Executive Summary / Key Takeaways

• Hinge Health is rapidly transforming musculoskeletal (MSK) care through an AI-powered platform, automating healthcare delivery to enhance outcomes, improve member experience, and reduce costs for clients.
• The company delivered robust Q3 2025 financial results, with revenue up 53% year-over-year to $154.21 million, and a significant improvement in profitability, achieving a 20% non-GAAP operating margin and a 53% free cash flow margin.
• Technological advancements, including the AI Care Assistant "Robin" and "Movement Analysis" via TrueMotion, are driving both care efficacy and substantial internal operational efficiencies, such as a 120% increase in code output per engineer.
• Strategic initiatives like HingeSelect, a high-performance provider network unifying digital and in-person care, are expanding the company's market reach and competitive moat, with strong client commitments already secured.
• Hinge Health has raised its full-year 2025 revenue guidance to $572 million to $574 million and non-GAAP income from operations to $106 million to $108 million, underscoring confidence in its growth trajectory and commitment to GAAP profitability.

The Untapped Opportunity in Musculoskeletal Care: Hinge Health's Foundational Strategy

Hinge Health, Inc. was founded with a clear vision: to build a new health system that leverages technology to scale and automate care delivery, beginning with the pervasive challenge of musculoskeletal (MSK) conditions. This mission is particularly pertinent given that MSK pain affects 40% of Americans, yet a mere 9% currently utilize traditional physical therapy (PT) services, highlighting a substantial, underpenetrated market. Physical therapy alone represents a market exceeding $60 billion in the United States, accounting for 1.2% of total healthcare spend. The broader industry context of dramatically rising employer healthcare costs, often in low double digits, further amplifies the demand for solutions that can demonstrate clear return on investment (ROI) and cost containment. Hinge Health's core business model, centered on an annual subscription for its digital MSK platform, primarily serves self-insured employers, with increasing diversification into fully-insured and Medicare Advantage markets through strategic health plan partnerships. This approach positions the company as a specialized leader, aiming to be the most validated and easiest-to-buy solution in the market.

AI as the Core Differentiator: A Technological Moat

Hinge Health's competitive edge is deeply rooted in its proprietary technology and continuous innovation, with Artificial Intelligence (AI) serving as a foundational pillar. The company's AI-powered care model integrates several key technologies that deliver tangible benefits to members and clients.

Central to its platform is TrueMotion Computer Vision technology, which enables highly scalable remote care by replacing traditional wearable sensors. This technology powers the newly unveiled Movement Analysis capability, which captures objective measurements like joint angles, symmetry, and endurance across a series of movements to produce "Hinge scores." These objective scores, paired with targeted questions, provide clinicians and members with a more comprehensive and actionable understanding of joint health, moving beyond subjective patient-reported outcomes.

The Enso device, an FDA-cleared wearable electrical nerve stimulation device, offers non-addictive pain relief and is a beloved aspect of the program. Its adoption rate is trending north of 25% this year, a significant increase from 15% last year and 5% two years prior. Members escalated to Enso tend to show improved activity sessions and substantially higher satisfaction scores, underscoring its role as a key differentiator and a critical hardware component in automating "touch aspects" of healthcare.

HingeConnect, an AI-driven database, integrates external Electronic Health Records (EHRs) and other data sources to enable highly personalized care and real-time interventions. This technology has been instrumental in the company's targeted enrollment initiatives, which saw enrollees more than double in Q3 2025 compared to Q3 2024, significantly enhancing the ROI delivered to clients.

Further bolstering its AI capabilities, Hinge Health introduced Robin, the AI Care Assistant, in Q3 2025. Robin acts as an always-on companion, available 24/7 to support members. It recognizes pain flare-ups, gathers crucial details, shares helpful resources, and alerts physical therapists for faster care. Soon, Robin will provide instant support, answer common questions, and proactively check in with members, driving higher engagement and improved health outcomes.

