Vocera Communications (NYSE:VCRA) the provider of mobile communication solutions for hospitals made its public debut on Wednesday.
The Public Offering
The company offered 5.85 million shares for $16 a piece thereby raising gross proceeds of $93 million. The company itself sold 5 million shares and selling shareholders offered 850,000 stocks.
Under the "Greenshoe" option joint book managers JPMorgan and Piper Jaffray are allowed to offer up to 877,500 additional shares on behalf of selling shareholders. At the moment 26% of the shares are listed, with the remaining being held privately. Initially the company set an initial offering range of $12-$14 per share, but eventually the actual public offer price got set to $16 per share. The opening print around $24 a share and the fact that shares have traded within the $20-$24 range for the remainder of the week make this a successful public offering.
Vocera intends to use the proceeds for general corporate purposes, an increase in working capital and possible investments. Its systems which include voice-controlled communication devices increase patient safety by reducing the cases of miscommunication while simultaneously reducing costs for the 800 hospitals which are equipped with Vocera's devices at the moment.
Shares ended the week at $23.4 towards the high end of its three day trading range. At this price the company is valued at $509 million. Subtracting the general gross proceeds of $80 million from the public offering and the initial $15 million cash balance, implies a valuation of the operating assets of $414 million. This valuation represents a 5.2 times revenue multiple for the year of 2011, during which the company lost $3 million.
Vocera operates in two long term growth markets. Healthcare in combination with mobile communication will see years of healthy growth ahead. Over the last two years the company has already doubled in terms of revenue. Although a valuation of around 5 times annual revenue is rather steep, long term net profit margins have room to expand to double digit numbers. Furthermore there is plenty of room to continue to grow revenues as the US alone has about 5,800 hospitals according to the American Hospital Association.
An added bonus for shareholders could be a possible takeout from the "usual suspects" including GE Healthcare or Philips Healthcare. Vocera is a nice addition to a long term portfolio.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.