It seems the euphoria for telehealth stocks is beginning to fade. On Wednesday evening, MCI Onehealth quietly submitted its final prospectus in which it had priced its IPO at $5.00 per share for gross proceeds of $30 million. Unfortunately for the company, this is at the low range of expectations.
The company had expected to price its IPO between $5.00 and $6.75 per share. The company was no doubt looking to cash in on the big boom in telehealth. However, as we discussed last time - this is very much a clinic stock that is transitioning into telehealth. It has a long ways to go to be deemed a telehealth stock and it generates the majority of revenue from in-person clinics.
Given this, and combined with the fact that revenue have only grown by low single-digits in 2020, the underpricing is not surprising. It is also a healthy sign that the markets are starting to take a more critical look at these health companies. Not all deserve high-flying valuations.
The company is expected to begin trading on January 6th, and we will be creating an IPO report with our more detailed thoughts for members this weekend. Interestingly, the company did not issue a press release in conjunction with its pricing and submission of its final prospectus.