US-based Ardent Health Raises $192 Mn in Trimmed IPO

The for-profit healthcare provider announced that it had sold 12 million shares at $16 each, positioning the company at a market valuation of around $2.3 billion. 

US-based Ardent Health Services raised $192 million in its initial public offering (IPO), a figure significantly below the initial target of approximately $300 million. 

The for-profit healthcare provider announced that it had sold 12 million shares at $16 each, positioning the company at a market valuation of around $2.3 billion. 

Ardent Health had initially aimed for a more ambitious IPO, targeting the sale of 14.3 million shares priced between $20 and $22 each, which would have resulted in a market valuation exceeding $3 billion. 

This higher expectation contrasted sharply with the final outcome, marking a notable reduction in share price and overall valuation.

The company granted underwriters a 30-day option to purchase an additional 1.8 million shares at the IPO price of $16, potentially increasing the total raised. 

However, the actual performance fell short of initial projections.

Utilization of Proceeds

Ardent Health stated in its regulatory filing that it plans to use the proceeds for working capital, acquiring complementary businesses, products, services, technologies, and general corporate purposes. These purposes may also include debt repayment and capital expenditures. 

"The proceeds will help us strengthen our financial position and support our strategic growth initiatives," the company noted.

Ardent Health is the fourth-largest privately held, for-profit healthcare provider in the United States. The system operates 30 acute care hospitals across six states, with 18 managed through joint ventures with other healthcare providers. 

In 2023, Ardent reported $5.4 billion in total revenue and $129 million in net income. For the first quarter of 2024, the company logged $1.4 billion in revenue and $45.9 million in net income, with estimates for the second quarter ranging between $61.1 million and $67.7 million in net income.

Ardent Health's joint venture model is a significant part of its operations, partnering with major nonprofit systems or academic medical centers. These partnerships include UT Health East Texas and Hackensack Meridian Medical Centers. In 2023, the joint ventures contributed $1.6 billion in revenue and $213.7 million in net income.

Post-IPO, Ardent Health remains majority-owned (53.6%) by an affiliate of Sam Zell’s Equity Group Investments. 

Other significant stakeholders include an affiliated entity of United Arab Emirates-based Pure Health Holding PJSC, holding a 21% stake, and a subsidiary of Ventas Inc., with a 6.5% stake. 

The company's shares are listed on the New York Stock Exchange under the symbol "ARDT."

Future Prospects & Market Reaction

The IPO's outcome suggests a cautious market reception, reflecting broader uncertainties within the healthcare sector and the economic environment. Despite the lower-than-expected performance, Ardent Health's leadership remains optimistic about the future. 

They aim to leverage the proceeds of the IPO to further their strategic goals and enhance their service offerings across the six states where they operate.

Ardent Health initially filed for a $100 million IPO in December 2018 but shelved the plan in early 2020. The recent IPO marks their second attempt at going public, aimed at expanding their operational and financial capabilities.