Hinge Health pops 17%, but joins growing ranks of down-round IPOs

Hinge Health, a digital physical therapy company, closed its first day of trading on the New York Stock Exchange on Thursday at $37.56, up about 17% over the $32 IPO price it set the previous day.

That’s a good first-day result. But even with the pop, Hinge’s public valuation is significantly less than its last private market one. The 11-year-old company’s approximate market capitalization, excluding employee options, was about $3 billion, which is less than half of the $6.2 billion Hinge attained in its October 2021 Series E funding round, which was led by Tiger Global Management.

Until recently, companies went to great lengths to avoid down-round IPOs. However, the stigma associated with going public below the last private valuation has lessened significantly if that valuation was during the heady 2020-2021 era.

Companies whose IPOs are priced lower than their last private valuation by VCs include Reddit, which debuted last year at about $5.4 billion, roughly half its $10 billion valuation from 2021.

Another example is ServiceTitan, whose IPO valued it at about $6.3 billion, below the $7.6 billion valuation it secured in a Series H round two years earlier.

Hinge Health’s IPO raised $437 million, with about $237 million in proceeds going directly to the company and the remainder to its existing investors. The company’s largest outside shareholders are Insight Partners, which holds 19% of all stock, and Atomico, which has 15% of all shares. Other venture capital firms that own approximately 8% of Hinge’s shares include 11.2 Capital, Coatue, Tiger Global, and Bessemer Venture Partners, according to the company’s latest S-1 filing. Co-founders Daniel Perez and Gabriel Mecklenburg own 18.9% and 8.2%, respectively.

The company aims to reduce musculoskeletal pain with the help of wearable sensors and computer vision technology remotely monitored by a clinical care team of physical therapists, physicians, and board-certified health coaches.

Omada Health, another digital health company, filed to go public earlier this month. The 13-year-old startup offers virtual care between doctors’ visits for chronic conditions like diabetes and hypertension, and competes with Hinge Health in the musculoskeletal pain reduction space. Omada’s biggest shareholders include U.S. Venture Partners and Andreessen Horowitz, and was last valued in 2022 at just above $1 billion.

Hinge Health’s primary competitor is Sword Health, which was valued at $3 billion about a year ago. At that time, Sword Health’s CEO, Virgilio Bento, told TechCrunch that the company might also pursue an IPO in 2025 if it grows as expected and the macroeconomic environment is favorable.