Beyond direct member care, AI is being threaded throughout Hinge Health's internal operations to drive efficiency and innovation. In Q3 2025, the company reported a 120% increase in code output per engineer and pushed new features live three times faster compared to Q3 2024. AI adoption among engineers surged from approximately 20% in Q1 to nearly 100% today, contributing to a 32% improvement in developer experience scores from April through October. These internal efficiencies directly translate into operational leverage and faster product development, reinforcing Hinge Health's competitive moat and ability to rapidly innovate.

Financial Momentum: Efficiency Fuels Growth and Profitability

Hinge Health's strategic focus on technology-driven automation and operational efficiency is clearly reflected in its strong financial performance. For the third quarter ended September 30, 2025, the company reported revenue of $154.21 million, representing a robust 53% year-over-year growth. Over the nine months ended September 30, 2025, revenue reached $417.13 million, also a 53% increase from the prior year. This growth was primarily driven by existing clients contracted in 2024 or earlier, stemming from increased member retention and enrollment within their existing client base. The client base itself expanded by 25% year-over-year to 2,560 as of September 30, 2025, contributing $10.80 million and $18 million to revenue for the three and nine months ended September 30, 2025, respectively.

The scalability of Hinge Health's technology-driven care model is evident in its improving profitability metrics. Gross margin reached 83% in Q3 2025, a 400-basis point improvement from 79% in Q3 2024. This enhancement was largely due to increased efficiencies in the care team and supply chain operations, partially offset by stock-based compensation. Total operating expenses, while increasing in absolute terms due to investments in growth and IPO-related stock-based compensation, decreased as a percentage of revenue, falling to 63% in Q3 2025 from 83% in Q3 2024. This operational leverage culminated in a non-GAAP income from operations of $30 million in Q3 2025, translating to a 20% operating margin, a significant turnaround from a negative 4% operating margin in Q3 2024. Management estimates that approximately half of the 2,600 basis points improvement in gross and operating margin can be attributed to AI advancements and process efficiencies.

The company's liquidity position is robust, with cash and cash equivalents, along with marketable securities, totaling $497 million at the end of Q3 2025. Hinge Health generated $81 million in free cash flow in Q3 2025, a substantial increase from $28 million in Q3 2024, representing an impressive 53% free cash flow margin. Year-to-date, free cash flow reached $118 million, or approximately $1.25 per fully diluted share. This strong cash generation provides significant flexibility for organic growth investments, potential targeted M&A, and future capital returns to stockholders. The company's commitment to managing the business to strong GAAP profitability, treating stock-based compensation as a real expense, underscores a disciplined approach to financial health.

Strategic Expansion and Competitive Landscape

Hinge Health's strategic initiatives are designed to solidify its leadership in the digital MSK market and expand its total addressable market. The company's sales season is progressing well, with a year-to-date increase in its head-to-head win rate, indicating a widening competitive lead. This success is observed across various segments, including large self-insured "jumbo clients" with over 100,000 lives, the federal space (marking its best year ever in federal employee programs), and the fully-insured segment, where health plans as purchasers validate the platform's demonstrated cost savings.

A significant strategic expansion is HingeSelect, a high-performance provider network launched in June 2025, which began going live with its first clients in Q3 2025. HingeSelect unifies the digital platform with high-quality in-person care when necessary, addressing the minority of cases requiring physical touch. The network has rapidly grown to over 3,300 provider locations across all 50 states, covering 86% of eligible lives within its footprint. Clients representing hundreds of thousands of eligible lives have already committed to HingeSelect, validating it as a natural extension of the core digital program. This initiative creates a powerful competitive advantage by offering a seamlessly integrated care experience, a challenge many digital health companies have historically struggled to overcome.

