Shares of Hinge Health surged nearly 18% in after-hours trading Tuesday after the virtual physical therapy company reported its first quarterly financial results as a publicly traded company.
Hinge Health went public in late May as the first digital health company to hit the public market in 2025, marking the end to a drought in digital health IPOs since 2021. The company's shares have risen about 52% from their initial public offering at $32.
The company brought in revenue of $139 million in the second quarter, up 55% year-over-year compared to revenue of $89.8 million in Q2 2024. Wall Street analysts expected revenue of $125 million.
The strong quarter was primarily due to higher eligible lives from both new and legacy clients, and better than expected enrollment yields, resulting in increased members and billings, Daniel Perez, co-founder and CEO of Hinge Health told investors and analysts on the Q2 earnings call Tuesday.
The company's adjusted gross margin was 83% compared to 77% a year ago.
But the company had hefty losses in Q2, reporting a net loss of $576 million, or a loss of $13.10 per share, compared to a loss of $13 million, or a loss per share of 96 cents, during the same period a year ago.
Hinge Health did report favorable operating leverage, driving non-GAAP operating income of $26.1 million, which was well ahead of the $4 million Street target, noted William Blair in an analyst note.
The company reported free cash flow of $32.6 million in Q2, which included an adjustment of $14.2 million for employer taxes related to stock-based compensation at IPO, compared to free cash flow of $14 million during Q2 2024.
Hinge ended the quarter with total cash of $237.2 million, marketable securities of $176.1 million, and no debt.
Hinge Health's client base grew to 2,359, up 32% year-over-year. The company also reported the last twelve months calculated billings reached $568 million compared to $367.8 million for Q2 2024, representing 55% growth YoY, which Perez said was a leading indicator of revenue.
Hinge, which launched in late 2014, developed software combined with artificial intelligence to automate physical therapy services for joint and muscle health. The company has designed its platform to address a broad spectrum of musculoskeletal (MSK) care, including acute injury, chronic pain, and post-surgical rehabilitation. To address the automation of care, Hinge has developed AI-powered motion tracking technology, a proprietary FDA-cleared wearable device called Enso and an AI-supported care team to deliver scalable and personalized MSK care.
According to its S-1 filing with SEC when it announced its IPO, the company's revenue grew 50% in the first quarter of 2025, jumping from $82.7 million in the first quarter of 2024 to $123.8 million.
In June, Hinge launched a referral network of in-person providers to complement its virtual physical therapy platform. The curated provider network for musculoskeletal (MSK) care, called HingeSelect, includes imaging centers and brick-and-mortar physical therapy providers to help bridge the gap between in-person and digital care. The aim is to offer a more comprehensive end-to-end MSK care model, executives said.
The company is starting with a limited pilot in late 2025 followed by a broader launch in 2026, Perez said. Hinge has secured contracts with providers across more than 2,100 locations as of the end of Q2 with many more being signed in Q3 to date,, he said.
"We have several large early client adopters, while we don't expect meaningful revenue impact until 2027, HingeSelect represents an important opportunity to improve member outcomes and client ROI while increasing yields and adding a high margin revenue stream for us as we'll recognize the percentage of the medical claims as net revenue," he told investors on the call.
For the third quarter, Hinge projects revenue between $141 million and $143 million, reflecting year-over-year growth of 41% at the midpoint. Based on its guidance, Hinge also expects non-GAAP income from operations to be between $17 million and $21 million, compared to non-GAAP loss from operations of $3.7 million in Q3 2024.
The company also provided full-year 2025 guidance with revenue expected to come in between $548 million and $552 million, reflecting year-over-year growth of 41% at the midpoint. Non-GAAP income from operations is expected to be between $77 million and $83 million, compared to non-GAAP loss from operations of $26.1 million in 2024.
Ryan Daniels, analyst at William Blair, said in an analyst note that the full-year guidance came in well above Street estimates on all key metrics.
Hinge is demonstrating strong growth momentum, Daniels wrote.
"We believe Hinge Health is well positioned to capitalize on a strong demand environment for digital MSK solutions, as employers seek cost savings solutions that also augment the employee experience. The company also continues to extend its market leadership with product innovation (e.g., a network of curated in-person care providers called HingeSelect, announced in mid-June) and new channel partners (e.g., launching with Cigna earlier in 2025)," Daniels wrote in the note.