IPOBoutique Brief 2.12.2015 – Inovalon & Invitae on the way

The IPO scene has been relatively weak over the past two weeks.

Many deals that have scheduled to come to market have been either postponed or subjected to ‘Day-to-Day’ status while, in theory, management mulls over valuation.

However, the weakness will likely be subsided as a pair of deals debut today: Inovalon Holdings (Nasdaq: INOV) & Invitae Corporation (NYSE: NVTA).

Inovalon Holdings is a leading technology company that combines advanced cloud-based data analytics and data-driven intervention platforms to achieve meaningful insight and improvement in clinical and quality outcomes, utilization, and financial performance across the healthcare landscape.  As we were quoted in Investors Business Daily, this deal was multiple-times over-subscribed. The follow-thru after the raise in range came thru as the deal priced $1.00 above the already upwardly-revised range.

Thomson-Reuters throws some cold water on the hot deal saying that growth within the company could be a reason for concern.

Inovalon’s 20% growth is not as impressive as that of companies, such as Castlight Health and Veeva Systems, in recent memorable health technology IPOs, reflecting its more measured performance over a longer period.

Inovalon also saw revenue fall slightly in 2013, though it put this down to the loss of a major customer. Customer concentration is an issue since Inovalon’s top 10 clients accounted for 70% of revenue in the first nine months of 2014.

The company also faces some high-powered competition in the form of Oracle, Dell, SAP and IBM, as well as Accenture and Deloitte Consulting.

The float attracted both healthcare and tech specialist investors though as Castlight’s disappointing post-IPO performance has shown (it has almost halved from its IPO price) there is a danger that expectations are too high when the less price-sensitive tech crowd sets the valuation.

The other deal debuting today, Invitae Corporation, slightly up-sized its deal and priced above range. This company’s goal is to bring comprehensive genetic information into mainstream medical practice to improve the quality of healthcare for billions of people.

IPO Scene just Heating Up?

That’s the word from our friend Bob Pisani of CNBC. In his latest article, he reminds us that things have been slow on the new issue scene so far in 2015.  Bob points out that energy and oil MLP IPOs have been virtually non-existent with the recent drop in oil. In addition, there’s a lack of ‘large deals’.

Currently, there are zero new IPOs on the schedule for the week of February 16, but we believe that will change.

“I expect underwriters to likely announce terms for a few deals next week and then I believe things will pick up in March,” senior managing partner of IPOBoutique, Scott Sweet said. “GoDaddy could come in March; Party City may debut sometime soon; I think things will certainly pick up.”

In reference to the IPO market last year, the scene really picked up from March-July. Last year, a total of 25 IPOs debuted in March as compared to 17 and 19 deals in the month of January and February of 2014, respectively.