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U.S. IPO Week Ahead: The IPO Marathon Continues In A 7-Deal Week Featuring Health-Tech

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Includes: CSTL, HCAT, LVGO, NOVA, PHR, PROS, VIST, WSG
by: Renaissance Capital IPO Research
Summary

Health-tech is hot, and two more fast-growing but unprofitable IPOs are on deck for the week ahead.

They're joined by one of the the world's largest hosts of marathons and triathlons (including the Ironman brand), along with a solar installation company, a specialty insurer, and a cancer diagnostics seller.

Backed by General Catalyst, diabetes management platform Livongo Health is the deal to watch, expected to raise $230 million at a market cap of $2.4 billion.

Health-tech is hot, and two more fast-growing but unprofitable IPOs are on deck for the week ahead. They're joined by one of the the world's largest hosts of marathons and triathlons (including the Ironman brand), along with a solar installation company, a specialty insurer, and a cancer diagnostics seller.

Backed by General Catalyst, diabetes management platform Livongo Health (NASDAQ:LVGO) is the deal to watch, expected to raise $230 million at a market cap of $2.4 billion. That's a large market cap for a company with only $88 million in sales, though it targets a massive market, and revenue spiked 157% in the 1Q19 to $32 million. Sequoia-backed healthcare analytics company Health Catalyst (NASDAQ:HCAT) expects to raise $129 million at a market cap of $826 million. It grew sales at a 71% clip in the 1Q19, with a 51% gross margin.

Those two could see interest based on the performance of technology IPOs this year, along with the more than 35% gain from this past week's health-tech provider Phreesia (NYSE:PHR).

Being spun out of China's Wanda Group, Wanda Sports Group (NASDAQ:WSG) operates a portfolio of sporting events, media, and marketing assets, including the well-known Ironman triathlon. It is raising $450 million (40% secondary) at a valuation of $1.9 billion. The company has demonstrated the ability to generate strong cash flow, though that can fluctuate substantially quarter to quarter, with EBITDA down 43% in the 1Q19 ($27mm).

U.S. IPO Calendar

Issuer
Business

Deal Size
Market Cap

Price Range
Shares Filed

Top
Bookrunners

Castle Biosciences (NASDAQ:CSTL)
Friendswood, TX

$50M
$259M

$14 - $16
3,333,334

Leerink
Baird

Sells genetic tests used to diagnose skin cancers.

Health Catalyst
Salt Lake City, UT

$129M
$826M

$20 - $23
6,000,000

Goldman
JP Morgan

Provides a data analytics platform and services to healthcare organizations.

Livongo Health
Mountain View, CA

$230M
$2,366M

$20 - $23
10,700,000

Morgan Stanley
Goldman

Provides a unified healthcare platform for chronic illness management.

ProSight Global (NYSE:PROS)
Morristown, NJ

$150M
$756M

$16 - $18
8,823,530

Goldman
Barclays

Specialty property & casualty insurer backed by Goldman Sachs and TPG.

Sunnova (NYSE:NOVA)
Houston, TX

$300M
$1,480M

$16 - $18
17,647,060

BofA ML
JP Morgan

Provides residential solar energy systems and services.

Vista Oil & Gas (NYSE:VIST)
Mexico City, Mexico

$95M
$841M

$9.46
10,000,000

Citi
Credit Suisse

Oil and gas E&P operating in Mexico and Argentina.

Wanda Sports
Beijing, China

$450M
$1,888M

$12 - $15
33,333,334

Morgan Stanley
Deutsche Bank

Sports events, media, and marketing platform of China's Wanda Group.

The following IPOs are expected to price this week:

Castle Biosciences, which sells genetic tests used to diagnose skin cancers, plans to raise $50 million by offering 3.3 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, Castle Biosciences would command a market value of $259 million. Castle Biosciences, which was founded in 2007, booked $28 million in sales over the last 12 months. The Friendswood, TX-based company plans to list on the Nasdaq under the symbol CSTL. SVB Leerink and Baird are the joint bookrunners on the deal. Insiders intend to purchase up to $15 million of the IPO (30% of the deal).

