US IPO Week Ahead: Reynolds attempts first billion-dollar IPO of 2020 in 5-IPO week

Five IPOs and one SPAC plan to raise $2.0 billion in the week ahead, led by Reynolds Consumer Products (REYN) as it attempts the first billion-dollar IPO of 2020. The consumer products giant is joined by healthcare unicorn One Medical (ONEM), two large biotechs, and a health products company.

Reynolds (REYN) plans to raise $1.25 billion at a $5.4 billion market cap. The company has a stable business with strong cash flow generation and estimates that it has a presence in 95% of US households. LBO’d by New Zealand billionaire Graeme Hart’s Rank Group, Reynolds is highly levered and plans to use IPO proceeds to pay down debt. It also plans on paying a dividend with 3.4% yield.

1Life Healthcare, a.k.a. One Medical (ONEM), which operates 77 membership-based health clinics, plans to raise $263 million at a $2.1 billion market cap. Backed by Carlyle and Benchmark, the company had 397,000 members and 6,000 enterprise clients as of 9/30/19, demonstrating decent revenue growth but widening EBITDA losses.

Oncology biotech Black Diamond Therapeutics (BDTX) plans to raise $151 million at a $572 million market cap. The Versant-backed company is developing small molecule, tumor-agnostic therapies. While some kinase inhibitor biotechs have had huge success, Black Diamond is still very early stage, with sole clinical candidate BDTX-189 expected to enter a Phase 1/2 trial in the 1H20.

Dermatology biotech Arcutis Biotherapeutics (ARQT) plans to raise $125 million at a $593 million market cap. Targeting common skin diseases, the company’s lead candidate ARQ-151 is currently in two Phase 3 trials for psoriasis, but failed to produce statistically significant results in a Phase 2 trial for atopic dermatitis.

Avadim Health (AHI), which develops and sells topical products for immune, muscular, and skin health, plans to raise $75 million at a $366 million market cap. The company, which currently markets its products under the Theraworx, Combat One, and PHUEL brands, is fast-growing and highly unprofitable (-78% LTM EBITDA margin).

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The following IPOs are expected to price this week:

1Life Healthcare (ONEM), which operates 77 membership-based health clinics under the One Medical brand, plans to raise $263 million by offering 17.5 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, the company would command a market value of $2.1 billion. 1Life Healthcare, which was founded in 2007, booked $257 million in revenue over the last 12 months. The San Francisco, CA-based company plans to list on the Nasdaq under the symbol ONEM. J.P. Morgan, Morgan Stanley, Allen & Company, and four others are the bookrunners on the deal.

Arcutis Biotherapeutics (ARQT), a Phase 3 biotech developing topical therapies for common skin diseases, plans to raise $125 million by offering 7.8 million shares at a price range of $15.00 to $17.00. At the midpoint of the proposed range, the company would command a market value of $593 million. Arcutis Biotherapeutics was founded in 2016. The Westlake Village, CA-based company plans to list on the Nasdaq under the symbol ARQT. Goldman Sachs, Cowen, and Guggenheim Securities are the bookrunners on the deal. Existing shareholders intend to purchase up to $50 million of the IPO (40% of the deal).

Avadim Health (AHI), which develops and sells topical products for immune, muscular, and skin health, plans to raise $75 million by offering 5.0 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, the company would command a market value of $366 million. Avadim Health, which was founded in 2007, booked $44 million in sales over the last 12 months. The Asheville, NC-based company plans to list on the Nasdaq under the symbol AHI. Raymond James, SunTrust Robinson Humphrey, and Oppenheimer & Co. are the bookrunners on the deal.

Black Diamond Therapeutics (BDTX), a Phase 1-ready biotech developing targeted kinase inhibitors for solid tumors, plans to raise $151 million by offering 8.9 million shares at a price range of $16.00 to $18.00. At the midpoint of the proposed range, the company would command a market value of $572 million. Black Diamond Therapeutics was founded in 2014. The Cambridge, MA-based company plans to list on the Nasdaq under the symbol BDTX. J.P. Morgan, Jefferies, and Cowen are the bookrunners on the deal.

InterPrivate Acquisition (IPV.U), a blank check company led by the founder of private equity firm InterPrivate, plans to raise $175 million by offering 17.5 million units at a price $10.00 to command a market value of $226 million. InterPrivate Acquisition was founded in 2019. The New York, NY-based company plans to list on the Nasdaq under the symbol IPV.U. EarlyBirdCapital is the sole bookrunner on the deal.

Reynolds Consumer Products (REYN), a leading provider of household and kitchen products, plans to raise $1.3 billion by offering 47.2 million shares at a price range of $25.00 to $28.00. At the midpoint of the proposed range, the company would command a market value of $5.4 billion. Reynolds Consumer Products, which was founded in 2011, booked $3.1 billion in sales over the last 12 months. The Lake Forest, IL-based company plans to list on the Nasdaq under the symbol REYN. Credit Suisse, Goldman Sachs, J.P. Morgan, and five others are the bookrunners on the deal.

IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 1/23/20, the Renaissance IPO Index was up 8.6% year-to-date, while the S&P 500 had a gain of 2.9%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Uber (UBER) and Spotify (SPOT). The Renaissance International IPO Index was up 4.1% year-to-date, while the ACWX was up 0.5%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Adyen and Xiaomi.