Can HealthPort IPO Repeat Emdeon's Success?

HealthPort (HPRT), a provider of outsourced medical records release services to hospitals and clinics, is expected to go public this week. Tom Taulli at Blogging Stocks reports that "HealthPort is the largest ROI [release of information] provider, with a market share of 20%. And it's a healthy market."

Business Overview (from prospectus)

We are a leading provider of healthcare information services and technology solutions to approximately 1,900 hospitals and health systems and 8,000 independent and hospital-affiliated physician clinics. Our primary business is providing outsourced technology-enabled release-of-information services to our customers, which we refer to as ROI. ROI is the process by which information contained in patient health records is requested by and provided to authorized requestors such as attorneys, insurance companies, government agencies and others. We believe we are the largest provider of ROI services with a market share of approximately 20%, and utilize our expertise and technology to fulfill requests for health records in an accurate, regulatory-compliant and timely manner. Our ROI services enable our customers to reduce staffing levels associated with these time-consuming and labor-intensive healthcare information functions, allowing them to increase their focus on patient care, and to more effectively comply with increasingly complex and cumbersome regulatory requirements. We also provide other software and services which complement our ROI services, including recovery audit compliance solutions, revenue cycle management software, healthcare coding and consulting services and physician practice management software.

Offering: 6 million shares at $14 - $16 per share. Net proceeds of approximately $79.8 million will be used to redeem senior preferred stock and to pay down debt.

Lead Underwriters: Deutsche Bank (DB), William Blair, Raymond James (RJF)

Financial Highlights:

Our total revenue was $193.2 million for the nine months ended September 30, 2009 compared to $127.7 million for the nine months ended September 30, 2008, an increase of $65.5 million, or 51.3%... Our costs of services and products were $111.3 million for the nine months ended September 30, 2009 compared to $72.6 million for the nine months ended September 30, 2008, an increase of $38.7 million, or 53.3%... Our total selling, general and administrative expense was $45.9 million for the nine months ended September 30, 2009 compared to $39.0 million for the nine months ended September 30, 2008, an increase of $6.9 million, or 17.7%... Our total bad debt expense was $8.3 million for the nine months ended September 30, 2009 compared to $6.5 million for the nine months ended September 30, 2008, an increase of approximately $1.8 million, or 27.7%.

Competition:

In our software and other services segment, we compete with products and services offered by certain healthcare information technology and service providers, many of whom are large, well-financed and technologically sophisticated companies, such as Allscripts-Misys Healthcare Solutions, Inc. (MDRX), Cerner Corporation (CERN), Emdeon Business Services LLC (EM), McKesson Corporation (MCK), MedAssets, Inc. (MDAS), The Sage Group plc (SGPYY.PK) and The SSI Group. We also compete with hundreds of smaller niche providers in this segment.

Additional Resources:

• Company website
• Online road show
• AP: 'HealthPort expects to complete its IPO this week'
• Renaissance Capital: 'Six IPOs Scheduled for Week of Nov. 16'
• Tom Taulli: 'Another e-healthcare company tries for an IPO'