The demand for digital health IPOs has significantly fluctuated in recent years. Notably, there was a remarkable spike in 2021, during which 21 out of 57 of the currently active public digital health companies made their initial public offerings. This information comes from Halle Tecco, the founder of Rock Health, in a detailed blog post. However, since that year, only a handful of companies, including Tempus AI and Waystar, have approached the public market for filings.
Many companies that have transitioned to public status have faced considerable challenges. For instance, it was recently revealed that Accolade, which made its public debut in 2020, is set to be acquired by Transcarent for a substantial $621 million, which will effectively take the company private once again. Additionally, Teladoc Health, a company that went public in 2015, reported a staggering loss of $1 billion in 2024, highlighting the volatility and uncertainty in the market.
In a bold move, Hinge Health recently filed for an IPO, showcasing its commitment to expanding its reach. Based in San Francisco, this innovative company specializes in providing digital musculoskeletal care, which includes services for acute injuries, chronic pain, and post-surgical rehabilitation. Having established partnerships with over 2,200 employers and health plans, Hinge Health achieved a notable valuation of $6.2 billion in 2021 and has successfully raised more than $1 billion to date.
Given the challenges faced by previous IPOs and the prevailing uncertainty in the financial markets, one might question if going public at this juncture is indeed a prudent decision.
Michael Greeley, a healthcare investor and cofounder of Flare Capital Partners, expresses a sense of cautious optimism regarding this IPO. He highlights that the financial profile of Hinge Health is particularly appealing, boasting high margins and significant growth potential, especially given that the company is targeting a vast and expanding market.
“I was genuinely excited to see that the dam was finally breaking,” Greeley commented in a recent interview. “However, when you observe the prevailing circumstances surrounding the sector and the company, including regulatory uncertainties, it raises concerns. You don’t want to see another digital health IPO fail, leading to speculation that it was merely another instance of a public offering gone awry. Nevertheless, I believe they possess a high-quality asset here.”
Greeley further noted that this IPO could be beneficial as long as the strategy is proactive rather than merely reactive.
“If this is a defensive strategy born from a lack of funds—and I don’t believe that’s the case—it may signal desperation,” he elaborated. “However, I perceive this as a high-quality company that is well-funded and profitable. Moreover, the investment banks involved have indicated that there exists a substantial base of public investors eager to purchase stock during the IPO, ensuring a successful launch.”
According to Hinge’s S1 filing, the company generated $390 million in revenue in 2024, reflecting a remarkable 33% year-over-year revenue growth. The operating cash flow stood at $49 million, although the company reported a net loss of $11.9 million for the year. This loss marks a significant improvement from 2023, when Hinge recorded a staggering net loss of $108.1 million. Furthermore, market research indicates that the musculoskeletal (MSK) care market is substantial, identified as the second largest cost driver for employers, trailing only behind cancer, as reported by the Business Group on Health in 2024.
Despite these promising metrics, the timing of Hinge Health’s IPO filing raises eyebrows for some industry experts, including Christina Farr, managing director at the consulting firm Manatt Health.
“I find myself questioning the timing of this move—why now, at this specific moment?” she stated during an interview. “The stock market is currently in a precarious state, exhibiting significant volatility.”
Nonetheless, Farr noted that the limited number of companies pursuing public offerings at this time could allow for Hinge to capture the spotlight, drawing attention to its potential.
She expressed optimism about Hinge Health’s prospects, stating, “There are numerous aspects to appreciate about Hinge Health.”
“Their metrics are impressive,” she continued. “The growth trajectory has been robust, revenue figures are strong, and their expansion into Medicare presents a formidable opportunity. Historically, they have excelled in dealings with employers, indicating potential for market expansion. However, it remains to be seen how all these factors will play out in the long term. We currently lack sufficient information to ascertain how the market will perceive this business.”
According to the S1 filing, Hinge Health boasts a client base of 2,250 and approximately 20 million contracted lives. The company serves not only employers but also commercial insurance health plans and Medicare. In contrast, its direct competitor, Sword Health, claims a reach of 10 million lives and engages with employers, commercial plans, and Medicare Advantage, as detailed on its website. Additionally, several other companies in the digital MSK space, such as Vori Health and RecoveryOne, have emerged recently.
Jordan Cohen, a partner at the law firm Akerman LLP, expressed his approval of Hinge Health, particularly as he has experienced their services firsthand due to a shoulder injury. He emphasized the significance of providing MSK support from an employer’s perspective, as it contributes to a healthier and more efficient workforce.
Additionally, the company has forged several partnerships lately, including collaborations with Amazon and the menopause-focused company Midi Health.
“Their approach doesn’t appear reckless; perhaps they aim to seize the current momentum,” Cohen remarked.
However, the company may face challenges regarding its valuation, particularly given its last round was at $6.2 billion, according to Greeley.
“Should it succeed and trade significantly above the $6.2 billion mark, that would be excellent. Conversely, there exists an equal possibility that it could be priced below its last round,” he cautioned. “The market may finally be recognizing that the valuations from investments made in 2021, 2022, and a bit in 2023 were inflated and not sustainable. If the pricing lands below the last round, it will reaffirm that those previous valuations were indeed inappropriate.”
Hinge Health declined to participate in an interview.
Implications for the Future of Digital Health IPOs
There exists a significant roster of digital health companies that are being monitored for potential public offerings, including Omada Health, Maven Clinic, and fellow MSK provider Sword Health, among others.
However, many companies may be holding off to gauge the outcome of the Hinge Health IPO before making any decisions regarding their own public offerings, as noted by Farr. Should this IPO prove successful, she anticipates that it could catalyze a series of other companies to pursue public listings.
“This IPO may well delineate the path for whether other companies can pursue public offerings in the current climate,” she remarked.
Greeley echoed Farr’s sentiments, asserting that if Hinge Health launches at a favorable price and maintains a respectable valuation, it could pave the way for others to follow suit. It is important to highlight that neither Greeley nor Farr have financial stakes in Hinge.
He expressed enthusiasm about the initiation of the public filing process: “Numerous stakeholders are sitting on significant unrealized gains and are eager to either sell their companies or take them public, enabling them to recoup capital and reinvest in new ventures and startups. The lack of mergers and acquisitions, along with stalled IPO activity, has created a recycling dynamic that many are hoping to see resolved. That’s why there is a palpable eagerness to witness the successful public launch of these companies.”
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