9 Promising Digital Health Startups Poised to Ride the IPO Wave
Several established digital health startups are preparing to enter the public market within the next year, signaling a new era for healthcare innovation.
While major tech IPOs often dominate headlines, a significant movement is underway among smaller digital health startups that are revolutionizing healthcare and gearing up for public offerings in the coming 12 months. Though not household names, these companies have operated for nearly a decade or longer, attracting substantial investor interest and capital, as reported by Business Insider.
Among these nine notable digital health startups are ZocDoc, 23andMe, HeartFlow, Modernizing Medicine, Livongo, Health Catalyst, Change Healthcare, Phreesia, and Peloton. Notably, the latter five have recently disclosed plans to go public, breaking a multi-year lull in healthcare IPO activity.
Bill Evans, CEO and managing director of Rock Health, explains, "We are now witnessing a cohort of companies mature enough to captivate investor attention. Public markets are beginning to recognize the transformative impact these firms have on healthcare, unveiling significant untapped value."
Implications for Investors
In the first half of 2019 alone, digital health companies secured approximately $4.2 billion through 180 funding rounds. Should this momentum persist, total annual funding could reach a record $8.4 billion. Impressively, 69% of this capital originates from returning investors, highlighting a seasoned investment landscape rather than a surge of inexperienced participants, according to Rock Health.
Since 2011, digital health startups have attracted $36.3 billion in venture capital. Historically, investors have primarily realized returns via mergers and acquisitions (M&As), which account for $4.1 billion, compared to $1.3 billion through IPOs. The last significant IPO in the sector occurred in 2016. However, with multiple startups announcing IPO intentions, this trend is poised to shift.
California-based 23andMe, established in 2006, offers DNA testing kits enabling customers to explore ancestry and assess genetic risks for hereditary conditions. Having raised $792 million, the company is valued at $2.5 billion, per Barron’s.
New York City’s ZocDoc, founded in 2007, provides an online platform for booking medical appointments, often within 24 hours. Serving around six million users monthly and backed by high-profile investors like Jeff Bezos, ZocDoc’s valuation stands near $2 billion, according to CNBC.
HeartFlow, another 2007-founded company, aims to revolutionize cardiovascular diagnosis and treatment through software that transforms CT scans into personalized 3D coronary artery models to detect blockages. Valued at $1.56 billion, HeartFlow serves patients globally.
Looking Forward
Of the $36.3 billion invested in digital health ventures since 2011, $29.4 billion remains invested without an exit. This suggests substantial latent value in the sector. Unlocking this potential will come from upcoming IPOs and ongoing M&A activity. Investors should closely watch mature startups likely to announce public offering plans within the next year.
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