Digital healthcare investors have been opening their wallets, with the hopes that devices, algorithms and patients' desire to control their personal health data will equal big business. Now these same investors are ready to see the payouts as these companies file for initial public offerings, according to CNBC.
Livongo, a provider of services and tools for patients to monitor chronic medical conditions, is leading the digital health IPO pack. The company has reportedly hired bankers for its IPO. It is expected to take time for public market investors to determine if the company's business model can generate predictable revenue.
"There hasn't [been] a true digital health IPO," Marc Albanese, senior director of research at CB Insights, told CNBC. "So, there is a bit of pressure on Livongo."
Change Healthcare is also leading the digital IPO trail. The company, which provides technology to reduce the costs of healthcare, filed its prospectus in March.
"To have a well-funded digital health company performing well and going public, it validates the digital health thesis," Blake Wu, a health investor at venture capital firm New Enterprise Associates told CNBC.
Many of the digital health companies that have filed for IPOs have been familiar to Wall Street. Veeva Systems and AthenaHealth sell cloud-based software and Fitbit sells devices. Both business models were common knowledge on Wall Street.
The digital health companies making a push for IPOs now are a little different as they emphasize the combination of technology and services, according to CNBC. This might include app-based behavioral coaching or nudges to promote healthy behavior.
"Livongo is truly a cross between health and tech," Mr. Albanese said. "Its performance will set the tone for how similar companies are received, which makes it so important."