IPO

Digital Health Firms Prepare To Go Public

Some digital health companies are finally getting set to go public.

According to CNBC, Livongo, which provides services and tools to help people manage chronic medical conditions, has reportedly chosen bankers for its IPO. Healthcare data company Health Catalyst has done the same, while Change Healthcare, which provides technology to lower health care costs, filed its prospectus in March.

“To have a well-funded digital heath company performing well and going public, it validates the digital health thesis,” said Blake Wu, a health investor at venture capital firm New Enterprise Associates.

So far most of the notable IPOs in the market have been from companies that have business models well-known to Wall Street, such as Veeva Systems and AthenaHealth, which sell cloud-based software, and Fitbit, which sells devices.

The current crop of digital health companies ready to go public are more focused on the combination of technology and services. For example, Livongo works with companies like Amazon, Microsoft, PepsiCo, Walgreens and Delta to provide technology that employees with diabetes can use to monitor and manage their disease. Founded in 2014, the firm has expanded to also help people with high blood pressure and mental health conditions such as depression and anxiety.

But Marc Albanese, senior director of research at CB insights, says it will take time to find out of this business model can actually generate predictable revenue, as well as result in long-term profitability.

“There hasn’t be a true digital health IPO, ” Albanese said. “So there is a bit of pressure on Livongo.”

“Livongo is truly a cross between health and tech,” he added. “Its performance will set the tone for how similar companies are received, which makes it so important.”

Livongo is expected to make more than $100 million in revenue this year, an increase from $70 million in 2018. The company has reportedly hired Morgan Stanley, Goldman Sachs and J.P. Morgan Chase to manage its IPO.

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