One Medical officially tapped into the Medicare Advantage market Wednesday with the closing of its acquisition of Medicare provider Iora Health, a deal the companies first announced in June. Here are five things to know:
1) One Medical is a concierge primary care provider for commercially insured patients that are young and mostly healthy. It operates on a primarily fee-for-service revenue model. That’s very different from Iora, which accepts full risk for 31,000 members’ care. Its members are covered by Medicare Advantage and Medicare’s new direct contracting program.
2) One Medical said the combined company operates in 28 markets covering 120 million people, or about 40% of the population, with a potential national market of about $870 billion. Membership is estimated to grow to between 717,000 and 723,000 by year-end, with roughly 95% of them being current One Medical customers.
3) By the end of 2021, the company expects to generate total revenue of $586 million to $599 million, with more than 80% coming from the existing One Medical subscribers and the rest from Iora. The company still expects negative earnings of between $40 million and $45 million by year’s end, however. One Medical’s losses have widened in recent years.
4) Publicly-traded One Medical’s shareholders have signaled their disapproval of the deal. The company’s share value plummeted 22% between the day the deal was announced and Aug. 31, to $24.51. That’s because the $2.1 billion all-stock purchase will dilute the value of One Medical shares. The company’s stock price rose slightly Wednesday.
5) A group of One Medical employees is trying to unionize under Workers United, a Service Employees International Union affiliate. The workers say the company misleads people in interviews about the workloads and complexity of their jobs and then pushes them past the limits of their well-being. The workers also allege they’re underpaid, among other complaints. One Medical has refuted those claims.
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