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

By Douglas A. McIntyre Updated Mar 10, 6:18PM EDT · Published Dec 16, 3:38PM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

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

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.