First Choice Emergency Room's parent goes public

Adeptus Health, the parent company of the largest free-standing emergency room network in the U.S., went public Wednesday, with shares jumping by the end of the day.

The Lewisville, Texas-based organization owns and operates First Choice Emergency Room. First Choice was founded in 2002 and has more than doubled in growth since 2012. At the end of 2012, First Choice operated 14 freestanding EDs. That number now sits at 37, with a vast majority in Texas suburbs.

Adeptus Health priced its stock at $22, the high range of its initial $19 to $22 estimate. By the end of Wednesday, Adeptus Health was trading at $25.75. As of Friday morning, shares were holding steady around $25.40.

The company offered 4.9 million shares, with net proceeds totaling about $100 million. After deducting $7.3 million in IPO expenses, including $2.3 million in bonuses to executives, Adeptus Health gained $93 million. Adeptus Health plans on using those funds to pay down debt, build working capital and other general corporate purposes.

Adeptus Health lost $3 million in 2013, but net patient service revenue grew 42% year over year, totaling $103 million, according to filings with the Securities and Exchange Commission. In the first three months of this year, revenue reached $38.8 million.

First Choice's business model relies solely on treating privately insured patients in its EDs. Four payers—Blue Cross and Blue Shield, UnitedHealthcare, Aetna and Cigna—accounted for 87% of its revenue last year. Hospitals and health systems have been partnering with freestanding ER companies more as a way to boost sluggish inpatient volumes.

Adeptus Health, owned by private-equity firm Sterling Partners, trades on the New York Stock Exchange under ADPT.

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