Imprivata Files Confidential SEC Documents Suggesting IPO

2014-02-04_22-42-08

Lexington, MA-based mobile communications vendor Imprivata has filed a draft registration statement with the Securities and Exchange Commission to conduct an initial public offering. Imprivata markets single sign-on solutions, authentication management, and secure mobile communications for the healthcare industry. They were the KLAS segment leaders for single sign-on in both 2012 and 2010.

The IPO filing was submitted as confidential, which means that no terms were publically disclosed. This approach is often taken by companies that want to be able to privately coordinate their IPO with the SEC prior to publically disclosing timelines or financial details.

Confidential IPO filing is a relatively new right for entrepreneurs looking to take their companies public. The ability to file IPO paperwork confidentially was granted as part of the JOBS act which was signed into law in 2012. Prior to the law, businesses had to report details of their financial performance and market risks along with their filing. As a result, as soon as one would file for an IPO, investors would begin scrutinizing their past performance and future projections. 

Confidential filing also gives companies more freedom to feel out the market and time their stock offering. Typically, companies like to file the necessary documents to offer stock, but then hold off on executing the stock offering until they feel that the market is ideal. Timing is key in the balancing act between when to file and when to offer stock. During this timeframe, companies that hold their filing for too long without moving forward with the stock offering are seen as tainted, or suspect.

With the new law in place, companies can file for an IPO without immediately disclosing their financial figures or timelines to potential investors. Industry insiders report that the changes could well lead to a boom in IPO filings from companies that may never have filed in the past.

“It’s increased the number of people who are filing. These companies didn’t want to file, they were nervous about filing, and didn’t want their numbers getting out,” said Insight Venture Partners managing director Deven Parekh.

With their confidential filing submitted, Imprivata is now free to discuss the financial details around their IPO without having to tip their hand or rush their decision on when to offer stock. For these reasons, confidential filing is becoming a far more common route. Fellow digital health leader Castlight Health submitted a confidential filing late last week, taking advantage of the same regulatory protections.

In Imprivata’s case, the filing was immediately disclosed by the company in the form of a press release, which suggests that the public offering will not be far behind. In the release, company officials report that the offering will commence as soon as the SEC finishes its review. They will be required to disclose financial performance information 21 days prior to the IPO to give potential investors enough time to evaluate their stock offer.

Imprivata has been linked to IPO rumors for more than a year. The rumors heightened in May 2013, when Beth Israel Deaconess CIO Dr. John Halamka was added to its board. During the announcement, Imprivata CEO Omar Hussain reported that he expected an initial public offering to commence within two years.

Imprivata closed its last investment round in 2008, with a $15 million Series C led by SAP Ventures, and joined by existing Imprivata investors Polaris Venture Partners, General Catalyst Partners, and Highland Capital Partners. The funding brought total funding to $50 million. In 2012, the company grew to a $50 million annual revenue has not needed VC funding since.


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