Carmel-based Syra Health cuts IPO expectations by one-third

Syra Health Corp., a two-year-old Carmel startup that provides professional services in the health care and life science industries, has sharply cut how much it expects to raise in its upcoming initial public offering.

The company’s latest registration papers, filed this week with U.S. Securities and Exchange Commission, said the offering would raise up to $5.4 million, or about one-third less than the $8 million figure it announced in May.

It added that the net proceeds could be as low as $4.6 million, if underwriters don’t exercise their so-called “over-allotment option,” which would allow the sale of additional shares.

The company’s latest filing did not say why it reduced the amount of expected proceeds. But a company spokeswoman, Christine Drury, said in an email to IBJ: “We are limiting the number of shares available to investors as we seek to complete our IPO as quickly as possible and continue the company’s growth momentum, providing solutions and services to improve health care.”

The company said it assumes the IPO price will be $4.125 per unit. Each unit consists of one share of Class A common stock and a warrant to acquire another share.

Syra’s action marks the second time in recent months that an Indiana company has lowered its guidance for an IPO. In August, NeurAxis, a Carmel medical-device startup that is developing electrical-nerve stimulation therapies for children, went public at an initial price of $6 a share—lower than the range of $7 to $9 a share it originally announced in February.

NeurAxis was originally hoping to raise about $15 million in its IPO, according to its February announcement, but said last month that gross proceeds are expected to be approximately $6.59 million, before underwriting discounts and commissions and estimated offering expenses payable by the company.

Syra said it intends to use the net proceeds from this offering for marketing and sales, application development, research and development, and working capital and other general corporate purposes. The lead underwriter is Kingswood Capital Partners LLC.

The IPO structure would keep most voting control in the hands of company insiders. Under a dual-stock owner plan, shares of Class A common stock will get one vote per share, but each share of Class B common stock will get 16.5 votes per share. As of April 15, there were 1 million shares of Class B common stock outstanding, representing 79.39% of the total voting securities outstanding.

The class B shares are largely held by CEO Deepika Vuppalanchi; Sandeep Allam, chairman and president; and Priya Prasad, chief financial officer and chief operating officer.

In its registration papers, Syra describes itself as a health care services company “promoting preventative health, holistic wellness, health education, and equitable health care.”

As of April 15, it had 64 full-time employees and 26 part-time employees.

In 2021, when it had 25 employees, it announced plans to add 126 new jobs by the end of 2025. The Indiana Economic Development Corp. said it would provide Syra Health with $2.1 million in tax credits if the company meets its job-creation commitments.

The company leases headquarters space at 1119 Keystone Way.

The company, which was founded Nov. 20, 2020, said the Indiana Family and Social Services Administration accounted for about 98% of its revenues in 2021 and 2022, and 92% of accounts receivable in 2021 and 2022. It provides services primarily to the NeuroDiagnostic Institute and Division of Mental Health and Addiction of the IFSSA.

Last year, Syra Health posted net revenue of $5.26 million and net loss of $2.09 million.