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Cash In on Obamacare With This Coming IPO

Envision is poised to benefit from healthcare megatrends


Envision Healthcare — an outsourced provider of healthcare services — will be hitting the markets soon. The company plans to issue its shares on the NYSE under the ticker “EVH” and the lead underwriters include Goldman Sachs (GS), Barclays (BCS), BofA Merrill Lynch (BAC) and Citi (C).

Why should you care? Well, healthcare is hot these days, so Envision could be too.

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The company has a network of over 20,000 physicians, which include 12,000 paramedic technicians. Its services are broad, covering areas like emergency, anesthesiology, hospitalist/inpatient care, radiology and surgery. To organize all this efficiently, the company has a sophisticated medical command center, which helps with tele-medicine, in-home monitoring and patient transportation.

Its no wonder, then, that Envision has invested big in technology. Some of the innovations include real-time patient monitoring systems and ePCRs (electronic patient care records) to enhance clinical data collection and improve billing.

The demand for such services is also growing, as many healthcare facilities have been turning to outsourced providers to deal with the complexities and costs of patient care. There has also been a need for better data collection and coordination.

This is reflected in the company’s numbers. For the first quarter of this year, revenues came to $888.3 million, up from $806.3 million in the same period a year ago. During this time, income from operations went from $52.5 million to $62.9 million — an increase of nearly 20%. About 86% of revenues come from exclusive contracts.

Obamacare will also be a huge driver for the company. Because it will provide coverage to millions of people, there will be significant demand for healthcare services. In other words, outsourcing is likely to be a way to deal with the volume.

Interestingly, the market is still fragmented, as no player with more than 8% of the marketshare. With that in mind, there is a big opportunity for consolidation … and EVH has already been aggressive with dealmaking. Since 2007, the company has completed and integrated 29 acquisitions, which were funded primarily through operating cash flows.

Of course, the business continues to grow organically as well. According to the company’s S-1: “New contract growth has been accelerating since 2011 as a result of our integrated service offerings and the success … in cross-selling services.” Plus, it certainly helps that EVH is focused on non-discretionary areas, such as emergency services.

All in all, the company looks poised for a hot IPO, especially for those investors looking for a play on Obamacare.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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