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Komodo Health is putting off its IPO after a rocky market shot down the startup's plans for a summer exit

Dr. Arif Nathoo and Web Sun.
Komodo Health's founders, Dr. Arif Nathoo and Web Sun. Komodo Health

  • Komodo Health has ditched its plans for an initial public offering in the near future.
  • Its founders say Komodo has enough cash runway to ride out a recession if one happens.
  • The health-data startup plans to be ready to make its public debut once the market improves.

Reports have been swirling for months about Komodo Health's plans to go public.

The startup, which leverages its massive healthcare database to create software for companies like drugmakers and insurers, was eyeing an initial public offering this past summer, Axios first reported.

But as the market tanks and a recession looms, Komodo's founders are now putting plans to go public on hold.

"We are private essentially until the markets say they're reopening for business, at which point we'll be ready to go," Web Sun, Komodo's president and cofounder, told Insider.

Sun said Komodo had enough cash runway to continue operating at least until 2024 without going public. The company, which isn't profitable, most recently announced a $220 million Series E led by Tiger Global in March 2021.

Insider reported in March that the startup had hired banks to gear up to go public and was hoping to file its S-1 in May. Axios reported that Komodo planned to IPO in June or July, depending on the market conditions.

But the market worsened as months passed. Arif Nathoo, the startup's CEO and cofounder, said Komodo was IPO-ready but wouldn't move to go public until the economy improved.

"Everyone's predictions have been wrong," he laughed.

Sun said Komodo was also surveying the market for companies it might acquire.

"We think this market will create opportunities for weaker entities to seek out other options," Sun said. Komodo has made two acquisitions to date, most recently buying the software company Breakaway Partners in July 2021.

Digital health's IPO desert

Globally, only six digital health companies have gone public via IPO in 2022 so far, according to a report by Galen Growth and Finn Partners.

That's a steep dropoff from 2021's numbers, when 44 digital health startups went public.

The companies that have gone public in 2022 haven't fared well either. Akili Interactive, a digital therapeutics company that went public in August through a SPAC merger, has seen its stock tumble from its highest point at $37.58 on the day of its debut to $1.65 as of Wednesday.

Besides Komodo, two other digital health companies were said to be pursuing an IPO earlier this year before the market slipped.

Insider reported in December that Included Health, which was formed after Grand Rounds Health and Doctor on Demand merged, planned to IPO early this year. The precision-medicine company Tempus Labs was also looking to IPO this year, Bloomberg reported in November 2021. Neither company has announced a public market debut.

"The IPO market is shut right now, for all intents and purposes," said Jon Swope, who leads SVB Securities' digital health and healthtech business.

Swope said high-growth companies that weren't yet profitable probably wouldn't succeed in the public markets next year, despite several such companies going public in 2021.

"How soon will we see the return of that for the IPO market?" he said. "It might not be until 2024."

IPO Dispensed

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