The dam is finally broken in the world of digital health.
Digital health companies emerged in 2020 and 2021, but many people who have made the leap are facing huge challenges. Honors were published in 2020 and was recently privately privatized after losing key clients. In addition, Amwell, which has an IPO in 2020, has seen its stock value drop sharply with the commoditization of telemedicine. Perhaps to deal with these difficulties, only a few digital health companies venture into the public market In recent years.
so far.
Last month, musculoskeletal company Hinge Health and chronic disease company Omada Health has made public. Although it's still early, many experts have made their debut a success. Yahoo Finance said Hinge Health went public at a quote of $32 per share on May 22, while Omada Health was publicly available last week at a price of $19 per share. Hinge has a market capitalization of about $3 billion, raising $437 million, while Omada has about $1.1 billion, raising $150 million. As of June 12, Hinge was trading above its quote price, while Omada was trading slightly below its asking price.
“I think with many other people you’re seeing relative to many others, especially with this Spac Mania in 2021, they are the leading companies in the field they compete for.” “They both have a path to profitability. In the case of hubs, they’re already profitable [Omada has] A clear way to get there in a reasonable time. Both have a lot of operational maturity and have indeed experienced management teams and have been around for a long time and have a long history of operations. ”
Another healthcare investor said both companies traded at higher prices than their offer prices. Hinge's stock debuted at $37.56 and was quoted at $32. Omada's stock closed at $23, with its offer price rising 21%.
“I think there is some anxiety [there’d be] After the stock price fell, stock trading sales fell, and both traded well. ”
Greeley conducted the flag in an interview Tuesday, with Omada's stock falling 14%, which is not concern yet, but worth noting.
Although many people call Hinge and Omada an early success in the public market, Seth Joseph, founder and managing director of consulting firm Summit Health Advisors, said it was in the eyes of bystanders.
“Hinge's early investors performed well, but others pointed out that the current market cap is $3 billion, about half of the $6 billion in 2021,” he said. “Omada has raised a small amount and has never been that high in flight, so it's easier to point out the success of all participants.”
What to pay attention to
It is important to note that disclosure is not the last chapter of Hinge and Omada.
“Getting this milestone is important in itself and it's acknowledged for both businesses,” said Bill Evans, founder and general partner of seed fund Rock Health Capital. “At the same time, an IPO is not a destination; it's a channel. Expectations will only improve from here.” Rock Health is an investor in Omada, but not a hinge.
Greeley said the most anxious period will be the next six months. Existing venture capital investors have been locked in for six months, meaning they are unable to trade their shares and get their return on investment.
“It's just a very disturbing window, and early investors have to have a kind of weather right now,” he said. “So if the stock continues to trade, then in reality, they can't sell the benefits for them because they get more gains. If the stock starts to trade, there's nothing you can do. You're just looking.”
This lockdown is the case unless bankers decide to release early investors based on an assessment of market conditions.
He also said the companies could issue a series of announcements and partner news to enhance their value.
Others have a slightly longer field of vision.
Beadle believes that the real sign of Hinge and Omada's success will be their performance for a year from now on. Every company faces hard income at some point. The real test for listed companies, he said, is how it handles the first wave of bad news.
“I think it’s hard to get public for companies that don’t have a huge free cash flow because the market can be sore on your name very quickly, often for trivial reasons. … I think the only certainty of running a business is to be a bad news in one form or another. So I think both companies will look back on their first bad events because of how they handle their first incident, how they handle them, how they handle them? He pointed out.
Interestingly, if they can be sustainable when they are public. Both companies have many mergers and acquisitions opportunities. For Omada, there might also be a chance to expand if they decide to switch to prescribe weight loss pills, Beadle said. They are currently focusing on providing behavioral change programs for people taking GLP-1 without actually distributing the drug. According to Beadle, this will be “the fastest growth medium if they decide to accept it”.
Joseph had less confidence in Omada's ability to grow.
“Hinge sits in $470 million in cash (with Omada only $60 million), so it seems we may expect more hinge acquisitions. How does Omada reach a more meaningful scale?” he said.
While both Omada and Hinge provide joint and muscle health support, it is important to note that they mainly operate in different spaces. Omada is known for its diabetes care.
Although many digital health companies have struggled in the public markets in the past, Evans noted that it is important to consider the differences between each other and other public companies.
“Although they are both in healthcare and both 'using technology', it's easy to ignore their real differences and adapting them to existing categories is a bit tricky,” Evans said. “As category leaders, the problems they solve, their business models, and history make them a little different. Public market investors are still learning from both companies and it may take some time to reach a consensus.”
Will more and more companies follow suit?
Joseph said Omada and Hinge's IPOs were “a sign of the thawing market” and were beneficial to other late-stage startups. He hopes that several companies will be released soon, including Maven Clinic, including Health, Sword Health and Zocdoc.
Beadle agrees that these IPOs could spur other companies to publicize and list Innovaccer as a company worthy of attention.
Hinge and Omada's IPOs are also beneficial to early stage companies.
“It is also encouraging for the founders who are just starting out and investors who want to fund early stage companies, so they can point to the recent successful exit,” Joseph said.
Photo: JXFZSY, Getty Images
