It had been a while since any digital healthcare company had tested the IPO waters. Part of that is due to the downturn in the economy and other factors which led most digital health companies to sell rather than going public. The other part is that the average age of a company that IPOs is 12 years which means that many digital health companies just aren’t mature enough to IPO yet.
This seems to be changing some as 2 health IT companies have gone through IPOs: Change Healthcare (NASDAQ: CHNG) and Phreesia (NYSE: PHR). The Change Healthcare IPO was a little different since Change Healthcare was built out of the Mckesson and Emdeon assets. The Phreesia IPO did really well with the stock price popping 53% even though the price has fallen a bit since the initial offering.
This is just the start of IPOs in healthcare. There are 2 big IPOs already announced by Health Catalyst, and Livongo. Given Livongo’s past history as a public company and Health Catalyst’s strong position, I expect they’ll both be really successful IPOs. Will this lay the groundwork for even more health IT IPOs?
I’m not sure this is the start of a wave of healthcare IPOs. I expect most health IT companies will still opt for the M&A route instead of an IPO. The exception might be a few of the companies that are consolidating cross sections of the industry. Also, there are a few companies like Epic and MEDITECH that could have easily gone public years ago and have decided to eschew the public markets. eClinicalWorks is another example of this, but it would be quite interesting to see how they’d do on the public markets. However, I don’t expect this to happen given some of the issues they had with the FTC.
I’m not sure these companies going public will impact healthcare organizations in a significant way. I think M&A activity is much more impactful on a healthcare organization than an IPO. So, maybe these IPOs are a good thing for healthcare versus acquisitions.
What’s your take on this digital health IPO activity. Do you think it’s a good or bad thing for healthcare? Are there other companies you think will IPO in the near future? Are there companies you think won’t IPO? Let us know your thoughts in the comments or on Twitter with @HealthcareScene.