IPO Lockup Expiration: Press Ganey Holdings

Press Ganey Holdings (NYSE: PGND) - Sell or Short Recommendation - PT $30.75

November 17, 2015 concludes the 180-day lockup period on Press Ganey Holdings .

When the lockup period ends for PGND, its pre-IPO shareholders, directors and executives will have the chance to sell their 41 million shares. The potential for a sudden increase in stock available in the open market may cause a significant decrease in Press Ganey shares.

The event opens a short opportunity for experienced investors.

We previewed this event on our IPO Insights platform.

Business Summary: Provider of Performance Measurement Services to the Healthcare Industry

Press Ganey Holdings provides performance analytics, patient experience measurement and strategic advisory services to many sectors within the healthcare industry. The company collects and analyzes data regarding patient experience and suggests solutions based on the information from both patients and caregivers. Their data collection methods include gathering insights via phone, survey, mobile phones and other electronic devices. In addition, the company provides solutions that measure physician, nurse and employee engagement and alignment in order to address their experiences during the care giving process as well.

Press Ganey also offers quality and clinical solutions, including its program to gather nursing quality indicators to improve quality indicator scores; patient reported outcome measurements that collect data on the quality of life and functional status of a patient throughout the course of care; and Core Measures, which is software to collect data on core measurements. In addition, Press Ganey offers a variety of customized consulting services, including implementing physician, nurse and leadership rounding programs, overcoming cultural barriers, creating targeted communication programs and evaluating and modifying work flow. The company serves hospitals, medical practices and other healthcare providers directly.

As of January 1, 2015, Press Ganey served close to 22,000 healthcare facilities, and the company has approximately 1,000 employees.

For further information, see our IPO preview and IPO quiet period expiration highlight.

Q2 Financial Highlights

For the second quarter of 2015, Press Ganey reported the following financial highlights:

• Revenue for the second quarter was $77.5 million, versus $68.4 million for the prior year period, an increase of 13.3 percent.
• Adjusted EBITDA was $29.1 million, versus $25.3 million for the same period last year, an increase of 15 percent.
• Adjusted net income was $10.5 million or $0.22 per share versus $8.4 million or $0.19 per share.
• GAAP net loss equaled $53 million or $1.15 per share versus net income of $2.4 million or $0.06 per share in the same period.

PGND next reports earnings after-mkt on November 4th.

Competition & Management Overview

Press Ganey Holdings faces competition from Envision Healthcare Holdings, Orpea, Brookdale Senior Living, Korian SA, Ryman Healthcare, Ensign Group, Civitas Solutions, and National Healthcare Corporation.

A strong management team is in place to face up to the challenge.

CEO Patrick Ryan has been in his position since February 2012. His previous experiences include executive positions at SV Life Sciences Advisers, MedAssets, MedAlliance, Polymedica, Image America, Physicians Dialysis, PrincipalCare, and American Hospital Supply. He holds a B.A. in Political Science and Sociology from the University of Rochester in New York.

President and COO Joseph Greskoviak has been in his position since September 2012. His previous experience comes from senior positions at MedAssets, Broadlane, Premier Purchasing Partners, and the West Suburban Hospital Medical Center in Chicago. He holds a Bachelor's Degree in Political Science from DePaul University in Chicago.

Early Market Performance: Strong Start, Solid Overall Performance

PGND's IPO priced at $25 per share, higher than its expected price range of $22 to $25. The stock opened on the first day of trading at $27.67 and closed at $27.50, for an increase of 10 percent. Since then the stock has held relatively steady while climbing to reach a high on September 2 of $33.27. Currently, the stock trades $33.

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(Nasdaq.com)

Conclusion: Short PGND Ahead of Its IPO Lockup Expiration

With fifteen individuals and funds currently possessing restricted PGND shares, the opportunity to short the stock is large. A new supply of shares available for public sale on November 17 could send PGND stock tumbling down.

Experienced investors, knowledgeable about this trend, often sell in advance of the event, exacerbating declines.

Our firm has found drops of ~5% in the period of (-11,+9) days following the event day (0).

We strongly suggest selling or shorting PGND ahead of November 17th given these criteria.