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Internet Equity Research, IPO Research, Stock Research, The Battle Road IPO Review

Everyday Health (NYSE: EVDY)

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Everyday Health (NYSE: EVDY) logoEveryday Health (NYSE: EVDY), founded in 2002 and based in New York City, operates an ad-driven, online health information portal that is utilized by consumers, physicians, healthcare professionals, and health plans. After posting revenue of $155 million and a loss in 2013, EVDY debuted on the NYSE on March 27th at an opening price of $14 per share, in a 7.1 million share transaction that raised roughly $70 million for the company, and about $23 million for selling shareholders. The transaction was led by five investment banks: J.P. Morgan, Credit Suisse, Citigroup, SunTrust, and Stifel Nicolaus. At a recent share price of $17.76, the company’s market cap. was roughly $530 million.

Like its key competitor, WebMD (NASDAQ: WBMD), EVDY’s primary path to monetization is through online advertisements, which account for roughly 87 percent of sales. Like WBMD, EVDY targets the global pharmaceutical industry, and 23 of the top 25 global pharma companies advertise on its websites. Among the most prominent of EVDY’s websites is Medpage.com, which it purchased three years ago. MedPage Today is a daily online news service, geared to physicians and healthcare professionals. The company estimates that one-third of US physicians engage with its websites on a monthly basis.

EVDY claims that average monthly mobile app visits to its operated properties were 37 million in 2013, though it is unclear whether these represent unique visitors.  In addition to its consumer websites, EVDY operates seven YouTube shows focused on health and wellness issues. Since closing its IPO, Everyday Health reported its first results as a publicly trade company. The most intriguing aspect of the report was the company’s ability to reduce its accounts receivable days sales outstanding from 145 days to 92 days, an encouraging sign of progress. Following its IPO EVDY has an acceptable balance sheet, which features nearly $90 million of cash on a pro forma basis, as a result of its IPO, but also more than $70 million in bank debt, which yields a net cash position of $17 million. Consensus estimates call for revenue of $180 million in 2014 and EPS of $0.41.

To see how Everyday Health screens against its internet peers in the Battle Road IPO Review internet coverage universe, please contact: info@battleroad.com.

IPO Research, Stock Research, The Battle Road IPO Review

Houghton Miflin Harcourt: a New Story to Tell

Houghton Miflin Harcourt logoHoughton Miflin Harcourt (NASDAQ: HMHC) is the merger of Houghton Miflin, the storied Boston book publisher, whose roots go back to 1832, and Harcourt Education, an educational publishing company, which was acquired by Houghton Miflin for $4 billion in 2007. Through a complex web of mergers, acquisitions, divestitures and private equity financings too complex to review here, the company has emerged as an independent entity, with over 85 percent of its sales coming from educational materials focused on the K-12 education market in the US.

Based in Boston, Massachusetts, the company came public on the NASDAQ in an 18.3 million share IPO on November 13th 2013, led by Goldman Sachs, Morgan Stanley, Citigroup, Credit Suisse, Wells Fargo Securities and six other investment banks. Notably, all of the IPO proceeds went to selling shareholders and none to the company. Consensus expectations call for revenue of $1.48 billion and EPS of $0.11 in 2014, up from $1.38 billion and a loss of $0.79 in 2013. Post IPO, HMHC has $425 million in cash and $246 million in debt. At a recent share price of $21, the company’s market cap. is roughly $2.9 billion.

Since September of 2011, HMHC has been led by Linda Zecher, president, CEO, and director. She is formerly corporate Vice President of Microsoft’s Worldwide Public sector group, an $8 billion business unit.  With its primary focus on the US K-12 market, HMHC sells educational materials, including books, software, reference and teaching guides, and digital software, which are utilized for both core curriculum purposes, as well as supplemental learning. The company targets an addressable market of 132,000 public and private elementary and secondary schools in the US which spent $30 billion on instructional supplies and services in 2011. In addition, HMHC publishes trade and reference books, including adult and children’s fiction and non-fiction titles, including Curious George, and Camen Sandiego, as well as the renowned reference guides Cliff Notes, and Webster’s New World Dictionary.

HMHC’s growth strategy calls for creating and leveraging digital content, including its wealth of story book characters into compelling educational material, expanding its curriculum and supplemental learning product and services offerings, focusing on new service and instructional content for early childhood development and workforce reentry, and targeting foreign markets with high quality English language instructional materials.

Risks to the HMHC story include the fact that K-12 educational spending in the US remains heavily tied to state and local budgets, many of which are still struggling even as the US emerges from recession. Another key risk is the company’s unproven track record for overseas sales, as sales outside of the US account for less than six percent of total revenue currently.