Why Ancestry.com's rumored IPO would be booming

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Utah-based direct-to-consumer (DTC) genetic testing company Ancestry.com is reportedly preparing to go public amid amplified demand from consumers and investors for DTC DNA tests, according to Bloomberg.

Ancestry had a brief stint as a public company beginning in 2009 before a $1.6 billion buyout in 2012 brought it back into the private sector. And Ancestry considered going public again in 2017, but put an IPO on the back burner until now, amid a crop of other rumored digital health IPOs.

Here's how Ancestry stacks up to its chief competitors:

• Ancestry has sold more tests than its rivals. Ancestry reported14 million sales of its DNA kits worldwide as of November 2018, while major competitor 23andMe has only sold 10 million as of April 2019, per Forbes.
• But competitors are bulking up their offerings with disease-specific screening tools. Ancestry has stuck to tests pertaining to ethnicity and family history, while the competition has branched out: 23andMe allows consumers to opt into tests that assess risk for prevalent diseases like certain types of cancersand diabetes, and Helix sells genetic tests to evaluate cancer and cholesterol risks.

The bigger picture: We think market conditions are ripe for Ancestry to secure a booming IPO.

• Investors would likely flock to Ancestry given a growing consumer market for DTC genetic tests. Ancestry has a securefoothold in a market that's recently skyrocketed: In 2018, the number of consumers who used a DTC DNA test nearly tripled, exceeding 12 million, per industry estimates. And 7 million of those consumers used Ancestry, up from 3 million in 2017.
• Investors may be bullish on the potential for Ancestry's troves of consumer data to offer access to new markets. For example, Ancestry could follow in the footsteps of 23andMe, which sold access to its consumer genetics database to British pharma GlaxoSmithKline (GSK) for $300 million.

• And Ancestry's already held a successful IPO, which could heighten investor confidence that Ancestry is IPO-ready. Ancestry has a management team that has experience taking companies public, which is one of the hallmarks of a successful IPO, PwC notes. Ancestry CFO and COO Howard Hochhauser has served in the same roles since before Ancestry first went public in 2009, and Margo Georgiadis - who Ancestry crowned CEO in May 2018 - oversaw Discover Financial Services' IPO in 2007, per Linkedin

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