Lemonade seeks to squeeze up to $808 million in secondary offering

The insurtech's stock slumps on the news

Insurtech Lemonade filed paperwork Jan. 11 seeking to squeeze as much as $808 million from a secondary offering.

The New York City-based company plans to sell 3 million shares of common stock, with underwriters having the option to sell nearly 680,000 more shares. In addition, several stockholders plan to sell a little over 1.5 million shares of common stock. Lemonade will not receive proceeds from the stockholders’ sale. The company hasn’t assigned a per-share price to the offering.

Lemonade’s filing with the U.S. Securities and Exchange Commission (SEC) shows two major stockholders plan to sell the bulk of the more than 1.5 million shares outside of its direct offering. General Catalyst wants to sell nearly 516,000 shares and Harel Insurance nearly 459,000 shares.

In July, Lemonade raised $319 million through its IPO, with an initial share price of $29 and a closing price of $69.41. The company’s stock closed Jan. 11 at $183.26, up 14% from its closing price Jan. 8 on the New York Stock Exchange. The Jan. 11 closing price was a record high; Lemonade announced the stock offering after the market closed.

Before going public, Lemonade had raised $480 million since being founded in 2015. Aside from General Catalyst, investors in the company’s funding rounds included Softbank, Allianz, GV, Thrive Capital, Sequoia Capital, Asian Cowboy and G Squared.

For the nine months ended Sept. 30, Lemonade reported $74 million in revenue with a net loss of $88 million. During the same period, the company’s gross written premium — a key indicator of an insurer’s financial success — totaled $156 million. Lemonade sells homeowners, renters and pet insurance, and plans to add auto and life insurance policies.

Lemonade closed 2020 with more than 1 million customers. For the year, Lemonade has projected revenue of $91 million to $93 million.

“With every new customer, our system grows smarter, our underwriting gets better, and our prices become more accurate and fair,” Shai Wininger, Lemonade’s co-founder and chief operating officer, said in a news release.

Lemonade sells policies in most of the U.S., as well as France, Germany and the Netherlands. As a Certified B Corporation, the company donates some of its premiums to nonprofits.

The company’s stock opened lower in reaction to the news. After closing at $183.26 on January 11, it opened at $154.95. By mid-morning Tuesday, it had rebounded some and was trading at around $177 per share.

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