Oscar Health, Inc. (NYSE:OSCR) stock fell 5.7% in after-hours trading Monday following the company’s announcement of a planned $350 million convertible senior subordinated notes offering.
The health insurance technology company said it intends to offer the notes, due in 2030, in a private placement to qualified investors. Oscar also plans to grant initial purchasers an option to buy up to an additional $52.5 million in notes.
Oscar intends to use the proceeds for general corporate purposes, including supporting expansion initiatives focused on artificial intelligence, reducing care costs, and enhancing consumer healthcare experiences. The company also plans to fund capped call transactions to reduce potential dilution from the convertible notes.
The notes will be unsecured, subordinated to Oscar’s designated senior debt, and will mature on September 1, 2030, unless earlier repurchased, redeemed, or converted. They will accrue interest payable semi-annually, with noteholders having conversion rights under certain circumstances.
In connection with the offering, Oscar expects to enter into privately negotiated capped call transactions with initial purchasers or their affiliates to help offset potential dilution from the notes. The company also plans to terminate its revolving credit facility contingent on the closing of the offering.
The interest rate, initial conversion rate, and other terms will be determined when the offering is priced. The notes and any shares issuable upon conversion have not been registered under the Securities Act.
