1Life Healthcare, Inc.

ONEM Details

One Medical Begins Vaccinating for COVID-19: 1Life Healthcare, Inc. (NASDAQ: ONEM) is mainly involved in the business of services-offices and clinics of doctors of medicine. The company provides administrative and managerial services for the affiliated One Medical physician-owned professional corporations. Notably, 1Life and the One Medical entities operate under the “One Medical” brand. Recently, One Medical started administering vaccinations for Phase 1a populations who work or live in San Francisco. It is also proceeding to start vaccinations in other markets as well.

Q3FY20 Result Highlights: For Q3FY20, the company reported total revenue of $101.7 million, up 46% on pcp. During the quarter, the company’s total membership count reached 511,000. Further, the company reported adjusted EBITDA of $3.5 million and a net loss of $16.4 million. The company ended the quarter with cash and short-term marketable securities of $682.3 million.

Q3FY20 Result Highlights (Source: Company Reports)

Outlook: With its technology platform, operations infrastructure, and clinical team, One Medical seems well placed to support broad COVID-19 vaccine efforts in markets across the country. For Q4FY20, the company expects its total revenue to be between $104 million and $109 million. Further, the adjusted EBITDA is expected to be in the range of an EBITDA loss of $4 million to positive $1 million. For FY20, the company expects total revenue to be between $362 million and $367 million. Adjusted EBITDA for FY20 is expected to be in the range of a loss of $29 million to a loss of $24 million.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: Over the last three months, the stock of ONEM has provided a return of 45.89% and is trading close to its 52-week high of $44.87. On the technical analysis front, the stock has a support level of ~$38.41 and resistance of ~$44.29. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price with a correction of low single-digit (in % terms). For the purpose, we have taken peers like Accolade Inc (NASDAQ: ACCD), Phreesia Inc (NYSE: PHR), and Oak Street Health, Inc. (NYSE: OSH). Considering the decent returns in the last three months, current trading level and valuation, we suggest investors to book profit and give a “Sell” rating on the stock at the closing price of $42.63, down by 2.34% as on 4 January 2021.

ONEM Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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