Large companies like Lyft, Pinterest, and Uber have made big-splash IPOs in 2019, and Slack and Airbnb are expected to join them. But behind the headline-making companies is a wave of digital health startups that have been transforming the health industry for close to a decade or more—and they are either announcing plans to go public or are rumored to be preparing for an IPO.
Nine of these digital health startups are ZocDoc, 23and Me, HeartFlow, Modernizing Medicine, Livongo, Health Catalyst, Change Healthcare, Phreesia, and Peloton.
“Now we’re seeing a group that is mature enough for investors to take an interest in,” said Rock Health CEO and Managing Director Bill Evans. “The public markets are beginning to understand that these companies are transforming healthcare. They’re realizing that there’s a lot of value to unlock.”
In the first half of 2019, digital health companies have raised as much as $4.2 billion over 180 deals; if dealmaking continues at this pace, we may see $8.4 billion—a record-breaking number. Of that financing, 69 percent is coming from return investors, according to Rock Health, and that means digital health is a maturing investment sector that isn’t just getting cash from new, inexperienced investors.
Since 2011, $36.3 billion has been invested in digital health startups. Most of the time, exits that allow investors to get a return on the money they invested have been in the form of mergers and acquisitions. Of that total $36.3 billion total invested, $4.1 billion has been realized in the form of M&As, as opposed to just $1.3 billion for IPOs. But $29.4 billion is still waiting for an exit option.
According to Investopedia, some of that unlocking will come in the form of the IPOs planned to take place this year, but others will come from continued M&A deals. They recommend that investors interested in digital health should monitor the other mature firms that are likely to announce plans to go public over the next year.
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