Group, GV and Benchmark (among others), the debut is a success, pricing their stakes in the company higher once again. For other unicorns, the news is even better. One Medical, a company with gross margins under the 50% mark, deeply minority recurring revenue and 30% revenue growth in 2019 at best is now worth about 8.5x its trailing revenues.
That is about as good a signal as one could imagine for venture-backed companies that aren’t in as good shape as Slack or Zoom were letting them know that now is the time to go public.
Unicorn directions
It’s possible to read One Medical’s new revenue multiple in a few ways. You can be positive, saying that its valuation and resulting metrics are signs of investor optimism for the medical service company. Or you could go negative and assume that its pricing looks like a case of the market being more excited about a brand than a set of accounting results.
But for other unicorns, there is only one way to read the results: with a glass of expensive Scotch or bubbly. Today’s results are great news.
Investors paid in-range for One Medical before its IPO, which helped it raise more money in a single round than it ever had before. And then the public investor pool ponied up even more for its equity, a second win. For companies that look like One Medical, then, we have a new set of valuation metrics to go on.
If, say, another unicorn wanted to go public with similar growth and profits (losses), but without the slim recurring portion of revenue that One Medical currently enjoys, we could discount them a bit from the 8.5x multiple. If they had a bit more, we could expect a higher figure.
You get the idea.
But after SmileDirectClub fell flat on its manicured face, and WeWork flopped harder than iHop going hamburgers, it turns out not to be true that all tech-enabled companies are doomed to endure poor welcomes from the public markets. That’s a green light, non-software unicorns.
Get those S-1s out.
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