Here’s what happened to health tech after the biggest IPO of 2017

With all that attention around the flu pandemic, what’s happened to health tech in 2018? A look back at two of the biggest health technology IPOs of 2017 and what they tell us.

Peloton

Meet Peloton. It’s a bike company with built-in video streaming. It sells $1,999 elliptical machines that are equipped with live or on-demand cycling classes via big screens at your seat.

The company says it aims to change the exercise experience — and shed the stigma that “dance classes are for frat boys” and “speed cycling is for NFL players” — by promoting exercise as a healthy activity. It lets you virtually pedal along with shows or listen to music, and change songs on the fly via touch controls.

Peloton was one of the health tech IPOs of 2017. The company was valued at nearly $2 billion in its offering in March 2017. It closed its first trading day on the New York Stock Exchange with a gain of 87 percent from its $25 opening price.

But the party soon ended. Between early November and December, the share price fell from $76.71 to close at $25.74 per share on Dec. 26, 2017, and from there fell to $12.54 on Jan. 1. At the close on Feb. 14 of this year, the stock was worth $13.70, which is much better than it was in October but not out of the woods.

While there is no big news to explain the stock’s fall, let’s look at what might be driving it now:

Skepticism about Peloton? Whether you love it or hate it, there has been plenty of skepticism about Peloton in the blogosphere for years. Some of the more trenchant can be read here. “It may be the perfect goodie — you show up in five minutes with the machines installed and there’s an instructor instructing you through the entire class,” wrote Business Insider’s Mathew Ingram in a 2015 article, “Science suggests that skipping exercise for a while could lead to less physical pain later.” Ingram wrote about a 2016 study published in the journal Mayo Clinic Proceedings that was centered on a lack of accountability for user exercise habits. The study found that despite 56 percent of participants tracking their workouts online, 72 percent admitted to failing to meet the required six-week targets.

Peloton’s stock price was also affected by Amazon’s introduction of at-home exercise programs through its Amazon Key service, which lets your delivery person take food and other items out of your home for delivery to your door.

Peloton is up against a global health technology market worth nearly $234 billion a year. Its biggest global rival, priced at around $4 billion, is StairMaster maker Steelcase Inc.

Peak earnings? It could be a big year for health technology IPOs in 2018. Matt Wiegand of Fortune says to watch the first half of the year for big signs of progress. The market is rife with “seed-stage startups — those with ideas and coding software — that could look spectacularly out of touch after failing to generate measurable revenue,” he wrote.

On top of that, Wiegand said, new offerings are also likely to include “something of a valuations crisis.”

So, where do we go from here? Should Peloton be considered a contender? It seems to have escaped investor wrath over recent woes. But this question remains: Do Americans want to pay more for health tech? Can they afford it?

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