LAS VEGAS—Hinge Well being and Omada Well being had been the primary two digital well being firms to go public this 12 months after an IPO drought, and the trade has been relying on them to open the floodgates.
The businesses’ exits had been carefully watched by buyers, analysts and different digital well being firms as a sign of a possible upswing within the public investor market.
So, now that the digital well being IPO window is open, when will the following group of firms comply with? Analysts and market observers anticipate some digital well being firms to go public in 2026 and are maintaining a tally of potential candidates together with Sword Well being, Quantum Well being, Transcarent and Maven.
In line with media studies, Zelis, a healthcare funds firm, is getting ready for an IPO subsequent 12 months, and so is Virta Well being, an organization targeted on metabolic situations.
As a founder and CEO who has simply gone by way of the method, Hinge’s Daniel Perez is aware of the work that is concerned with tightening the ship in preparation for an IPO. He believes it could take a bit longer for the trade to see the following huge wave of digital well being IPOs.
Talking typically in regards to the market, Perez informed Fierce Healthcare on the present ground of the HLTH convention this week, “I can’t say for positive, however I feel that firms noticed the numbers that we had put up. We put in critical work to carry our prices down and get to the gross margins we had. I do not suppose a number of these digital well being firms have the gross margins or the free money movement. Will probably be tough to IPO with the numbers that a number of digital well being firms have proper now. That is my working assumption.”
Hinge developed software program mixed with synthetic intelligence to automate bodily remedy companies for joint and muscle well being. The corporate additionally developed AI-powered movement monitoring expertise, a proprietary FDA-cleared wearable machine referred to as Enso and an AI-supported care workforce to ship scalable and personalised MSK care.
As a personal firm, Hinge’s management workforce managed the corporate as a public firm for 2 years earlier than going public, together with having mock earnings calls, Perez famous.
“We informed our administration workforce, what we informed the corporate general, is that we would have liked 4 straight quarters of ‘beat and lift’ simply to make sure we’re higher,” Perez stated throughout a panel dialogue at HLTH on Monday. “There may be nothing extra depressing than being a public firm and lacking your numbers. Plenty of non-public firms have not found out the predictability and forecast capacity of their enterprise. We needed to make it possible for was down first, and we had been assured of the sturdiness of our longer-term development.”
Sean Duffy, co-founder and CEO of Omada, a digital power illness remedy supplier, additionally pressured the significance of getting a enterprise able to go public whereas talking on a panel with Perez at HLTH. Each CEOs shared their views on what it takes to be a public firm, what buyers are searching for proper now and what comes subsequent for his or her companies.
“As I mirror, I’d say 80% of the questions I get about IPO timing are, how do you know the markets had been prepared? And 20% is, how are you aware your corporation is prepared? In fact, it ought to be utterly inverted. I feel 80% of the questions ought to be, how are you aware your corporation is prepared?” Duffy informed the HLTH viewers. “That introspection is vastly essential. Mature your operations, scale the enterprise, get predictable revenues. The maturity of even issues like your accounting workforce, your capacity to forecast orientation towards ‘beating and elevating,’ that is a very powerful factor. What is going on on within the macros turns into secondary. And we each went out at a time the place success wasn’t a assure. There hadn’t been any IPOs for a few years, however, essentially, we felt that Omada was prepared.”
Advisors cautioned that the bar to go public could be excessive, Duffy stated, given the IPO drought in digital well being.
“The suggestions we obtained is that what it’ll take is a number of factors of engagement with buyers, like they should actually perceive the story. This isn’t an period the place you can shotgun wedding ceremony an IPO or throughout your roadshow once you meet your new buyers,” Duffy stated in the course of the panel. “You are going to must have dependable progress in opposition to these contact factors, ideally accelerating income development, compelling margins and a compelling path to profitability, and that is not really easy. However they had been sincere with us about what it could take. And I feel that is what’s required in at present’s market. The bankers had been good shepherds to assist make sure that, in opposition to these realities, we had the proper technique and engagement.”
Public buyers are searching for digital well being firms with sturdy income development and free money movement, Perez stated.
“Progress is valued two instances extra within the public markets than profitability proper now. If an investor will get a valuation fallacious, however you are rising, ultimately you may develop into that valuation,” he stated. “If you’re producing money, it utterly adjustments the tenor of conversations you might have with buyers. They don’t seem to be asking whether or not you are sustainable or whether or not you’ll make it. They’re now saying, ‘Nicely, how a lot larger are you able to get?’ And, for us, we made positive we had been free money movement constructive for 4 quarters previous to IPO.”
