(Reuters) - Shares of GoHealth Inc GOCO.O jumped as much as 25% in their Nasdaq debut Wednesday as investors bet that more U.S. consumers will buy health insurance online in the future.
GoHealth raised $913.5 million in an upsized initial public offering (IPO) after pricing its shares at $21 apiece, above its marketed range.
Shares opened trading at $25, valuing the company at $7.83 billion. The stock pared gains by 1:25 ET to trade up 11.6% at $23.44.
GoHealth’s business of selling health insurance online has grown rapidly since the passage of the Affordable Care Act in 2010. The company has since started selling Medicare plans to seniors, a business that is expected to continue to grow as more Americans age.
Last year, GoHealth’s net revenue increased 138.5% to $539.5 million. Its net income in 2019 rose to $30.5 million from $28.1 million in 2018.
With the listing, the company has more than quintupled in value since U.S. private equity firm Centerbridge Partners LP invested in it ten months ago. At the time, GoHealth was worth $1.5 billion.
Before investing, Centerbridge initially weighed directly backing a health insurer but became wary as more plans entered the market. The firm saw more value in companies that helped consumers sift through their increasing options.
“What became obvious to us is that there was going to be a big change in how people bought insurance,” said Jeremy Gelber, senior managing director at Centerbridge, in an interview. “There’s a much bigger market in helping people understand and get the best use out of their health plans.”
GoHealth’s listing comes amid booming equity markets in the U.S. A record $184 billion was raised in U.S. equity capital markets in the second quarter, according to Refinitiv IFR data.
Over $8.9 billion worth of IPOs in the second quarter priced above the target range, the highest amount since the third quarter of 2014, according to Dealogic.
Reporting by C Nivedita and Rebecca Spalding; Editing by Ramakrishnan M. and Arun Koyyur