Some companies just aren’t meant to go public.
That’s the thinking at HealthPort, the Alpharetta, Ga.-based developer of revenue cycle management and outsourced release of information services that postponed its planned initial public offering of common stock in November. The last-minute decision to shelve the IPO didn’t sit well with some analysts, who wondered if the company was on weak financial footing and unable to keep up with competitors, but company officials have responded by saying the company is in fine shape.
“We’re actually pretty excited,” said Patrick J. Haynes III, the company’s founder and board chairman. “We’re far from desperate.”
“We are not really publicly oriented. We like to grow the business organically,” he added. “Going public is not a panacea – it’s the start of a journey.”
HealthPort officials had begun the IPO process last March, with Haynes saying the company was wooed by financial investors envisioning a payday of $90 million to $100 million. Added to that scenario was the early success of an IPO launched by Nashville-based RCM provider Emdeon Business Services, which netted $422.5 million – selling 2 million more shares than anticipated – in August.
Since then, however, Emdeon has seen its stock drop back down to below its priced IPO range of $15.50, recently closing at a 52-week low of $15.03. In addition, Haynes said, HealthPort’s underwriters, Deutsche Bank Securities and William Blair & Co., weren’t able to find investors willing to pay $14 to $16 a share for HealthPort stock.
“For whatever reasons, the buyers didn’t want to pay the price that everyone expected,” Haynes said, adding that the uncertainty surrounding healthcare reform may have caused investors to back off. “We had an oversubscribed offering at a price that was below the range.”
Haynes disagrees with those who say the company is struggling, even though it hasn’t technically turned a profit. The company posted revenues of $242.1 million in 2008, but lost $59.4 million, and it lost $6.9 million on revenues of $126.8 million for the first half of 2009. Haynes is expecting earnings before interest, taxes, depreciation and amortization of $41 million to $45 million by the end of this year, and feels the company’s struggles so far can be attributed to accounting charges primarily related to its acquisition this past year of ChartOne, Inc.
Haynes and Gerald Hansberger, CFO of the Thurston Group, a HealthPort partner, say the future looks bright for HealthPort, regardless of whether the company decides to go public. They expect the nation’s push toward ‘meaningful use’ of information technology and electronic medical records will create more of a demand for the company’s products – and see the company’s offerings grow as it develops more revenue cycle management tools.
Just as important is the company’s ROI outsourcing product, which accounts for roughly 85 percent of HealthPort’s revenues. “If you think about it,” Haynes points out, “records are everything. And our business doesn’t just go away.”