In morning trading on the New York Stock Exchange, Emdeon shares were changing hands for $17.52, or 13 percent over the IPO price of $15.50 set Wednesday evening. Shares began trading for $17.75.
Nashville-based Emdeon, which provides payment and billing systems to U.S. health care companies, sold 23.7 million shares and raised about $367 million in an IPO led by Morgan Stanley (MS.N), Goldman Sachs & Co, (GS.N) UBS Investment Bank (UBSN.VX) and Barclays Capital (BARC.L).
Emdeon’s software links U.S. health care providers such as hospitals, pharmacies and doctors with private and public insurers, such as Medicare and Medicaid. Last year, it processed almost half of the payment claims made electronically in the United States.
Emdeon had revenues of $444.4 million in the six months ended June 30, 2009, up 5 percent over the year-earlier period, while net income rose 115.8 percent over the same period.
Despite that tepid sales growth, Emdeon likely benefited from strong investor interest in the sector that has also buoyed the stocks of chief rivals such as Eclipsys Corp (ECLP.O) and Cerner Corp (CERN.O), which have risen by 21.6 percent and 68.2 percent respectively this year, an analyst said.
“They are dominant in their market; investors are taking a look at this sector, so it makes sense that the leader would command a premium,” said Francis Gaskins, president of advisory firm IPO Desktop.
Nashville-based Emdeon is held in part by two private equity firms, General Atlantic Partners and Hellman & Friedman, which bought the firm in 2006.
If Emdeon held onto its first-day gains, it would be 15th out of 17 IPOs this year, excluding those by real estate investment trusts, to rise in debut trading.
(Reporting by Phil Wahba, editing by Gerald E. McCormick)