Oura IPO: $2.2B Target, Investor Exits & Growth Metrics

Smart ring innovator Oura is preparing for its public market debut on the Nasdaq, signaling a significant liquidity event for its early backers. The company and its existing shareholders are offering 50 million shares, with a price range set between $40 and $44 per share. At the upper end of this range, Oura could achieve a valuation of approximately $14.1 billion, with the offering potentially raising up to $2.2 billion.

A substantial portion of the offering, nearly two-thirds, originates from existing shareholders looking to divest. This secondary sale accounts for the majority of the capital raised, with approximately $1.53 billion flowing to current investors. Leading this exit is venture capital firm Forerunner Ventures, which plans to sell its entire 9.3% stake, representing roughly 28.7 million shares. This move alone could net Forerunner Ventures around $1.20 billion, marking a significant return on its initial investment, which began with a $28 million Series B round.

The capital infusion for Oura itself will be more modest. The company anticipates net proceeds of about $567 million from the IPO. However, a significant portion, approximately $526.4 million, is earmarked to cover tax liabilities stemming from the vesting of employee stock awards. This leaves a relatively small amount, around $6.2 million, for general corporate purposes, indicating the IPO is primarily a liquidity event for early investors rather than a major capital raise for expansion.

Despite the large secondary component, the IPO has attracted significant interest from anchor investors. Pharmaceutical giant Eli Lilly has indicated its intention to subscribe for up to $100 million in shares. Additionally, funds managed by Dragoneer have committed to investing up to $300 million. Eli Lilly also holds a convertible note (SAFE) valued at $50 million, which will convert into equity as part of the IPO.

Oura's financial performance leading up to the IPO has been robust. In the first nine months of the current fiscal year, the company reported revenue of $1.214 billion, a 74% increase year-over-year. Net profit surged from $1.6 million to $60.8 million, while adjusted EBITDA grew from $83.5 million to $106.7 million. While adjusted EBITDA margins slightly decreased to 9% due to increased marketing and R&D spending, the subscription model is proving to be a key driver of profitability. Hardware sales still dominate, accounting for $974 million, but the subscription business generated $240.5 million, boasting an impressive 89% gross margin compared to the overall 55% gross margin. The company expects to reach approximately 5.7 million paying members by year-end, a near doubling from the previous year.

The valuation reflects a dramatic increase in just two years. Less than a year ago, Oura was valued at around $11 billion in a round led by Fidelity, with participation from ICONIQ, Whale Rock, and Atreides. Prior to that, a $200 million funding round valued the company at $5.2 billion. This upward trajectory underscores the growing investor confidence in the wearable health technology sector, a market projected for significant expansion driven by increasing consumer focus on personal wellness and data-driven health insights. Competitors in this space include Apple, Google (with Fitbit), Samsung, Coros, Garmin, and Whoop.