Oura, the AI-driven health monitoring ring, just pulled their $2.2B IPO citing "uncertainty in the IPO market".

TL;DR: Oura withdrew its $2.2 billion IPO just hours before pricing. The official reason was "uncertainty in the IPO market," but the prospectus shows that 73% of the offering consisted of existing shareholders cashing out, 93% of the money raised by the company would go toward covering employees' taxes, and buyers were only willing to step in at a lower price. ## Eight Days of Roadshows, Then a Withdrawal the Night Before Pricing On September 29, just hours before pricing its shares, Oura withdrew its $2.2 billion IPO. I'm a venture capitalist, and startups going public are a big deal in my world, so I went through the offering documents line by line. First, look at the structure: of the 50 million shares slated for sale, 36.5 million were existing shareholders cashing out, and only 13.5 million were newly issued Oura shares. So this was essentially an exit, not a fundraising round. On September 21, Oura launched its roadshow—the company and its underwriters pitched major investors in meeting after meeting. Pricing was scheduled for the evening of September 29, with trading to begin the following day. Demand looked very strong: Eli Lilly indicated interest in buying up to $100 million, and Dragoneer up to $300 million. Together, roughly one-fifth of the entire deal was spoken for before the roadshow had even ended, and the offering was about four times subscribed. Then, on the morning of Tuesday the 29th, Oura issued a press release saying that despite strong demand, it would postpone the IPO because of uncertainty in the IPO market. No new date was announced. CEO Tom Hale said they had "the luxury of choosing our own timing." The company added that it was already profitable, growing substantially, and that its business had strengthened further since it began the IPO process. IPO delays are common, but withdrawing after a full roadshow, just hours before pricing, is unusual. Jay Ritter, who heads the University of Florida's IPO program and has studied IPOs for decades, told Fortune: "They always blame market conditions. They never say, 'Oh, the reason we withdrew our IPO is that our expectations of our own value were unrealistic.'" ## Oura's Rise Oura was founded in 2013 and is headquartered in Oulu, a city in northern Finland. Its three founders were Petteri Lahtela, Kari Kivelä, and Markku Koskela. Their bet was that your most valuable health data comes from sleep—heart rate, body temperature, recovery—and that a ring could measure those things more comfortably than a watch. In 2015, they raised about $650,000 on Kickstarter. For years, Oura was essentially a titanium ring for biohackers and sleep geeks. Then several things changed at once. Tom Hale became CEO in 2022, the company pushed aggressively into the U.S. market, the rings became smaller and better, and celebrities and athletes started wearing them. More consequential was a major business decision: memberships. You pay a few hundred dollars for a ring, then $5.99 a month for health insights—sell the hardware once, then charge for software every month. And it worked. In the year before its IPO filing, Oura sold about 3.6 million rings. By the end of June, it had more than 5 million paying members, and 72% of its customers were women. By 2025, Oura held roughly 76% of the global smart ring market. When cheaper competitors such as Ultrahuman and RingConn entered, Oura sued and won, blocking their rings from entering the U.S. market. RingConn ultimately paid Oura patent royalties, while Ultrahuman had to redesign its ring to return to the United States. Its valuation climbed accordingly: $2.5 billion in 2022, $5 billion in 2024, $11 billion in 2025, and around $15 billion for the IPO. One investor that stood out across all those funding rounds deserves special mention: Forerunner Ventures. It first invested in March 2020, when Oura was valued at about $725 million, implying a roughly 20-fold return at the IPO valuation. ## Primary and Secondary Shares: Raising Capital or Cashing Out? When a company goes public, it can sell two types of shares. Primary shares are newly created by the company, and the money goes to the company—that is fundraising. Secondary shares already exist and belong to founders, employees, and early investors. When they are sold, the money goes to the sellers—that is cashing out. Remember those 36.5 million shares at the beginning: they accounted for 73% of the entire deal, all from existing shareholders. In an IPO of roughly $2 billion, only about $567 million would go to Oura, while roughly $1.5 billion would go to the sellers. Forerunner, the largest investor, had planned to sell its entire stake in the IPO—about 9% of the company, worth $1.2 billion, against an investment cost of just around $60 million. It gets worse. According to TechCrunch and the S-1 filing, about $526 million of that $567 million—roughly 93%—was earmarked for employee tax withholding on vesting shares. Many employees receive RSUs, or restricted stock units, as compensation. When the company goes public, a large batch of shares vests at once, triggering taxes for employees. The company typically withholds some shares and pays the taxes in cash on their behalf. The result: insiders cash out $1.5 billion, while the company raises $567 million and sends it straight to the tax authorities, leaving almost no net capital for business growth. ## An Accounting Mess on Paper There is also an accounting issue in the offering documents. Oura is actually profitable—it earned $61 million in the first nine months of this year—but the filing shows a $924 million loss. The reason is that before the IPO, Oura repurchased shares from early investors, paying