Whirly lollipop on orange background.

Imprivata (IMPR) priced their IPO in the middle of the range at $15 last night for trading today (Wednesday). Their positioning as a technology provider in the healthcare space is certainly intriguing. The core of what they do is make secure signing in and access to health information simple and streamlined. Regulations like HIPAA put some wind at their back as organizations must find ways to comply with the regulations.

To figure out how interested we might be in this deal we put together an IV model that is consistent with the company’s target financial model. The basic conclusion is that shares are right on their 2014 IV of $14.90 with about 30% upside in 2015 where the IV will reach $20. It’s not bad but not great. Investors should be price sensitive. If the company can move further “upstream” in terms of their software functionality we could see a bigger opportunity. Note we are using a generous 30x multiple on earnings. The target model is reasonable but there is probably some room for reductions in G&A in the out years as highlighted here. However if the company intends to be aggressive with acquisitions and/or international expansion then these numbers will remain at 10%.

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We have posted the IMPR roadshow slides in the archive for review.

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