Waystar's initial public offering could lead to a wave of digital health companies going public.
Waystar was the first digital health company to go public since August 2022. Companies have been hesitant to enter the public markets but analysts said the tide is beginning to turn, albeit slowly, starting with Waystar's Nasdaq debut Friday.
Read more: Will Waystar kick off another wave of digital health IPOs?
Waystar had a tepid start Friday with shares closing down 3.72% from the $21.50 per share offering price. The stock rallied Monday to close at $22.10 per share.
The industry is flush with digital health companies valued at more than $1 billion, called 'unicorns', whose investors are seeking payouts. There were 36 unicorns in 2023, up from 15 in 2020, according to Pitchbook data. While investor interest is only a piece of a company's decision to go public, the growing number of unicorns shows a robust pipeline of potential candidates.
Here are some companies analysts predicted could follow Waystar with their own IPOs.
Ro
Ro is a direct-to-consumer telehealth company that prescribes medications for conditions such as obesity, fertility, hair loss and erectile dysfunction. Analysts said the closest comparison to Ro is Hims & Hers, a direct-to-consumer telehealth company treating similar conditions that has seen positive stock performance since it went public in 2021.
The company is leaning into glucagon-like peptide agonists and launched a tracking platform showing real-time availability of GLP-1s in May. Aaron DeGagne, senior analyst at Pitchbook, predicted an IPO for the company in the next 15 months but did not rule out something happening more quickly. Market interest in GLP-1s and the strong public performance from one of its competitors make it a safe bet, he said.
“Ro has long wanted to go public,” DeGagne said.
A Ro spokesperson declined to comment on the company’s IPO plans and said it was focused on delivering patient care.
Noom
Since October 2022, telehealth company Noom has undergone an internal transition as it attempts to appeal to more enterprise customers rather than rely on direct-to-consumer subscription revenue. It rolled out Noom for Work in October 2022 and followed with a telemedicine platform, Noom Med, in May 2023.
The platform offers clinical services that aim to help patients lose weight, including lab tests to assess their metabolic health, video consultations with physicians who specialize in obesity care and can prescribe GLP-1 medications.
“They’ve obviously hit a great tailwind,” said Christina Farr, a health technology investor and consultant.
A Noom spokesperson declined to comment.
Hinge Health
Virtual musculoskeletal health company Hinge Health has raised more than $1 billion in venture capital funding since it was founded in 2014. The company provides digital care for patients dealing with joint and muscle problems through its health plan and its employer customers.
Hinge last shared its valuation of $6.2 billion in October 2021. In September 2023, the company posted a job opening for a senior director of Securities and Exchange Commission reporting and technical accounting, further fueling IPO speculation.
Hinge appears “primed” for an IPO due to how much the company has raised, said Alex Lennox-Miller, lead analyst for healthcare information technology at research firm CB Insights. Still, he said the lofty valuation was unlikely to hold up if it were to go public.
“I don’t know that they’ll have any choice, although we don’t have the visibility into its finances,” Lennox-Miller said. “Another [funding] round would almost have to be a down round, but it raised $600 million in late 2021, so it shouldn’t be under immediate pressure.”
A Hinge spokesperson declined to comment.
Sword
Virtual care and artificial intelligence company Sword Health said last week it closed a $130 million financing round that increased its valuation to $3 billion. Co-founder and CEO Virgílio Bento re-emphasized the company’s long-term plan to go public but didn't provide a timeline.
“There is no active process for that to happen,” Bento said last week. “That could happen in 2025. Honestly, that could also happen in 2026. It's going to be dependent on the macro [economic] environment. It's going to be dependent on our ability to execute on our plan.”
Sword pairs AI and motion-tracking technology with in-house clinicians to provide virtual physical therapy programs to patients. Both DeGagne and Lennox-Miller said Sword’s fundamentals are similar its competitor Hinge.
The company has previously raised from well-known venture capital firms including Founders Fund, General Catalyst and Khosla Ventures.
Omada Health
Digital chronic care management company Omada has partnered with big healthcare and tech companies in the last past two years. It partnered Amazon on its health condition programs in January and with Salt Lake City-based Intermountain Health in January 2023.
Omada offers a similar product as Livongo, which went public in July 2019 and was later acquired by Teladoc in August 2020. The company raised $192 million in a February 2022 Series E funding round that boosted its valuation to $1 billion.
“There are going to be a lot of eyes on it given what happened with Livongo,” Farr said. “This is a true digital health company and it will be defining for the category."
An Omada spokesperson declined to comment.
Headspace
While some subsectors of digital health don't have many public market comparisons, the mental health startup space does — Teladoc, BetterHelp, Talkspace and Amwell to name a few. Headspace, which has raised more than $300 million and has a diversified business, could appealing to public-market investors because of that familiarity, analysts said.
“I think this would probably happen later, probably 2025, realistically,” DeGagne said. “There are pluses and minuses to having a public comp out there.”
However, the stocks of both Teladoc and Talkspace have underperformed, which could give investors pause, DeGagne said.
A Headspace spokesperson declined to comment.
