Digital health makes its Wall Street debut

After a long IPO drought for the health-tech sector, two leading startups in the space went public yesterday — and it went well, to put it mildly.

Salt Lake City-based Health Catalyst, which sells tools to hospitals to help them crunch their own data, closed yesterday afternoon at about 50% over its offering price. Meanwhile, Silicon Valley-based Livongo, which charges employers to monitor and coach their employees with chronic diseases, closed at 36% over its offering price, good for a market capitalization of about $4.3 billion. That means Livongo is now valued higher than 33-year-old electronic health records vendor Allscripts, which brought in more than 13 times as much revenue as Livongo in the first three months of this year.

The IPOs, expected to lead the way for a new generation of startups in the sector, are raising interesting questions on Wall Street, as STAT’s Rebecca Robbins reports. One of them: Can these companies succeed where their predecessors have failed? Digital health, after all, has a spotty track record in the public markets.

Health Catalyst CEO Dan Burton, though, is optimistic. He said in a phone interview yesterday that he and his team were mindful of not going public too early, before they’d reached certain milestones, like enough recurring revenue and a sufficiently wide customer. Reaching those goals “was something that gave us a level of assurance that we were ready,” Burton said.

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