Investors in digital health have been opening their wallets in recent years, with the promise that the coming together of devices, algorithms and consumers’ growing obsession with personal health data will translate into big business.
Livongo, a Silicon Valley provider of services and tools that help people manage chronic medical conditions, has reportedly picked bankers for its IPO, as has HealthCatalyst, a health-care data company. Change Healthcare, which provides technology to bring down the costs of health care, filed its prospectus last month.
in 2018, health-tech start-ups raised more than $8 billion, but the only significant exits came from a few acquisitions, like Roche’s purchase of Flatiron Health for almost $2 billion and Amazon’s $1 billion acquisition of online pharmacy PillPack. For investors to keep putting in capital, they need companies to not only go public but also to impress financially once they debut.
“To have a well-funded digital heath company performing well and going public, it validates the digital health thesis,” said Blake Wu, a health investor at venture capital firm New Enterprise Associates. Wu’s investments include Bright Health, a provider of affordable health insurance, and Pager, a digital health platform that helps consumers connect with providers.
To date, most of the notable IPOs in the health-tech market have been from companies with business models that are familiar to Wall Street. For example, Veeva Systems and AthenaHealth sell cloud-based software and Fitbit sells devices.