The IPO Buzz: When Health Is A Hottie

athenahealth (Nasdaq: ATHN proposed) plans to price 6.3 million shares at $14 to $16 each to raise $94.3 million. The company will offer 5 million shares and selling shareholders will offer 1.3 million shares.
Formed in 1997, athenahealth is a Watertown, Massachusetts-based provider of Internet-based business services for physician practices. The company provides a full range of services, on a subscription basis, for billing and clinical data management for physician practices. As of June 30, 2007, the company serviced more than 10,500 medical providers, including more than 8,000 physicians, and 54 medical specialties in 32 states.
The company has experienced steady, solid growth. Consider this: For the 12-month cycle ending June 30, 2007, athenahealth reported total revenues of $86.9 million, up from $38.9 million reported for the year ending Dec. 31, 2004.  
However, there is a negative.
The company has never turned a profit. The following was taken from its preliminary prospectus: “We have an accumulated deficit of $71.3 million as of June 30, 2007. It is not certain that we will become profitable, or that, if we become profitable, our profitability will increase. In addition, we expect our costs and operating expenses to increase in the future as we expand our operations.”
athenahealth is expected to be priced Wednesday evening and to trade on Thursday, Sept. 20, 2007.
Steady Flow into the IPO Pipeline
The other story isn’t so much what else is on this week’s new-issues calendar, but what hit the IPO pipeline last week.
Twelve companies filed to go public, according to U.S. Securities and Exchange Commission filings. They expect to raise over $4.1 billion.
By Sept. 14, 2007, 279 companies had filed go public so far this year. They expect to raise $59.6 billion. This is a much faster pace than a year ago.
By Sept. 15, 2006, 238 companies had filed to go public. They expected to raise $40.6 billion.
And last week’s filings could be signaling an emerging trend in the IPO market – it’s entertainment.
Three of the 12 companies filing for an IPO last week are from the entertainment industry. The three were looking to raise $900 million:
  • AMC Entertainment (NYSE: AC proposed), a Kansas City-based owner and operator of about 411 movie theaters under the AMC and Loews Entertainment brands, filed to raise $500 million. Note: This is the company’s second attempt to go public. On Dec. 11, 2006, it filed for an IPO under the name Marquee Holdings to raise $750 million. The offering was withdrawn on June 19, 2007.
  • China Digital TV Holdings (NYSE: STV proposed), a Beijing-based provider of conditional access systems to China’s digital television market, filed to raise $150 million.
  • RHI Entertainment (Nasdaq: RHIE proposed), a New York City-based developer, producer and distributor of new made-for-television movies, mini-series and other television programming, filed for an IPO to raise $250 million.
It makes for an interesting selection by bankers. The entertainment and broadcasting industry has been a laggard in the securities markets over the last 52 weeks. The Dow Jones US Broadcasting & Entertainment Index was up 12.8 percent on Sept. 14, while the Nasdaq Composite Index was up 18.5 percent.
Maybe the bankers sniff a window of opportunity?
Now, that’s entertainment.