Medical Device Daily Executive Editor
Insulet (Bedford, Massachusetts) has unveiled the pricing of its initial public offering of 7.7 million shares of common stock at $15 a share.
Shares of Insulet began trading on the Nasdaq Global Market yesterday, under the symbol PODD.
All shares in the offering are being sold by the company, and it has granted to the underwriters an option to purchase up to 1,155,000 additional shares of its common stock to cover any over-allotments.
Founded in 2000, Insulet is a developer of continuous subcutaneous insulin infusion (CSII) therapy. It manufactures and markets the OmniPod Insulin Management System, consisting of the OmniPod disposable insulin infusion device and a handheld, wireless Personal Diabetes Manager (PDM) device. Comparing it to other "conventional" insulin pumps, the company says its system features "only two discreet, easy-to-use devices that eliminate the need for a bulky pump, tubing and separate blood glucose meter, provide for virtually pain-free automated cannula insertion, communicate wirelessly and integrate a blood glucose meter."
The OmniPod is currently sold primarily on the East Coast, and the company said it plans to use the proceeds of the IPO to expand manufacturing and marketing capabilities across the U.S. and abroad.
Insulet received FDA clearance for the OmniPod in 2005 and began selling it in October of that year in the U.S. As of March 31, 2007, it estimated about 1,750 patients using the OmniPod System in the U.S.
Revenue for 2005 was $50,000 and in 2006, $3.7 million. At the end of 2006 the company had an accumulated deficit of $102.0 million, and it expects continued quarterly losses "at least into 2008."
Among the risks listed by the company in its SEC filing is that it is dependent upon a license agreement with Abbott Diabetes Care (Alameda, California), providing a nonexclusive, fully paid, non-transferable and non-sublicensable license in the U.S. under patents and other relevant technical information for seven years, the current term is scheduled to expire in January 2009. "Termination of this agreement could require us to either remove the blood glucose meter from PDMs to be sold in the future, which would impair the functionality of the OmniPod System, or attempt to incorporate an alternative blood glucose meter into the PDM, which would require us to acquire rights to or develop an alternative blood glucose meter …."
In another IPO, Skilled Healthcare Group (Foothill Ranch, California) has priced 16,666,666 shares of class A common stock at $15.50 a share. Skilled Healthcare is selling 8,333,333 shares in the offering, and selling stockholders are selling the remaining 8,333,333 shares.
Net proceeds from this offering to Skilled Healthcare are about $116.8 million and to the selling stockholders about $120.4 million. The selling stockholders have granted to the underwriters a 30-day option to purchase up to an additional 2,500,000 shares at the initial public offering price to cover over-allotments, if any.
As of April 1, Skilled Healthcare reported owning or leasing 64 skilled nursing facilities and 13 assisted living facilities, comprising about 8,900 licensed beds. For the first three months of 2007 and the year ended Dec. 31, 2006, its skilled nursing facilities, including its integrated rehabilitation therapy services at these facilities, generated about 84.4% and 85.5%, respectively, of our revenue, with the remainder generated by other related healthcare services.
The company's centers provide sub-acute specialty care, including dialysis, chemotherapy, tracheotomy, and ventilator care. The company also offers hospice care, as well as occupational, physical, and speech therapy to both affiliated and unaffiliated health care facilities.
In the first three months of 2007 and the year ended December 31, 2006, our revenue was $144.7 million and $531.7 million, respectively. For the first three months of 2007, net income was $4.7 million, EBITDA was $23.8 million and adjusted EBITDA was $23.8 million. In 2006, net income was $17.3 million, our EBITDA was $88.5 million and our adjusted EBITDA was $88.7 million.
The company was acquired by Onex (New York/Toronto) for about $750 million in late 2005. Immediately following the offering, Onex, its affiliates and the directors and members of its senior management will own about 19,835,081 shares of the company's class B common stock.
Among the risks noted in the company's SEC filing is a significant amount of indebtedness. It said: "On March 31, 2007, total indebtedness, after, giving effect to the completion of this offering and the application of the net proceeds to the repayment of debt, was approximately $413.9 million."
In other financing activity: Southern Home Medical Equipment (Spartanburg, South Carolina) reported that Greg Tucker, the company's president/CEO, recently agreed to retire 10 million personally-held shares of Southern Home Medical stock. Upon the completion of the retirement, the company will have about 51 million shares outstanding.
Southern Home Medical is a holding company with a focus on medical equipment operations in the Southeastern U.S.