Hinge Health is pushing forward with its IPO despite the market uncertainty that led several other companies to shelve their plans. Now, Hinge Health is slated to become the first digital health tech company to go public in two years.
Could Hinge Health’s plans open up the health tech IPO floodgates? While it may be too soon to tell, early signs are positive. Shortly after Hinge’s announcement, health tech company Omada Health announced its own IPO plans. Other health tech companies will surely be watching these IPOs closely.
Below, we leverage insights from the AlphaSense platform to learn more about Hinge Health, its value proposition, and how it is positioned in the digital health market.
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Hinge Health 101
Hinge Health is a virtual physical therapy company specializing in guided physical therapy using artificial intelligence and remote coaching. Founded in 2014, the company has grown to serve over 1.2 million members and partner with more than 2,200 companies in its goal “to build a new health system that transforms outcomes, experience, and costs by using technology to scale and automate the delivery of care.”
Hinge Health got its start in musculoskeletal pain management and has since expanded into new focus areas, including women’s health. The company states it has seen positive treatment outcomes, with members reporting reductions in pain, depression, pain-related work absenteeism, and their expectations of needing surgery.
The Hinge Health platform leverages AI, motion tracking technology, and a proprietary electrical nerve stimulation wearable device to deliver personalized and largely automated care. Members also have access to a care team of licensed physical therapists, physicians, and board-certified health coaches who design and monitor personalized care plans.
Hinge Health’s Competitive Advantages
Experts are optimistic about Hinge Health’s prospects for success post IPO. The company’s market leadership, provider partnerships, ability to generate cost savings, and unique business model are considered key differentiators.
Market Positioning and Expansion Opportunities
Experts point out that Hinge Health has the first-mover advantage in a large and underpenetrated market. The company is broadly considered the clear leader in the musculoskeletal solution space, with a strong track record of adoption across large employers and health plans.
From what I’ve seen in the market and what I’ve read, Hinge Health is the leader … From my point of view, there are three levers that can make you win the market, one is having a higher engagement in your customer base … The second reason to win is having more reasons to use … The third is having better sales channel agreements … To those three, I do believe that Hinge Health has the best platform.
Experts say Hinge Health’s unique business model differentiates it from other platforms. The company operates on a pay-per-patient basis, which rewards patient volume and recurring usage. This model enables Hinge to take advantage of durable demand for its services, with one expert pointing out that around 40% of the general population has musculoskeletal pain.
Hinge Health’s AI capabilities reduce the need for live therapists, which experts say sets the company apart from competitors. Yet company leadership has stated it is committed to further expansion as the company continues to innovate, with a focus on uncovering more AI use cases and addressing underserved patient segments. For example, Hinge Health has reported making inroads in Medicare and Medicaid, which experts believe will expand the total addressable market due to the higher prevalence of musculoskeletal pain among the elderly.
Strategic Provider Partnerships
Hinge Health’s partnerships with large health plans are seen as a strong growth catalyst. The company targets health insurers as customers, which experts say has helped Hinge scale, since signing up a large provider is effectively signing up all of their patients. A former RVP of Sales at Hinge Health says the company went from just three partnerships to around 45 during their time with the firm. Competitors concur.
Hinge Health has done a really good job at creating partnerships with these major carriers and having this be an added service to their benefit offering … They’re able to deploy those programs across their customer base through their carrier relationship.
A Senior Director with one of Hinge Health’s health plan partners pointed to Hinge as a key offering that drives plan renewals.
People love Hinge, they’re a market leader, they’ve got a great reputation. The fact that a member of ours finds out that they have Hinge included with their health plan is typically a big delighter and is commonly a reason why they might choose to renew their plan with us when open enrollment comes around.
Still, one expert believes that Hinge Health’s reputation as a tough negotiator threatens the long-term viability of its partnership strategy.
Could Hinge Health Help Employers Unlock Cost Savings?
Experts believe Hinge Health is a boon to the musculoskeletal pain management space due to the high prevalence of costly, inefficient care. They say virtual therapy is more affordable than in-person therapy. Musculoskeletal pain is also a significant cost burden on employers due to lost man hours.
In treating [musculoskeletal conditions], there’s vast room for potential improvement or synergies because right now it’s really costly and inefficient. There’s often unnecessary or preventable care that health plans have to pay for. Having a virtual solution such as the one Hinge offers, it can help patients or members manage their pain better, reduce unnecessary care, and do it in a more cost-efficient manner.
With companies being cautious about their spending in light of market uncertainty, one expert fears Hinge Health may not provide enough value to justify the additional costs. Yet others point out that Hinge’s ability to generate cost savings would likely more than make up for its upfront cost.
There is a really, really hard-core cost-saving component to this product. If the message is delivered correctly and the vendor is able to maybe put more fees at risk or be a little bit more convincing or have a stronger ROI calculation, I think that people would still be willing to buy in a recession because there’s definitely cost savings associated with it.
A Growth Opportunity
Even though the musculoskeletal pain management market has matured, it is still broadly seen as an underserved market. The total addressable market is large and growing, since the U.S. population is aging and older adults generally utilize non-invasive treatments and virtual therapies to a greater degree than other demographics, according to a Hinge Health survey. Hinge Health’s management believes the company is uniquely positioned to capitalize on this untapped potential.
Hinge Health is unlike any enterprise software or health-tech company that’s ever come before. We’re using technology to truly scale the delivery of care. Our software and connected hardware automates away ~95% of human clinician hours associated with physical therapy while improving people’s health. ...
Despite [our] progress, our current contracted lives only represent 5% of our total addressable market.
Hinge Health is also seen as having an opportunity to further increase its total addressable market by expanding into new service areas. In-person musculoskeletal care is pinpointed by a former Hinge Health VP as a natural progression for Hinge Health and its peers.
There’s still a lot of market left to obtain in the digital space, just in the space that they’re in. ….To capture a bigger part of the MSK pie is to be able to also provide and capture some of the in-person care that is being done for MSK. I think that’s going to be a natural progression for any digital vendor, because health plans are looking for continuity of care.
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