Team Health IPO Scores Poorly on IPO Report Card (TMH)

Team Health Holdings, Inc. (NYSE: TMH) did not drop out of the chute, but many are going to say that Team took one for the team.  The company priced 13.3 million shares in an IPO at $12.00 per share.  The problem with this one was that Team was supposed to originally sell 20 million shares and we had a price range expected of $14.00 to $16.00 per share.   This could have been worse, but it is getting far from high marks for its debut.

The company listed its use of funds of roughly $146.5 million from the offering to pay down $136.9 million of its existing $203.0 million of 11.25% senior subordinated notes due 2013.

Team had a very large underwriting group.  BofA Merrill Lynch, Goldman Sachs, Barclays Capital and Citi were all joint book-running managers; while co-managers were Credit Suisse, Deutsche Bank, UBS, Morgan Keegan, and Stephens. An overallotment option for up to 1,995,000 shares of common stock was granted to underwriters.

The company is one of the largest suppliers of outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers in the United States, based upon revenues and patient visits. It serves about 550 hospital clients and their affiliated clinics in 46 states with a team of about 6,100 healthcare professionals, including physicians, physician assistants and nurse practitioners.

It seems that these healthcare professional groups are not going to be immune from the healthcare reform, at least not ultimately.  For the year ended December 31, 2008, Team generated net revenues less provision for uncollectibles of $1.33 billion and net earnings of $44.7 million.

Shares are trading at $12.98 and with about 30 minutes to the close there has only been about 3.5 million shares traded.  The stock did show a $12.00 low on the day, and the intra-day high was $13.38.  The company is lucky that it did not trade as a busted deal after a lower pricing.  If it had, we’d add up a lower price and a lower share count and assign a “F” grade to it.  Instead, this is a toss-up between a “C-” and a “D+”.

JON C. OGG