Core Stock Offering Falls Short of Expectations

Core Inc. on Tuesday became the latest Orange County company to test the temperamental stock market and come up short on a public stock offering.

The company, which provides health care management services to large employers, raised $16 million Tuesday as part of a secondary stock offering of 2 million new shares. The company’s offering price of $8 a share was well below the $9.63 target price the company had hoped to garner from the sale, according to documents filed with the Securities and Exchange Commission.

CORE stock closed at $8 Tuesday on the NASDAQ, down 38 cents.

The volatile stock market has dampened investors’ enthusiasm for initial and secondary stock offerings of late. Many firms have shelved plans for new issues until the market settles down. Some companies that have forged ahead have raised much less new capital than they had hoped for.

Last month, for example, Yorba Linda-based Research Engineers raised $6.5 million from an initial public offering on NASDAQ, well below the $10 million the engineering software maker had counted on raising.

George Carpenter, chairman and chief executive officer of Core, acknowledged that market conditions weren’t optimal for Tuesday’s sale. He said the company proceeded with the offering because it needs the funds to grow its business, and there is no way of knowing how long this period of market volatility will last.

“We have a young company with a steep growth trajectory and we need a strong balance sheet,” Carpenter said. “As painful as it is, we decided to go ahead . . . but it’s been an expensive education.”

Carpenter says Core will use proceeds from the secondary offering to pay down debt, open new offices and fund other general operating expenses.

Since 1991, CORE has recorded cumulative net losses of nearly $10.5 million. Last year, the company posted a net loss of $79,000 on revenue of $20.8 million.