Shares of Premier Inc (PINC.O) rose 15 percent in their market debut on Thursday as investors bet on the medical supply-chain management company's cost-effective services that complement a broader regulatory goal of lower healthcare spending.
Premier's initial public offering valued the company at about $4.40 billion.
The company's stock was up 14 percent at $30.72 in late-morning trading after touching a high of $31. About 14 million shares changed hands, making Premier one of the heavily traded stocks on the Nasdaq.
The Charlotte, North Carolina company operates a healthcare alliance that provides care, insurance and data analytics services to providers so they can better manage their costs - in line with the goals of President Barack Obama's Affordable Care Act.
Demand for outsourced medical services, such as ones that Premier offers, is also growing amid soaring healthcare costs and an aging U.S. population.
Premier is owned by 181 hospitals, health systems and healthcare organizations including Adventist Health System, Banner Health and Bon Secours Health System Inc. These members will hold 80 percent of Premier's Class B stock after the IPO.
Premier priced its offering of 28.2 million Class A shares at $27 each, above its proposed price range. The company sold all the shares in the offering, raising $761.4 million.
Premier's debut clocks a successful run of healthcare IPOs that have listed their shares in the U.S. markets this year. Nearly all of the about 20 health-focused companies that have gone public this year are trading above their IPO price.
Cancer diagnostic company Foundation Medicine Inc (FMI.O), which counts Bill Gates and Russian billionaire Yuri Milner among its investors, saw its stock rise nearly 85 percent in its market debut on Wednesday, valuing the firm at about $874 million.
From the beginning of the year to August 9, healthcare IPOs have raised about $3 billion and had an average one-day return of 16.1 percent, according to accounting firm PricewaterhouseCoopers.
Premier's net profit rose to $7.4 million in the year ended June 30, from $3.9 million a year earlier.
JP Morgan, BofA Merrill Lynch and Wells Fargo were the lead underwriters to Premier's IPO.
(Reporting by Neha Dimri and Zeba Siddiqui in Bangalore; Editing by Maju Samuel)