Team Health Trades Higher After Weak IPO

NEW YORK (Reuters) – Team Health Holdings Inc (TMH.N) shares jumped in their debut on Wednesday, making up some of the ground the hospital staffing company lost when its initial public offering priced well below expectations in a downsized deal.

Shares of Team Health, which is majority owned by private equity firm Blackstone Group (BX.N), rose 6.75 percent over their $12 IPO price to end their first day of trading at $12.80 on the New York Stock Exchange.

But that rise came on the heels of an IPO that raised far less money than expected on Tuesday after Blackstone decided not to sell any of its stake in Team Health in the IPO.

The Knoxville, Tennessee-based company had expected to price its shares for $14 to $16 and ended up selling only 13.3 million shares, raising net proceeds of $146.5 million, rather than the 20 million shares it had originally planned to offer.

Blackstone had planned to sell 9.3 million of its Team Health shares, or 21 percent of its stake, in the IPO, but ended up selling none, according to a regulatory filing on Wednesday, with all proceeds going to Team Health.

The pricing was the latest in a series of disappointing performances by deals put forth by private equity firms looking to exit portfolio companies.

Sources told Reuters in October that Blackstone was planning to bring as many as eight of its portfolio companies public. 

Team Health provides staffing and other administrative services to 550 U.S. hospitals, according to a prospectus filed with the U.S. Securities and Exchange Commission.

Team Health’s net revenue, minus a provision for uncollectibles, rose 7.5 percent to $1.1 billion in the nine months ended Sept. 30, compared with a year earlier. The company’s net earnings rose 10.3 percent to $55.2 million in the same period.

The underwriters are led by Bank of America Merrill Lynch, Goldman Sachs & Co, Barclays Capital and Citi.

(Reporting by Clare Baldwin and by Phil Wahba; Editing by Lisa Von Ahn and Richard Chang)