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Monday, Dec 5, 2022

OC’s Newest Public Cos. Ramp Up, Restructure

Edwards, Masimo & Other Medtechs Jump

For the crop of Orange County businesses that went public in 2021—a record number of local companies, 11, hit the stock market last year via traditional initial public offerings—revenue growth in 2022 has been a mixed bag.

For Irvine’s Rivian Automotive Inc. (Nasdaq: RIVN), which had the biggest IPO in the country in years, sales have been revving up.

Rivian cruised past analyst forecasts on revenue in the second quarter, with $364 million running some $26 million more than expectations.

The electric vehicle maker said last month that it had delivered a record 6,584 vehicles in the third quarter and said it’s still on track to meet its target of producing 25,000 electric vehicles this year.

The firm is now the third-most valuable among all public companies in Orange County with a market cap nearing $28 billion.

Rivian didn’t make this week’s edition of the Business Journal’s Fastest-Growing Public Companies, which measures companies by two-year revenue growth, since it was pre-revenue as of mid-2019.

Growing Xponentially

Boutique fitness franchise group Xponential Fitness Inc.’s (NYSE: XPOF) revenue jumped 20% last year over 2019 levels despite a pandemic that for a time brought the in-person fitness category to a halt.

Revenue for 2022 continues to grow, thanks to an aggressive growth strategy.

Second-quarter North America systemwide sales of $249.8 million were up 45% from $172 million in the second quarter of 2021, officials said in its last earnings call. On a consolidated basis, Xponential’s revenue for the quarter was $59.6 million, up 66% from $35.8 million in the prior-year period.

Xponential currently has a valuation approaching $1 billion, and operates over 2,100 studios globally. Last week, it announced an expansion into the county of Kuwait. Its studios already are located 15 countries in North America, Europe, Asia-Pacific and Australia.

Interest Rate Woes

The residential market was one of few sectors that boomed during the shutdown, and Foothill Ranch-based loanDepot Inc. (NYSE: LDI) reaped the rewards, with revenue more than tripling in 2020 to $4.3 billion.

Last year’s revenue of $3.7 billion was 208% ahead of 2019 levels for the company founded by local entrepreneur Anthony Hsieh.

This year has been a far tougher one for the company. Interest rate hikes have largely ended home refinancing; the lender this year announced plans to restructure and will shutter its wholesale channel this month.

The company also reduced its funding capacity earlier this month, marking the third such move since August.

In August, the nation’s seventh-largest mortgage originator reported second-quarter revenue dropped 60% to $308.6 million; analysts were expecting sales of $372 million.

“Our second-quarter results reflect the extremely challenging market environment that continues in our industry, which led to ongoing declines in our mortgage volumes and profit margins,” Frank Martell, who took over the CEO role from Hsieh earlier this year, said in a statement.

Medtech Standouts

Not all companies that went public in 2021, including loanDepot and Xponential, have broken out their 12-month revenue for the period running from June 2019 to June 2020, the baseline figure the Business Journal uses for the Fastest-Growing Public Companies list, hence their omission from this week’s list.

The 37 entries that are on this week’s trio of listings saw revenue climb 52% for the two-year period ended June 30 to a total of $50.7 billion.

Last year’s listing reported 47% growth to a combined $36.9 billion in annual sales.

The lists are broken into three categories: small, under $100 million, where sales grew a combined 97%; midsize, $100 million to $500 million, which grew the fastest at 141%; and large, above $500 million, where sales increased 49%.

Medtechs were among the standout performers on the lists.

Edwards Lifesciences Corp. (NYSE: EW) and Masimo Corp. (Nasdaq: MASI) were among the big movers in the Large category. Edwards posted two-year growth of nearly 24%, while Masimo jumped 44%.

In the Midsize category, Axonics Inc. (Nasdaq: AXNX) saw two-year growth of over 300%, Inari Medical Inc. (Nasdaq: NARI) was up 288%, and Staar Surgical Co. (Nasdaq: STAA) was up 76%.

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