The November IPO market produced 21 IPOs with gross proceeds of $3.26 billion over the first three weeks of the month before shutting down for Thanksgiving. Not since 2010 has the Thanksgiving week seen an IPO.
The year-to-date total of 231 IPOs is 30% greater than the 178 IPOs in all of 2013. Gross proceeds through the first 11 months of the year were $71.6 billion, or 74% above the full-year 2013 total of $41.3 billion and only 6% below the total gross proceeds in 2012 and 2013 combined.
The median IPO offering size declined 12% from $107.4 million in full-year 2013 to $94.1 million in the first 11 months of 2014—the lowest yearly figure since the $89.3 million median offering size in 2004.
Among US venture-backed IPOs, the median offering size declined 5% from $81.0 million in 2013 to $77.3 million over the first 11 months of 2014, representing the lowest yearly figure since the $71.0 million median offering size in 2006.
The median offering size for life sciences IPOs declined from $68.6 million for full-year 2013 to $57.2 million over the first 11 months of 2014. While the median offering size for non-life sciences IPO companies declined 33% from $187.0 million in 2013 to $125.0 million in the first 11 months of 2014, the 2014 figure was largely in line with the $124.3 million median figure for non-life sciences IPO companies for the five-year period preceding 2013.
The median annual revenue for IPO companies fell by one-third, from $133.6 million in 2012 to $89.9 million in 2013, and fell a further 22% to $70.2 million in the first 11 months of 2014—the lowest level since 2000. The percentage of profitable IPO companies declined from 55% in 2012 to 43% in 2013 and to 36% in the first 11 months of 2014.
The median annual revenue for emerging growth companies (EGCs) completing IPOs declined by 43%, from $107.8 million in 2012 to $61.5 million in 2013, and then declined a further 34% to $40.7 million in the first 11 months of 2014. The decline, however, was largely driven by the influx of IPOs by life sciences companies.
Among all life sciences IPO companies in 2014, median revenue was just $1.2 million, and only 14% were profitable. Excluding broadly-defined life sciences company IPOs, median annual revenue for EGC IPO companies declined by only 5%, from $120.6 million in 2012 to $114.5 million in 2013, and then dipped a further 6% to $107.4 million in 2014.
The median annual revenue for non-EGC IPO companies remained relatively steady between 2013 and 2014, declining by only 4% from $2.54 billion in 2013 to $2.44 billion in 2014.
November saw two "moonshots" (an IPO that doubles in price on its opening day), bringing the total number of moonshots for the year to seven—one above the prior year's tally. The combined total of 13 moonshots in 2013 and 2014 now tops the total of 11 moonshots in the 12-year period between 2001 and 2012, but is only a fraction of the 85 moonshots in 2000.
The average IPO company in the first 11 months of 2014 ended its first day of trading with a 14% gain compared to an average first-day gain of 21% for IPOs in all of 2013. Year-to-date, 20% of IPOs produced a first-day gain of at least 25%, and 28% of IPOs were "broken" (closing below the offering price on the first day).
The average 2014 IPO company ended November 17% above its offering price—an average gain of only 3% from its first-day closing price through November 30. At November month-end, 19% of all 2014 IPOs were trading at least 50% above their offering price and 42% were trading below their offering price, with 45% trading below their first-day close.
IPO activity in November consisted of offerings by the following companies listed in the order they came to market:
- Xenon Pharmaceuticals, a clinical-stage biopharmaceutical company discovering and developing a pipeline of differentiated therapeutics for orphan indications, priced below the range and produced a first-day gain of 17%.
- Nevro, a medical device company that has developed and commercialized an innovative neuromodulation platform for the treatment of chronic pain, priced an IPO upsized by 12% above the range and ended its first day of trading up 40% from its offering price.
- Upland Software, a leading provider of cloud-based enterprise work management software, priced at the low end of the range and declined 19% in first-day trading.
- Coherus BioSciences, a late-stage clinical biologics platform company focused on the global biosimilar market, priced at the midpoint of the range and ended its first day of trading down 7% from its offering price.
- Freshpet, a manufacturer and seller of fresh pet food through a fast-growing network of company-owned branded refrigerators installed in over 12,500 retail stores across North America, priced above the range and gained 27% in first-day trading.
- INC Research Holdings, a leading global contract research organization exclusively focused on Phase I to Phase IV clinical development services for the biopharmaceutical and medical device industries, priced in the middle of the range and produced a gain of 11% on its first trading day.
- Triumph Bancorp, a financial holding company headquartered in Dallas, Texas, priced below the range and ended its first day of trading up 6%.
- The Joint, a rapidly-growing franchisor of chiropractic clinics that operates on a non-insurance, cash-based model, priced at the midpoint of the range and edged up 1% in first-day trading.
- Axalta Coating Systems, a leading global manufacturer, marketer and distributor of high performance coatings systems, priced an IPO upsized by 11% in the middle of the range and produced a first-day gain of 6%.
- PRA Health Sciences, one of the world's leading global contract research organizations by revenue, providing outsourced clinical development services to the biotechnology and pharmaceutical industries, priced an IPO downsized by 9% below the range and gained 9% in first-day trading.
- FibroGen, a research-based biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics to treat serious unmet medical needs, priced an IPO upsized by 14% within the range and ended its first day of trading 22% above its offering price.
- NeuroDerm, a clinical-stage pharmaceutical company developing next-generation treatments for central nervous system disorders through proprietary formulations based on existing drugs that are intended to make a significant difference in patients' lives, priced below the range and declined 9% on its first trading day.
- Sky Solar Holdings, a developer, owner and operator of solar parks, priced a twice-downsized IPO at the top of a downwardly revised price range and produced a first-day gain of 14%.
- Virgin America, a premium-branded, low-cost airline based in California that provides scheduled air travel in the continental United States and Mexico, priced toward the top of the range and increased 30% in first-day trading.
- eHi Car Services, the No. 1 car services provider and No. 2 car rentals provider in China in terms of market share by revenues in 2013, priced at the low end of the range and ended its first day of trading down 3% from its offering price.
- Second Sight Medical Products, a medical device company that develops, manufactures and markets implantable visual prosthetics to restore some functional vision to blind patients, priced at the expected price and soared 122% in first-day trading—the third-best opening day gain for an IPO in 2014 and the sixth "moonshot" of the year.
- Cnova, one of the largest global e-commerce companies, with operations in Europe, Latin America, Asia and Africa, priced below the range and gained 2% in first-day trading.
- The Habit Restaurants, a high-growth, fast casual restaurant concept that specializes in preparing fresh, made-to-order char-grilled burgers and sandwiches featuring USDA choice tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame, priced above the range and jumped 108% on its first day of trading—the fifth-best opening day gain for an IPO in 2014 and the seventh "moonshot" of the year.
- Neothetics, a clinical-stage specialty pharmaceutical company developing therapeutics for the aesthetic market, priced at the midpoint of the range and declined 14% in first-day trading.
- Neff, a leading regional equipment rental company in the United States, focused on the fast-growing Sunbelt states, priced below the range and ended its first day of trading down 1% from its offering price.
- Peak Resorts, a leading owner and operator of high-quality, individually branded ski resorts in the US, priced at the low end of the range and declined 5% in first-day trading.