Tabula Rasa HealthCare Inc (TRHC) Is A Buy Ahead of IPO Quiet Period Expiration

The IPO quiet period on Tabula Rasa HealthCare Inc (NASDAQ:TRHC) will come to an end on October 24, allowing the firm’s underwriters to publish reports and recommendations for the first time on October 25. Our research has found significant potential for above-market returns in the five days prior to and two days after the conclusion of a company’s quiet period.

Tabula Rasa Healthcare, Inc. is backed by a strong team of underwriters, including: Wells Fargo, UBS, Piper Jaffray; Baird, and Stifel. We believe all are likely to publish positive reports at the conclusion of the quiet period. These reports could result in a boost in stock price in the days surrounding the IPO quiet period expiration event. We suggest buying ahead of Oct 24 to benefit from potential inclines.

Tabula Rasa HealthCare Inc (NASDAQ:TRHC) provides medication risk management services to enable healthcare organizations the ability to better optimize medication regimens. Tabula’s solutions aim to enhance patient outcomes, reduce hospitalizations, and lower healthcare costs. The company also serves prescribers and pharmacists. The company was founded in 2011, is based in Moorestown, NJ and has over 100 employees.

The company’s cloud-based software applications include: EireneRx, which is used by at-risk healthcare organizations to access its patients’ medication-related information; MedWise Advisor that allows for components of EireneRx to be used independently and by a broader healthcare audience; and NiaRx, an educational software platform used in the pharmacy educational community.

Executive Management Highlights

Dr. Calvin Knowlton, BScPharm, MDiv, PhD, founded Tabula Rasa and serves as Chairman and CEO. He also founded CareKinesis, Inc., and Enclara Pharmacia, Inc. He served as Professor and Department Chair for the University of Sciences in Philadelphia in the 1990s.

CFO Brian Adams has served in his position since June 2016. His previous experience comes from positions at CareKinesis, KPMG LLP, and excelleRx Inc.

Key Financials

The company has shown consistent and impressive revenue growth since its founding. The company grew revenue from $4.9 million for the first quarter of 2013 to $22.4 million in the second quarter of 2016. The company reported $80.3 million in revenue for the last twelve months ended June 2016, approximately 35.8% higher than the previous twelve months ended June 2015.

Performance Since IPO

Tabula Rasa HealthCare Inc (NASDAQ:TRHC) went public on Sept. 28 and we previewed the company ahead of its IPO here. At the time we were very keen on the IPO given the company’s valuation, reported growth, and market opportunity.

TRHC has had a decent performance since its IPO. It raised $52 million, selling 4.3 million shares at $12, slightly below its initial range of $13 to $15. Shares jumped during its first day of trading by 24.0%, then pulled back 16.1% in after-market return. As of Thursday’s market close, TRHC was trading at $12.60, still above its offer price.

Conclusion: Buy Prior to 10.24

As noted above, we liked TRHC’s valuation and strong revenue growth ahead of its IPO.

Performance since its IPO has been tepid, yet we view the upcoming IPO quiet period expiration as a very solid buying opportunity.

The company is backed by a strong team of underwriters, who will likely publish detailed positive reports at the conclusion of the quiet period. We expect a price increase between 5% – 8%.

Buying ahead of October 24 could also allow investors to take advantage of any anticipation (price inclines) leading up to the event itself.

Disclosure: I am/we are long TRHC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Note: This article is written by Don Dion. Visit his site at DRD Investments for expert analysis on current and upcoming IPOs.