Frank Sinatra used to sing that love is lovelier the second time around. The folks running a struggling digital publishing company called Everyday Health can only hope that's true as they try for the second time to persuade investors to buy their initial public offering.
Everyday Health runs a cluster of websites featuring expert advice from CNN medical correspondent Sanjay Gupta and others. There's lots of information for expectant mothers, tips on weight loss and fitness, and so on, and more than 60 million people have registered to read its offerings.
The Manhattan-based company wants to turn all those eyeballs into cash and seeks to raise up to $123 million in an IPO this week. Everyday Health pulled the plug on an attempted IPO back in November 2010, citing "changed circumstances regarding the securities markets." It's understandable why the company is trying again, considering IPO investors are snapping up shares in unprofitable outfits like Coupons.com. But Everyday Health's financials look a little pale.
It has accumulated a deficit of $124 million since its start in 2002, which happens to be exactly twice the amount of the IPO proceeds expected to go to the company. Revenue grew by 12% last year, to $155 million, thanks to more ads and sponsorships. The company posted an $18 million loss, however, and subscription revenue fell by $2.9 million in 2013, to $17 million, attributed to "a general decline in the popularity of certain of our brands."
If this discourages you, just overlook the $8 million it costs the company to service its $70 million long-term debt load, and ignore $5 million in compensation expenses. Then Everyday Health is profitable on an "adjusted EBITDA" basis.
You might be wondering what a successful IPO might mean for Mr. Gupta, arguably the company's star attraction. He isn't listed as a shareholder, but his employer, Time Warner, owns a 2.5% stake, or more than 600,000 shares. Not for long, though: Time Warner intends to sell a third of its stake in the IPO. Other insiders, including Chief Executive Benjamin Wolin, TCV Ventures and Village Ventures, are also selling some of their shares.
Existing stockholders paid an average $6.92 each for their shares, so at the expected IPO price of $14, they will double their money. It seems unlikely that anyone who buys in now will be so fortunate."Everyday Health tries again on IPO" originally appeared in Crain's New York Business.