MindBody Inc., a San Luis Obispo company that sells business management software for clients in the beauty, health and wellness industries, is expected to go public later this week, a major step in the San Luis Obispo County business community.
The company amended its prospectus filed with the U.S. Securities and Exchange Commission on June 8, saying it proposed to price its stock at between $13 and $15 per share with an offering of 7.15 million shares. The goal is to raise a maximum of $123 million.
In May, the company filed plans for an initial public offering with the SEC. The news was not unexpected as Reuters had reported that the firm was working with large banks on an IPO, and its chief executive officer, Rick Stollmeyer, had previously discussed the possibility of going public in an effort to finance its global expansion.
To help fuel its growth through the years, the company has raised about $100 million, including $35 million from investors in 2012 and $50 million last year.
MindBody has applied to list its Class A common stock on Nasdaq Global Market under the symbol MB.
Kathleen Smith, principal at Renaissance Capital, a Greenwich, Conn., provider of IPO-focused exchange-traded funds that provides portfolio management of newly public companies, said the company is estimated to be valued at $567 million, a valuation based on 40.5 million fully diluted shares outstanding.
“They have an impressive base of wellness businesses that they service, and they have a recurring revenue business, charging about $170 a month on average,” Smith said. “The sales are growing at about 40 percent.”
Smith noted, however, that MindBody has significant losses on the books.
It reported $70 million in revenue for the year that ended Dec. 31, up 44 percent from $48.7 million in 2013. Its net loss last year was $24.6 million, compared with a net loss of $16.25 million the year before, according to MindBody’s prospectus filed with the SEC.
For the first quarter that ended March 31, revenue was $22.26 million, up 42 percent from $15.65 million in the same period a year ago, and the company’s net loss was $7.86 million, compared with $4.84 million.
“They’ll be trying to prepare investors for continuing losses while building up their sales and marketing,” Smith said, adding that the stock could be volatile in the beginning. “Public investors want to see the logic of that and where that could turn out to give it a benefit. The opportunity is good, but the small-business market is a hard one to crack.”
Founded in 1998, MindBody has more than 42,000 business subscribers that pay a monthly fee to use its mobile-enabled software as a service platform in 124 countries and territories.
The company employs about 900 people locally and has 200 more in New York, the United Kingdom and Sydney, Australia. Because of its recent expansion in San Luis Obispo, it has room to grow to about 1,100 employees locally.