Investing in health care has been tricky during the COVID-19 pandemic. While the public may be trying to save money on what might be thought of as nonessential health spending, the harsher reality is that the public spent roughly 90 to 100 days of being scared to go visit a doctor or a health clinic due to fears of the coronavirus.

One aspect of health care could be new models with new upside ahead. 1Life Healthcare Inc. (NASDAQ: ONEM) came public in an initial public offering in January of 2020. Some might have thought this to be an unlucky timing for an IPO, but 1Life has defied the odds and managed to rise even during the pandemic scare that caused massive stock market selling.

1Life is known for its One Medical service, which is effectively a membership-based primary care model that includes recurring revenues and modernized remote or telehealth that has become so popular. It offers medical facility locations and comes with digital health services. As of December 31, 2019, the company counted approximately 422,000 members in just nine U.S. markets with some 7,000 enterprise clients. 1Life then had 455,000 in its membership count as of the end of the first quarter of 2020, and it is targeting 500,000 to 515,000 members by the end of 2020.

The company recently expanded its virtual health care services with Remote Visits (scheduled video appointments with a primary care provider) and Mindset (virtual therapy and coaching for behavioral health). To stay up to snuff with recent trends, it also began offering COVID-19 testing services nationwide, along with 10X Genomics.

After pricing its IPO and full allocations of the overallotment options, the $14 per share IPO raised more than $280 million before fees for the company. On top of the January IPO, 1Life Healthcare raised $275 million in May via the sale of convertible senior notes with a premium conversion price.

While its shares fell from $25 to as low as $16.50 or so during the panic selling, the company’s obvious business model and growth allowed its shares to rock higher and higher. It was back at $25 by mid-April and closed up at almost $40 (hitting a high of $42.00) in May before pulling back. The most recent share price was closer to $34 and its market cap is still near $4.3 billion.

Canaccord Genuity initiated coverage on 1Life Healthcare with a Buy rating and a $39 price target. That was a fresh call on May 19, and the firm called it a next-generation primary care provider that offers investors a recurring revenue model.

Canaccord Genuity’s report spells out the bullish growth expectations here. The firm sees robust revenue growth in the mid-20% range for the foreseeable future. It also sees 1Life expanding with existing customers and within existing markets, while it continues to add new customers and partners and continuing to enter new markets.

Other firms have even raised their initial price targets after the shares have run up:

• Morgan Stanley to $35 from $21 on May 18.
• SunTrust to $30 from $26 on May 14.
• Wells Fargo to $23 from $18 on May 14.
• Piper Sandler to $29 from $27 on May 14.

1Life Healthcare joined the ranks of other companies by not offering revenue, margin, earnings and EBITDA guidance for 2020 due to uncertainties around the COVID-19 pandemic and self-isolation practices. The company has an obvious path to growth here, but despite growth in 2020 and 201 expected by analysts, the company is projected to keep losing money in 2020 and through at least 2021.

Shares of 1Life Healthcare were up 3.3% at $33.50 in early afternoon trading on Friday. Its post-IPO range is $15.00 to $42.00, and the Refinitiv consensus analyst price target is $26.50.

With every upside story, there are also risks. Many health care models have started out with promise. Some have faded, some have been acquired and some are squashed because larger and deeper-pocketed players decide to model after them.

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