This Week in Tech IPO?s: eHealth Inc and Acme Packet Inc

Posted Oct 9, 2006

Mountain View, CA based eHealth Inc. had spent $50 million in development costs to form an application that sells health insurance online. This week eHealth Inc. is hoping to raise $47.1 million through its upcoming IPO. The basis of eHealth Inc.?s business is to solve the everday problem of choosing the right medical coverage. As of right now, most individuals, families, and small-to-mid sized businesses go through agents that take in excessive commission fees to help them choose medical insurance.

Thus far, eHealth Inc. had sold health insurance to over 325,000 customers through its website. eHealth Inc. has over 5,000 health insurance products and 150 insurance companies in its database including services provided by Aetna and UnitedHealth. The market eHealth is aiming to tap includes the 17 million Americans that buy their own medical insurance and opposing plans selected by their employers. This is an estimated $658 billion market.

To help serve the 46 million Americans that are not health insured, eHealth Inc. provides rate quoting, plan comparisons, and provides communication services between insurers and potential customers. Through such services, eHealth enables uninsured consumers to discover affordable rates.

To make money, eHealth Inc. is acting essentially as a broker and takes commission fees from the insurance providers. In 2001, eHealth?s revenues were $9.3 million compared to 2005?s $41.8 million, an increase by nearly 450% in 4 years.

In the IPO, eHealth Inc. is planning on selling 5 million shares @ $10-$12 per share. eHealth Inc.?s symbol will be traded under the stock symbol ?EHTH? through NASDAQ. At that current share, the estimated market cap is at $271 million. According to the NASDAQ website, eHealth is expected to go public on October 12.

Acme Packet Inc. is a Burlington, MA company that provides internet security for numerous clients that output video, VoIP, and other multimedia services. Acme Packet has a strong prescence all over the world and has partnerships with some of the biggest names in telecommunication services such as D-Link, Cisco, and NEC. Microsoft is also an Acme Packet partner. Although Cisco Systems Inc. is a partner, they are also competition for network equipment against Acme.

According to Acme Packet?s press releases, Acme Packet filed a registration statement with the SEC proposing an IPO on June 2, 2006, but is planning to go public this week. Goldman Sachs Group, Inc. (NYSE: GS) is acting as the book-runner and Credit Suisse Group?s Securities (VTX: CSGN) division is acting as the joint lead manager and J.P. Morgan Securities Inc. is co-managing the IPO. ThinkEquity Partners LLC are also serving as underwriters.

Acme is planning to sell 8 million shares with a price opening of between $6.50 and $7.50 per share. Acme?s stock symbol will be ?AKPT? through NASDAQ. Acme is hoping to raise $60 million. Between January and June of this year, Acme Packet has reported revenues of $38.1 million which is up from $16.7 million from the year before in the same period.