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Oscar Health’s IPO filing will test the venture-backed insurance model

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Late Friday, Oscar Health filed to go public, adding another company to today’s burgeoning IPO market. The New York-based health insurance unicorn has raised well north of $1 billion during its life, making its public debut a critical event for a host of investors.

Oscar Health lists a placeholder raise value of $100 million in its IPO filing, providing only directional guidance that its public offering will raise nine figures of capital.

Both Oscar and the high-profile SPAC for Clover Medical will prove to be a test for the venture capital industry’s faith in their ability to disrupt traditional healthcare companies.

The eight-year-old company, launched to capitalize on the sweeping health insurance reforms passed under the administration of President Barack Obama offers insurance products to individuals, families and small businesses. The company claimed 529,000 “members” as of January 31, 2021. Oscar Health touts that number as indicative of its success, with its growth since January 31 2017 “representing a compound annual growth rate, or CAGR, of 59%.”

However, while Oscar has shown a strong ability to raise private funds and scale the revenues of its neoinsurance business, like many insurance-focused startups that TechCrunch has covered in recent years, it’s a deeply unprofitable enterprise.

Inside Oscar Health

To understand Oscar Health we have to dig a bit into insurance terminology, but it’ll be as painless as we can manage. So, how did the company perform in 2020? Here are its 2020 metrics, and their 2019 comps:

  • Total premiums earned: $1.67 billion (+61% from $1.04 billion).
  • Premiums ceded to reinsurers: $1.22 billion (+113%, from $572.3 million).
  • Net premium earned: $455 million (-3% from $468.9 million).
  • Total revenue: $462.8 million (-5% from $488.2 million).
  • Total insurance costs: $525.9 million (-8.7% from $576.1 million).
  • Total operating expenses: $865.1 million (+16% from $747.6 million).
  • Operating loss: $402.3 million (+56% from $259.4 million).

Let’s walk through the numbers together. Oscar Health did a great job raising its total premium volume in 2020, or, in simpler terms, it sold way more insurance last year than it did in 2019. But it also ceded a lot more premium to reinsurance companies in 2020 than it did in 2019. So what? Ceding premiums is contra-revenue, but can serve to boost overall insurance margins.

As we can see in the net premium earned line, Oscar’s totals fell in 2020 compared to 2019 thanks to greatly expanded premium ceding. Indeed, its total revenue fell in 2020 compared to 2019 thanks to that effort. But the premium ceding seems to be working for the company, as its total insurance costs (our addition of its claims line item and “other insurance costs” category) fell from 2020 to 2019, despite selling far more insurance last year.

Sadly, all that work did not mean that the company’s total operating expenses fell. They did not, rising 16% or so in 2020 compared to 2019. And as we all know, more operating costs and fewer revenues mean that operating losses rose, and they did.

Oscar Health’s net losses track closely to its operating losses, so we spared you more data. Now to better understand the basic economics of Oscar Health’s insurance business, let’s get our hands dirty.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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EBay and Adevinta to sell UK sites Gumtree, Motors.co.uk and Shpock to get their $9.2B deal past regulators

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After inking a $9.2 billion deal to merge their classifieds businesses last year, eBay and Norway’s Adevinta have announced a deal to sell off three popular web properties in the UK to get the deal cleared by local regulators, the Competition Markets Authority. The companies plan to sell off Adevina-owned Shpock, and eBay-owned Gumtree and Motors.co.uk — three UK sites that let individuals sell used goods and find/offer services — with the transactions expected to be completed in time for eBay and Adevinta to complete their bigger deal in Q2 2021, pending final regulatory approvals.

“EBay and Adevinta remain excited about the proposed combination of Adevinta and eBay Classifieds Group and now target closing the transaction in Q2 2021, subject to final ratification of the remedies execution plan by the CMA and receipt of outstanding regulatory approval in Austria,” the companies said in a joint statement.

The companies have not yet said whether they plan to sell them in a single package or to independent buyers, but a spokesperson for Adevinta said that it’s likely that there will be another update in 4-6 weeks. She declined to give a price range for the properties.

But in the statement from the companies, eBay said that Gumtree and Motors, which form its UK classifieds business, account for less than 10% of its consolidated revenues ($10.3 billion last year); and Adevinta said that Shpock revenues make up less than 1% of its consolidated revenues (which were about $80 million in the last 12 months). Adevinta is the majority owner of Norwegian publisher Schibsted, among other businesses.

The CMA provisionally has said that it would support the deal if the sale of the three properties gets completed.

“The CMA considers that there are reasonable grounds for believing that the undertakings offered by Adevinta and eBay, or a modified version of them, might be accepted by the CMA under the Enterprise Act 2002,” it noted in a brief update (which was dated 2 March, 2020, although I think that was a typo).

The divestment decision comes as a result of the CMA last month announcing that the deal raised competition concerns as is.

“It is important that people have choice when it comes to selling items they no longer require or searching for a bargain online, and that they can enjoy competitive fees and services,” said CMA’s Joel Bamford, Senior Director of Mergers, in a statement. “There is a realistic chance that without this deal Gumtree and Shpock would have been direct competitors to eBay, which is by far the biggest player in this market. This is the latest in a series of merger probes by the CMA involving large digital companies, where we are thoroughly examining deals to ensure that competition is not restricted, and consumers’ interests are protected.”

