Hinge Health IPO: Valuation Drops Despite 17% Pop

Hinge Health's Public Debut and Valuation

Hinge Health, a company specializing in digital physical therapy, concluded its initial day of trading on the New York Stock Exchange on Thursday at $37.56.

This price represented an increase of approximately 17% compared to the $32 initial public offering (IPO) price established the previous day.

Initial Performance and Market Capitalization

The first-day performance was positive. However, the company’s public valuation currently stands considerably lower than its most recent private valuation.

With employee options excluded, Hinge Health’s market capitalization is around $3 billion.

This figure is less than half of the $6.2 billion valuation achieved during its Series E funding round in October 2021, which was spearheaded by Tiger Global Management.

Shifting Attitudes Towards Down-Round IPOs

Historically, companies actively sought to avoid IPOs that resulted in a lower valuation than their last private funding round.

The negative perception surrounding public offerings below previous private valuations has diminished, particularly when those valuations occurred during the peak of 2020-2021.

Recent Examples of Down-Round IPOs

Several companies have recently launched IPOs priced below their last private valuations.

Reddit, for instance, debuted last year with a valuation of approximately $5.4 billion, which is about half of its $10 billion valuation from 2021.

ServiceTitan is another case, with its IPO valuing the company at around $6.3 billion, falling short of the $7.6 billion valuation secured in its Series H round two years prior.

Hinge Health's IPO Details

The IPO for Hinge Health generated $437 million in capital.

Of this amount, roughly $237 million went directly to the company, while the remaining funds were distributed to existing investors.

Insight Partners holds the largest stake among outside shareholders, possessing 19% of all stock.

Atomico follows with a 15% share of all shares.

Other venture capital firms with approximately 8% ownership each 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% of the company, respectively.

Hinge Health's Technology and Approach

The company focuses on alleviating musculoskeletal pain through the use of wearable sensors and computer vision technology.

A clinical care team, comprised of physical therapists, physicians, and board-certified health coaches, remotely monitors patient progress.

Competition in the Digital Health Space

Omada Health, another digital health company, filed for an IPO earlier this month.

This 13-year-old startup provides virtual care for chronic conditions such as diabetes and hypertension, and competes with Hinge Health in the musculoskeletal pain management sector.

Omada’s major shareholders include U.S. Venture Partners and Andreessen Horowitz, and its last valuation was slightly above $1 billion in 2022.

Key Competitor: Sword Health

Hinge Health’s primary competitor is Sword Health, which was valued at $3 billion approximately a year ago.

Sword Health’s CEO, Virgilio Bento, indicated to TechCrunch that the company may also consider an IPO in 2025, contingent on continued growth and a favorable macroeconomic climate.