Wild, unpredictable swings in the stock market are not conducive to a healthy IPO market. Companies looking to go public don't want to see their stock get pummeled out of the chute, while investors are far more hesitant to take on significant risk by buying stock in an often unproven company.
So, with that context, it doesn't come as much of a surprise that medical technology company Vapotherm (VAPO 15.17, +15.17, +9.50%) saw muted interest in its deal. Specifically, its 4.0 mln share IPO priced at $14, the low end of the $14-$16 expected range, generating total gross proceeds of $56 mln. That said, it could have been much worse. Over the past few weeks, we have seen plenty of IPOs get cut in size, while also pricing at the low end of expectations, or worse.
The deal was led by BofA Merrill Lynch and William Blair. Shares are set to open for trading later this morning on the NYSE.
Vapotherm (VAPO) is a medical technology company which has developed proprietary Hi-VNI technology products that help with treatment of patients suffering from respiratory distress.
The Hi-VNI technology allows for the delivery of heated, humidified, and oxygenated air at a high velocity through a small nasal interface. The company’s Precision Flow systems are considered clinically-validated alternatives to current treatment of respiratory distress offered in a hospital setting. At the end of September, more than 1.5 mln patients have undergone treatment with Vapotherm’s Precision Flow systems.
The FDA granted the company’s de novo request for an expanded indication for a new version of the company’s Precision Flow system. Furthermore, Vapotherm’s updated Precision Flow system is the only device currently listed under a new regulatory classification created by the FDA. According to the new designation, the system will be identified as “a high velocity nasal insufflation device that augments breathing of spontaneously breathing patients suffering from respiratory distress in a hospital setting.” The company believes its system is an attractive alternative to current standards of care for the treatment of respiratory distress.
The company has three versions of its Precision Flow systems. The systems are sold to hospitals through a direct sales organization in the U.S. and through distributors in select countries outside the U.S. The company also has clinical educators who focus on medical education efforts to increase adoption and utilization. The company targets, physicians, respiratory therapists, and nurses who work in acute hospital settings or ICUs.
Vapotherm has sold its Precision Flow systems to more than 1,200 hospitals across the U.S. Most of these systems are used in intensive care units.
The company generates revenue through sales of capital units of its Precision Flow systems and single-use disposables. Total revenue in 2017 increased 18.3% yr/yr to $35.60 mln. Through the first nine months of 2018, the company’s revenue grew 21.8% to $30.70 mln.
Gross margin increased to 37.2% in 2017 from 33.0% in 2016. Gross margin for the first nine months of 2018 ticked up to 38.9% from 38.8% one year ago. Revenue from single-use disposables made up 67.3% of total 2017 revenue and 66.7% of revenue recorded through the first nine months of 2018. International revenue made up 21.5% of total 2017 revenue and 21.9% of revenue recorded through the first nine months of 2018.
The company reported a loss per share of $3.36 for 2017. Through the first nine months of 2018, the company’s net loss per share hit $2.61. Vapotherm used $29.25 mln for operating activities in 2017. Through the first nine months of 2018, the company used $28.60 mln for operating activities.