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Half a decade after COVID pushed digital health valuations to fever pitch, venture investors are resetting the parameters for public market readiness.

Why it matters: Profitability — or a line of sight to it — has become a non-negotiable. 

That's according to VCs from Oak HC/FT, Initiate Ventures and Seae Ventures who spoke at an Axios-moderated panel at the Aspen Ideas Health Festival on Tuesday. 

What they're saying: "If you go back to 2018 or so, valuations were going through the roof. That gravy train ended," said Seae Ventures managing partner Jason Robart.

"The pendulum has swung back, and there's reluctance to invest in just growth. It has to be profitable growth, and that has to happen sooner rather than later," Robart added.

"You have [to have] year-over-year growth that's predictable and a margin that's sustainable and does not erode ... on a quarterly basis," said Nancy Brown, general partner of Oak HC/FT.

"There has to be that path to profitability," agreed Jessica Owens, general partner at Initiate Ventures.

Between the lines: Being profitable and having a path to profitability are not synonymous. The macro environment continues to be challenging as companies try to grow income while managing operational and interest costs.

What happened: "We sort of took our eye off the ball as to what were the fundamentals that made for a good company and ultimately would make for a good investment," said Robart.

"We had a period where there were a lot of tourists coming into the market that were not health care investors — Silicon Valley — and didn't know what they were looking at," said Brown. 

What's next: "Things were valued at that time as a multiple of revenue. That's how we invested, for the last eight years or more. Now the companies will only come out based on a multiple of EBITDA. There's a huge difference between those two numbers," Brown added.

The new parameters for health tech IPOs

Now that the gravy train of bloated digital health valuations has ended, investors say they're more focused on profitability than growth.

Panelists speaking at the Aspen Ideas Health Festival in June 2025.

From left to right: Axios' Erin Brodwin, Seae Ventures' Jason Robart, Initiate Ventures' Jessica Owens, and Oak HC/FT's Nancy Brown. Photo: Leigh Vogel 

Half a decade after COVID pushed digital health valuations to fever pitch, venture investors are resetting the parameters for public market readiness.Why it matters: Profitability — or a line of sight to it — has become a non-negotiable.

The new parameters for health tech IPOs

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