Hinge Health's Tech Is Primed To Capture America's Untapped MSK Pain Market: Analyst

In May, Hinge Health Inc HNGE priced its initial public offering of 13.7 million shares at $32 per share.

The company leverages software, including AI, to largely automate care for joint and muscle health, delivering an outstanding member experience, improved member outcomes, and cost reductions for its clients.

The company has designed its platform to address a broad spectrum of musculoskeletal (MSK) care, from acute injury to chronic pain to post-surgical rehabilitation.

Also Read: Hinge Health Skyrockets On Wall Street Debut, Signals Comeback For Health-Tech IPOs: ‘…Tilts Things…Towards Potentially More Listings,’ Says Analyst

On Monday, several analysts initiated coverage of the digital-physical therapy start-up company.

Bank of America Securities (BofA)

Analyst Brad Sills writes that Hinge Health is well-positioned to continue capturing a share of an addressable market worth $18.5 billion due to competitive advantages. The analyst initiated with a Buy rating and a price forecast of $42.

The analyst adds that Hinge Health has strong customer economics. Its solid lifetime value (LTV)/customer acquisition cost (CAC) ratio of 4.4x indicates that each customer is very profitable, and margins can expand further.

While Hinge Health competes with in-person physical therapy, alternative digital physical therapy vendors exist. These include Sword Health, Kaia Health, and Omada Health Inc OMDA (Physera).

BofA’s research points to Hinge Health as a leading product in the digital-physical therapy market; there is a risk that competitors can improve to reach product parity.

KeyBanc Capital Markets

Analyst Scott Schoenhaus sees Hinge Health as the clear leader in digital therapy for MSK conditions, one of the largest and costliest healthcare markets still largely underserved.

Hinge’s tech-enabled platform is highly accessible, user-friendly, and at no cost/ or inconvenience to the member (unlike traditional physical therapy or PT). The analyst sees new women’s health offerings (pelvic floor + menopause) as a catalyst.

KeyBanc initiated with an Overweight rating and a price forecast of $45.

Analyst Schoenhaus writes that, unlike many digital health companies that find it hard to show real cost savings, Hinge uses a tech-driven platform that helps reduce the cost of serving its members.

This, in turn, allows Hinge to offer solid financial returns to its business and insurance clients. A key reason Hinge can deliver this kind of return on investment is its access to medical claims and electronic health records (EHR) data.

Needham

Analyst Ryan Macdonald says Hinge Health is the top virtual MSK care player thanks to its strong technology and smart business partnerships.

Needham believes this gives Hinge an edge over other digital health companies and traditional in-person physical therapy providers, helping it grow its market share over time.

Needham highlights a significant opportunity for Hinge Health to disrupt the American MSK pain treatment landscape. Despite 40% of Americans experiencing MSK pain, a mere 9% currently utilize traditional physical therapy (PT) services.

This low engagement with conventional PT presents a substantial, underpenetrated market ripe for Hinge Health’s innovative approach, Needham asserts.

Needham initiated with a Buy rating with a price forecast of $47 and sees strong potential for Hinge to keep growing its member base.

The company already operates in a market worth over $17.5 billion, and it could expand further by partnering with fully insured and Medicare Advantage plans. Changes to Hinge’s business model could also help boost its revenue per user.

Needham values Hinge Health at 5.5 times its estimated 2025 sales. The firm sees this as a good time to invest in a fast-growing company that will likely accelerate its revenue growth next year.

William Blair

Analyst Ryan S. Daniels writes that Hinge Health has an attractive financial model driven by a highly recurring subscription-based revenue stream that provides significant visibility.

The company’s highly visible revenue model is supported by net-dollar retention levels in excess of 115% and client retention rates of 98%.

William Blair initiated with an Outperform rating.

“We believe Hinge Health compares well with HCIT peers, given its industry-leading growth profile (nearly 20% compound growth forecast in our model versus low-to-mid teens average growth for peers), highly visible model, and free cash flow generation. Thus, we believe this discount to peers can narrow as the company executes on its growth strategy over time,” analyst Daniels writes.

Price Action: HNGE stock is trading lower by 0.39% to $36.07 premarket at last check Tuesday.

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