When the COVID-19 pandemic first disrupted the U.S. economy, most business sectors fell under unprecedented pressure. A lucky few segments — particularly contactless e-commerce services and the telehealth industry — enjoyed dramatic growth due to sudden relevance. Using a similar logic, some investors reasoned that the broader healthcare network would also benefit from a growth uptick.
However, largely companies dedicated to finding a treatment or vaccine for the SARS-CoV-2 virus received an upside catalyst. For other subsectors, the focus toward the global health crisis directed attention away from non-pandemic needs. Fortunately, the latest evidence suggests that new daily infections are on the mend, potentially auguring well for Definitive Healthcare and its upcoming initial public offering (IPO).
Specializing in commercial healthcare intelligence solutions, Definitive Healthcare uses an array of data science technologies and artificial intelligence to help its client enterprises achieve success in selling into the expansive and convoluted healthcare ecosystem. Ultimately, by lowering costs and raising revenue-generation probabilities, Definitive’s clients can better serve and improve patient outcomes.
When is the Definitive Healthcare IPO Date?
From a recent corporate press release, Definitive Healthcare began its roadshow — a meeting with prospective investors to drum up interest for an upcoming offering and to ensure ample demand for it — on Sept. 7, 2021. On the same day, Definitive amended its prospectus with the Securities and Exchange Commission to reflect a registration of nearly 17.9 million shares of Class A common stock at a maximum offering price of $24.
Later, on Sept. 13, Definitive amended the prospectus to reflect an offering of 15.55 million shares, with the AI solutions provider now expecting its IPO to price between $24 and $26 per share. As well, Definitive anticipates that it will offer the underwriters for the deal a 30-day option to purchase an additional 2.33 million shares.
If everything goes to plan, Definitive has a date on the IPO calendar of Sept. 15. Its equity unit will trade on the Nasdaq exchange under the ticker symbol DH.
Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM) lead the joint bookrunning services for the deal, as well as represent the underwriters for the offering. Also providing bookrunning and managerial services in the proceedings are several high-powered financial institutions, including Morgan Stanley (NYSE: MS) and Barclays (NYSE: BCS).
At the midpoint of the IPO pricing estimate, Definitive Healthcare should raise approximately $389 million, making it one of the biggest public market debuts for the week starting Sept. 13. Once public, the healthcare services firm could command a market capitalization of $3.7 billion.
Also of note to prospective participants of DH stock is that BlackRock (NYSE: BLK) and privately held financial services firm Capital World intend to purchase $80 million worth of Definitive shares, which translates to 21% of the IPO. Though buying into an offering with strong institutional interest is no guarantee of success, it does distinguish DH from lesser-known IPOs.
Definitive Healthcare Financial History
Since the start of the first institutionalized healthcare facilities in India as far back as the 5th century BC, the nature of the industry hasn’t changed much fundamentally: medical professionals aim to best serve people in need. What has changed, though, is the burgeoning role of technology in delivering that care.
Over recent years, a new subsegment emerged in healthcare — clinical and business intelligence, or “the use and analysis of data captured in the healthcare setting to directly inform decision-making.” Colloquially, medical researchers Brian Pinto and Brent I. Fox reference this concept as “the right information given to the right person at the right time in the right way.”
No matter how one explains the idea, state Pinto and Fox, “the fact remains that timely access, synthesis, and visualization of clinical data have become key to how health professionals make patient care decisions and improve care delivery.”
Bolstering this narrative is the financial backdrop for the clinical and business intelligence market. According to data from Valuates Reports, the sector was worth $4.36 billion in 2020, with experts projecting that it will expand at a compound annual growth rate of 9.9% between 2021 and 2026. Ultimately, the numbers culminate in an estimated $7.63 billion valuation by the end of the forecasted period.
Other projects are even more optimistic. For instance, Grand View Research states that the global healthcare business intelligence market was worth $5.8 billion in 2020, with the segment anticipated to generate a total revenue of $10.64 billion by 2025.
