Last year was an active one for medical IPOs, and this year looks likely to keep pace.

There were 36 medical companies that went public in 2006, the third-largest number since 1999 when IPO-tracking firm Renaissance Capital started keeping records.

However, 78% of those medical companies went public at a discount to insiders' hopes and underwriters' expectations -- the worst performance ever for medical IPOs, says Renaissance Capital. By contrast, only 32% of last year's 162 non-medical IPOs went public at discounted prices.

Renaissance Capital defines a discount as the difference between an IPO's offer price and the midpoint of the price range first pitched by underwriters. For example, if a company seeks a range of $9 to $11 a share and it goes public at $5, the discount is 50%.

Medical IPOs, especially biotech offerings, are notorious for discounts. Even in 2000, the best year for medical IPOs, 44% of 80 public offerings were discounted.

Last year, "investors' risk tolerance may not have changed, but they wanted a bigger reward," says Melanie Hase, a vice president at Renaissance Capital. In this case, a bigger reward translates into a discounted offer price because investors won't pay an underwriter's sticker price.

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