Healtheon, a health-care technology company that nixed plans to go public last fall, got a wild reception on Thursday as its shares more than doubled in the first few hours of trading.
Healtheon, a start-up founded by Netscape Communications chairman Jim Clark, got the timing right this time. Last October, it backed out of its plans for an initial public offering because of a big drop in demand for new technology stocks. Since then, the markets have roared back.
What's more, Clark, a former computer-science professor who founded Netscape and Silicon Graphics, still has a cachet with investors looking for the next hot stock.
Healtheon's (HLTH) stock was priced at US$8 a share on Wednesday night. Shortly after the stock began trading Thursday morning, it shot up to as high as $33.25. The stock closed at $31.63.
Healtheon, based in Santa Clara, California, sold 5 million shares and raised $40 million in the offering, underwritten by Morgan Stanley Dean Witter.
"The deal was postponed several times. They couldn't attract the interest to get it done," said Vincent Slavin, an institutional trader at Cantor Fitzgerald who tracks IPOs. "Nothing has changed with the company, but the perception of investors has changed, because it's an Internet stock."
Healtheon is looking to profit from wiring the $1 trillion health-care industry, sweeping away the massive paper trail that doctors, insurers, and hospitals leave behind. The software allows secure access to information such as patient records and transactions like submitting an insurance claim or ordering a lab test -- all online.
"What differentiates us from the myriad of information sites are the transactions," said Dr. Charles Saunders, Healtheon's vice president and medical director. Healtheon is facilitating 70 million transactions a year, he said.
But the company has experienced product delays, and some analysts say Healtheon is a company with a good concept, but not much to back it up.
"We've come online with all the software and services we said we would," said Saunders. "We're doing real work, we have real revenues."
Healtheon customers include Brown & Toland Physician Services, United Healthcare, and SmithKline Beecham Clinical Laboratories.
The company also has said that it expects to lose money through 1999, has an accumulated deficit of $85 million, and "may never achieve or sustain profitability," according to filings with the Securities and Exchange Commission. The company is also trying to wire a reluctant industry.
"To date, the health-care industry has been resistant to adopting new information technology solutions," wrote Healtheon in SEC filings.
