Digital Health IPO Window Opens Amid Uncertainty, M&A Activity Rises

The digital health sector is witnessing a resurgence in initial public offerings (IPOs) after a prolonged period of stagnation, though economic and policy uncertainties cloud the outlook. Meanwhile, mergers and acquisitions (M&A) activity is on the rise as companies seek alternative growth strategies.

IPO Landscape: Opportunities and Challenges

Health technology firms are showing renewed interest in going public, with experts at the HLTH conference highlighting a potential wave of IPOs in 2026 and 2027. However, the current environment poses significant challenges for companies considering this route.

Robbert Vorhoff, managing director and global head of healthcare at General Atlantic, emphasized the difficulty for management teams to commit to public offerings amid uncertainties. The ongoing federal government shutdown, now in its fourth week, has halted SEC reviews of new IPOs. Additionally, the healthcare sector is bracing for the impact of the One Big Beautiful Bill Act, which could disrupt insurance coverage and strain providers financially.

Despite these hurdles, recent success stories have emerged. Healthcare payments firm Waystar went public in 2024, followed by digital musculoskeletal care company Hinge Health and chronic condition management firm Omada Health earlier this year. These companies have "redefined the blueprint of what it could take to be a public company," according to Sasha Kelemen, a director in Baird's global healthcare investment banking group.

M&A Activity Accelerates

As the bar for going public remains high, many digital health companies are turning to M&A as an alternative exit strategy. Deal volume has increased 37% over last year, with 166 acquisitions recorded through the third quarter of 2025, compared to 121 in 2024, according to Rock Health.

Megan Scheffel, head of credit solutions for life science and healthcare at Silicon Valley Bank, noted that companies are consolidating to build efficiency or combining with adjacent businesses to add new capabilities. For instance, a behavioral health company might merge with a physical therapy provider to expand its service offerings.

However, experts caution that integrating two companies can be challenging, particularly for startups new to M&A. Kelemen described it as a "painful process" but acknowledged that many companies are realizing the need to "come together in different ways" to survive and thrive in the evolving digital health landscape.