Emdeon Shares Surge on Debut
NASHVILLE, Tenn. (
) -- Healthcare IT specialist
Emdeon
( EM) burst out of the gate on its first day of trading as a public company Wednesday, with shares quickly surging past their $15.50 offering price.
With the debate about U.S. health care reform intensifying, the company's shares opened at $17.75, and were soon trading at $17.85. The stock dipped, however, to around $17.57 by mid-morning.
Emdeon priced its shares at the top end of its anticipated range of $13.50 to $15.50 after the market's close Tuesday, underlining the growing interest in healthcare technology. The electronic billing giant also increased the number of shares offered by about 10% to 23.7 million.
The interest in Emdeon's shares was not a complete surprise. The company's offering has already generated plenty of
, even in a somewhat cautious IPO market.
Emdeon handled half of all the electronic health care transactions in the U.S. last year. It is seen as well-positioned to exploit President Obama's ambitious
health care agenda
.
The Obama administration, for example, plans to spend
$10 billion
over five years to implement electronic medical records, and has promised to streamline the byzantine U.S. health care system.
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Even as the debate about Obama's broader strategy intensifies, fueled by recent comments from former Alaska governor Sarah Palin, there seems little doubt that technology will play a much larger role in how Americans access medical services.
Set against this backdrop, Emdeon is an attractive proposition, according to Scott Sweet, principal researcher at analyst firm IPO Boutique.
"It's a very user-friendly, streamlined system that's easily installed and their numbers are quite compelling," he told
TheStreet.com
. Some 92 % to 95% of the company's revenue is recurring, added Sweet.
Emdeon, which competes with
McKesson
(MCK) - Get McKesson Corporation Report
and
EDS
, now part of
Hewlett-Packard
, clinched revenue of $444.4 million during the first six months of 2009, up from $422.9 million in the same period last year.
The global economic slowdown prompted a hiatus for tech-related IPOs, although recent months have seen a number of firms take the public plunge. Last week, for example,
Avago Technologies
(AVGO) - Get Broadcom Inc. Report
and
CDC Software
( CDCS) began trading as
public companies
, just a few weeks after software specialist
LogMeIn
(LOGM) - Get LogMeIn, Inc. Report
launched its own
.
Other tech-related offerings this year include
restaurant reservation Web site
OpenTable
(OPEN) - Get Opendoor Technologies Inc Report
company
SolarWinds
(SWI) - Get SolarWinds Corporation Report
,
hi-resolution imagery specialist
DigitalGlobe
(DGI)
and language learning software firm
Rosetta Stone
(RST) - Get Rosetta Stone Inc. Report
.
This momentum looks set to continue. Security specialist
Fortinet
and private equity-backed genealogical Web site
Ancestry.com
, for example, recently filed their S-1s, and IPO Boutique's Sweet says that most recent offerings have performed well.
"They are pricing them right and bringing these
companies that are seasoned in the top-line revenue growth and the bottom line," he said.
--
Written by James Rogers in New York
.
