Alignment Healthcare plans to generate $516m in IPO
Alignment Healthcare has launched its IPO and has announced plans to raise $516m from the move, as part of an expansion plan strategy.
The US-based startup which provides Medicare Advantage plans, will sell 27.2m common stock shares, with 5.5m shares that will be offered to existing company stockholders.
According to reports by the Securities and Exchange Commission filing last week, share prices are expected to sell between $17 and $19.
Furthermore, the insurtech says it predicts it will have 187.3m outstanding shares following the IPO, positioning Alignment Healthcare at a valuation of $3 .6bn.
Currently, Alignment has a health plan customer base of more than 81,000 and provides Medicare Advantage plans in 22 markets across the US. The company is one of a growing number of disruptive insurtechs that are transforming the healthcare sector through the latest technology solutions.
For example, Alignment uses predictive analytics to ascertain the level of cover eldely customers may need and also has a 24-hour hotline for members who require additional support in their healthcare.
Medicare a growing market
Alignment Healthcare has enjoyed a strong growth trajectory over the past few months, with revenues up from $756m to 959m in just 12 months. However, the company experienced some losses in 2019 and 2020.
According to a report by the Kaiser Family Foundation, the Medicare Advantage sector is skyrocketing, with 39% of all Medicare beneficiaries taking out such plans. Data shows the growth rate has hit 9% consecutively for 2019 and 2020.
The startup will trade on NASDAQ as ALHC and the working capital raised will be used for investments and debt repayments. Plans show the company aims to explore new markets as well as expanding its position in the maturing markets of San Joaquin and Stanislaus.
Global investment in insurtech reaches all-time high
Global investment in the InsurTech sector reached an emphatic record during H1, 2021, as half-year funding of US$7.4 billion exceeded full-year investment in 2020, and in every other year, according to the new Quarterly InsurTech Briefing from Willis Towers Watson.
It was found that the latest quarter saw 162 deals yield more than $4,824 million in investment, a 210% increase over Q2, 2020. The enormous quarterly total, itself more than any annual total before 2019, was driven largely by 15 mega-rounds of $100 million or more. Collectively, these deals reached $3.3 billion, or two-thirds of total funding during the quarter. The money was raised predominantly by later-stage players seeking expansion.
A need for the insurance community to reflect digital changes
Series B and C fundraisings drove a large number of deals in the second quarter, but the number of early-stage deals also increased. They were up by more than 9% from the previous quarter, and 200% from pandemic-stricken Q2, 2020. As a percentage of overall deals, early-stage activity held roughly steady, at 57%.
InsurTechs focused on distribution accounted for 55% of start-up deals, and for 10 of the 15 mega-rounds. Most of the distribution InsurTechs target reduced dependence on agent channels. Of all Q2 deals, 73% were for P&C-related InsurTechs, while 43 companies raised funds for L&H technology. Funds were raised by companies from 35 countries, including new entrants Botswana, Mali, Romania, Saudi Arabia, and Turkey.
Dr. Andrew Johnston, global head of InsurTech at Willis Re, said: “As technology changes our lives, society will demand an insurance community that reflects and supports our changing, digitally empowered behaviours. Consumers and businesses increasingly expect insurance to be delivered when and how they want it, and risk carriers that fail to respond will fall away over time. To embrace technology is a minimum survival condition. Those that use it to redefine service in the insurance world will thrive. That means a positive future for InsurTechs that bring a truly differentiated business approach to our industry. Some of them will create untold long-term opportunities for themselves and the insurance sector.”