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Is Practice Fusion Heading for an IPO?

Posted on January 21, 2016 I Written By

John Lynn is the Founder of the blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of and John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

The New York Times recently reported that Practice Fusion is said to have hired JP Morgan Chase to evaluate an IPO. Here’s a look at the estimated IPO number for Practice Fusion according to the New York Times:

Practice Fusion later created a way to estimate its I.P.O. valuation if revenue came in at $155 million in 2018 instead of $181 million, according to one of the people. Using the lower revenue assumption, the company could command a valuation of $1.1 billion to $1.2 billion if it goes public. It is unclear if the lower revenue estimate was made in response to the market turmoil.

Practice Fusion itself is of course not really commenting on their plans for an IPO or not. However, since it has raised $149 million to date at a valuation of $635 million, you have to imagine that an IPO is in their future. However, many big silicon valley companies have stuck to the private market lately and avoided the IPO. I’m not sure Practice Fusion will be in a similar position to them though. A look at their revenue numbers is one indication of why they’re a bit different than other companies that have raised larger rounds in the private markets:

Practice Fusion’s revenue was $26.9 million in 2014 and was expected to increase by 71 percent to $46.1 million in 2015, with the company projecting it would pare losses by 40 percent to $25.8 million in 2015, according to the document prepared by bankers and the company.

At the time the document was prepared, the company estimated revenue would hit $70 million in 2016.

I personally think that an IPO is in Practice Fusion’s future. It’s just a question of when it will happen. Certainly the market volatility we’ve seen lately isn’t helping their case to do an IPO. However, I bet the bigger challenge is going to be creating attractive revenue numbers that make sense to the public markets. I believe public markets have a hard time valuing number of users and other metrics that make Practice Fusion look attractive.

Ever since the first venture capitalists asked me about Practice Fusion, I’ve said that the company has created value. The number of doctors they were able to sign up on their platform was impressive. That’s the power of offering something for free that other doctors pay hundreds of thousands of dollars to buy. No doubt their network of physician users is a valuable asset. I hope it is since they raised $149 million to build it.

The real question for me around Practice Fusion isn’t whether they created value. Instead, the question is how valuable is what they created? I once heard Peter Thiel suggest at their user conference that Practice Fusion was building the platform for healthcare. Building that would be worth multiple billions of dollars. However, Practice Fusion hasn’t built anything close to that since Practice Fusion is doing nothing in the hospital EHR space. It’s naive to think that Practice Fusion could compete in that piece of healthcare. Not to mention they have a very small part of the hospital owned ambulatory practice space where the trend is to go with the integrated hospital EHR solution.

Long story short, I think that Practice Fusion will do an IPO. I could even see them doing an IPO for a billion dollars. I’m sure that’s what Ryan Howard, Practice Fusion Founder and former CEO, wants so he can claim his startup unicorn status. Although, I’ll be interested to see how Practice Fusion’s revenue grows between now and an IPO. The golden age of EHR is over and we’re entering the dirty slog of EHR sales and EHR switching. I don’t think that makes for a compelling story for investors.

Greenway Medical (GWAY) IPO Suggests Big Opportunities For EMR Vendors

Posted on February 2, 2012 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies. Contact her at @ziegerhealth on Twitter or visit her site at Zieger Healthcare.

While there’s a number of  large, publicly-traded EMR vendors out there — General Electric (NASDAQ: GE) and Cerner (NASDAQ: CERN) immediately come to mind — to date we haven’t seen many mid-sized or small companies kick off an initial public offering. But one medium-sized EMR/practice management vendor has broken the mold.

Today, Greenway Medical Technologies (NASDAQ: GWAY) took the plunge , pulling in $67 million to fund its operations. While the company had hoped to raise $100 million, its take is nothing to sneeze at. Health IT is a tricky investment, even for pros like yourselves, readers, and institutional investors in particular are a conservative bunch. The fact that they’re spending on a risky business means a lot.

Greenway, whose EMR is bundled with practice management software, had one heck of a ride today, with its stock climbing 30 percent during its first day of trading. The company sold 6.7 million shares at prices below its expected $11 to $13 range, diluting its intake somewhat, but the stock closed at a promising $13 per share.

The Carrollton, Ga.-based vendor has certainly done well in recent times. According to insider Wall Street blog Seeking Alpha, Greenway revenues shot up 55 percent, to $25.7 million, during the last quarter of operations. Operating margins went from negative to a positive 2 percent, which is at least a start.  Its biggest cash generator during the quarter was licensing revenue, which climbed 49 percent.

What’s interesting about this IPO isn’t just the fact that it ended well for Greenway. After all, it did take in less than planned, and the Wall Street crowd justifiably wonders how it will fare in a mind-boggling competitive market.  But it’s worth asking whether Greenway did better because it bundles both an EMR and practice management tools. Did the fact that Greenway wasn’t relying solely on EMR revenue contribute to its growth and financial success?  It would be interesting to find out, as that might help predict whether the bundled model is especially popular with physicians.

As for those who’d seek to imitate Greenway, they may have a chance if they move soon. Seeking Alpha editors think HITECH will still pump enough money into the EMR market to make these companies a reasonable investment. And given how many doctors and hospitals are still struggling to put EMRs in place, I have to agree.  In fact, given that an amazing number of hospitals and medical practices junk their first EMR, there may be a whole second wave of opportunity within three to five years.

All told, if the market’s response to a smallish IPO is any indication, you can expect a bunch of other EMR players to follow in its footsteps.  I’m thinking it will be companies in the $100m to $200m range, as they’re small enough to need capital (much cheaper capital than banks offer these days!) and nimble enough to benefit from the cash influx. Stay tuned and in coming months, I’ll tell you which other EMR and HIT companies I’m betting will climb onto the launch pad.