YogaWorks, which planned to go public today, decided not to price its initial public offering.
Underwriters cited “market conditions,” but it looks more likely the company and the underwriters want to avoid its stock becoming a downward dog.
The terrible performance of Blue Apron (APRN), which is down nearly 35% since its debut on June 29.
YogaWorks Planned to Raise $65 Million
YogaWorks filed to trade on the Nasdaq under the symbol YOGA (surprise). It would’ve been the first public yoga studio.
The company planned to sell 5 million shares at an expected range of $12 to $14 per share. That would have raised $65 million if the offering priced between the middle of its range.
Great Hill Partners bought YogaWorks in July 20114 for $45.6 million. Great Hill intended to buy $10 million in shares and have a 70% ownership of the company.
Company Is Still Losing Money
YogaWorks has 50 company-owned studios and also operates MyYogaWorks.com. It had nearly 30 million visits last year, according to its latest filing with the SEC. It operates in Los Angeles, Orange County, New York, Northern California and the Baltimore-D.C. area.
It says 40% of yoga practitioners are millennials, making it a growing market. And more than 60% earn more than $75,000 annually.
But that looks like where the good news ends and probably what is spooking the institutional investors.
Even with the backing of Green Hill, it hasn’t been able to turn a profit.
The company gets revenue from one-month membership and paid-in-full six-month and annual membership.
Revenue from the first quarter of 2017 fell to nearly $14 million from $15.1 million in the same quarter a year ago. The company said that was mainly due to less deferred revenue being recognized in the three months ended March 31, 2017.
The net loss for the quarter rose to $2.6 million in the first quarter 2017 from $1.5 million in 2016.
Overall, YogaWorks’ losses resulted in an accumulated deficit of $36.3 million.
“Based upon our current level of operations, we believe that our cash balance on hand, together with the net proceeds of this offering, our cash flow from operations and our ability to draw under our Loan Agreement prior to the closing of this offering will be adequate to meet our short- and long-term liquidity requirements for at least the next twelve months from the date of this prospectus,” the company wrote in its SEC filing.
It also said in the filing that it is in late-stage negotiations to buy up to 14 more studios. Those would cost between $5 million to $6 million, but the negotiations are not binding.
Are you a thoughtful investor looking for uncommon investment ideas?
Stirling Strategic Investor is a new source of high-quality investment ideas from seasoned investment professionals Tim Collins and Kim Khan, formerly senior members of TheStreet.com. Tim and Kim share 50 insightful equity trade’s per year for $100. That’s just $2 per trade.
Tim and Kim’s first recommendation, Mobileye, was recently acquired at a 34% premium by Intel. We provide the first two ideas at Stirling Strategic Investor for free. We look forward to providing you uncommon ideas of true value.
Learn more at Stirling.
Comments
YogaWorks IPO Can’t Get off the Mat; Debut Delayed