Investing & Startups| February 24, 2020
Hinge Health Raises Money to Improve Its Chronic MSK Pain Treatment
Hinge Health, a San Francisco-based startup (originally based in London) offering a digital solution to treat chronic musculoskeletal (MSK) conditions — such as back and joint pain — closed a $90 million Series C funding round earlier this month.
Founded in 2015, Hinge Health primarily works with U.S. employers and health plans, considering itself a digital healthcare solution for chronic MSK conditions. Through wearable sensors, an app and health coaching, the platform remotely delivers physical therapy and behavioral health. Hinge Health is part of a select group of healthcare providers who deliver health services using the newest technology to ensure better care, as the companies from this selection do.
Since existing healthcare systems are not able to successfully treat chronic MSK disorders due to funding pressures and other systematic reasons, there is an over the tendency to use opioid-based painkillers or surgery. These tend to bring poor results, often at an even greater cost. Hinge wants to avoid all this through the use of technology and better data, with a focus on improving treatment adherence.
Hinge CEO and co-founder Daniel Perez says the company is already helping avoid two out of three elective surgeries, “delivering a 3-4x ROI across our book of business.” More broadly, Hinge is helping four in five participants achieve “meaningful pain reduction,” with the average person on its program reducing their pain by 69%, Perez claims.
Bessemer Venture Partners’ Steve Kraus is joining Hinge Health’s board
The funding round was led by Bessemer Venture Partners, with additional participation from Lead Edge Capital. All of Hinge’s existing institutional investors again returned: Insight Partners, Atomico, 11.2 Capital, Quadrille Capital, and Heuristic Capital.
Although Perez would not disclose Hinge’s Series C valuation, that was around $420 million according to sources. Perez and co-founder Gabriel Mecklenburg still control half of the board’s voting rights and, according to Perez, the round was oversubscribed. Hinge could have raised $125 million-plus, but “chose to pull back.”
Bessemer Venture Partners’ Steve Kraus is joining Hinge Health’s board as part of the funding. In a written statement, he expressed his confidence in the company.
“U.S. employers and health plans are looking not just for outcomes, but also meaningful engagement and — critically — enterprise experience and maturity. That’s why we’ve invested in Hinge Health. Rarely have I seen customers more enthusiastic about a product. In all of my customer reference calls (and there were many), the praise for Hinge Health’s product and especially their ease of implementation was universal.”
Other companies are trying to raise money for MSK treatments
Hinge Health is not the only company that raises money to provide treatments for musculoskeletal (MSK) disorders.
Germany-based digital health startup, Kaia Health, has raised $10 million in a Series A financing round, with the funding to be used to scale up operations, including the roll-out of its app, and financing a move to New York.
The app uses artificial intelligence (AI) and motion-tracking technology to help manage pain. In explaining how Kaia Health works, the Scientific Computing World website said the startup “develops innovative machine learning and computer vision technology and works with medical experts to create a home-based, affordable and clinically-validated alternative to painkillers, delivered through a smartphone. The app offers users a daily plan which features physical exercises, relaxation techniques, and medical educational content.”
A series B financing round helped Hinge build its team
After raising $26 million in a Series B funding round in 2018, Hinge Health built its team in the first half of 2019, with particular emphasis on “executive management, R&D, clinical, and commercial footprint.”
Hinge Health is probably doing something right since, according to Perez, it has tripled its customer base in the last six months. The company has completed over 200 enterprise implementations and is working with Walgreens, Red Bull, Vail Resorts, Kraft Heinz and US Foods, among others. Overall, it has had 40,000 participants to date and, Perez said, is aiming to cross 100,000 this year. At US Foods alone, 40,000-plus members all have access to Hinge Health. And the company tripled its Annual Recurring Revenue in 2019, according to Perez.
“One thing we’re particularly happy about is that we’re cutting anxiety and depression rates by more than half,” he adds. “This is really important because a lot of people don’t appreciate how much mental health comorbidities, like depression or anxiety, can impact chronic pain.”
Plans to expand operations and extend the team
Currently headquartered at Spotify’s former San Francisco offices, where around half of the staff is based, Hinge is planning to move to larger premises in the next three months. The company now employs 225 people, with the intention to increase that headcount to more than 400 within the next 12-18 months.
“We have a clinical team 10x larger than any of our competitors,” Perez says. “Most companies are really good at enterprise or D2C… but in healthcare, while the purchasing decision is often made by an enterprise (employer, health plan, hospital, etc.), the end-user is a patient who makes their own decision whether to engage. Early on we realized we needed to be maniacally focused on customer service, from both the enterprise and end-user perspective. That really paid off, because not only did our enterprise book triple in six months, but we’ve maintained 100% customer retention.”