Hinge Health’s IPO: A 17% Pop Masks a Down-Round Trend
Digital physical therapy company Hinge Health experienced a positive first day on the New York Stock Exchange, closing at $37.56 on Thursday. This represented a roughly 17% increase over its initial public offering (IPO) price of $32 set the previous day. Hinge Health’s IPO marks it as one of the many companies that went public in a down-round IPO.
Despite the first-day pop, Hinge Health’s public valuation is significantly lower than its last private market valuation. The company’s market capitalization, excluding employee options, is approximately $3 billion. This is less than half of the $6.2 billion valuation it achieved in its October 2021 Series E funding round, which was led by Tiger Global Management. Source
The trend of companies proceeding with IPOs at valuations below their last private funding rounds, once heavily avoided, is becoming more common. This shift reflects a changing perspective, particularly for companies whose peak valuations occurred during the investment surge of 2020-2021.
Other companies that have experienced similar down-round IPOs include Reddit, which debuted last year with a valuation of approximately $5.4 billion, significantly lower than its $10 billion valuation from 2021. Source
ServiceTitan is another example, with its IPO valuing the company at about $6.3 billion, below the $7.6 billion valuation it secured in a Series H round two years prior. Source, Source
Hinge Health’s IPO generated $437 million, with approximately $237 million going directly to the company and the remaining funds allocated to existing investors. Insight Partners is the largest outside shareholder, holding 19% of the stock, while Atomico possesses 15% of all shares. Other venture capital firms with approximately 8% ownership include 11.2 Capital, Coatue, Tiger Global, and Bessemer Venture Partners, as detailed in the company’s latest S-1 filing. Co-founders Daniel Perez and Gabriel Mecklenburg own 18.9% and 8.2%, respectively.
Hinge Health utilizes wearable sensors and computer vision technology, remotely monitored by a clinical care team of physical therapists, physicians, and board-certified health coaches, to alleviate musculoskeletal pain.
Omada Health, another digital health company offering virtual care for chronic conditions, has also filed to go public. Omada was last valued in 2022 at just above $1 billion, competing with Hinge Health in the musculoskeletal space.
Sword Health, a primary competitor to Hinge Health, was valued at $3 billion approximately a year ago. Sword Health’s CEO, Virgilio Bento, indicated a potential IPO in 2025 if growth targets are met and macroeconomic conditions are favorable.