Interestingly, one of those other deals also involves eBay, indirectly. Another asset that eBay sold off as part of its wider divestment efforts aiming to streamline its business was selling secondary ticket market company Stubhub to Viagogo in a $4 billion deal. That acquisition closed last year, but then the merger was investigated by the CMA, which last month ordered Viagogo to divest the company’s business outside of North America. It’s a crushing blow when you consider that events have fallen off a virtual cliff (literally and figuratively).

Turning back to Gumtree, Shpock and Motors.co.uk, even if those sites are a relatively small part of eBay and Adevinta’s wider business revenue-wise, collectively they form a very popular option for people looking to buy or sell used goods or hire people for service jobs in the UK. I’ve been a regular user of both in my time, to sell and buy items, and to advertise for/discover several excellent au pairs. Coincidentally, people also use them to resell tickets.

It’s notable that the CMA didn’t consider Facebook, or any others, big enough yet to be seen as viable competitors in that market. It will be worth watching to see how and if that changes though. With deals like last week’s $191 million fundraise for Wallapop, and Facebook’s persistent Marketplace efforts, it is clear that there is still business to be found in classified listings, both as a standalone enterprise, or as something that creates stickiness for users to hang around for other services and advertising alongside them.

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Microsoft’s Power Automate Desktop is now free for all Windows 10 users

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Microsoft today announced that it is making Power Automate Desktop, its enterprise-level tool for creating automated desktop-centric workflows, available to all Windows 10 users for free. Power Automate Desktop is what Microsoft calls its “attended Robotic Process Automation” solution, but you can think of it as a macro recorder on steroids. It comes with 370 prebuilt actions that help you build flows across different applications, but its real power is in letting you build your own scripts to automate repetitive and time-consuming tasks.

Power Automate Desktop originally launched last September. It’s based on Microsoft’s acquisition of Softomotive in early 2020, but Microsoft has since extended Softomotive’s technology and integrated it deeper into its own stack.

Users who want to give Power Automate Desktop a try can now download it from Microsoft, but in the coming weeks, it’ll become part of Microsoft’s Insider Builds for Windows 10 and then eventually become a built-in part of Windows 10, all the way down to the standard Windows Home version. Until now, a per-user license for Power Automate Desktop would set you back at least $15 per month.

“We’ve had this mission of wanting to go democratize development for everybody with the Power Platform,” Charles Lamanna, the CVP of Power Platform engineering at Microsoft, told me. “And that means, of course, making products which are accessible to anybody — and that’s what no-code/low-code is all about, whether it’s building applications with Power Apps or automating with Power Automate. But another big part of that is just, how do you also expand the imagination of a typical PC user to make them believe they can be a developer?”

This move, Lamanna believes, reduces the licensing friction and sends a message to Windows users that they can build bots and automate tasks, too. “The way we’ve designed it — and the experience we have, particularly around the recording abilities like a macro recorder — makes it so you don’t have to think about for loops or what is this app I’m clicking on or this text box — you can just record it and run it,” he said.

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Piano acquires analytics company AT Internet

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Piano is expanding its platform for digital publishers with the acquisition of AT Internet, a 25-year-old analytics company based in France.

Even if you don’t recognize Piano as a company, TechCrunch readers will probably be familiar with the product, since we use it to manage the reader experience of our Extra Crunch membership program.

Other customers include CNBC, The Wall Street Journal and the Associated Press, and Piano describes itself more broadly as a “digital business platform” with products around personalization, advertising and analytics, as well as subscriptions.

“Fundamentally, our job is to help big websites make more money,” said CEO Trevor Kaufman. “We view that not as a billing problem, but as a marketing problem.”

Kaufman described a “pretty siloed system” used by most publishers and other digital businesses, where data around ad revenue, subscriptions, content engagement and customer profiles is all stored separately. By integrating with AT Internet’s “user-centric, event-based data store,” he said Piano can provide a more comprehensive picture of “the full customer journey,” allowing businesses to personalize their marketing and messaging accordingly.

He also praised AT Internet for its focus on “data quality and privacy,” with the company helping clients comply with GDPR and CCPA regulations.

New York-based Piano says AT Internet’s chief executive Mathieu Llorens will continue in that role while becoming a “significant shareholder” in the combined organization. The acquisition price was not disclosed, but the transaction involves both cash and equity and was funded by Updata Partners, Rittenhouse Ventures and Sixth Street Partners.

“The merger of our two organizations is an exciting chapter in our company’s history and prominence in the web analytics industry,” Llorens said in a statement. “This next chapter with Piano will enable AT Internet to invest more resources in and drive expansion of our current products, as well as help more organizations leverage analytics values and segments to deliver personalized customer experiences.”

Kaufman added that Piano and AT Internet will both work to integrate their platforms while continuing offer standalone products, but “the line becomes blurrier and blurrier as we use the backend of AT Internet to power more and more stuff for Piano.”

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