Mindbody (MB) IPO: What Investors Need To Know

Mindbody, Inc.  priced its IPO Thursday night after market close, with its stock becoming available for trading on Friday morning. The company will be offering 7.2 million shares for a price between $13 and $15 per share. The net proceeds for the deal are expected to be $89.3 million. The company will trade under the ticker MB.

What is Mindbody? 

Mindbody Inc. was started in 2001, and is an online wellness marketplace that offers cloud-based management to assist companies in the wellness and fitness industry in simplifying their day-to-day operations. The company currently services 42,000 businesses in over 124 countries worldwide.
Morgan Stanley (MS - Analyst Report), Credit Suisse (CS - Snapshot Report), and UBS Group (UBS) will be the main underwriters in the deal, with JMP Securities and Pacific Crest Securities also assisting in the process.

Strong Revenue Growth, Struggling to Profit

Mindbody has seen revenue growth of $31.99 million in 2012, $48.69 million in 2013, and $70.01 million in 2014, as well as growth in the first quarter of this current year being up 42.2% compared to that of the first quarter of the previous year.

Despite significant growth each year in revenue, operating expenses have been growing for the company as well, causing net losses in each of the last three years. Losses were $5.52 million in 2012, $16.25 million in 2013, and $24.61 million for 2014. Their net losses for the first quarter of this year were up 62.3% compared to the previous year’s first quarter losses.

Moving Forward

While the market for management software solutions for wellness business is slated to grow 17 percent between this year and 2018, it is unclear if Mindbody will be able to take advantage. Aside from profitability issues, the company is also faced with declining cash reserves, but is hoping that its IPO will replenish their cash supply and allow the firm to focus on growth initiatives.

It is unclear if becoming a publicly traded company will be the catalyst for Mindbody’s growth, but if the company can fix its profitability issues and tap into the substantial growth of its industry over the next few years, this company’s stock will definitely be one to watch for investors.   

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