Neoforma takes center stage
The business-to-business company is one of just a handful of initial public offerings scheduled for this week.
Just a smattering of IPOs are scheduled, and Neoforma will be the only business-to-business (B2B) offering, said Jeff Hirschkorn, senior analyst with IPO.com.
"They have that buzzword--B2B--and being that they're pretty much the only deal next week, they should have a huge run up," Hirschkorn said.
Business-to-business offerings in the past few months have recorded sizable first day gains.
Ariba, a procurement software maker, saw its share price soar from its IPO price of $23 to close at $90 on its first day of trading. Competitor Commerce One, which also posted a strong first-day performance, received top ranking in 1999 for having the IPO with the largest gains since its debut. The company, which first sold its shares to the public last July, soared more than 2,700 percent from its offer price of $21 last year.
Hoping to cash in on the public's appetite for business-to-business stocks, venture capital firms are focusing more on the industry.
In November, investment firm CMGI launched its @Ventures B2B Fund, while Venturehouse Group said it would concentrate on only business-to-business deals.
Neoforma, which serves as a marketplace to sell new and used medical products, supplies and equipment online, is looking to raise up to $70 million, based on the high end of its $8 to $10 pricing range and the 7 million shares it plans to sell.
Merrill Lynch is the lead underwriter. The company expects the shares to be sold to institutional investors Thursday and begin trading publicly Friday under the ticker "NEOF."
The company operates three primary businesses, focusing on shopping, auctions and planning services.
Neoforma's shopping service serves as a middleman between health care providers and suppliers, offering a place where buyers and sellers can locate new products from disposable gloves to surgical instruments. The company's auction service conducts transactions for used and refurbished equipment and surplus medical products.
Another service provides about products and floor plans so planners can outfit a medical facility.
"The worldwide medical equipment market is a $145 billion market and growing 6 percent annually, so the opportunities are huge," Hirschkorn said. He added that the company has some notable investors, such as computer giant Dell.
Dell, which holds 4.9 million shares, will have an 8.5 percent stake in the company after the IPO.
Neoforma generated $464,000 in revenues during the nine-month period ended Sept. 30, compared with zero revenue the previous period. The company reported a loss of $25.6 million during the period.
Transaction fees accounted for most of the revenue, but Neoforma also hopes to collect sponsorship fees from suppliers and service providers for having their products featured on its planning service.