Life sciences companies dominated deal flow in May, and were responsible for 52% of all IPOs in 2015. Emerging growth companies, meanwhile, accounted for 93% of all IPOs last year. In the first five months of 2014, there were four billion-dollar IPOs, and five over $500 million. In contrast, in the first five months of 2015, there has been one billion-dollar IPO, but no one has yet surpassed $500 million.
IPOs are a lucrative exit channel for U.S. healthcare startups
Digital health startups raised a record $9.5 billion in venture capital funding last year – 32% higher than a year ago. Until now, these entrepreneurs have had to rely on a buyout to exit. But IPOs are becoming an increasingly lucrative exit route for U.S. healthcare startups. A new market research firm says that by the end of 2020, there will be 145 digital health acquisitions and 79 healthcare IPOs.
IPOs can be lucrative, but they also present a unique set of challenges. Taking a company public means exposing it to a much larger industry. It also means increased regulatory costs and intense scrutiny from shareholders, both of which can deter some entrepreneurs. While an IPO can result in a significant profit for founders, the process also comes with high stakes and demands rigorous progress reporting.
A recent IPO saw three companies in the healthcare sector go public. Two of them, Health Catalyst and Livongo, both started trading on Nasdaq. Both companies expanded their digital health service and expanded their distribution. Another acquisition was Modern Fertility, a startup less than four years old that was acquired by Ro for $225 million.
Another popular exit vehicle for digital health companies is special purpose acquisition companies, or SPACs. More than a dozen SPAC deals have closed in the first three-and-a-half months of 2021. Eleven of these transactions are set to close in 2021.
Doximity filed for an IPO earlier today. The startup said it has reached a market of 800,000 doctors and licensed healthcare professionals. The company’s CEO, Jeff Tangney, previously brought Epocrates public. With more than $80 million raised from investors, Doximity could raise $1.5 billion.
Healthcare SPACs are a significant source of capital for high-risk biotech and digital health companies. Evercore ISI predicts that SPACs will play an increasingly important role in healthcare in 2020 and 2021. It invites comments. There are over 60 healthcare SPACs currently in existence.
They’re a lottery ticket for investors
If you’re an investor and you’re looking for a way to make money, companies that had their initial public offering (IPO) in 2015 are a good choice. There’s a lot of hype surrounding these IPOs, and they offer a chance to own a piece of the future. The top three performing IPOs of the year, China Internet Nationwide Financial Services, AnaptysBio, and Roku, have risen between 230 percent and 510 percent. With so many companies on the market, it’s important to choose carefully which ones are worth investing in.
They can be a lottery ticket for investors
The buzz surrounding IPOs is hard to ignore. They offer the investor the opportunity to buy into a company that has a bright future. Companies that had their IPO in 2015 outperformed the S&P 500 by between 230 and 510 percent last year. But which companies will be worth investing in?
Top 5 Companies That Had Their IPO in 2015
Companies that have waited longer than traditional venture-backed companies to have their IPOs have a number of reasons for doing so. One of the primary reasons is that becoming a public company is more expensive due to Sarbanes-Oxley. Another reason is that staying private makes it easier to ward off M&A interest. Companies like Facebook and Google waited longer than they usually did. But Pure’s customers encouraged the company to IPO. Customers tend to do business with public companies because they can have access to their financials.
Trivago has a history of being a successful, yet unprofitable IPO. Founded in Duesseldorf, Germany, the company was acquired by Expedia in 2012. In return, the company received $628.0 million in cash and stock. Since then, Expedia has agreed to postpone its put/call window until March 2017. While this could mean a slowdown in Trivago’s IPO, it is important to note that the company’s revenue has climbed 43% YoY.
Despite a high-profile list of underwriters, Trivago missed its IPO price target of $15 per share. Analysts believe the lower price is due to the timing of the IPO. Technology IPOs tend to struggle during the end of the year. In addition, the IPO is highly dependent on a small number of online travel agencies.
Box is one of the leading online storage companies. Its services are a major part of a trend called “cloud computing,” where content is stored in remote data centers and can be accessed through any Internet-connected device. As more businesses and individuals use smartphones and tablets to do their work, the demand for cloud computing services is on the rise.
The IPO was a smart move for Box, as its stock had been falling for years. It rewarded investors and improved employee financial stability, as well as pushed the company on a more structured path to profitability. In the meantime, it also served as a cautionary tale for other tech companies that would like to go public.
Jaguar Animal Health
Jaguar Animal Health had its initial public offering (IPO) in 2015. The company was spun off from Silicon Valley-based Napo Pharmaceuticals. The company developed products to help animals with their digestive systems. It also developed crofelemer, the basis of an HIV drug. The company is now headquartered in San Francisco.
The IPO came nine months after Jaguar Animal Health announced plans to go public. The company raised $20 million by selling 2.86 million shares of stock for $7 each, down from the initial plan of a seven-to-nine price range. The company is now listed on the NASDAQ under the symbol JAGX. The IPO was led by Aegis Capital, which acted as sole bookrunner.
Fenix Parts is a company that recycles and sells auto parts. It has an opportunity to expand its business by turning old auto parts into new ones. However, Fenix faces stiff competition, as its publicly traded peer LKQ recently became a Fortune 500 company with $6.7 billion in revenue and $382 million in profit.
In 2015, Fenix Parts completed its initial public offering. It raised $96 million by offering 12 million shares of common stock at $8 per share. However, the proceeds were 13% lower than expected, resulting in a market capitalization of $143 million. The company plans to list on the NASDAQ under the ticker symbol FENX.
It was a great year for burgers, so it’s no wonder Shake Shack had its IPO last year. The market environment was simply too tempting to pass up. Several factors have made burger-related IPOs attractive in recent years, including lower gas prices, decreasing unemployment, and high consumer confidence. Nevertheless, the company will face stiff competition from burger chain competitors like Five Guys and Smashburger.
Shake Shack has continued to improve its menu, adding new flavors, such as canvas chicken and burgers. Moreover, the company is paying attention to menu innovations, such as seasonal offerings and the addition of a train pickup service. In addition to burgers, the chain also offers seasonal shakes. Among them are the Mud Pie shake, Mint Cookies shake, and Cream shake. Despite the fact that the company continues to grow rapidly, the company is still paying attention to menu innovation and focusing on new menu items.
Tallgrass Energy GP
Tallgrass Energy GP LP has increased its quarterly distributions. The company now pays out approximately $3.02 per common unit on an annualized basis, an increase of nearly 32 percent from the fourth quarter 2014 distribution of $0.485 per common unit. In addition, this is the company’s 10th consecutive quarterly increase since its IPO in May 2013.
Tallgrass Energy GP LP has a general partnership interest in Tallgrass Energy Partners LP, a company that provides crude-oil and natural-gas transportation services in the Rocky Mountains, the Midwest, and Wyoming. The company plans to list on the NYSE under the symbol TEGP. The company has appointed Citi, Goldman Sachs, BofA Merrill Lynch, Morgan Stanley, and others as joint bookrunners.