Cotiviti Holdings, Inc. (NYSE:COTV) priced their IPO of 12.5 million shares at $19.00, the high end of the anticipated range., The company will have a market capitalization of approximately $1.74 billion (assuming the overallotment is exercised), and an enterprise value of approximately $2.55 billion. The proceeds will be used to repay outstanding borrowings under their second lien credit facility, and for working capital. Lead underwriters are Goldman, Sachs and J.P. Morgan. Sponsor: Advent International Corp will own approximately 65% post offering.
Cotiviti is a leading provider of analytics-driven payment accuracy solutions for the healthcare sector. They help their healthcare clients by enhancing payment accuracy in interactions with their providers and suppliers. They work with over 40 healthcare organizations, including 8 of the top 10 health insurance providers. They are also a leading payment accuracy provider to more than 40 retail clients, including 8 of the largest retailers in the U.S.
The company was formed in 2014 through the merger of Connolly Superholdings and iHealth Technologies. The combination gave them a broad suite of payment accuracy solutions in both retrospective and prospective payment accuracy solutions.
Revenue grew 22.7% year over year to $541 million in 2015. Adjusted EBITDA was $203 million, for a 37.5% margin (down from 39% in 2014). For the 3 months ended March 31, 2016, revenue was $142.7 million (up 19% versus the same period in 2014), and adjusted EBITDA was $50.59 million (35.5% margin). Post offering they will have approximately $30 million in cash and $840 million in debt.
COTV was said to have been well oversubscribed at the beginning of the week, and the top end pricing reflects the solid demand. Of the 25 IPO's to price thus far this year, only one (Pending:ACIA) has priced above the anticipated range, and 4 have priced at the top of the anticipated range. All of these had solid day one debuts, and all are currently above their IPO prices.
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