NASHVILLE, TN – Emdeon Business Services, a developer of revenue and payment cycle management solutions, is looking to raise as much as $460 million through an initial public offering of stock, according to a recent filing with the U.S. Securities and Exchange Commission.
The Nashville, Tenn.-based company, which employs 2,250, announced on September 12 that it intends to list the Class A common stock on the New York Stock Exchange and has listed as underwriters Morgan Stanley, Goldman Sachs, UBS, Merrill Lynch, Banc of America, Citi, Credit Suisse, Oppenheimer, Piper Jaffray, Wachovia and William Blair & Company.
The company’s software processed 3.7 billion transactions last year, and revenues were reported at $808.5 million, with adjusted EBITDA of $182.8 million and generated net income of $16 million. The company’s network reportedly includes 1,200 payers, 500,000 providers, 5,000 hospitals, 77,000 dentists and 55,000 pharmacies.
The company expects to use proceeds from the IPO to purchase some interests held by private equity owners and for working capital and general corporate purposes, including repayment of debt and funding future acquisitions.
Some analysts say Emdeon’s large size might insulate the company from the risky nature of IPOs, particularly in this year’s economic climate. According to Bloomberg LP, 26 IPOs launched this year so far have raised $29 billion, which is far below the $37 billion raised in 156 IPOs by this time last year. In addition, another 71 companies have withdrawn or postponed IPO plans so far this year, the most since 2002.
The move comes several months after two private equity firms bought the remaining shares of the company from the HLTH Corp. of Elmwood Park, N.J., the majority owned of WebMD. In February, HLTH sold its 48-percent stake in Emdeon for $575 million to General Atlantic LLC of Greenwich, Conn. and Heilman & Friedman, LLC of San Francisco. General Atlantic had purchased a 52-percent stake in the business in November 2006 for $1.2 billion.
According to the SEC release, the company isn’t specifying how many shares will be issued or at what price, but did say that principal shareholders will own more than 50 percent of the voting stock upon completion of the IPO. The company will then be termed a “controlled company” under NYSE rules, and will therefore not have a majority of independent directors.