A pre-revenue health IT business registers for IPO, following trend set by biotech

Pre-revenue biotech companies have been registering for IPOs and now a health IT company is taking its chances.

A combination of the JOBS Act and bullishness towards healthcare technology and biotech is prompting a series of pre-revenue companies to file for initial public offerings.

The latest example is KokiCare Inc. The health IT company, which doesn’t appear to have any customers yet, “aims to develop health care enterprise software to be sold to hospitals, medical centers and health care facilities in the United States and internationally,” according to its S-1 filing. Nice and vague.

It’s seeking to raise up to $330,000, according to the document.

KokiCare Inc.’s CEO, president, chairman and CFO is Jason Lane. He currently serves as director of asset management sales, for the Midwest and Western Territory at ClearStructure Financial Technology.

Lane did not respond to calls prior to publication.

KokiCare stands apart from pre-revenue healthcare IPOs included in a report by Proskauer law firm earlier this year. The second annual IPO report noted that 10 percent of IPOs in 2014 were for pre-revenue companies — all of them in biotech or biopharma . Interestingly, pre-revenue issuers had significantly better aftermarket performance than those in the study with negative net income, the report said.

Although it takes years for biotech companies to do the clinical trials and get regulatory approval to commercialize their drug or therapy, health IT companies do not typically face those kind of challenges. That makes KokiCare’s move seem a bit weird.

KokiCare’s prospectus notes that it qualifies “as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies.”

It will be interesting to see how KokiCare fares with this approach. I suspect few companies would be interested in the expense and headache of taking this funding route.

Photo: Flickr user Simon Cunningham