The digital MSK health company said that it tripled its customer base and quadrupled its revenue in 2020.
With its latest $300 million funding round, Hinge Health is now one of the most valuable startups in digital health.
The company, which launched in late 2014, offers a digital platform that uses wearable sensors and one-on-one health coaching to deliver in-home musculoskeletal therapy.
Hinge Health’s “heavily oversubscribed” series D round was jointly led by Coatue Management and Tiger Global with participation from existing investors Atomico, Insight Partners, Quadrille, 11.2 Capital, Lead Edge Capital, Bessemer Venture Partners and Heuristic Capital.
The company has raised $426 million to date, according to Crunchbase.
The deal values Hinge Health at $3 billion, according to the company. The startup is eyeing a potential initial public offering in 2022.
“It’s one of the options on the table,” Gabe Mecklenburg, Hinge Health co-founder and president, told Fierce Healthcare. “We have enough cash on the table not to need additional funding. Three hundred million dollars is larger than the average IPO, and having access to that capital in the private market gives us a lot of agility. That being said, we’re evaluating different options: direct listing, SPAC (special purpose acquisition company) and an IPO. There will be a time when we will want to go public.”
Daniel Perez, chief executive at Hinge Health, told Reuters the company will look for innovation in pricing in an IPO to eliminate huge first-day trading pops some tech companies have seen.
Airbnb Inc., for example, opened at $146 per share on its first day of trading, more than doubling the $68 per share price set by underwriters, causing concerns about leaving money on the table.
“That’s a scenario we want to avoid,” Mecklenburg said.
Accelerated growth during the COVID-19 pandemic
As Americans accelerated digital health care adoption during the pandemic in 2020, Hinge Health’s customer base tripled, revenue quadrupled and customer retention continued at 100%, and the fourth quarter alone saw a 937% growth in added covered lives, the company reported.
The startup was seeing strong growth before the health crisis, with revenue consistently tripling year over year, Mecklenburg said.
“[COVID-19] has poured gasoline on the fire, but it’s part of a larger trend of the adoption of the Hinge Health solution,” he said.
Mecklenburg and Perez both have a personal history of musculoskeletal injuries and started Hinge Health to improve outcomes for musculoskeletal disorders.
Hinge Health developed a digital musculoskeletal clinic that offers a complete clinical care model for back and joint pain with dedicated programs for different patients’ needs, from early-stage prevention, acute pain, chronic pain or surgical rehabilitation.
The company offers patients a more convenient option of virtual, in-home musculoskeletal care. The solution guides users through musculoskeletal exercises using sensors to track movement. The sessions are augmented with one-on-one virtual coaching sessions with physical therapists or clinicians.
More than 1 in 2 American adults suffers from musculoskeletal conditions. Musculoskeletal represents one-sixth of all spending in the U.S. healthcare market and is the top cost driver of healthcare spending, equating to a total addressable market estimated at over $300 billion, according to the company.
The shift to working from home in the last year has aggravated the issue, with 70% of employees reporting their musculoskeletal pain has either gotten worse or they are experiencing new pain since making the switch to remote working, the company said.
Hinge Health currently works with Fortune 500 companies like Boeing, Salesforce and US Foods and has 300-plus health plan, employer and public sector customers.
Studies have supported that Hinge Health’s solution leads to improved outcomes and reduced healthcare costs. A study from the University of California, San Francisco (UCSF) and Stanford University clinically validated that Hinge Health users reported an average 69% reduction in pain and 58% reduction in depression and anxiety.
A peer-reviewed, randomized control study found that Hinge Health avoided two of three surgeries for participants. A medical claims study conducted by food service distributor US Foods found musculoskeletal surgery spend decreased by 56% for Hinge Health participants compared to a 30% surgery spend increase for nonparticipants.
“Hinge Health is eliminating variability in healthcare quality and instead delivering better outcomes through consistent digital-first clinical care no matter where a person lives across the country,” Perez said in a statement.
The company will use the fresh capital to expand the solution’s clinical capabilities with a focus on R&D as well as hiring medical staff and possibly expanding to new international markets, Mecklenburg said.
“There may be some M&A activity as well as we look to plug certain gaps,” he said.
The musculoskeletal space is attracting new digital health players. Sword Health raised $9 million in the beginning of 2020, and Kaia Health banked a $26 million funding round in June.
In May, Omada Health scooped up digital health company Physera for a reported $30 million to add virtual musculoskeletal care to its services.
