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Reflecting the growing demand for electronic health records, Greenway Medical Technologies, a medium-sized vendor of ambulatory-care EHRs, has filed for an initial public offering of $100 million in stock.

Greenway, based in Carrolton, Ga., has been in existence for 13 years. In 2010, it earned nearly $2.9 million on $64.6 million in revenue, according to its prospectus. The previous year, Greenway had net income of $955,000 on revenue of $48.7 million.

Greenway claims that 33,000 providers use its product line. Besides EHRs, the company supplies practice management systems, provider and patient portals, and mobile applications. Its EHRs are designed for primary care and a broad range of specialties, including obstetrics and gynecology, pulmonary medicine, ophthalmology, cardiology, and surgical specialties.

David Larsen, an analyst with Leerink Swann in Boston, believes that Greenway's IPO might be very successful. "The company's growing their top line 30%-plus per year, so they're probably go to be breaking $100 million in revenue pretty soon," he said. "Number two, you're at the beginning of the stimulus [incentive] program, and the [electronic medical record] penetration rate in physician practices is only about 20%. So they've got to buy a solution, and that's driving a lot of demand. Number three, Greenway has a high-quality product. When you're talking about EMRs, the quality and integrity of the product code is what matters."

Several of Greenway's competitors offer both inpatient and ambulatory-care EHRs, and a few of them--notably, products from Allscripts and Epic--are well accepted in both hospitals and physician offices. But Larsen doesn't think this is a drawback for Greenway's IPO.

"Investors will be focused on the growth rates in revenues and earnings," he noted. "If there are 700,000 doctors in the U.S. and 550,000 are in offices in the community, you have a pretty large market, even if you exclude hospital-based physicians. So you don't have to conquer the world to defend a 30%-top-line growth rate. If you can grow by 30% for a couple of years, I think the stock will work."

Hundreds of vendors provide EHRs, and some observers expect there will be a shakeout in their ranks as the government increases its requirements in stages 2 and 3 of Meaningful Use. Larsen agrees, and he thinks that will benefit Greenway, because it has developed a high-quality product that is on the approved lists of most regional extension centers that help doctors choose and implement EHRs.

The investment firms shepherding the Greenway IPO include J.P. Morgan Securities, Morgan Stanley, and William Blair & Company.

Other health IT vendors that have gone public in recent years include Allscripts and Athenahealth. NextGen, Cerner, McKesson, GE, Sage Software, and Optuminsight (formerly Ingenix) are other public companies or units of public firms that make EHRs. Among market leaders, the most notable exception is Epic Systems, which remains privately held.

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