This story incorrectly identified the company going public as PRA Health Services. The company is PRA Health Sciences.
Pharmaceutical services company PRA Health Sciences, which last year made noises about going public before being acquired, has filed plans to raise as much as $375 million in an initial public offering of stock.
This week’s filing with the Securities and Exchange Commission comes about 14 months after the Raleigh-based company was acquired by private equity giant Kohlberg Kravis Roberts for $1.4 billion. Even if PRA succeeds in going public, however, KKR will retain controlling interest in the business.
PRA, which has about 10,300 employees worldwide, posted $1.2 billion in revenue and a net loss of $62.2 million last year.
Never miss a local story.
For the first six months of this year, PRA posted revenue of $622.8 million and a loss of $14.1 million. The company’s revenue rose 80 percent from $345.6 million a year earlier, but $239.1 million of that increase was the result of acquisitions made by the business last year.
As is typical when companies first file their plans for an IPO, PRA didn’t disclose details such as how many shares it plans to sell at what price, or how much of the company is being sold to the public. Those details will come later.
In addition, both PRA and KKR would sell shares in an IPO, but no breakdown was provided. KKR would reap the proceeds from any shares it sells.
PRA plans to use its share of the IPO proceeds to pay down some of its debt, which stood at $1.26 billion as of the end of June.
PRA, which has 453 employees locally, is the world’s fourth-largest contract research organization. CROs helps pharmaceutical and biotechnology companies test experimental drugs.
The Triangle is the epicenter of the CRO industry. Indeed, PRA moved its headquarters to Raleigh from Virginia in 2008 because of the region’s talent pool.
About 40 percent of PRA’s employees have at least a master’s degree. About 850 employees have PhDs or MDs.
PRA spokeswoman Christine Rogers declined to comment on the filing.
“As you know,” she wrote in an e-mail message, “SEC regulations limit our ability to provide additional information regarding the IPO.”
In May 2013, a month before the KKR deal was announced, KKR made a confidential filing with the Securities and Exchange Commission regarding a possible IPO. Choosing to announce its confidential filing, which companies aren’t required to do, raised questions about whether private equity firm Genstar Capital, PRA’s previous owner, was seeking to flush out a buyer for the business.
PRA was publicly traded from 2004 until 2007, when Genstar acquired the business and took it private in a deal valued at $790 million. Genstar previously had owned a minority stake in the business.
PRA, which recently changed its name from PRA Global Holdings to PRA Health Sciences, has made two acquisitions since KKR acquired it.
In August 2013, KKR acquired ReSearch Pharmaceutical Services for $274.3 million and merged it with PRA. In November, PRA bought CRI Lifetree for $77.1 million in cash. CRI specialized in early-stage studies of drugs that affect the central nervous system, including pain medications and treatments of psychiatric and neurological conditions.
If successful, PRA would be the second local CRO to go public in recent years. Durham-based Quintiles, the world’s largest CRO, raised nearly $950 million in May 2013 with an IPO.
PRA’s shares would be sold on Nasdaq under the symbol “PRAH.”
CROs have become attractive to investors because of two converging trends: Drug companies are seeking to save money by outsourcing more of their clinical trial work at the same time that they are boosting their spending on research and development.
Market research firm Industry Standard Research estimates that the worldwide CRO market, which was about $22 billion last year, will rise to $32 billion in five years.
Because KKR would continue to own a controlling stake in the business after an IPO, PRA would be classified as a “controlled company.” That would exempt PRA from certain corporate governance requirements designed to protect shareholders, such as ensuring that a majority of the company’s board of directors are so-called independent directors.
In addition, PRA, which last year paid KKR $2 million in fees for advisory and consulting services, will pay KKR a one-time, not-yet-disclosed termination fee to end that arrangement once it goes public.
That’s a fairly typical scenario when a company controlled by private equity firms goes public. For example, Quintiles paid a $25 million termination fee to its private equity firms last year.
PRA also paid $131.6 million in dividends to its private equity owners last year, with all but $4.3 million of that amount going to Genstar. But investors interested in buying IPO shares shouldn’t count on receiving any dividends.
“We have no current plans to pay any cash dividends on our common stock for the foreseeable future,” PRA states in its filing.