He added, “We have been within the doldrums and folks haven’t had a number of confidence in digital well being firms. You’ve started working twice as laborious for half the credit score, and being free money movement constructive goes a good distance.”
Each Hinge and Omada had been seeing sturdy development previous to going public. Hinge, based in 2014, booked $432 million in income for the 12 months ended March 31, 2025. Pre-IPO, the corporate reported sturdy monetary metrics: 80%-plus gross margin, 117% internet greenback retention and double-digit free money movement.
Omada launched its preliminary digital program in diabetes prevention and weight well being in 2012. The corporate sells primarily to employers, which both contract with Omada straight or acquire entry to its packages by way of a channel companion akin to a well being plan or PBM. Omada’s income grew 38% in 2024 to $170 million, up from $123 million in 2023. Within the first quarter of 2025, the corporate introduced in $55 million in income, up 57% from the primary quarter of 2024.
When speaking to public buyers, it is important to assist them perceive the corporate’s enterprise.
“We additionally needed to inform the story of how we’re a tech-driven enterprise. Our imaginative and prescient is to make use of expertise to automate and scale care, and we allow them to dive into our P&L. We allow them to see our product on our investor days. They’d mess around with our product and actually achieve confidence that expertise is on the coronary heart of the way you’re delivering care and due to this fact you may actually scale this enterprise,” Perez stated.
Put up-IPO, each firms reported sturdy monetary efficiency. In its first quarter as a public firm, Omada reported $61 million in income, up 49% 12 months over 12 months. The corporate now has 2,000 prospects and greater than 750,000 complete members enrolled in a number of packages.
In its first earnings since going public, Hinge reported $139 million in income, up 55% 12 months over 12 months. The corporate’s adjusted gross margin was 83% in comparison with 77% a 12 months in the past.
Life as a public firm just isn’t that a lot totally different, Duffy asserted.
“Clearly, it is extra financially oriented. You need to stay and breathe and perceive and really feel your P&L in new methods the place you would not essentially on the collection A stage. While you’re pitching to your first institutional verify, you’ve got obtained an investor that is making an attempt to underwrite a workforce, a market, a functionality, that might maybe get to $100 million-plus prime line and an IPO. It isn’t all that totally different. They’re simply considering an order of magnitude past that. It is the identical imaginative and prescient you have to create however with extra exact financials round the way to get there,” he informed the HLTH viewers.
Each firms are constructing AI capabilities to enhance efficiencies and improve the care expertise for members.
Perez is bullish that every one non-touch elements of healthcare will quickly be automated by AI.
“Take into consideration deciphering signs, arising with a prognosis, making a care plan. Even a telemedicine go to with a supplier will quickly be capable of be delivered through AI at a better constancy than a human on the opposite aspect of that video, apart from for edge circumstances. We’ve to get prepared for a world the place all non-touch elements of healthcare can be automated by AI, and then we now have to suppose by way of what elements of healthcare requires contact. So you are going to must spend money on {hardware} as nicely,” he stated.
This week, Hinge unveiled an AI-based motion evaluation instrument that makes use of pc imaginative and prescient expertise to information members by way of focused actions, capturing joint angles, symmetry and endurance. It additionally rolled out an AI care assistant named Robin that gives 24/7 help.
The corporate is also working to “weave” AI all through its enterprise, Perez stated.
“For lots of us who’ve been based after ChatGPT got here out, you must retrofit your organization for an AI-first world. We have had to retrofit the enterprise and weaving it into finance, weaving it into HR, weaving it into our operations. That is going to have a dramatic enchancment in your general firm’s effectivity,” he stated, including, “Utilizing AI is sort of like studying the way to use a calculator—it’ll perhaps gradual folks down at first, however long run, it’ll make them go a lot quicker.”
Hinge is also eyeing M&A alternatives within the subsequent one to a few years to reinforce its expertise for MSK care, with a give attention to smaller startups. The amount of inbound calls about M&A alternatives has jumped for the reason that firm went public, Perez stated.
Trying forward, the following wave of digital well being IPOs can be a “totally different beast,” Duffy famous.
“These firms aren’t delivering software program options on a legacy system that’s creating incremental worth. They’re essentially delivering ‘the care’ and new care fashions, extra evidence-based fashions, confirmed fashions, and people create sturdy worth props that result in, particularly in opposition to totally different enterprise fashions, sturdiness of revenues,” Duffy informed the viewers at HLTH.
