LAS VEGAS—Hinge Health and Omada Health were the first two digital health companies to go public this year after an IPO drought, and the industry has been counting on them to open the floodgates.
The companies' exits were closely watched by investors, analysts and other digital health companies as a signal of a potential upswing in the public investor market.
So, now that the digital health IPO window is open, when will the next group of companies follow? Analysts and market observers expect some digital health companies to go public in 2026 and are keeping an eye on potential candidates including Sword Health, Quantum Health, Transcarent and Maven.
According to media reports, Zelis, a healthcare payments company, is preparing for an IPO next year, and so is Virta Health, a company focused on metabolic conditions.
As a founder and CEO who has just gone through the process, Hinge's Daniel Perez knows the work that's involved with tightening the ship in preparation for an IPO. He believes it may take a little longer for the industry to see the next big wave of digital health IPOs.
Speaking generally about the market, Perez told Fierce Healthcare on the show floor of the HLTH conference this week, “I can’t say for sure, but I think that companies saw the numbers that we had put up. We put in serious work to bring our costs down and get to the gross margins we had. I don't think a lot of these digital health companies have the gross margins or the free cash flow. It will be difficult to IPO with the numbers that a lot of digital health companies have right now. That's my working assumption."
Hinge developed software combined with artificial intelligence to automate physical therapy services for joint and muscle health. The company also 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.
As a private company, Hinge's leadership team managed the company as a public company for two years before going public, including having mock earnings calls, Perez noted.
"We told our management team, what we told the company overall, is that we needed four straight quarters of 'beat and raise' just to ensure we're better," Perez said during a panel discussion at HLTH on Monday. "There is nothing more miserable than being a public company and missing your numbers. A lot of private companies haven't figured out the predictability and forecast ability of their business. We wanted to make sure that was down first, and we were confident of the durability of our longer-term growth."
Sean Duffy, co-founder and CEO of Omada, a virtual chronic disease treatment provider, also stressed the importance of getting a business ready to go public while speaking on a panel with Perez at HLTH. Both CEOs shared their views on what it takes to be a public company, what investors are looking for right now and what comes next for their businesses.
"As I reflect, I would say 80% of the questions I get about IPO timing are, how did you know the markets were ready? And 20% is, how do you know your business is ready? In truth, it should be completely inverted. I think 80% of the questions should be, how do you know your business is ready?" Duffy told the HLTH audience. "That introspection is hugely important. Mature your operations, scale the business, get predictable revenues. The maturity of even things like your accounting team, your ability to forecast orientation toward 'beating and raising,' that's the most important thing. What's going on in the macros becomes secondary. And we both went out at a time where success wasn't a guarantee. There hadn't been any IPOs for many years, but, fundamentally, we felt that Omada was ready."
Advisors cautioned that the bar to go public would be high, Duffy said, given the IPO drought in digital health.
"The feedback we got is that what it's going to take is multiple points of engagement with investors, like they need to really understand the story. This is not an era where you can shotgun wedding an IPO or during your roadshow when you meet your new investors," Duffy said during the panel. "You're going to need to have reliable progress against those touch points, ideally accelerating revenue growth, compelling margins and a compelling path to profitability, and that's not so easy. But they were honest with us about what it would take. And I think that's what's required in today's market. The bankers were good shepherds to help ensure that, against those realities, we had the right strategy and engagement.”
Public investors are looking for digital health companies with durable revenue growth and free cash flow, Perez said.
“Growth is valued two times more in the public markets than profitability right now. If an investor gets a valuation wrong, but you're growing, eventually you'll grow into that valuation,” he said. “If you are generating cash, it completely changes the tenor of conversations you have with investors. They are not asking whether you are sustainable or whether you’ll make it. They're now saying, ‘Well, how much bigger can you get?’ And, for us, we made sure we were free cash flow positive for four quarters prior to IPO.”
He added, “We have been in the doldrums and people have not had a lot of confidence in digital health companies. You’ve got to work twice as hard for half the credit, and being free cash flow positive goes a long way.”
Both Hinge and Omada were seeing strong growth prior to going public. Hinge, founded in 2014, booked $432 million in revenue for the 12 months ended March 31, 2025. Pre-IPO, the company reported strong financial metrics: 80%-plus gross margin, 117% net dollar retention and double-digit free cash flow.
Omada launched its initial virtual program in diabetes prevention and weight health in 2012. The company sells primarily to employers, which either contract with Omada directly or obtain access to its programs through a channel partner such as a health plan or PBM. Omada’s revenue grew 38% in 2024 to $170 million, up from $123 million in 2023. In the first quarter of 2025, the company brought in $55 million in revenue, up 57% from the first quarter of 2024.
When talking to public investors, it's critical to help them understand the company’s business.
“We also had to tell the story of how we are a tech-driven business. Our vision is to use technology to automate and scale care, and we let them dive into our P&L. We let them see our product on our investor days. They would play around with our product and really gain confidence that technology is at the heart of how you're delivering care and therefore you could really scale this business,” Perez said.
Post-IPO, both companies reported strong financial performance. In its first quarter as a public company, Omada reported $61 million in revenue, up 49% year over year. The company now has 2,000 customers and more than 750,000 total members enrolled in one or more programs.
In its first earnings since going public, Hinge reported $139 million in revenue, up 55% year over year. The company's adjusted gross margin was 83% compared to 77% a year ago.
Life as a public company is not that much different, Duffy asserted.
“Obviously, it's more financially oriented. You have to live and breathe and understand and feel your P&L in new ways where you wouldn't necessarily at the series A stage. When you're pitching for your first institutional check, you've got an investor that's trying to underwrite a team, a market, a capability, that could perhaps get to $100 million-plus top line and an IPO. It's not all that different. They're just thinking an order of magnitude beyond that. It's the same vision you need to create but with more precise financials around how to get there,” he told the HLTH audience.
Both companies are building AI capabilities to improve efficiencies and enhance the care experience for members.
Perez is bullish that all non-touch aspects of healthcare will soon be automated by AI.
“Think about interpreting symptoms, coming up with a diagnosis, creating a care plan. Even a telemedicine visit with a provider will soon be able to be delivered via AI at a higher fidelity than a human on the other side of that video, other than for edge cases. We have to get ready for a world where all non-touch aspects of healthcare will be automated by AI, and then we have to think through what aspects of healthcare requires touch. So you're going to have to invest in hardware as well,” he said.
This week, Hinge unveiled an AI-based movement analysis tool that uses computer vision technology to guide members through targeted movements, capturing joint angles, symmetry and endurance. It also rolled out an AI care assistant named Robin that provides 24/7 support.
The company also is working to “weave” AI throughout its business, Perez said.
“For a lot of us who have been founded after ChatGPT came out, you have to retrofit your company for an AI-first world. We've had to retrofit the business and weaving it into finance, weaving it into HR, weaving it into our operations. That's going to have a dramatic improvement in your overall company's efficiency,” he said, adding, “Using AI is kind of like learning how to use a calculator—it's going to maybe slow people down at first, but long term, it's going to make them go a lot faster.”
Hinge also is eyeing M&A opportunities in the next one to three years to enhance its technology for MSK care, with a focus on smaller startups. The volume of inbound calls about M&A opportunities has jumped since the company went public, Perez said.
Looking ahead, the next wave of digital health IPOs will be a “different beast,” Duffy noted.
“These companies aren't delivering software solutions on a legacy system that’s creating incremental value. They're fundamentally delivering ‘the care’ and new care models, more evidence-based models, proven models, and those create durable value props that lead to, especially against different business models, durability of revenues,” Duffy told the audience at HLTH.