Health Tech: VC Lessons from Public Markets
- After a multi-year slowdown,the digital health sector has seen renewed IPO activity with Hinge Health,a musculoskeletal care company,and Omada Health,which focuses on chronic disease management,both going public this...
- At the AHIP 2025 conference in Las Vegas, venture capitalists discussed lessons learned about health tech in the public markets.
- Panelists expressed enthusiasm tempered by caution regarding the renewed interest in digital health.
Venture capitalists are recalibrating their strategies for digital health IPOs. This yearS renewed focus reveals crucial lessons from hinge Health and Omada Health‘s public debuts. Experts at the AHIP 2025 conference highlight the critical need for strong business fundamentals, emphasizing the vital balance between growth and profitability in the public market. Success hinges on demonstrating a sound business model and clear pathways to revenue. Siobhan Nolan Mangini from Venrock suggests the “rule of 40,” where growth and EBITDA margins need to exceed 40%. Amy Belt Raimundo from Kaiser Permanente Ventures notes a return to foundational principles after the exuberance of 2021. Explore how venture capitalists now view health tech investments, and navigate the evolving landscape. News Directory 3 provides in-depth reports. Discover what’s next …
Venture Capitalists Discuss Digital Health IPO Lessons
After a multi-year slowdown,the digital health sector has seen renewed IPO activity with Hinge Health,a musculoskeletal care company,and Omada Health,which focuses on chronic disease management,both going public this year. This follows a surge in 2021 that largely underperformed expectations.
At the AHIP 2025 conference in Las Vegas, venture capitalists discussed lessons learned about health tech in the public markets. Bill Evans, founder of Rock Health Capital, moderated the panel.
Panelists expressed enthusiasm tempered by caution regarding the renewed interest in digital health. Kurt Sheline, a partner at Echo Health Ventures, emphasized the need for solid business fundamentals. “You still need to come out with a solid business,” Sheline said, adding that public markets consider the trade-off between growth and profitability. He noted that unprofitable companies need rapid growth,while slower-growing companies require high margins.
Sheline added that many successful private companies are navigating this trade-off, balancing growth and profitability to determine the right time for an IPO.
Siobhan Nolan Mangini, a partner at Venrock, pointed out that the bar for digital health IPOs is now exceptionally high. “I think it’s hugely positive now that we have Hinge and Omada that just went out,” Mangini said. She cited the “rule of 40,” where growth and EBITDA margins should exceed 40%. Hinge Health, with nearly $400 million in revenue and 80% margins, exemplifies this high standard.
Amy Belt Raimundo, vice president at Kaiser Permanente Ventures, noted a return to fundamentals in health tech. The exuberance following the COVID-19 pandemic in 2021 lacked a solid foundation. Kaiser Permanente has invested in Omada Health as 2014.
“Having to come out with good fundamentals is, I think, the next wave,” Raimundo said.”that there is an exit market here,which then will spawn more investment.”
What’s next
The focus shifts to companies demonstrating strong fundamentals, balancing growth and profitability to attract public market investment and spur further growth in the digital health sector.
Worth a look