Issue 078
Welcome back to E&O’s Selling to Employers, the enrollment-focused digital health newsletter from Exits & Outcomes — for paying subscribers only. This newsletter digs into digital health companies that sell to self-insured employers, fully insured plans, and other payers. It’s digital health as an employee benefit.
E&O: Employers
In this issue of E&O: Employers… a fine-toothed combing of Hinge Health’s latest S-1 filing with Q1 2025 updates and more; plus a new look at Sword Health’s annual revenues from 2021 through its forecast for 2025. Let’s get to it…
- Read on below!
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All of the details from Hinge Health’s Q1 update
You’ve likely already seen the new topline numbers for Q1 2025 that Hinge Health added to the latest version of its S-1 filing, but I haven’t read a full write-up of all of the details Hinge disclosed in the filing. Here are the updated numbers and new metrics that jumped out to me:
All-time sessions count increases: As of March 31, 2025, Hinge members “have collectively done 74 million sessions, with [about] 25 million happening in just 2024.” The company was at 65 million sessions at the end of 2024, so that’s a big jump. Hinge also said that it has collected “32 million member-reported outcome logs as of March 31, 2025.” It was at 30 million at the end of last year.
Net income: Hinge “had net income of $17.1 million” for Q1 2025 vs net loss of $26.5 million for q1 2024.
Revenue: Revenue for the three months ended March 31, 2025 was $123.8 million, which marks an increase of $41.1 million, or 50 percent, compared to Q1 2024. “The increase was due to revenue growth from existing clients. Due to the timing of our sales cycle, revenue from new clients contracted in a given year is largely recognized in the following year. As such, our revenue growth in the three months ended March 31, 2025 came from existing clients that were contracted in 2024 or prior. The increase within existing clients was the result of retaining members within, and adding more members to, our existing client base.”
Cost of revenue for Q1 2025: Decreased by $1.2 million, or 5 percent, compared to Q1 2024. “The decrease was primarily due to lower inventory costs from a reduction in the per unit cost for our Enso device as well as a reduction in kit costs.”
Gross margin: For Q1 2025 GM increased by 11 percentage points compared to the year ago period. “The increase was due to an increase in revenue and a decrease in inventory costs.”
Research and development expenses: Decreased by $6.3 million, or 21 percent y-o-y. “The decrease was primarily due to a decrease of $4.9 million in personnel-related costs, which were attributable to lower headcount as a result of the 2024 Restructuring Plan, and a decrease of $1.1 million in contractor costs.”
Sales and marketing expenses: Increased by $4.6 million, or 11 percent. “The increase was primarily due to an increase of $2.7 million in marketing and promotion costs to support our growth initiatives and an increase of $2.6 million in commissions due to higher revenue, partially offset by a decrease of $0.8 million in personnel-related costs as a result of the 2024 Restructuring Plan.”
General and administrative expenses: Decreased by $0.6 million, or 3 percent. “The decrease was primarily due to a decrease of $1.7 million in personnel-related costs, which were attributable to lower headcount as a result of the 2024 Restructuring Plan, partially offset by an increase in professional services costs of $1.2 million due to higher costs associated with our public company preparation activities.”
Which partners contributed the most revenue in Q1 2025?
- HCSC accounted for 15.7% in Q1 2025 vs 17.4% of Hinge revenue in Q1 2024.
- Elevance accounted for 13.4% in Q1 25 vs 12.6% of Hinge revenue in Q1 24.
- Aetna accounted for 12.2% in Q1 25 vs 12.5% of Hinge revenue in Q1 24.
Headcount jumps in Q1: As of March 31, 2025, Hinge had 1,514 full-time employees, including 1,376 employees based in the United States. 524 Hinge employees were on the care team as of March 31, 2025. That’s up from 1,437 total FT employees at the end of 2024. 1,300 of them were in the US. And 438 of them were care team members. Hinge’s partnerships sales team, which sells directly to health plans’ and PBMs’ partners’ fully insured and Medicare Advantage lines of business added one new employee during the quarter and now includes 35 sales professionals. Hinge’s self-insured employer sales team also added one new sales pro during the quarter — and is now at 46. Gross margin improved: At the end of 2024, Hinge had a gross margin of 77 percent compared to 66 percent for 2023. During Q1 2025 the company had a gross margin of 81 percent — that’s up from 70 percent for Q1 2024.
Hinge’s number of clients increased: From 2,256 at the end of 2024 to 2,311 by the end of Q1 2025.
Last 12 Months of Billings: Hinge drove up its LTM billings from $467.5 million at the end of 2024 to $507 million at end of Q1 2025.
Q-o-Q revenue growth: Finally, just to put Hinge’s quarter-over-quarter growth into better perspective, here’s a rundown of how much revenue Hinge brought in for each quarter over the past few years. Q1 2023: $60 million Q2 2023 $69.8 million Q3 2023: $81.4 million Q4 2023: $81.5 million Q1 2024: $82.7 million Q2 2024: $89.8 million Q3 2024: $100.6 million Q4 2024: $117.3 million Q1 2025: $123.8 million
New estimates for Sword Health’s annual revenues
Sword Health’s CEO and co-founder Virgilio “V” Bento posted a chart on Linkedin a few weeks ago that charts his company’s annual revenue vs the annual revenue of its biggest competitor. While Bento didn’t name Hinge Health it is pretty clear that is who he is referencing. Bento’s chart didn’t disclose any actual numbers, however, he did list a multiple for how much bigger Sword’s competitor’s annual revenue for each year between 2021 and (the forecast for) 2025.
Since I’ve done some work piecing together Hinge Health’s annual revenues for those years, with Bento’s annual revenue multiples at hand, it’s simple to construct a new set of estimates for Sword Health’s annual revenues for the years 2021 through what it expects to bring in for 2025.
Here’s what I came up with: E&O’s estimates for Sword Health’s annual revenues:
2021 — $6.4 million
2022 — $21.9 million
2023 — $77 million
2024 — $118.3 million
2025 — $265.6 million (forecasted)
Bento has frequently referenced Sword’s revenue in interviews and other social media posts, but he used to only talk about less common flavors of revenue like “contracted annualized recurring revenue” or more simple “annualized revenue” figures, which seemed to be extrapolated from one of the company’s better months. The numbers above seem to me to be the closest to reality. Bento recently wrote in a social media post that Sword had “crossed $200M in annualized revenue” — likely calculated by taking Sword’s revenue from the month of March 2025 and multiplying it by 12. The post makes clear that Sword’s actual revenue hasn’t topped $200 million yet, but could do so next year. That lines up with the list of annual estimates above.
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