Alphabet-backed Oscar Health valued at $7.09 billion in lackluster debut

(Reuters) - Shares of Oscar Health fell more than 7% in their stock market debut on Wednesday, fetching a valuation of just over $7 billion for the health insurance startup backed by Google parent Alphabet Inc.

The company’s shares opened at $36 on the New York Stock Exchange, below its initial public offering (IPO) price of $39 per share. Oscar Health raised $1.2 billion from its offering of 31 million shares on Tuesday, after increasing the price range.

Oscar Health is yet to bring in a profit but saw its customers grow 75% in 2020 as more people sought remote healthcare during the COVID-19 pandemic, supercharging the telemedicine market and prompting companies to expand their scale.

It reported a net loss of $406.8 million in 2020, regulatory filings showed.

About 529,000 users strong, the New York-based company allows patients to schedule physician visits, check lab results, make emergency virtual appointments and refill prescriptions through its mobile app or online platform.

The company was worth $3.2 billion in a private fundraising round in 2018, according to PitchBook. Alphabet took a nearly 10% stake in Oscar Health for $375 million that year.

Oscar Health was founded in 2012 by Mario Schlosser, Kevin Nazemi, who is no longer a part of the company, and Josh Kushner, brother of former U.S. President Donald Trump’s adviser and son-in-law, Jared Kushner.

The company’s other investors include venture capital firm General Catalyst Group, Fidelity Investments parent FMR LLC, Peter Thiel’s Founders Fund, investment firm Thrive Capital and Khosla Ventures.

Goldman Sachs & Co LLC, Morgan Stanley, Allen & Company LLC and Wells Fargo Securities are among lead underwriters for the offering.

Reporting by Noor Zainab Hussain and Manojna Maddipatlain Bengaluru; Editing by Devika Syamnath