Either way, Definitive Healthcare should enjoy a very robust addressable market. According to its SEC filings, the company posted revenue of $76.8 million for the 6 months ended June 30, 2021. This tally represented a massive improvement of nearly 41% against the year-ago comparison.
Moving forward, investors will expect to see Definitive become profitable. During the aforementioned period, the company posted a net loss of $25.5 million, which expanded slightly from a loss of $25.3 million from the year-ago level. Nevertheless, should Definitive snag market share from its core lucrative sector, DH stock could represent an attractive buy.
Definitive Healthcare Potential
Not only is Definitive Healthcare’s IPO one of the biggest for the week, it has unsurprisingly generated significant buzz, with many seeking information about DH stock. Much of this is due to the tremendous relevance of the offering.
For instance, rising healthcare costs pose a major challenge to patients and their families. But per the analysis from medical researchers Pinto and Fox, “Having access to real-time purchasing and utilization data can be a valuable asset for identifying opportunities for performance improvement and determining the effectiveness of interventions that have been implemented.”
Moreover, Definitive Healthcare serves enterprise-level clients attempting to sell innovations within any framework of the healthcare system. Primarily, Definitive Healthcare facilitates mission-critical services for the biopharmaceutical sector by identifying, for instance, which physicians are early adopters for particular therapeutics or deciphering market dynamics to decide how certain drugs should be priced.
But the beauty of the Definitive platform is that it offers strong return on investment for even administrative concerns related to healthcare. These segments include areas such as professional services, staffing, food service, waste management and any component that supports the healthcare supply chain.
Through helping healthcare businesses improve the underlying industry, everyone — from the doctors to administrators to most importantly the patient — benefits.
How to Buy Definitive Healthcare IPO (DH) Stock
As a traditional public market offering, retail investors must carefully consider how they want to approach DH stock. Because this is an extremely popular IPO — with world-famous financial institutions supporting the deal — it’s reasonable to anticipate that shares can fly immediately following its debut.
Known as an IPO pop, the enthusiasm for Definitive Healthcare could make buying its shares a less-than-favorable process. At the same time, as a retail investor, you have the option of discretion. Sometimes, new issues flounder, which means you could pick up shares on discount.
Also, acquiring equity units at the open is easy if you already know how to buy stocks. But if you don’t, just follow the steps below.
Step 1: Pick a brokerage.
Due to democratization initiatives, some brokerages allow you to buy pre-IPO shares or new issues at their initial offering price. If you’re serious about IPOs, narrow your search of best brokers that provide such access.
Step 2: Decide how many shares you want.
Because IPOs are incredibly unpredictable, you’ll want to choose a balanced share count, one that facilitates adequate gains but also limits downside exposure.
Step 3: Choose your order type.
Before placing your bet, acquaint yourself with these market concepts.
- Bid: The buyer’s top offer.
- Ask: The seller’s lowest acceptable price.
- Spread: The bid-ask price difference, the spread also signals market liquidity and risk, with narrower spreads indicating a high-volume, low-risk market while the opposite is true for broader spreads.
- Limit order: Buy or sell requests at a specific price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate, which is variable.
- Stop-loss order: A protective function, a stop-loss order automatically exits your position at either a predetermined price or anything lower.
- Stop-limit order: Stop limits are like stop losses but only execute (exit) at a predetermined price. However, such orders carry the same non-fulfillment risk as limit orders.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
DH Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons if you have questions about conflicts of interest over an IPO. In short, securities laws impose harsh penalties on those profiteering from privileged information.
For those that want to build their IPO acumen, you should consider opening an account with ClickIPO. Democratizing the traditional IPO process by offering pre-IPO shares of select enterprises, you can get on the ground floor of the next big deal.
An IPO You Can Feel Good About
With any new offering, you’re taking a step into the unknown. However, with Definitive Healthcare, you at least have the knowledge that your dollars are going to a meaningful endeavor. By helping improve the efficiency and effectiveness of the healthcare supply chain, Definitive Healthcare may usher in a fresh paradigm of medical services.