Health Catalyst, which provides a data analytics platform and services to healthcare organizations, plans to raise $129 million by offering 6.0 million shares at a price range of $20.00 to $23.00. At the midpoint of the proposed range, Health Catalyst would command a market value of $826 million. Health Catalyst, which was founded in 2008, booked $127 million in sales over the last 12 months. The Salt Lake City, UT-based company plans to list on the Nasdaq under the symbol HCAT. Goldman Sachs, J.P. Morgan, William Blair and Piper Jaffray are the joint bookrunners on the deal.

Livongo Health, which provides a unified healthcare platform for chronic illness management, plans to raise $230 million by offering 10.7 million shares at a price range of $20.00 to $23.00. At the midpoint of the proposed range, Livongo Health would command a market value of $2.4 billion. Livongo Health, which was founded in 2008, booked $88 million in sales over the last 12 months. The Mountain View, CA-based company plans to list on the Nasdaq under the symbol LVGO. Morgan Stanley, Goldman Sachs and J.P. Morgan are the joint bookrunners on the deal. Insider Kinnevik AB intends to purchase up to $20 million of the IPO (9% of the deal).

ProSight Global, a specialty property & casualty insurer backed by Goldman Sachs and TPG, plans to raise $150 million by offering 8.8 million shares at a price range of $16.00 to $18.00. At the midpoint of the proposed range, ProSight Global would command a market value of $720 million. ProSight Global, which was founded in 2009, booked $818 million in sales over the last 12 months. The Morristown, NJ-based company plans to list on the NYSE under the symbol PROS. Goldman Sachs, Barclays and BofA Merrill Lynch are the joint bookrunners on the deal.

Sunnova Energy International, which provides residential solar energy systems and services, plans to raise $300 million by offering 17.6 million shares at a price range of $16.00 to $18.00. At the midpoint of the proposed range, Sunnova Energy International would command a market value of $1.5 billion. Sunnova Energy International, which was founded in 2012, booked $111 million in sales over the last 12 months. The Houston, TX-based company plans to list on the NYSE under the symbol NOVA. BofA Merrill Lynch, J.P. Morgan, Goldman Sachs and Credit Suisse are the joint bookrunners on the deal.

Vista Oil & Gas, an oil and gas E&P operating in Mexico and Argentina, plans to raise $95 million by offering 10.0 million shares based on a price of $9.46, the as-converted last close of its shares on the Bolsa Mexicana de Valores (VISTA). At this price, Vista Oil & Gas would command a market value of $841 million. Vista Oil & Gas, which traces its roots to 1968, booked $425 million in revenue over the last 12 months. The Mexico City, Mexico-based company plans to list on the NYSE under the symbol VIST. Citi, Credit Suisse, Itau BBA, Morgan Stanley and Santander are the joint bookrunners on the deal.

Wanda Sports Group, the sports events, media, and marketing platform of China's Wanda Group, plans to raise $450 million by offering 33.3 million shares at a price range of $12.00 to $15.00. At the midpoint of the proposed range, Wanda Sports Group would command a market value of $1.9 billion. Wanda Sports Group, which traces its roots to 1980, booked $1.1 billion in sales over the last 12 months. The Beijing, China-based company plans to list on the Nasdaq under the symbol WSG. Morgan Stanley, Deutsche Bank, Citi and Haitong International are the joint bookrunners on the deal.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 7/18/19, the Renaissance IPO Index was up 41.0% year-to-date, while the S&P 500 had a gain of 20.8%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Spotify (NYSE:SPOT) and Elanco (NYSE:ELAN). The Renaissance International IPO Index was up 12.2% year-to-date, while the ACWX was up 13.4%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and SoftBank.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.