In the competitive landscape, Hinge Health operates as a specialized leader in digital MSK care. Its direct competitors include broader virtual health providers like Teladoc Health , chronic condition management platforms such as Omada Health, integrated virtual care providers like Included Health, and AI-driven app specialists like Kaia Health. While larger players like Teladoc Health (TDOC) may have greater scale and diversified revenue streams, Hinge Health's proprietary AI technology, particularly TrueMotion and Enso, provides a distinct edge in specialized MSK care, potentially leading to superior patient outcomes and stronger pricing power in its niche. The company's focus on user engagement and its ability to leverage HingeConnect for targeted enrollment also differentiate it from competitors. However, Hinge Health's smaller scale compared to some rivals could lead to higher operational costs in certain areas, and its reliance on a limited number of health plan partners (79% to 83% of revenue from its top three partners) presents a potential vulnerability if those relationships are disrupted. The company's strategy to build a "two-sided marketplace" with HingeSelect is a difficult problem to solve, but if successful, it will create an enduring competitive moat.

Outlook and Risks: Sustaining Momentum

Hinge Health's management has provided an optimistic outlook for the remainder of 2025, driven by strong business fundamentals and accelerated efficiency gains from AI. For the fourth quarter of 2025, revenue is projected to be in the range of $155 million to $157 million, representing 33% year-over-year growth at the midpoint. Non-GAAP income from operations for Q4 is expected to be $34 million to $36 million, translating to a 22% margin at the midpoint.

For the full year 2025, the company has raised its revenue guidance to $572 million to $574 million, indicating 47% year-over-year growth at the midpoint, a meaningful increase from previous guidance. Full-year non-GAAP income from operations is now anticipated to be $106 million to $108 million, representing a 19% margin at the midpoint, also a significant raise. These projections are underpinned by continued strength in eligible lives, yield (with targeted enrollment doubling year-over-year), and stable average selling prices from the engagement-based pricing model.

The company plans to prioritize investments in organic growth, with most headcount additions in 2026 directed towards Research & Development and go-to-market functions. Notably, care team headcount is anticipated to remain flat or even decrease despite increasing revenue, as gross margin tailwinds from AI-driven efficiencies are reinvested into product infrastructure. Hinge Health is also actively developing a new product that could address an area of healthcare potentially half the size of physical therapy, representing a multi-billion dollar total addressable market expansion.

Despite the positive outlook, investors should consider several risks. The company has a history of net losses, with an accumulated deficit of $1.1 billion as of September 30, 2025, and future profitability remains a focus. The rapid evolution of AI technologies introduces development, deployment, and regulatory uncertainties, including potential third-party claims and the need to comply with evolving frameworks like the EU AI Act and state-level regulations in the U.S. (e.g., California's CPRA and Texas' TRAIGA). The Enso device is subject to extensive government regulation, and any delays in marketing authorizations or changes in FDA enforcement policies for medical software could impact operations. Furthermore, the dual-class common stock structure concentrates voting control with founders and Series E preferred stockholders, limiting the influence of other shareholders. A significant near-term event is the lock-up expiry on November 17, 2025, which will free approximately $77 million of shares to trade, potentially impacting stock price volatility.

Conclusion

Hinge Health stands at the forefront of healthcare automation, leveraging its advanced AI-powered platform to address the substantial and underserved musculoskeletal care market. The company's Q3 2025 results underscore a compelling narrative of strong top-line growth, significant operational efficiency gains driven by AI, and a clear path towards sustainable profitability. With innovative technologies like TrueMotion, Enso, HingeConnect, and the new AI Care Assistant Robin, Hinge Health is not only enhancing member outcomes and client ROI but also building a formidable competitive moat. The strategic expansion into HingeSelect further unifies digital and in-person care, positioning the company for continued market leadership. While the path ahead involves managing regulatory complexities and competitive pressures, Hinge Health's disciplined capital allocation, robust cash flow generation, and commitment to organic growth, coupled with a raised full-year guidance, present a strong investment thesis centered on its ability to automate and transform a critical segment of the healthcare industry.