HireRight’s (HRT) IPO Is Here, and Its Stock Looks Promising

HireRight has priced its IPO and is expected to go public on Oct. 29. The company plans to list its shares on the NYSE under the ticker symbol “HRT.” What’s HRT’s forecast, and should you buy the stock?

Founded in 1990, HireRight provides a wide range of background screening and associated services to companies worldwide. The company is backed by private equity company General Atlantic.

HireRight is expected to start trading on Oct. 29, 2021. Shares that make their public stock market debut typically begin trading between 10:00 a.m. and 2:00 p.m. ET.

HireRight raised $422 million by offering 22.2 million shares at $19 each. Previously, the company planned to offer shares for $21–$24. The net proceeds from the offering will be used to repay debt and for general corporate purposes. Credit Suisse, Goldman Sachs, Barclays, and Jefferies are the IPO's joint book-running managers. The underwriters have the option to buy an additional 3.3 million shares at the IPO price.

HireRight offers employee-related services, including background screening checks, identification, verification, as well as drug and health screening services for organizations. The Nashville, Tennessee-based company’s software is integrated with third-party employee management systems, including Service Now, Oracle, Workday, and SAP, among others. In 2020, HireRight screened more than 20 million job applicants, employees, and contractors for its customers.

HireRight reported revenue of $326.5 million in the first half of 2021, marking a rise of about 26 percent YoY (year-over-year). The company’s revenue fell by 17 percent YoY in 2020. HireRight posted a net loss of $15.6 million in the first half of 2021, compared with $45.9 million in the same period a year prior. The company was hit hard by the COVID-19 pandemic as companies lowered their hiring activities, resulting in a decrease in demand for employee-screening services.

HireRight is seeking a valuation of $1.8 billion. Based on its pro forma market cap, HireRight’s 2020 price-to-sales multiple is 3.3x. To compare, First Advantage and Equifax have next-12-month EV-to-sales multiples of 5.2x and 6.9x, respectively.

In the near term, the hiring environment seems to be relatively strong as the pandemic wanes and companies seek employees to handle demand growth. The global background screening service market, valued at an estimated $5.1 billion in 2021, is set to reach $7.6 billion in value by 2026, according to Allied Market Research.

HireRight has over 40,000 customers across the globe, including half of the Fortune 500 companies. In 2018, HireRight merged with background screening company General Information Services (GIS) and had since gone on an acquisition spree, acquiring companies including BackTrack, J-Screen, and PeopleCheck. Overall, HireRight IPO is worth a close look as the company has recovered quickly from the COVID-19 pandemic, and the IPO looks to be reasonably valued.

HireRight shares will be available to purchase through any stock brokerage, including Robinhood.