After
a
years-long
IPO
drought
in
digital
health,
two
companies
—
Hinge
Health,
focused
on
musculoskeletal
care,
and
Omada
Health,
specializing
in
chronic
disease
management
—
have
gone
public
this
year.
The
renewed
activity
follows
a
2021
surge
in
digital
health
IPOs
that
largely
failed
to
meet
expectations.
So
what
have
venture
capitalists
learned
during
this
period
about
health
tech
in
the
public
markets?
That
question
was
posed
during
a
recent
panel
discussion
at
the
AHIP
2025
conference
held
in
Las
Vegas.
The
session
was
moderated
by
Bill
Evans,
founder
and
general
partner
of
Rock
Health
Capital,
a
seed
fund.
One
of
the
panelists
noted
that
it’s
great
to
see
the
public
markets
interested
in
digital
health
again.
However,
the
enthusiasm
is
tempered.
“You
still
need
to
come
out
with
a
solid
business
and
[profit
and
loss],
and
there’s
always
that
kind
of
trade
off
between
growth
and
profitability
that
public
markets
are
looking
at,”
said
Kurt
Sheline,
partner
of
Echo
Health
Ventures.
“If
you’re
unprofitable,
you
better
be
growing
fast.
And
if
you’re
not
growing
fast,
you
better
be
a
pretty
high
margin
business.
And
everything
in
between
is
kind
of
in
this
weird,
not-sure
land.
“Speaking
for
our
portfolio,
there
are
some
great
companies
that
are
still
private
at
scale,
growing
fast,
solid
margins,
and
trying
to
deal
with
that
trade
off,
and
the
timing
of
when
that
trade
off
hits
the
[profit
and
loss]
to
be
able
to
go
public,”
he
added.
Another
investor
noted
that
the
“doors
were
too
wide
open”
a
few
years
ago
when
there
was
a
spike
of
digital
health
companies
going
public.
Many
of
these
companies
have
since
underperformed.
This
made
it
difficult
for
other
companies
to
go
public
in
the
years
following.
“I
think
it’s
hugely
positive
now
that
we
have
Hinge
and
Omada
that
just
went
out,”
said
Siobhan
Nolan
Mangini,
partner
at
Venrock.
“That
being
said,
the
bar
is
super
high.
And
I
think
it’s
growth
and
profitability.
If
you’ve
heard
of
the
rule
of
40,
you
want
to
make
sure
your
growth
and
your
EBITDA
margins
are
basically
north
of
40%.
And
if
you
look
at
a
company
like
Hinge,
they
were
almost
$400
million
of
revenues
last
year.
They
have
almost
8%
margins,
they’re
profitable.
That
is
a
really
high
bar.
That
is
not
necessarily
where
public
markets
have
been
historically.”
Amy
Belt
Raimundo,
vice
president
and
managing
director
of
Kaiser
Permanente
Ventures,
said
that
health
tech
companies
are
going
back
to
the
fundamentals.
In
2021,
digital
health
became
very
exciting
post-Covid
and
there
was
a
lot
of
“exuberance,”
but
the
“fundamentals
weren’t
there,”
Raimundo
said.
She
noted
that
Kaiser
Permanente
has
been
an
investor
in
Omada
Health
since
2014.
“Having
to
come
out
with
good
fundamentals
is,
I
think,
the
next
wave,”
she
said.
“That
there
is
an
exit
market
here,
which
then
will
spawn
more
investment.”
Photo:
Chunumunu,
Getty
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