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Amerigroup finally floats IPO
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November 3, 2001: 7:00 a.m. ET
Two new issues expected this week; Amerigroup to sell 4.4 million shares.
By Staff Writer Luisa Beltran
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NEW YORK (CNNmoney) - Amerigroup Corp. will finally get a chance to float its long-delayed initial public offering in what is now a strong market for health-care issues.
October emerged a good month for new issues with eight IPOs raising $4.1 billion, less than one-third of last year's total 26 deals which raised $8.8 billion
But this year's volume is still significantly off 2000's break neck pace. Seventy IPOs raised $33.8 billion by the end of October 2001, compared to 400 offerings last year that raised $91.1 billion, according to John Fitzgibbon, editor of IPO Desktop.
However, new issues are still performing better than the broad market, Fitzgibbon said. The Nasdaq Composite has dropped 29.4 percent since the beginning of the year while the Dow has shed nearly 14 percent.
In contrast, the average new issue this year is down only about 2 percent from its offer price. "You are better off buying IPOs," Fitzgibbon said.
Three IPOs scored solid gains last week. Anthem Inc., an insurance company, gained nearly 14 percent on the New York Stock Exchange. Two other IPOs followed later in the week. Odyssey Healthcare Inc. (ODSY: down $1.02 to $17.93, Research, Estimates), an operator of hospices, surged by 15 percent on Oct. 31 while LogicVision Inc. (LGVN: down $0.63 to $9.00, Research, Estimates), a provider of chip testing technology, increased by 7 percent.
Two new issues are planning to launch this week, according to MCM CorporateWatch which tracks new issues.
Amerigroup, a multistate managed health-care company, has waited 18 months to go public. The company even postponed its planned new issue in August of 2000 and then revived plans last March.
But the recent strength of health-care issues could prove a boon for Amerigroup. "The momentum is in health care," Fitzgibbon said of the current status of IPOs. He expects the Amerigroup offering to score a first day gain of $1-to-$2.
"It's all in health care and those that will make it will be priced cheaply enough to reflect a small premium," he said.
Virginia Beach, Va.-based Amerigroup plans to sell 4.4 million shares at $17 to $19 each, up from $15-to-$17 a share, via lead underwriters Banc of America and UBS Warburg. Amerigroup expects to price Monday and trade Tuesday under the Nasdaq symbol "AMGP."
However, analyst Mike Falbo of IPOpros.com is downbeat on the deal and expects a small premium. Originally filed in May 2000, the Amerigroup offering suffered price cuts before it was postponed last year. But with health care now in favor, the IPO has boosted its share price.
Last August, the company also changed underwriters, dumping lead underwriter Deutsche Banc Alex. Brown in favor of Banc of America and UBS.
"It seems like they have been looking for a spot for this deal for quite a while," Falbo said. "They've been in registration for a long time."
Amerigroup provides consumers in four states with health-care benefits through state-sponsored programs such as Medicaid, Children's Health Insurance Program and Family Care.
The company targets a younger population that has a hard time accessing healthcare efficiently and has a greater percent of expenses related to obstetrics, diabetes and respiratory conditions, Amerigroup said in its most recent filing with the Securities and Exchange Commission.
Amerigroup is also profitable. Revenue jumped 42 percent to $236.6 million while net income rose 50 percent to $9.6 million in third quarter.
Serving up units
The week's second IPO, Nations Express Inc., provides freight delivery services for time sensitive cargo. The company has a fleet of 108 independent truck owner-operators and manages 15 locations.
Organized in 1998, Nations Express booked $20.9 million in revenue on $372,000 in losses for the year ended June 30.
Charlotte, N.C.-based Nations Express plans to sell 700,000 units at $6.50 to $7.50 each via underwriter Schneider Securities Inc. The company plans to price Wednesday and trade Thursday under the American Stock Exchange symbol "NAX."
Most analysts do not follow "units" deals. "They've had lots of price cuts," IPOpros.com's Falbo said of Nations Express. "We're not recommending it." 
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