Shares of Hinge Health jumped 22% above the initial public offering price in the company's New York Stock Exchange debut Thursday, bringing its market capitalization to more than $3 billion.
The physical therapy company's stock opened at $39.25 on Thursday and closed at $37.56, up 17% from its $32 per share IPO price. Hinge Health's IPO has been closely watched given the recent stagnation in the exit markets and signals a potential upswing in the public investor market.
Insight Partners-backed Hinge Health said it raised $437 million in its IPO priced at the top of its marketed range. The digital health company sold 8.5 million shares, with 5.1 million shares being sold by existing shareholders, for a total of 13.7 million shares. Insight Partners, a venture capital and private equity firm, is the company's largest shareholder and has backed the company since 2018, when it led the company's $26 million series B round. It also participated in Hinge Health's series C and series D rounds.
Hinge Health initially filed its S-1 in early March. While it seemed market uncertainty and tariff concerns would delay the IPO, Hinge Health moved forward with its debut.
Daniel Perez, co-founder and CEO of Hinge Health, told Fierce Healthcare Thursday that the timing to go public is never perfect, but the company was excited to open the IPO markets, particularly for digital health.
"We're 10 years old. We grew 50% year over year in Q1. We're free cash flow positive for the last four quarters, 12% operating margin in Q1, we weren't raising any primary capital that is putting any money on the balance sheet. It was just secondary to pay employee taxes and give early investors a bit of liquidity. You could be waiting for the perfect moment for forever. But I learned, as a founder, you have to take control of your own destiny, and if you're going to be bold enough to automate the delivery of healthcare, then you've got to be bold and take the plunge in the IPO markets," Perez said.
There was a pack of more consumer-oriented health tech and digital health startups that went public in the 2020-21 period including Amwell (American Well), GoodRx, Accolade, Talkspace, Doximity and Progyny. Teladoc went public in 2015, five years before the COVID-19 pandemic boosted growth in digital health and telehealth.
But Perez sees Hinge Health as distinctly different from the earlier waves of publicly traded digital health companies.
"Healthcare is hard, but there has not been a company quite like us, not even close. Earlier, digital health companies were really focused on building technology to automate back-office processes in healthcare, or they're actually marketing companies in healthcare, or the technology was simply enabling one-on-one provider interactions," he said Thursday. "What makes us different is our technology is automating care delivery itself. That is a fundamental change between what's ever come before, and our metrics prove it. We have fantastic clinical outcomes for our members, fantastic financial outcomes for our customers and for our business."
Perez enumerated Hinge Health's strong financial metrics: 80%-plus gross margin, 117% net dollar retention and double-digit free cash flow.
"But what is really fundamental is that we are using technology to automate the delivery of care itself. We've exemplified we could do it in physical therapy. We've automated away about 95% of human clinician hours. And that's not been the goal or the focus of digital health companies that have come before," he said, adding, "nor have they been profitable."
The company, founded in 2014, booked $432 million in revenue for the 12 months ended March 31, 2025.
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, according to its S-1 filing. The company boasted net income of $17.1 million in the first quarter, a significant improvement from a net loss of $26.5 million during the same quarter a year ago.
Hinge Health's IPO pricing at the top end of the range, at $32 per share, puts the company's valuation at $2.6 billion, or $2.9 billion on a fully diluted basis.
This valuation is a nearly 60% decline from its $6.2 billion valuation in October 2021 when it banked a $400 million series E funding round.
However, fall 2021 was near the top of the market cycle, and a valuation cut was expected, noted Aaron DeGagne, senior research analyst for healthcare at PitchBook.
Assuming a valuation of around $3 billion, Hinge Health would trade at a 5.5x-6x EV/sales multiple, a reasonable figure considering Hinge's growth profile, DeGagne wrote in a PitchBook report published Thursday. This figure stands above that of most publicly traded digital health peers, but the premium appears justified given the company’s stronger growth trajectory and healthier margin profile, according to DeGagne.
A potential digital health IPO comeback
Hinge Health's IPO could kick off the next crop of digital health startups to go public following the pandemic. Omada Health filed to go public earlier this month, and there are other companies waiting in the wings.
There were 20 digital health companies that went public in 2021 and only two, including prescription digital medicine company Akili Interactive, in 2022. There were no digital health IPOs in 2023, according to Rock Health.
Condition-specific virtual care companies focused on employer markets are poised to lead the way with the next wave of digital health IPOs. Other digital health companies on PitchBook's IPO radar include Sword Health, which is a Hinge competitor, Ro, Quantum Health, Spring Health, ZocDoc, Headway and Maven.
The company's listing is a key test case for the digital health IPO window and for the IPO window broadly considering the number of even larger delayed tech IPOs such as Klarna, StubHub, Circle and others, DeGagne wrote.
While there have been no major IPOs of VC-backed digital health companies in more than three years, there are well over 50 digital health unicorns globally and many of these are likely to explore exit options in the coming years.
Public investor reception to Hinge with its strong financials may not translate to demand for less profitable IPO candidates though, DeGagne noted, but a strong listing could still spur more IPOs in the sector this year.
