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

Summary

Hinge Health, a digital physical therapist 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 S1 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 ...