3 recent health IT IPOs to watch

Two raise millions, the third is waiting in the wings
By Bernie Monegain
10:13 AM
Wall Street

Healthcare is flying high these days, with analytics seen as the next big wave on both the business and clinical sides of the industry. The verdant market has startups and also established companies looking to public offerings to raise capital. Here are two recent IPOs and one that has filed its intent to go public with the Securities & Exchange Commission. The three of them offer interesting industry bellwethers.

Evolent goes public in a big way

Evolent Health, founded by UPMC Health Plan and The Advisory Board Company, raised $195 million in its initial public offering on June 4. The Arlington, Va.-based company sold stock at $17 a share.

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Before going public, the company had forecast shares would sell in the $14 to $16 range. Moreover, it sold more shares than it had expected – 11.5 million versus $10 million.

Evolent shares are trading on the New York Stock Exchange with the ticker EVH.

Evolent offers a mix of consulting and technology. Its cloud-based IT, which includes population health and analytics tools, is built to help hospitals and health systems migrate from a fee-for-service system to value-based care, executives say.

"We've got a healthcare system that's only treated illness, Evolent Health CEO Frank Williams, told CNBC on June 5. "We actually want a health system that tries to keep people healthy. So we're providing technology tools, analytics, clinical program to help providers manage healthcare better. I don't think there's anyone who really does what we do.

[See also: Health IT banks record VC cash in 2013.]

Teledoc IPO in the wings

Founded in 2002, Dallas-based telemedicine company TelaDoc submitted confidential IPO paperwork with the Securities and Exchange Commission on March 24. Today, the details it filed are public. When the offering might be made has not been made public.

Filing the paperwork are Teladoc CEO Jason Gorevic and Mark Hirschhorn, executive vice president and chief financial officer.

Meanwhile Teladoc is embroiled in a legal battle against the State of Texas over a recently adopted Texas Medical Board rule requiring face-to-face, doctor-patient visits before prescribing medication. The rule was to take effect on June 3. At the end of May, a judge issued a temporary injunction, which puts the medical board rule on hold until the lawsuit is resolved.

In the prospectus summary filed with the SEC, Gorevic and Hirschhorn describe Teladoc as the nation's first and largest telehealth platform, delivering on-demand healthcare anytime, anywhere, via mobile devices, the Internet, video and phone.

"Our solution connects consumers, or our members, with our over 1,100 board-certified physicians and behavioral health professionals, or our providers, who treat a wide range of conditions and cases from acute diagnoses such as upper respiratory infection, urinary tract infection and sinusitis to dermatological conditions, anxiety and smoking cessation," they write.

Nearly 11 million unique members tap into Teladoc for healthcare, according to the filing. The service is available 24/7, 365 days a year. The cost is $40 per visit. Median response time is 10 minutes. Teladoc completed about 300,000 telehealth visits in 2014. Teladoc serves 4,000 employers, health plans, health systems and other entities.

"Our solution offers our clients substantial savings opportunities and an attractive return on investment," Gorenic and Hirschhorn write.

[See also: Teladoc, HealthSpot team on telehealth.]

Press Ganey raises $223M

Press Ganey Holdings raised $223 million, 8.9 million shares at $25 in a May 20 IPO. The company is listed on the New York Stock Exchange with the symbol PGND.

The company, founded in 1985, conducts surveys and provides consulting services to hospitals and medical practices. It has locations in Boston, Chicago, Charlotte, N.C., Baltimore and Kansas City and South Bend, Indiana, where the company was founded by two University of Notre Dame professors – Irwin Press, a professor of medical anthropology, and Rod Ganey, an expert in statistics

As company executives describe it, Press Ganey employs a combination of advanced analytics and strategic advisory services, to deliver insights and guidance that give health care organizations a competitive edge in boosting patient experience.

The market for patient experience measurement and performance improvement solutions is nearly $3.7 billion and is projected to grow to $6 billion by 2018.
Press Ganey intends to use the capital to pay $175 million loan, a one-time $8.5 million advisory fee to its sponsor Vestar Capital Partners. The rest, it plans to invest in additional businesses, technologies, products or assets.

[See also: Press Ganey spotlights ways to improve the patient experience.]