The digital health sector has posted its second recent capital-markets success, with virtual-care company Omada Health Inc. listing its shares on the Nasdaq to a warm welcome.
The investment banks bringing to market Omada—a group of eight institutions led by Morgan Stanley, Goldman Sachs and J.P. Morgan—set the offering price of 14-year-old Omada at $19 per share late on June 5. The following afternoon, the shares (Ticker: OMDA) closed trading at $23—roughly where they first changed hands earlier but below their midday peak above $27—and were changing hands around that level on June 9.
Omada partners with insurers and pharmacy benefit managers to market care programs focused on prediabetes, diabetes, obesity, hypertension and musculoskeletal conditions. The company’s client base comprises more than 2,000 employers, health systems and other entities and it narrowed its net loss to $9.4 million during the first quarter on sales of $55.0 million.
The successful IPO means co-founder and CEO Sean Duffy took home about $150 million that will fund Omada’s growth. The company finished March with more than 679,000 people enrolled in one or more of its programs, a number that was up nearly 50 percent from a year earlier.
Omada’s investment banks finalized the company’s IPO about three weeks after Hinge Health Inc., a digital player focused on helping treat musculoskeletal conditions, completed its IPO. Hinge, which last year booked revenues of $390 million and turned profitable early this year, also was well received by investors: Its shares (Ticker: HNGE) finished June 6 trading at nearly $39 compared to their $32 IPO price. At that level, the company’s market capitalization tops $3 billion.
“What stands out in looking at both companies is not just their growth, but the consistency: strong net revenue retention, deep customer relationships, and a track record of tying commercial success to measurable outcomes,” Beadle told Healthcare Innovation. “These IPOs are best seen not as isolated financing events (this is how nearly all of the 2021 opportunistic SPACs should be regarded), but the natural next chapter in building durable businesses.”
The success of Hinge’s launch on Wall Street is likely to lead leaders of other promising healthcare technology ventures to test the public market, PitchBook Data Inc. analysts Aaron DeGagne and Ben Riccio wrote late last month. In a note published after Hinge’s IPO and before Omada’s, the duo said “condition-specific virtual care companies focused on employer markets” are likely to lead a wave of digital health IPOs and called out Sword Health (another venture focused on the musculoskeletal market), as well as Noom, Spring Health and Zocdoc, among others, as candidates to come public.
