Livongo Health and Health Catalyst became the two newest digital health companies to go hold their IPOs in what’s turning out to be a banner health for the industry and the public markets.

Shares for Mountain View, California-based chronic disease management company Livongo popped in early trading, trending as high as 62 percent over its $28 offering price. Currently the company’s shares are up around 36 percent at $38.10.

Livongo raised more than $350 million from its sale of 12.7 million shares with a valuation in excess of $2.5 billion. The company’s shares are listed on the Nasdaq exchange under the listing LVGO.

Livongo was launched in 2014 and emerged from a previous company called EosHealth that was invested in by Livongo Founder Glen Tullman’s VC firm 7wire Ventures. The company has raised nearly $240 million from investors prior to its IPO from investors including Merck, Microsoft and Kleiner Perkins.

Tullman, who also serves as the company’s executive chairman, has a long history with the public markets, successfully shepherding EHR company Allscripts and health IT company Enterprise Systems to successful IPOs.

Somewhat ironically, Livongo, which earned $68.4 million in revenue last year, has a current market capitalization higher than that of Allscripts, which made $1.75 billion in revenue in 2018.

According to its S-1, Livongo has 164,000 members across 679 clients, which include 20 percent of the Fortune 500. The company has more than 470 employees and earns most of its revenue through PMPM contracts with self-insured employers like CitiGroup, PepsiCo, Target and Delta Airlines.

“Today going public is really a branding event and we deal with 20 percent of the Fortune 500. Those organizations like to see that we’re stable and they like the transparency of public companies,” Tullman said in an interview on CNBC.

“We also wanted to make sure we had a currency to use for acquisitions as we grow our whole person platform to serve more and more people with chronic conditions.”

Health Catalyst, which develops data analytics tools and services for healthcare organizations, joined Livongo on the public markets with its own IPO on the Nasdaq under the ticker HCAT. The company priced its offering of 7 million shares at $26, raising $182 million.

Share prices for the Salt Lake City-based company jumped up more than 50 percent in early trading and is currently at $39.17.

Besides the choice of IPO date another thing both Livongo and Health Catalyst have in common is their current lack of profitability. The companies saw net losses of $33.4 million and $62 million in 2018, respectively.

The company earned $112.6 million in revenue last year and has signed up more than 126 health system customers like UPMC, UnityPoint Health and Allina Health, according to its S-1. Prior to its public listing, the company raised $235 million from private funders like UPMC, Kaiser Permanente and Sequoia Capital.

The nearly three-year drought of digital health IPOs since 2016, alongside the continued growing investment figures, led some observers to fret about a potential bubble in the industry.

But that drought was ended earlier this year with the public listings of Change Healthcare and Phreesia, which continue to trade higher than their offering prices.

The success of these efforts could a signal to the larger industry about the potential viability of a public offering as an exit option. Some companies rumored to be going public later this year include Ancestry and SmileDirectClub .

“We believe the digitization of healthcare is a wave that is happening over the coming decades and we’re excited to see the number of companies pushing that forward,” said Health Catalyst CFO Patrick Nelli. “We’re still in the early innings.”

Still even with these series of successes, the longer term historical record of digital health businesses going public is has been more of a mixed bag.

On the one hand are examples like medication management software company Tabula Rasa, which has seen its stock price more than quadruple since its $12 initial offering back in 2016.

On the other are cases like healthcare price transparency company Castlight Health, which currently trades at around $2, a fraction of its $16 listing price.

Photo: jxfzsy, Getty Images