Hinge Health plots future growth with new offerings, possible M&A
Hinge Health leverages software to largely automate care for joint and muscle health. Its virtual care platform can address a range of MSK care—from acute injury to chronic pain to postsurgical rehabilitation.
According to the company's S-1 filing with the U.S. Securities and Exchange Commission, its clients are primarily self-insured employers, including public sector employers such as state and local city governments and labor unions. Hinge currently works with more than 2,250 enterprise customers and has client agreements with nearly half of Fortune 100 companies. The company reported 532,000 members at the end of 2024 with 20 million contracted lives.
To address the automation of care, Hinge has developed artificial-intelligence-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.
"We're weaving AI across our organization, throughout our product, to better personalize our program and to better predict who will become a high-risk member, because 5% of members will drive 50% of musculoskeletal costs. So, if we're going to drive a compelling enterprise ROI, we're going to to have to continue to invest in ROI, and we had 98% logo retention in 2024 because we drive such good clinical and financial outcomes," Perez said.
The company also plans to continue using AI to automate provider interactions. "We've done a really good job of helping our physical therapists summarize patient charts and better understand what's the next best action for a given member and better triage their panel of members. But we're also weaving AI within every other department, HR, finance, operations, tech support, R&D, engineers, product designers," he said. "We have a stated goal at the business to improve our efficiency by 25% in each team by the end of the year."
Hinge Health has ambitions to expand its services beyond physical therapy to other areas of healthcare. The company plans to have a new offering that is adjacent to physical therapy, Perez said Thursday.
"We hope to announce that sometime in 2026, and what's exciting is that physical therapy is only like 1.2% of healthcare spend, so it's actually not that big, and yet it's $50 to $70 billion of spend in the U.S. It's hard to choose an area of healthcare and not hit a $20 to $30 billion market," he said.
He added, "Our overall vision is to automate the delivery of care, whether it's in 50 years or 200 years; one day, all of healthcare will be automated. It will be delivered via technology, and the technology continues to mature. We want to peel away aspects of in-person care and use technology to automate it, where we can transform outcomes, experience and costs and bring that innovation through our established sales channels."
M&A deals also could be on the horizon as the company looks to enhance its capabilities.
"We're always interested in young companies that have transformative technologies, enabling technologies. We're not looking at these big M&A deals. We've done three acquisitions, each of them has been in the smallish range of $20 million to $25 million. These were relatively small companies, but really accelerated a key piece of technology that we were trying to develop," Perez said. "We're excited about those type of acquisitions."
The U.S. IPO market started 2025 with a mix of optimism and caution, but factors such as persistent inflation concerns and shifting government policies have created an environment of heightened uncertainty, according to a recent PwC report. Now, many companies in the IPO pipeline consider waiting for more stable market conditions.
Perez seems unperturbed by any potential rockiness in the macroeconomic market.
"We've seen our business to be very much anti-fragile. In good times, where it's 'go, go, go' and you're hiring a bunch of employees, we're a great solution to buy because you're trying to attract and retain employees, and we deliver great experience. In tougher times, we are a great solution to buy because we deliver such a compelling enterprise ROI. We flourish in both good times and bad," he said.
"In fact, with the uncertainty that's happened in the macro environment just in the past two months, our pipeline is hitting near an all-time high in terms of our enterprise pipeline, and we have several customers accelerating their implementation of Hinge because they need to deploy us faster so they can start banking some cost savings sooner."
Through the use of technology, Hinge Health positions its services as an accessible and cost-effective alternative to in-person care. The company also aims to expand its core market by reaching the large patient population that does not seek physical therapy for their MSK condition due to inconvenience, cost or inaccessibility. And that's a massive market. The company says 40% of U.S. adults have a MSK condition, but only 9% have sought physical therapy.
Hinge Health is well positioned from a business perspective in its core market of contracting with self-insured employers, both directly and through health plan partners, DeGagne wrote in the PitchBook report. "This segment benefits from excellent margins—over 80% as of last quarter—strong growth, and a scalable model that will require relatively modest investment as the company seeks to increase member engagement," he noted.
Hinge Health plans to further expand into fully insured employers, Medicare Advantage and federal insurance plans.
"While we do not question the growth potential in these segments, meaningful expansion will likely require additional investment in research & development, sales, marketing, and technology," DeGagne wrote.
Hinge Health achieved profitability for the first time in late 2024, but analysts do not expect profits to accelerate rapidly as the company continues to aggressively pursue growth opportunities, he wrote.
The company also faces considerable competition from in-person providers and other virtual care companies.
Another key factor to Hinge Health's longer-term outlook is whether it can integrate with other care providers, DeGagne wrote, noting that its HingeConnect feature is a good start.
"While Hinge Health has not prioritized formal integration with health systems to date, it has forged strategic partnerships with care navigation provider Quantum Health and specialty care network Carrum Health. These collaborations aim to connect Hinge Health’s virtual physical therapy services with existing care pathways, enhancing coordination across different patient touchpoints," he wrote.