Perspectives
What Does This Hotly Debated Tech IPO Say About the Future of Health Care?
In his latest Forbes column, 7wire’s Managing Partner Glen Tullman talks about the palpable excitement in the investment community about the emerging combination of health care technology and disease/cost management.
Read the full column here and an excerpt below:
“There is palpable excitement in the investment community about the emerging combination of health care technology and disease/cost management. We saw it bubble over in March, when software maker Castlight Health pulled off one of the most successful — and controversial — IPOs in recent memory.
Castlight, which helps consumers see how much health care services cost, went public on March 14 at $16 per share and immediately shot up to nearly $40 per share. That valued the company at $3 billion —more than 230 times its 2013 revenue. Castlight shares have recently come back to around $16 per share, pegging the company’s value in the $1.4 billion neighborhood, but still valuing it at more than 100 times last year’s sales.
Castlight’s initial run-up has prompted a lot of bubble talk among skeptics. Aaron Pressman from Yahoo Finance noted, “It’s pretty clear a bubble is inflating in this sub-sector of Internet stocks and Castlight makes that incredibly obvious.” Ted Tobiason of Deutsche Bank said the IPO should give investors “sufficient reason” to question whether a bubble exists in health care technology in particular.”