HM Goes Public
You know your industry is on the map when a trailblazer takes his company public. That signals the capital markets that top executives in a leading company are confident in their business model’s ability to grow the company enough to satisfy Wall Street’s voracious hunger for profits.
It’s a tall order, and Adam Singer, MD, founder and CEO of IPC-The Hospitalist Company, based in North Hollywood, Calif., accomplished it in January.
During 2007, Dr. Singer set the wheels in motion for taking IPC public the following year. “Our company is built right, has a solid revenue stream, and the nirvana of a real healthcare company—a battle-tested, proven business model,” he says.
Dr. Singer and his management team had the usual reasons for going public: raising capital to pay for operations and to allow for growth by acquisition, reducing debt, and creating liquidity for shareholders. He also had other fish to fry with a public offering. “I wanted to be the first in our industry to make it out of the box,’’ he says. “I also wanted IPC to be a model for the many hospital medicine companies that would like to mature beyond having a bunch of doctors running around a hospital and calling themselves a hospitalist medicine company.”
For Dr. Singer, going public went beyond the desire to produce quarterly financial results that would warm investors’ hearts. It spoke to his core belief in what the business of hospital medicine should be and, from his vantage point, isn’t.
“By leading a publicly traded hospital medicine company I am debunking the myth that hospitalist groups need hospital subsidies to survive,” he says. “This is a powerful myth, one that is mired in a work force’s idea that its members should get full-time pay for less than full-time work. IPC has raised the bar for our industry. We think that hospitals should demand the overall level of sophistication, physician commitment and productivity that IPC has.”
With few publicly traded physician companies for templates for a public offering, Dr. Singer looked to a colleague, Roger Medel, MD, for direction. Dr. Medel took his company public in 1979 and has grown Sunrise, Fla.-based Pediatrix Medical Group, a provider of neonatal, maternal-fetal, and pediatric intensivist/hospitalist services, from a company with $100 million in market capitalization to $3.32 billion and a recent stock price of $67 per share. The company has a “buy” consensus rating from analysts and respectable price-to-earning and earnings-per-share values.
