After a years-long IPO drought in digital health, two companies — Hinge Health, focused on musculoskeletal care, and Omada Health, specializing in chronic disease management — have gone public this year. The renewed activity follows a 2021 surge in digital health IPOs that largely failed to meet expectations.
So what have venture capitalists learned during this period about health tech in the public markets? That question was posed during a recent panel discussion at the AHIP 2025 conference held in Las Vegas. The session was moderated by Bill Evans, founder and general partner of Rock Health Capital, a seed fund.
One of the panelists noted that it’s great to see the public markets interested in digital health again. However, the enthusiasm is tempered.
“You still need to come out with a solid business and [profit and loss], and there’s always that kind of trade off between growth and profitability that public markets are looking at,” said Kurt Sheline, partner of Echo Health Ventures. “If you’re unprofitable, you better be growing fast. And if you’re not growing fast, you better be a pretty high margin business. And everything in between is kind of in this weird, not-sure land.
“Speaking for our portfolio, there are some great companies that are still private at scale, growing fast, solid margins, and trying to deal with that trade off, and the timing of when that trade off hits the [profit and loss] to be able to go public,” he added.
Another investor noted that the “doors were too wide open” a few years ago when there was a spike of digital health companies going public. Many of these companies have since underperformed. This made it difficult for other companies to go public in the years following.
“I think it’s hugely positive now that we have Hinge and Omada that just went out,” said Siobhan Nolan Mangini, partner at Venrock. “That being said, the bar is super high. And I think it’s growth and profitability. If you’ve heard of the rule of 40, you want to make sure your growth and your EBITDA margins are basically north of 40%. And if you look at a company like Hinge, they were almost $400 million of revenues last year. They have almost 8% margins, they’re profitable. That is a really high bar. That is not necessarily where public markets have been historically.”
Amy Belt Raimundo, vice president and managing director of Kaiser Permanente Ventures, said that health tech companies are going back to the fundamentals. In 2021, digital health became very exciting post-Covid and there was a lot of “exuberance,” but the “fundamentals weren’t there,” Raimundo said. She noted that Kaiser Permanente has been an investor in Omada Health since 2014.
“Having to come out with good fundamentals is, I think, the next wave,” she said. “That there is an exit market here, which then will spawn more investment.”
Photo: Chunumunu, Getty Images
