IPOs filed in the first three months of 2020

2019 was a great year for the IPO market in which more than 200 companies went public in the US. The notable listings included Uber Technologies (NYSE: UBER), Lyft (NASDAQ: LYFT), Beyond Meat (NASDAQ: BYND), CrowdStrike (NASDAQ: CRWD), Pinterest (NYSE: PINS) and Cloudflare (NYSE: NET). Also, last year, Slack Technologies (NYSE: WORK) went public through a direct listing. In the first quarter of 2020, 37 companies have become public companies in the US, a little less than 40 companies that went public in the first three months of 2019.

It’s worth noting that during March 2019, 14 companies got listed while the count decreased to just 5 companies in March this year due to the current uncertain situation arisen in the wake of COVID-19 pandemic and the lockdown related to it. All over the world, major stock market indexes fell drastically and trading was halted a few days in March. While the secondary markets have been facing tremendous pressure, companies that planned to debut in these turbulent times have postponed their listings. In this scenario, let’s look at some of the recently listed companies whose market cap is more than one billion dollars.

1. Reynolds Consumer Products Inc. (NASDAQ: REYN)

Debut date: Jan 31, 2020

IPO price: $26

This Lake Forest, Illinois headquartered company, which is a subsidiary of Packaging Finance Limited, produces and sells household products. Known for its iconic brands such as Reynolds, Hefty, and Presto, the company’s product lines include cooking products, waste & storage products and tableware. REYN stock had advanced 15% to $29.90 from its listing price.

Reynolds reported its fourth quarter and full-year 2019 results last month. The company had projected 2020 GAAP EPS to be in the range of $1.52 to $1.67 and non-GAAP EPS to be in the range of $1.67 to $1.76.

In 2019, sales to the top ten customers accounted for 68% of the company’s total revenue, and its two largest customers; Walmart (WMT) and Sam’s Club, accounted for 30% and 13%, respectively, of its total revenue.

2. 1Life Healthcare Inc. (NASDAQ: ONEM)

Debut date: Jan. 31, 2020

IPO price: $14

1Life Healthcare (One Medical), a membership-based primary care provider, directly enrolls customers and also through employer sponsorship. ONEM shares, which were priced at the lower end of the original range ($14-$16), opened at $18 and ended at $22.07 on its first day of the trading. After reaching a new low of $15 on March 19, One Medical stock closed at $18.70 on Thursday, April 9.

Earlier this month, the company introduced new virtual care solutions and COVID-19 testing through the US in response to the growing community outbreaks. With the rise in the outbreak, around 250,000 members sought care digitally. One Medical has provided a 30-day offering to the general public for accessing its virtual medical team, getting clinical guidance and scheduling testing.

One Medical reported a 33% jump in its recently ended fourth-quarter revenue, helped by the increase in the membership count. As of 2019-end, membership grew 22% to about 422,000. For the first quarter of 2020, the company had projected revenue to be between $74 million and $77 million and membership count in the range of 443,000 to 447,000. For fiscal 2019, the top three customers accounted for 36% of the company’s net revenue. One of these three top customers is Google Inc., which accounted for 10% of the company’s net revenue in 2019.

3. Arcutis Biotherapeutics Inc. (NASDAQ: ARQT)

Debut date: Jan. 31, 2020

IPO price: $14

The late-stage biotechnology company, which had developed more than 50 FDA-approved products, focuses on developing and commercializing treatments for dermatological diseases. Arcutis currently conducts Phase 3 clinical program with Roflumilast cream to treat Plaque Psoriasis. ARQT stock, which soared 17.59% yesterday to $31.95, has jumped 88% from its IPO price.

4. Schrodinger Inc. (NASDAQ: SDGR)

Debut date: Feb. 6, 2020

IPO price: $17

Schrodinger, which was established in 1990, provides computational software solutions for drug discovery. The New York-based firm generates revenue from the sales of its software solutions and from research funding and milestone payments from its drug discovery collaborations. SDGR stock, which reached its peak ($56.65) on February 24, had skyrocketed 143% to $41.30 from its offer price.

For 2019, Schrodinger’s loss shrank to $24.6 million from the year-ago loss of $28.4 million. Revenue grew 28% year-over-year to $85.5 million. The company had 131 customers with annual contract value (ACV) of over $100,000 and 10 customers with ACV of over $1 million for the period ended December 31, 2019.

Last month, Schrodinger expanded its existing collaboration with AstraZeneca, which deploys the former’s computational platform to advance small molecule drug discovery efforts.

5. PPD Inc. (NASDAQ: PPD)

Debut date: Feb. 6, 2020

IPO price: $27

This contract research firm, which provides drug development services to the biotech companies, operates in two segments; Clinical Development Services and Laboratory Services. PPD, which opened at the higher end of its offer price ($24-$27), surged 11% on its first trading day. After plunging to a new low ($10.61) on March 18, the stock recovered and yesterday it closed at $23.20, well below its listed price.

For the fourth quarter of 2019, PPD reported net income attributable to common stockholders of $6.76 million or $0.02 per share on revenue of $1.05 billion. For the full-year 2020, the company targets revenue to be in the range of $4.35 billion to $4.47 billion.

6. Revolution Medicines Inc. (NASDAQ: RVMD)

Debut date: Feb. 13, 2020

IPO price: $17

Revolution Medicines, a clinical-stage precision oncology company, focuses on developing targeted therapies in the field of oncology. The Redwood City, California-based firm and its partner Sanofi have a 50-50 profit-sharing deal and a co-promote right in the US and are eligible to receive royalties on net sales outside of the US. RVMD stock, which surged 70% on its opening day of trading, lost the momentum in later days and closed at $23.65 yesterday.

The company had incurred net losses in each year since its inception in 2014. Net loss in 2019 expanded to $47.7 million from a net loss of $31.1 million in 2018. Revolution Medicines expect to incur significant expenses and increasing operating losses over at least the next several years.

7. GFL Environmental Inc. (NYSE: GFL)

Debut date: Feb. 13, 2020

IPO price: $19

The Vaughan, Ontario-based diversified environmental services company offers waste management solutions. GFL stock had lost 19% of its IPO listing price and closed at $15.37 yesterday.

Yesterday, the company provided an update on COVID-19 and said that COVID-19 related disruptions are more significant in the company’s primary markets. Secondary markets account for about 63% of solid waste revenue. Of the 37% of solid waste revenue generated in primary markets, 49% is tied to more stable residential revenue. No single customer represented over 3% of 2019 revenue.

Postponement of IPOs

It is expected that the companies that planned to list in the primary markets will delay their decisions and second quarter, we will have less number of IPO listings compared to the last year. When the economy recovers and the stock markets stabilize, we can expect some of the private companies to become public in the third or fourth quarters of this year.