Why the Hinge Health IPO is so important for digital health

Hinge Health has filed for an initial public offering, and the whole industry is talking about it. There hasn’t been an IPO in the category for a while, not since Waystar, the practice management software company that went public in the summer of 2024. Before then, there was very little activity for a few years, making Livongo’s $18.5 billion sale to Teladoc seem like a blip.

So what do I think about the Hinge IPO? Well, I spent the morning calling up friends in the industry - bankers, researchers, analysts and investors - to get their take on it. I also read Hospitology’s fantastic analysis, which pointed to one big question: Valuation. VCs previously valued Hinge at $6.2 billion in 2021 — will public market investors place that high of a premium on the business?

Hinge, if you’re not familiar, delivers virtual physical therapy to people, potentially in lieu of expensive surgeries. It sells its services to health plans and employers, with an eye towards growth in Medicare. The big competition includes companies like Sword and Vori Health.

Hinge’s revenue in 2024 rose to $390.4 million, and it reported a reduction in net losses. So there’s a lot to like about the company’s performance in the past few years (we have limited data to go on pre-2023), and yet there’s still some questions to dig into. Needless to say, I’m keeping a close watch on how the public markets react to Hinge. It is emblematic of a lot of the digital health companies right now, although it is clearly best in class in terms of revenue growth and customer traction. It’s heavy on services and humans in the loop; gross margin typically is in the 70s at the high end; and sales and marketing represents a huge chunk of the spend.

It’s still early days, but here’s some thoughts. Read the S-1 yourself here. I focused more on this analysis on the macro questions, and less on the numbers, both because there’s so many great takes out there tearing into the growth, margin, spend & more. And we’ll learn more about the metrics as time goes on.

1) Moving beyond the self-insured employer: I’ve long been bearish on the self-insured employer market for newcomers to the digital health space.