Digital health startups raised $8.1B from investors in 2018. However, with the exception of Roche’s $2B purchase of Flatiron Health and Amazon’s $1B acquisition of PillPack, there has been a lack of significant exits within the digital health landscape. In the past, many IPOs came from companies with business models familiar to Wall Street. For example, Veeva Health and AthenaHealth have a business model focused on selling cloud-based software while Fitbit focuses on selling devices.
Unlike in previous years, digital health companies planning to IPO have business models that emphasize combining technology and services. Livongo is a provider of chronic disease management services bundled with a blood glucose meter. It has hired Morgan Stanley, Goldman Sachs, and J.P. Morgan Chase to manage their IPO. According to Marc Albanese, senior director of research at CB Insights, “there hasn’t been a true digital health IPO,” putting a bit of pressure on Livongo. Undoubtedly, Livongo’s IPO performance will set the tone for how similar companies are received by Wall Street.