There has been a boom in public offerings in the healthcare sector this year, particularly for tech companies, as the coronavirus pandemic and investors saw an excellent opportunity to take advantage of turbo telemedicine.
The business follows a few relatively poor years in terms of public listing among healthcare companies, with the exception of a few high-profile examples.
The year began with the announcement of the initial public offering of the primary supply chain One Medical, with a market capitalization of $ 1.7 billion. At the end of January, when ONEM started trading, the stock was up 60% on the first day.
Then the world changed as COVID-19 spread and hit the United States hard from March to April. When the economy nearly stalled, stocks went into free fall and most companies hunkered down to avoid major moves.
In the months that followed, however, the burgeoning telemedicine industry took a leap forward. This led to companies like SOC Telemed and Hims & Hers going public in July and October respectively.
Meanwhile, telemedicine provider Amwell has announced its initial public offering in an enthusiastic market. On the first day of trading, the shares were up nearly 30%, although they have been relatively stable since then.
The US leader in IPO services from PwC said the IPO market has been active in more industries this year, not just healthcare IT, which is a bit confusing given the volatility of the market. “The crazy part of 2020 is that we’ve had a lot of uncertainty and a very active IPO market, and I’ve never seen that in my 30-year career on Wall Street,” he explained.
In the third quarter of this year, healthcare companies conducted initial public offerings worth nearly $ 30 billion. This is more than the full-year amount of the past five years. This comes from a recent S&P Global Market Intelligence report.
Arielle Trzcinski, the senior analyst at Forrester, said the IPO series had told its covered consumers and employers that they were looking for more affordable and accessible support.
“This indicates a huge market opportunity for primary care reaching people where they are, for digital health, for both remote patient monitoring and the use of artificial intelligence,” she said. “It just shows that the future is on the horizon of transitioning to a more continuous model, and I think these IPOs and these companies that are already open will have a significant impact on how very different the healthcare landscape will be.” “”
Looking ahead, it sees space for other areas, including behavioral health and physical therapy, needs that have increased during the pandemic.
Ethridge said there are many reasons a company might decide to go public. You may want to finance ambitious growth or mergers and acquisitions. Or you could try to draw more attention to the brand and differentiate yourself from private competitors.
A central question that will emerge in 2021 is whether this wave of IPOs will continue and what the trend will mean for the industry.
Ethridge said he will check whether companies set prices within the original price range. For example, a large number of prices above the range could cause investors not to look at trades as closely as they should.
With healthcare IPOs to date showing what Ethridge calls “outstanding returns,” momentum will be high for the next year, especially if telemedicine continues.