- Oak Street Health's and One Medical's revenue skyrocketed in Q3 in stark contrast to traditional practices that are facing closures.
- And these primary care disruptors are perfectly positioned to fill a growing pit in the US primary care market.
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Oak Street Health witnessed a 57% year-over-year (YoY) jump in revenue to $218 million in Q3, while One Medical saw a 46% YoY hike to $102 million—both surpassing Wall Street estimates. These startups' impressive earnings come on the heels of US digital health startups altogether amassing a record-breaking $4 billion in funding in Q3.
These sky-high earnings piggyback on busy years for both Oak Street Health and One Medical—which have been on expansion tears and are leapfrogging to the front of the primary care space:
- Oak Street Health went public in July and partnered with Walmart that same month tapping a larger user base and geographic network. Oak Street Health operates a network of primary care clinics that offer value-based care (VBC) payment models and specialize in senior care. It filed for its IPO in July of this year, which opened the door for bigger opportunities—like scoring a partnership with retail giant Walmart to fast-track its growth strategy by hooking into Walmart's supercenter clinics. This deal was game-changing for the startup, because now it can leverage Walmart's widespread, established infrastructure to accelerate expansion.
- One Medical also hit the public market earlier this year and is expanding its roster of employer customers nationwide. One Medical's primary care platform offers 24/7 access to both in-person and digital healthcare via its employer partnerships—and it's been shown to cut emergency visits by 41%, and employer costs by 8% or more. In January, the startup filed its IPO, and in Q2 it announced plans to grow beyond the 13 markets it operated in—and in just the last three months it's already set up shop in Texas and Ohio.
Traditional primary care practices are on life support as the pandemic exacerbates their financial woes—and flourishing, tech-savvy primary care disruptors are in a good position to fill in gaps left by mass closures and bankruptcies. In August alone, 2% of US primary care practices closed, while another 2% were weighing bankruptcy.
This is creating gaps in care delivery that are only being compounded by impending physician shortages: 1 in 5 primary care providers are considering ditching their field, according to an August 2020 survey by Primary Care Collaborative.
In spite of these headwinds, the demand for primary care is soaring, along with the aging population—and startups like One Medical and Oak Street Health have the potential to fill in gaps in primary care because they bring something innovative and valuable to the table: virtual care and digital tools that can optimize care, costs, and customer experience. And while traditional primary care practices deal with plummeting pools of cash, tech-savvy primary care startups are flush with investor cash and ready to charge deeper into the primary care space.
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