Physical therapy company Hinge Health went public this week in a blockbuster move for the digital health market. Now, as a public company, Hinge Health is planning to keep investing heavily in AI to automate care delivery further.
It’s the first healthcare delivery startup to IPO in years — and for the first mover, it’s setting a strong example. In the first quarter of the year, Hinge Health recorded an 81% gross margin and brought in $123.8 million in revenue with a $17.1 million profit, giving investors the high margins and the profitability they’ve long sought in healthcare IPOs.
CEO Daniel Perez told Business Insider that the startup has been able to hit those financials, in part, by using AI to help slash 95% of clinician hours spent on PT.
“The long-term vision is to continue to peel away aspects of in-person care and deliver the care itself via technology,” Perez said in an interview Thursday morning, before Hinge Health’s stock began trading.
Perez cofounded Hinge Health with Gabriel Mecklenburg in 2014 to provide virtual care for musculoskeletal conditions, such as joint and back pain. The startup provides personalized care plans, exercise therapy, messaging with clinicians, and wearable pain-relief devices.
It’s already leveraging AI for care coordination and motion tracking, using AI-powered computer vision to track patient movements during exercises and adjust their treatment plans based on the feedback.
The company is also planning to expand outside physical therapy into new care areas, Perez said. While he didn’t name what specialties Hinge Health will target next, he said the company anticipates making announcements this summer about its efforts to dig deeper into musculoskeletal care, as well as releases in 2026 that enable Hinge Health to deliver care in specialties adjacent to physical therapy, elevated by AI.
“At some point, whether 10, 50, or 200 years in the future, care delivery will be automated with technology. And that’s a good thing,” he said.
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Automation in volatile markets
Hinge Health began trading on the New York Stock Exchange Thursday with the ticker “HNGE” at an initial share price of $32, at the top end of its expected range, at a $2.6 billion valuation. Its shares popped at its public market debut, jumping to $39.25 a share, 23% up from its initial pricing.
The company was forced to consider delaying its IPO in April after President Donald Trump’s wide-reaching tariff plans sent markets reeling. Hinge Health publicly resumed its plans in May after the markets stabilized.
Hinge Health sells to employers and health plans to help lower their healthcare costs, including by automating traditional physical therapy. Perez said that puts the company in a good position to weather market volatility.
“We’ve had several customers who are facing financial challenges reach out and accelerate their implementation of Hinge Health because they need our help to lower their cost structure overall,” he said. “So we’re actually seeing tailwinds to our business with some of the volatility.”
Stocks tumbled on Friday after Trump published multiple social media posts about issuing additional tariffs. The S&P 500 index fell about 1%. In the same period, Hinge Health’s stock rose about 4%.
Perez added that Hinge Health was able to go public largely because of improvements in its positive cash flow, which would allow it to weather market turbulence. That’s why his biggest piece of advice for the next iteration of digital health companies hoping to go public is to “become a sustainable business.”
“When you become a sustainable business, the questions you have with prospective investors are very, very different. It’s, ‘how fast could you grow?’ Not, ‘will you still be around?'” Perez said. “There are a lot of digital health companies that came before us that have struggled simply to become sustainable.”
For many digital health companies, achieving profitability is a difficult and long-fought battle. While Hinge Health posted a profit in the first quarter of 2025, the company recorded $45 million of free cash flow in 2024 but a net loss of $11.9 million for the full year. Diabetes company Omada Health, the only other digital health company to have publicly filed for an IPO this year, reported a net loss of $47.1 million in 2024 despite continuing to grow its revenue.
Many founders like Perez are banking on AI to streamline their businesses and lower the costs of growth. Omada Health released new AI-powered nutrition tools on Tuesday to bolster its food-as-medicine push as it manages more patients on GLP-1 drugs like Ozempic. Hinge Health competitor Sword Health has been ramping up its AI tech to help clinicians manage hundreds of patients at a time, BI reported in November.
