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Imprivata swipes into the market with healthcare tech IPO

Dr. Niraj Desai (C) and others prepare aDr. Niraj Desai (C) and others prepare a

Imprivata, a provider of healthcare software, priced its shares on late Tuesday night at $15 apiece, at the middle of its expected range ($14-16), with an initial offering of 5 million shares.

The Lexington, Mass.-based company will begin trading on the New York Stock Exchange on Wednesday and plans to raise $75 million in its offering. The firm sells single-sign-on authentication and access management software to hospitals, doctors offices, and clinics. While it has struggled to turn a profit over the past two years, sales of its time-saving approval systems brought in $19.4 million for the first quarter of this year. Its annual revenue was $71.1 million in 2013, an almost 32% jump year-over-year.

Healthcare and technology have been two of the busiest sectors in this year’s IPO rush. The two industries have raised about $27 billion across 181 offerings now trading, according to data from Bloomberg. Imprivata’s public debut comes on the heels of fellow healthcare-focused software firm Castlight Health (CSLT), which went public in March. Castlight saw the year’s biggest first-day share price increase of any U.S. tech listing this year, with a 149% jump, though its stock has since lost those gains and now trades almost 6% below its initial price.

As health records go electronic, Imprivata is hoping to cash in on the ability to simplify access to these materials by replacing traditional log-ons with faster options like proximity cards and fingerprint biometrics, which streamlines work at doctors offices and can even provide life-saving minutes during an emergency.

Imprivata accomplishes this through its OneSign platform, which has more than 2.8 million licensed users at over 950 healthcare organizations, as of the end of March, according to filings with the U.S. Securities and Exchange Commission. The company’s single sign-on method isn’t restricted to the medical world. OneSign has expanded to about 770,000 users across 400 non-healthcare businesses.

While sales and growth have been strong, the health-tech business has battled shrinking profits over the past three years. Imprivata posted net income of $2.7 million in 2011 and $1 million in 2012 followed by a net loss in 2013 of $5.5 million.

Imprivata is also competing against other better-funded authentication and workflow management companies. Its main competitor is Bellevue, Wash.-based Caradigm USA, a joint venture between Microsoft (MSFT) and General Electric (GE).

Primarily, Imprivata went public to secure access to capital markets and increase its liquidity, which will help it compete against companies like Caradigm. The company said it will use the chunk of money for general business purposes and may use a portion to acquire or invest in complementary businesses.

Imprivata will trade under the symbol IMPR. The deal was managed by JPMorgan and Piper Jaffray.