James E. Flynn’s Deerfield Management has filed a 13G with the U.S. Securities and Exchange Commission regarding its ownership of shares of Imprivata Inc. (NYSE:IMPR). The publicly-available filing discloses that the fund holds a 7.41% ownership stake in the company, holding 1.81 million shares. This is up by 782,500 shares from the position in the company that the fund reported holding in its latest 13F filing for the reporting period of March 31.
Deerfield Management is a New York-based healthcare-focused hedge fund founded in January 1994. James Flynn, the current Managing Partner of Deerfield, joined the firm in 2000 and has gradually taken more responsibility within the firm. James Flynn began co-managing Deerfield Management with the firm’s founder, Arnold Snider, beginning in 2004. However, the current Managing Partner of Deerfield took the reins of the firm upon the founder’s retirement in 2005. Deerfield is a non-activist, relationship-focused hedge fund launched with $17 million in equity and currently has more than $5 billion in assets under management. The investment firm’s entire team has a comprehensive understanding of the healthcare industry, which allows the firm to identify investment opportunities even when complex financial, legislative, and/or regulatory pressures are present. As stated by the fund’s latest 13F filing with the SEC, Deerfield Management oversees a public equity portfolio with a market value of $3.09 billion as of March 31.
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In the eyes of most traders, hedge funds are assumed to be underperforming, old investment tools of the past. While there are more than 8000 funds in operation at present, Hedge fund experts at Insider Monkey look at the aristocrats of this group, around 700 funds. Contrary to popular belief Insider Monkey’s research revealed that hedge funds underperformed in recent years because of their short positions as well as the huge fees that they charge. Hedge funds managed to outperform the market on the long side of their portfolio. In fact, the 15 most popular small-cap stocks among hedge funds returned 123.1% since the end of August 2012 and beat the S&P 500 Index by 66 percentage points (see the details here). This is a huge margin which is why hedge funds’ recent Imprivata purchases is a strong indicator.
Imprivata Inc. (NYSE:IMPR) is a healthcare IT security company that provides authentication, access management, secure communications, and patient identification solutions for the healthcare industry. Put differently, Imprivata assists companies operating in the healthcare industry in improving the quality, efficiency, and manageability of the care they deliver. The shares of Imprivata are currently trading at an all-time high, gaining nearly 40% since the beginning of the current year. The strong performance delivered by the company this year can be attributed to its success in growing through both organic and inorganic expansion.
Imprivata completed an important acquisition earlier this year, which has significantly boosted the growth of the company. To be more detailed, Imprivata acquired HT Systems at the end of April, which was the leading provider of palm-vein based biometric patient identification systems at the time of acquisition. Thus, the deal enabled Imprivata to penetrate the emerging patient identification market, which is estimated to be a $2.0 billion market globally. The strong add-on to the company’s businesses has already been reflected in the company’s second quarter financial results. Imprivata paid $19.1 million in cash for its acquisition and is expected to pay up to $1.9 million in retention-based payments plus up to $5 million based on reaching certain sales targets over the next two years following the transaction. Unquestionably, the recently-completed acquisition of HT Systems and its PatientSecure biometric patient identification technology supports Imprivata’s long-term vision of being the leading provider of healthcare IT security solutions. Considering the company’s desire and success towards becoming a leader in its industry, the stock might actually represent a great buying opportunity despite trading at an all-time high, which the experts at Deerfield Management clearly believe.
As already mentioned, Imprivata has delivered a very strong financial performance for the second quarter of this year. The healthcare company posted record revenues of $30.0 million, which marks an increase of 29% year-over-year. At the same time, the company’s net loss came to $5.4 million or $0.22 per basic and diluted share, compared to a loss of $4.8 million or $1.08 per share reported a year ago. Imprivata’s adjusted EBITDA for the quarter was a loss of $2.2 million, compared to a loss of $2.8 million reported a year ago.
Given that its systems for secure patient identification and access are believed to be crucial to the development of the healthcare industry, it would certainly sugest there is more upside potential for Imprivata. Justin John Ferayorni’s Tamarack Capital Management is among the largest shareholders in Imprivata Inc. (NYSE:IMPR), holding an ownership stake of nearly 1.03 million shares as of June 30.
Disclosure: None