Greenway Medical (GWAY) IPO Suggests Big Opportunities For EMR Vendors

While there’s a number of  large, publicly-traded EMR vendors out there — General Electric (NASDAQ: GE) and Cerner (NASDAQ: CERN) immediately come to mind — to date we haven’t seen many mid-sized or small companies kick off an initial public offering. But one medium-sized EMR/practice management vendor has broken the mold.

Today, Greenway Medical Technologies (NASDAQ: GWAY) took the plunge , pulling in $67 million to fund its operations. While the company had hoped to raise $100 million, its take is nothing to sneeze at. Health IT is a tricky investment, even for pros like yourselves, readers, and institutional investors in particular are a conservative bunch. The fact that they’re spending on a risky business means a lot.

Greenway, whose EMR is bundled with practice management software, had one heck of a ride today, with its stock climbing 30 percent during its first day of trading. The company sold 6.7 million shares at prices below its expected $11 to $13 range, diluting its intake somewhat, but the stock closed at a promising $13 per share.

The Carrollton, Ga.-based vendor has certainly done well in recent times. According to insider Wall Street blog Seeking Alpha, Greenway revenues shot up 55 percent, to $25.7 million, during the last quarter of operations. Operating margins went from negative to a positive 2 percent, which is at least a start.  Its biggest cash generator during the quarter was licensing revenue, which climbed 49 percent.

What’s interesting about this IPO isn’t just the fact that it ended well for Greenway. After all, it did take in less than planned, and the Wall Street crowd justifiably wonders how it will fare in a mind-boggling competitive market.  But it’s worth asking whether Greenway did better because it bundles both an EMR and practice management tools. Did the fact that Greenway wasn’t relying solely on EMR revenue contribute to its growth and financial success?  It would be interesting to find out, as that might help predict whether the bundled model is especially popular with physicians.

As for those who’d seek to imitate Greenway, they may have a chance if they move soon. Seeking Alpha editors think HITECH will still pump enough money into the EMR market to make these companies a reasonable investment. And given how many doctors and hospitals are still struggling to put EMRs in place, I have to agree.  In fact, given that an amazing number of hospitals and medical practices junk their first EMR, there may be a whole second wave of opportunity within three to five years.

All told, if the market’s response to a smallish IPO is any indication, you can expect a bunch of other EMR players to follow in its footsteps.  I’m thinking it will be companies in the $100m to $200m range, as they’re small enough to need capital (much cheaper capital than banks offer these days!) and nimble enough to benefit from the cash influx. Stay tuned and in coming months, I’ll tell you which other EMR and HIT companies I’m betting will climb onto the launch pad.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.


  • Joe,
    That definitely provides perspective. Although, I still like my comment on that post:
    If the source was something other than the screwed up mess of a “research” company that KLAS is, then I’d like the data better. However, intuitively I agree with the idea. Private companies are more beholden to the customers than public companies who are more beholden to their investors. It’s a rare public company that this is not the case.

  • John – why do you say they are screwed up and why do you quote “research?” I have my own objections to KLAS, but I haven’t found them to be biased. In fact, I found them a fresh relief from some of their competitors who wanted a pay-to-play arrangement.

    I’m biased, of course, because they rate the company I work for really, really well (like…the highest rated vendor in every category across the board). But I have a lot of interesting experiences with them that, from a vendor perspective, give me a lot of confidence, PCC aside.

  • Too many issues to list in a comment. One simple example was when they were doing KLAS surveys at EHR vendor user group meetings. Talk about a biased sample.

    I don’t think the people at KLAS are bad people. I just don’t trust their results for the above reason and dozens more.

    Not to mention that they’re a pay-to-play model as well.

  • My distinct impression is that KLAS takes such surveys and actually calls the customers to confirm and f/u on the results.

    How are they a pay-to-play model? I heard about our results from another vendor, they came as quite a surprise. Never asked us for a penny, never suggested we could pay one.

    I called them once because of a comment I read about us that was actually falsely positive (one of our clients said something that isn’t true, as much as I’d like it to be). Once the rep on the phone understood I was the vendor, she all but hung up on me.

  • Chip,
    Give them a call as a vendor asking for the info and if you get their sales person you’ll see. Here’s a post I did a while back as an example:

    Much more could be said, but I’ll just point out another thing that irks me. They report results even when they barely have any sample for the result. Sure, they put some asterisk about the result, but they still put the info out there and claim things that don’t have the data to back them. At least that was the last result I’d seen. Maybe they’ve gotten better here, but I wouldn’t expect it.

  • My experience was that they refused to run anything about our EHR until we gave them a list of ALL of our customers in order to get a requisite sample. You can see exactly how many practices are in the samples.

    Personally, I find that their customer comment section is the most valuable portion.

    I knew of KLAS long before they rated us – they were the only one of their type whose numbers matched what we were hearing one the phone…if Vendor A started to have bad service, we’d get calls from Vendor A practices who wanted to switch and then I could see the numbers go down.

    My biggest pet peeve is their lack of specialty specific results. Not all specialties are the same – in fact, few are. Just my $.02.

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