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LAS VEGAS — The digital health IPO window has opened after a long period of stagnation, but the outlook isn’t entirely smooth for companies looking to take the plunge into the public markets, experts said at the HLTH conference this week.
Few digital health companies have entered the public markets in recent years, unlike the wave of health tech IPOs in 2021. However, many companies that went public during the pandemic funding boom struggled to get noticed — and some collapsed entirely.
There is a lot of uncertainty in the healthcare industry right now, making it more difficult for companies to decide whether to make a decision, Robbert Vorhoff, managing director and global head of healthcare at private equity firm General Atlantic, said during a panel discussion at HLTH.
For example, the federal government shutdown currently extends into its fourth week and prevents the Securities and Exchange Commission from reviewing new IPOs. Meanwhile, the healthcare industry is bracing for the impact of the One Big Beautiful Bill Act, which will likely remove millions of people from insurance coverage and add new financial pressures for providers.
This creates a more challenging environment for companies, which must meet and exceed expectations set during the IPO process during their first quarters on the public markets, Vorhoff said.
“When there is uncertainty, it is very difficult for management teams to commit to doing this,” he said. “And I think the most precarious period in the growth of this company, the maturation that contributes to the value creation of this company, is as a new public company.”
Yet there is a lot of pent-up demand among established digital health startups to exit, experts say.
The sector has seen some bright spots recently. Healthcare payments company Waystar went public in 2024. And earlier this year, digital musculoskeletal care company Hinge Health and chronic disease management company Omada Health both hit the public markets.
“We know of many companies that are very excited about the possibility of going public in 2026 and 2027,” said Megan Scheffel, head of life sciences and healthcare credit solutions at Silicon Valley Bank. “There are companies that are ready. There are companies that I think have the financial profile to go public if the market opens up.”
The Omada, hinge plane
Watching Omada and Hinge “redefined the model of what it takes to be a public company,” Sasha Kelemen, head of Baird’s global healthcare investment banking group, said during a panel.
Both companies delivered attractive revenue growth and margins, and demonstrated they were either profitable or on the path to profitability, she said.
Acting like a public company while still private helped them prepare, Omada and Hinge executives told HLTH.
Hinge tried to run its company like a public company for two years before going public, simulating earnings calls and deciding the company needed to beat and raise expectations for four quarters before going public, said Daniel Perez, the company’s CEO and co-founder.
And when pitching investors before an IPO, companies should try to get specific feedback on their businesses instead of just trying to find the most optimal time to enter the public markets, Sean Duffy, co-founder and CEO of Omada, told Healthcare Dive.
“I just had enough investors saying, ‘We’d love to see this come to market,’” he said. “And you have one saying that, you have two saying that, you have 10 saying that, you have 20 saying that. You’re like, ‘Okay, it’s ready.'”
Mergers and acquisitions on the rise
Going public is a high bar to meet – requiring more costs, restrictions and shareholder scrutiny – and so it cannot be every company’s goal, experts say. More companies will likely be able to pursue a different exit by being acquired by a larger company.
This year, mergers and acquisitions are increasing, largely through startups buying other startups, according to Rock Health. Transaction volume increased 37% from last year, with the sector recording 166 acquisitions in the third quarter, compared to 121 in 2024.
Some companies consolidate, combining two similar companies to increase efficiency, Scheffel said. Others partner with adjacent companies to add new capabilities. For example, a behavioral health company could merge with a physical therapy provider.
However, integrating two companies can be difficult, especially for startups that have never dabbled in M&A before, experts say.
“Now we’re seeing kind of a Jesus moment in general, where a lot of companies are also realizing in digital health in general that if they wanted to survive, or if the legacy was going to survive, maybe they should have come together in different ways,” Kelemen said. “But it’s a painful process to do that.”
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