EndoChoice raises $96m in NYSE IPO

Mori Arkin
Mori Arkin

The main beneficiary of the medical device company's IPO was Mori Arkin and Uri Geiger's Accelmed with a 9% stake.

US-Israeli medical equipment company EndoChoice Holdings Inc.(NYSE:GI) last Friday raised $96 million on the New York Stock Exchange at a company value of $366 million, after money. The offering was priced at the lower limit of the range mentioned by the company - $15 a share. On the first trading day, however, the share price already rose to $17, giving the company a $415 million market cap.

An immediate rise in the share following pricing usually indicates pressure from the underwriters to lower the price, and that the company made a concession on its price in order to bring strong parties into the offering, even though demand outstripped supply. In this case, the demand for the flotation totaled $500 million-$1 billion.

JP Morgan and Bank of America Merrill Lynch led the offering, with the William Blair and Stifel banks as secondary underwriters. The main beneficiary of the IPO was Mori Arkin and Uri Geiger's Accelmed, which holds 9% of EndoChoice (worth $37.5 million) after investing $14 million in the company. Evergreen Venture Partners and the discoverer of EndoChoice's flagship product, Avi Levy, are likely to sell shares for $1.87 million each if the underwriters exercise their 30-day green shoe option, which appears likely, given the positive trend in trading in the share.

Accelmed's 4th flotation

Founded as a US company, EndoChoice has a portfolio of hundreds of specially designed products for gastroenterologists. In 2013, Israeli company Peer Medical, which developed a more accurate colonscope for diagnosing intestinal cancer and precancerous tumors, was merged into EndoChoice. This product is now EndoChoice's growth engine. EndoChoice's 2014 revenue totaled $61.4 million in 2014, 20% more than in 2013, and the company posted a $53.2 loss in 2014.

The IPO represents a triumph for the business model that has resulted in half of Accelmed's business. Accelmed, among the first investors in Peer Medical, merges innovative Israeli technology into a company with tens of millions of dollars in sales, but no major growth engine. The current price reflects a multiple of six for the company's revenue, meaning that the market perceives EndoChoice as a growing company with future growth potential. The IPO is Accelmed's fourth out of the 18 companies in its portfolio.

Published by Globes [online], Israel business news - www.globes-online.com - on June 7, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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