The digital health IPO market hasn’t exactly been active in recent years. There was a surge in 2021, when 21 of the 57 active public digital health companies today made their debut on the public markets, according to Halle Tecco, founder of Rock Health, in a blog post. Since then, only a smidgen of companies have filed, including Tempus AI and Waystar.
And many of those who have gone public have largely stumbled. Just recently it was announced that Accolade, which went public in 2020, is being acquired by Transcarent for $621 million. The deal will take the company private again. Teladoc Health, which went public in 2015, reported a $1 billion loss in 2024.
Hinge Health, meanwhile, took a leap of faith last week by filing for an IPO. The San Francisco-based company offers digital musculoskeletal care for acute injury, chronic pain and post-surgical rehabilitation. It serves more than 2,200 employers and health plans. The company’s last valuation was at $6.2 billion in 2021 and it has raised over $1 billion to date.
But knowing the struggles of those that have IPO’d before, and the deep uncertainty the markets are currently embroiled in, is going public now a wise move?
One healthcare investor, Michael Greeley, cofounder and general partner of Flare Capital Partners, is “cautiously optimistic” about this move. He noted that the financial profile of the company is interesting with high margins and high growth, not to mention that Hinge is addressing a massive market.
“I was really excited to see that finally, the dam was breaking,” he said in an interview. “But then you just sit back and you look at all of what’s going on around the sector and the company, [like] regulatory uncertainty. … You just don’t want it to go out and be unsuccessful and then have people say, ‘See, yet another digital health IPO kind of broke,’ But I think they have a high quality asset here.”
He added that this is a wise move as long as it’s offensive rather than defensive.
“If it’s defensive, where the company is running out of money — and I don’t think that’s the case — then that’s probably a sign of desperation,” he said. “But I think this is a company where it’s a high quality company, well-funded and very profitable. And the underwriters, the investment banks that they’re working with, have said, ‘Yeah, there’s a whole set of public investors that want to buy your stock in an IPO. And so we’ll be successful in getting this company public.’”
According to Hinge’s S1, it gained $390 million in revenue in 2024, and had a 33% revenue growth year over year. It also had $49 million in operating cash flow, though it is not currently profitable with a net loss of $11.9 million in 2024. This is a vast improvement from 2023, however, when Hinge had a net loss of $108.1 million. And research shows that MSK is a massive market: it’s the second largest cost driver for employers behind cancer, the Business Group on Health reported in 2024.
That said, the timing of this filing doesn’t entirely make sense to Christina Farr, managing director at consulting firm Manatt Health.
“I am very curious about why now? Why this moment?” she said in an interview. “Because the stock market is really not in a great place right now. You can see it’s very volatile.”
However, with so few companies going public right now, it allows there to be a moment where “all eyes” are on Hinge, Farr noted.
She added that there is a lot to like about Hinge Health.
“They do have some impressive metrics,” she said. “The growth has been really strong. Revenue is strong. They’re starting to expand into Medicare, and I think that’s a really big opportunity for them. … They’ve tended to do very well with employers, so there are market expansion opportunities. But let’s see how it all goes. We just don’t know enough yet to be able to determine how this business will be viewed.”
The S1 shows that Hinge has 2,250 clients and about 20 million contracted lives. In addition to employers, it serves commercial insurance health plans and Medicare. This compares to its direct competitor Sword Health, which has 10 million lives and serves employers, commercial plans and Medicare Advantage, according to its website. Several other companies in the digital MSK space have popped up, including Vori Health and RecoveryOne.
Jordan Cohen, partner at law firm Akerman LLP, agreed that there is a lot to like about Hinge Health, especially having been a patient of Hinge’s in the past due to a shoulder injury. He noted that from an employer perspective, providing MSK support to employees is important because it makes the workforce healthier and more efficient.
The company has also recently entered into several partnerships, including with Amazon and menopause company Midi Health.
“It certainly doesn’t seem reckless. … Maybe they want to capture the momentum now,” Cohen said.
The company may run into challenges with its valuation, however, with the last round at $6.2 billion, according to Greeley.
“If it’s successful and trades wildly up from the $6.2 billion, that would be terrific, but there’s an equal chance that it’s going to be priced lower than the last round,” he said. “Now maybe the world has finally come to realize that the investments that were made in 2021 and 2022 and little bit in 2023 were frothy and wildly overvalued. And if it gets priced below the last round, it’ll just confirm yet again that those valuations were not appropriate.”
Hinge Health declined to be interviewed.
What does this mean for the future of digital health IPOs?
There is a long list of digital health companies that the industry has been eyeing to go public: Omada Health, Maven Clinic and fellow MSK provider Sword Health to name a few.
However, many companies may be waiting to see how the Hinge Health IPO will shake out before they make any decisions themselves, according to Farr. If this IPO is successful, Farr anticipates that it will kickstart several other companies filing to go public.
“This is sort of the IPO that will define whether or not any other companies can go public at this moment in time,” she said.
Greeley echoed Farr’s comments, stating that if the company goes out at a high price and stays relatively well valued, then others may follow. It’s important to note that neither Greeley nor Farr have invested in Hinge.
He added that he’s thrilled that someone finally started the process of filing to go public.
“There are a lot of us who are sitting on large unrealized gains, and need to either sell our companies or have them go public so we can start to get that capital back and invest in new companies, new startups,” he said. “There’s a recycling dynamic that, given the lack of M&A and IPO activity, it’s kind of stalled. That’s why we’re all eager to see some of these get public successfully.”
Photo: jxfzsy, Getty Images
