NEW YORK�Investors appeared hesitant to bet on big gains for low-cost insurance provider Health Insurance Innovations Inc. Its shares slid in their public trading debut.
The company's stock opened at $14.12 on the Nasdaq Stock Market on Friday, slightly above its $14 offer price, but slumped to $13.70, off 2.1%.
The Tampa, Fla., company sells short-term health insurance plans online using health questionnaires that allow it to make immediate acceptance and rejection decisions.
In the stock offering, it sold 4.6 million shares at the low end of the expected price range of between $14 to $16, valuing the deal at $64.4 million.
Health Insurance Innovations' focus is fixed-term, 12- or six-month medical-insurance plans, lower-cost alternatives to traditional insurance plans, which are renewable. Its products are underwritten by insurance carriers including Cigna Corp., among others, according to filings with the Securities and Exchange Commission.
The company's customer base is the uninsured�about 50 million people in the U.S. in 2010, according to the census bureau�as well as those that require stopgap insurance options, such as new graduates or the recently divorced.
The company says regulatory changes affecting the health insurance industry will spur its growth in the years ahead. For instance, the Patient Protection and Affordable Care Act, passed in 2010, includes a mandate expanding requirements that people carry health insurance.
The insurance market is highly competitive, and the company states that the implementation of provisions in the recent health-care law could hamper its business. For instance, it states in its prospectus that partial or complete repeal of the laws could shift the pricing and provider landscape.
The company's sales rose to $30.1 million in the nine months ended in September, up 38% from a year earlier. Over the same period, the company's net income increased 50% to $2.76 million.
Health Insurance Innovations said it plans to use proceeds to repay its $3.49 million in total debt, with the remainder to be used for general corporate purposes.
Credit Suisse Group AG, Citigroup Inc. and Bank of America Corp. served as lead underwriters.
Write to Chris Dieterich at chris.dieterich@dowjones.com
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