After years of digital health IPO drought, two companies were released this year (Hinge Health, which focuses on musculoskeletal care, specializing in musculoskeletal care and specializing in chronic disease management). The new activity comes after a surge in digital health IPOs in 2021, largely failing to meet expectations.
So, what did venture capitalists learn about health technology in the public market during this period? This question was raised during a recent panel discussion at the 2025 AHIP conference in Las Vegas. The conference was chaired by Bill Evans, founder and general partner of seed fund Rock Health Capital.
One panelist noted that it was nice to see the public markets that were interested in digital health again. However, enthusiasm was relieved.
“You still need to be in a solid business and [profit and loss]And, said Kurt Sheline, a partner at Echo Health Ventures, “If you’re not profitable, you’d better grow fast. And if you’re not growing fast, it’s better to be a very high-profit business. On this weird land, everything in between is.
“Speaking for our portfolio, there are some great companies that are still on a large scale private, growing rapidly, and stable profits and trying to cope with this tradeoff, and when the tradeoffs are reached [profit and loss] Can be disclosed. ” he added.
Another investor pointed out that when a digital health company went public a few years ago, the door was “too open.” Many companies have been underperforming since then. This makes it difficult for other companies to make public in the following years.
“I think now we have hinges and Omada, which is very positive,” said Venrock partner Siobhan Nolan Mangini. That being said, so the bar is high. I think it’s growth and profitability. If you’ve heard of 40 rules, make sure your growth and EBITDA margins are basically 40% north 40%. And, if you look at a company like Hinge, that was nearly $400 million last year, they would have almost 8% of revenue last year. In fact, it is impossible for the public.
Health Tech companies are returning to fundamentals, said Amy Belt Raimundo, vice president and managing director of Kaiser Permanente Ventures. In 2021, digital health becomes very exciting and there is a lot of “thrilling”, but “the fundamentals aren’t there,” Raimundo said. She noted that Kaiser Permanente has been an investor in Omada Health since 2014.
“I think that having to get good fundamentals is the next wave,” she said. “There is an export market here and then more investment will be generated.”
Photo: Chunumunu, Getty Images
