After years of limited activity, the digital health department has finally shown signs of life in the public market.
In recent years, only a few companies have applied for disclosure, including Waystar and Tempus AI. Many people who are listed are struggling. For example, honors were made public in 2020 and were privatized again after being perspective.
But last Friday, chronic disease management company Omada Health applied for an initial public offering (IPO). It is the second major digital health company this year, second only to the musculoskeletal company Hinge Health in March.
San Francisco-based Omada Health was launched in 2011 and provides virtual support for diabetes, high blood pressure, and joint and muscle health. Under its S1, it works with employers and health programs to serve more than 2,000 clients and approximately 1 million members are enrolled. S1 said it also experienced “strong growth”: revenue increased from $122.8 million in 2023 to $169.8 million in 2024. It raised nearly $530 million in total, according to CBInsights.
So will Omada Health succeed in public interest? Christina Farr, an industry follower of consulting firm Manatt Health, noted in her newsletter that the company has good engagement and customer satisfaction. In addition, it has many procedures, including diabetes, musculoskeletal, weight management, and hypertension. Farr said it was beneficial because employers wanted to get rid of a little solution.
According to Farr, tailwinds may also be the popularity of GLP-1. The company itself does not prescribe GLP-1, but it provides lifestyle support for those who take them. She added that although the headwind may be a fact that the company doesn’t pay much attention to in the Medicare market.
Another health care expert pointed out that this is positive news that “the dam is breaking” due to the recent lack of publicly publicly available digital health companies. Michael Greeley, co-founder and general partner of Flare Capital Partners, said Omada’s revenue growth is interesting, although it is still losing a lot of money. According to S1, it had a net loss of $47.1 million and a cumulative deficit of $444 million.
“They have to be very confident that they do have a good job of the growth trajectory over the next few quarters and that the company will get profitability,” Greeley said in an interview. “Otherwise, if the numbers deteriorate as a public company, they may end up with a big penalties. Stocks may be really tanky.”
Greeley added that the key signal of success in Omada Health’s move toward the open is whether Fidelity Management & Research Company and Wellington Management are a large mutual fund investing in the company’s Series E Series, investing in the IPO.
“You’re going to see there’s a lot of internal support, which emphasizes the belief that it’s a fundamentally good thing. When they lose so much money, there’s a lot of questions, how does this thing come together to make a profit? If the existing investors are big buyers in the IPO, it’s a real positive sign,” he said.
It is also worth noting that the decision to conduct an IPO shows a better route at present than selling a company in today’s market, Greeley said. He said that generally, selling a company, such as a large insurance company or a tech company, is better than selling it publicly.
“When you’re public, you’re locked up for six months,” he said. “You’re now under the bright lights of the public market, and the last three to four years of being cruel to healthcare tech companies. Those who trade publicly have very low valuations. It’s a negotiated deal compared to the company’s private sale. It’s not in public market scrutiny, and it’s not revealed that there like that. Selling to the company.”
In other words, bankers say the sales path is lower than the price of a company’s public offering.
Greeley hopes to see several other companies openly publicly in the near future, such as the Musculoskeletal firm’s swordsmanship health, weight loss and diabetes company VIRTA and the online healthcare market Zocdoc.
However, according to another industry follower, there are still some unresolved issues with digital health companies in the public market.
“The IPO may be an exit from early investors, but it’s just the beginning of Omada, Hinge Health and other companies looking to prove that digital health can mature and truly reach a meaningful scale. … Can technology-based digital health services companies really scale and hinge to truly scale and stay independent? Seth Joseph, founder and managing director of Summit Health Consultants, said in an email.
Omada Health declined to comment.
Photo: Chunumunu, Getty Images
