Dive Brief:
Omada Health went public Friday, marking the second recent digital health IPO after a dry spell for the sector.
The digital chronic condition management company opened at $23 per share, a 21% bump over its public offering price of $19 per share.
Omada’s debut comes on the heels of virtual musculoskeletal company Hinge Health’s IPO last month. “I think it is definitely a promising bellwether for the industry,” John Beadle, co-founder and managing partner of Aegis Ventures, told Healthcare Dive.
Dive Insight:
Omada, which was founded in 2011 and has raised hundreds of millions of dollars in venture capital funding, offers digital management programs for conditions like diabetes, obesity and hypertension. Care teams also work with patients to build treatment plans and equip users with connected devices like blood pressure cuffs or digital scales.
The company filed to go public in May. Now, Omada is trading on Nasdaq under the ticker symbol “OMDA,” having raised $150 million in its IPO. The firm’s public offering price of $19 was at the midpoint of the expected range it released Thursday.
Omada’s IPO comes as the digital health sector has seen few public offerings in recent years. A surge of companies notched public exits in 2021, but the number has declined significantly in recent years.
Many digital health companies that went public during the boom — particularly ones that used mergers with special purpose acquisition companies — performed poorly, and may have been better off as strategic M&A targets, Beadle said.
However, the industry seemed poised for more companies to make the leap this year, and their performance could push others to follow in their footsteps, experts told Healthcare Dive late last year.
Now, two digital health companies have gone public in recent weeks. Hinge debuted on the New York Stock Exchange in May, opening 23% above its public offering price. Still, the sector isn’t seeing a flood of digital health companies moving to go public like in 2021, Beadle said.
“I don’t think there’s that many companies that are ready and have the operational maturity, growth trajectory [and] outcomes that Hinge and Omada do,” he said. “But I think both companies were exceptionally well prepared to do well when they went public.”
Though Hinge had given back most of its early post-IPO gains by the time of Omada’s pricing, its performance still provided a “good tailwind” for the chronic conditions management firm, Edward Best, co-chair of the capital markets practice at Willkie Farr & Gallagher, said via email.
Still, larger macroeconomic conditions will also impact whether more digital health companies decide to make the leap to the public markets. Some technology companies decided to delay their IPOs this spring after tariffs announced by President Donald Trump roiled the markets.
Stability is key to the IPO market, as investors will likely choose safer investments during periods of volatility, Best said. Companies need to think about their own operations and readiness to go public as well as broader conditions.
“The IPO market has periods when the window is more open than others. A company that is ready and wants or needs to go public when the window is open should certainly take a long hard look within,” he said. “Waiting too long could mean missing the window.”
