Article preview from Start-Up - April, 2012
Globus Medical filed for an initial public offering of stock in March, making it the first spine company to test the public markets since TranS1 raised $86 million in its own IPO at the tail end of 2007.
Article preview from Start-Up - April, 2012
A spine company IPO? Well, stranger things have happened. Globus Medical Inc. filed for an initial public offering of stock last month, making it the first spine company to test the public markets since TranS1 Inc. raised $86 million in its own IPO at the tail end of 2007. The public markets aren’t typically open to spine companies. Over the past 10 years, only four companies with an exclusive spine focus managed to go public: Kyphon Inc. (before it was bought by Medtronic Inc.), NuVasive Inc., Alphatec Holdings Inc., and TranS1 have successfully found a way onto the public markets. So Globus’ effort is definitely noteworthy.
The filing isn’t a surprise. If anything, Globus expected – and had encouraged expectations – that it would go public one of these past years. Even before the ink dried on the term sheets for its $110 million Series E raised in 2007 Globus speculated openly about going public in 2009. Of course, then 2008 happened, and the markets shut down for a time. The $110 million investment by Clarus Ventures, AIG SunAmerica, and Goldman Sachs seemed unusually large even at the height of the spine bubble. But the company, founded in 2003, was already reporting $100 million in sales, so this wasn’t an unstable start-up. Globus has tripled those sales since, reporting $331 million in 2011.
Globus had only raised $18 million prior to the $110 million round, so an IPO wasn’t necessary for Clarus and other investors to realize a return. But it seemed as if the most likely result would be an IPO, particularly after the performance of orthopedics company Tornier NV, which is reporting slightly less in annual sales but still saw a healthy jump in its stock price. At its February 2011 IPO, Tornier opened at $19 and now trades in the mid-$20s. This stands to be a potential windfall for Clarus and Goldman Sachs (AIG is not listed as a shareholder) even if the company executes the reverse stock split outlined in the IPO, since Series A investors paid only $2.16 per share of Series E stock.
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