nearly $1 billion more than their book value, which was recorded as a loss. When early investors receive enormous payouts right before a public listing, you should pay attention. Secondary sales are normal in themselves: venture capital funds have ten-year lifecycles and eventually have to return money to their LPs; employees who have been paid in stock for years want to buy homes. But the proportion matters. IPOX's Cathie Wood told Fortune: "This is a red flag for the market. It indicates that this IPO is not about growth." If the company's earliest backers are selling as much as they possibly can, why should you be the sucker taking those shares off their hands? ## Business Fundamentals: A Good Business, but Is It Worth $15 Billion? In the nine months ended June 30, Oura generated about $1.2 billion in revenue, up 74% year over year; trailing twelve-month revenue was $1.43 billion. Nine-month net income was about $60 million, compared with $1.6 million a year earlier, and adjusted EBITDA was $107 million. It is actually rare for a technology company to go public with that growth rate while also being profitable. The real bright spot is the membership business: membership revenue over the past nine months was $240 million, up 121%, with an 89% gross margin—those are software-company numbers. Retention is also strong: more than 94% of users who activate a ring become paying members, and 85% of members are still paying a year later. Oura's narrative is that the ring pays back the cost of acquiring a customer on day one, after which that member remains in a high-margin subscription for years. But the other side is that roughly 80% of Oura's revenue still comes from selling rings, with ring margins estimated at around 46%. Gross margins are moving in the wrong direction—from about 65% two years ago to just 55% now—and the net margin is only around 5%. ## The Valuation Debate: Software Multiples, Hardware Reality At the top of its pricing range, Oura wanted a $15.6 billion valuation on roughly $1.4 billion in trailing revenue, or about 11 times sales. Software companies can command high multiples because the cost of serving each additional customer is close to zero. Hardware companies usually cannot, because every sale comes with a physical product that has to be manufactured. An 85% one-year retention rate and an 89% gross margin are metrics VCs dream of, but membership growth is a story about the future. Today, Oura is still primarily a ring company, and public investors are being asked to pay for that future—with insiders selling it to them. Wall Street has heard this story before: a hardware company, a health subscription, and an enormous lifestyle narrative. GoPro went public at $24 in 2014 and is down 94% since then; Peloton went public at $29 per share in 2019 and is down more than 82%. People loved both products, and both rode major trends, but once growth slowed, the economics of hardware caught up with them. Then there is Fitbit, which sold about 140 million devices yet still watched usage steadily decline. The risk in consumer health is that people buy a device to achieve a goal, and once they achieve it or give up, the subscription usually gets canceled too. ## The Bigger Threat: Giants All Around Oura is king of the smart ring world, but smart rings are only a small slice of wearables. Apple already tracks sleep and heart rate through the Apple Watch; Samsung sells the Galaxy Ring without a monthly fee, connected to the largest phone ecosystem on Earth, and Samsung and Oura are fighting a patent battle; Google has just released a screenless Fitbit; Whoop also sells subscription wristbands; and Ultrahuman and RingConn skip subscriptions altogether. If Apple decides to launch a ring, Oura's entire business could essentially disappear. Apple has not announced any ring, but the possibility alone hangs over the valuation. Oura's counterargument: it holds roughly three-quarters of the smart ring market and is the only smart ring most people can name; it has already beaten Ultrahuman and RingConn on patents; and its 85% one-year retention rate demonstrates far stronger user retention than Fitbit. Oura may not be the next Peloton, but public investors will demand a discount until that is proven. ## Does "Market Uncertainty" Hold Up? Oura was not the only company to cancel an IPO: health technology company Nuclear postponed its IPO in early September, citing rising energy costs, trade tensions, and inflation concerns. Bamboo Insurance and Amira also withdrew around the same time. The entire IPO market was waiting for the biggest listing in a decade—Anthropic. But the broader market had not collapsed: in early October, the S&P 500 was up more than 13% for the year and less than 1% below its all-time high. One technology researcher commented: "Saying market conditions caused the IPO delay seems a bit of a stretch." ## Oversubscribed ≠ Guaranteed to Price Successfully Demand does not mean buyers agree with your price. During IPO bookbuilding, institutions typically submit limit orders: they will take shares at $36 or $38, but at $44, the order book dries up. You can have enormous demand at $40 and far less at $44. Bloomberg reported that some prospective buyers backed away over concerns about Oura's valuation. Plenty of people wanted Oura, just not at $44. ## Price Determines Everything There is no absolutely good or bad business; everything depends on the price. The 73% figure is crucial here: in a normal IPO, a lower price means the company raises less money, which hurts, but at least it raises capital. In Oura's deal, most of the shares belonged to insiders, so a lower price mainly meant less money for Forerunner and other early shareholders, while Oura's own share was mostly going toward employee taxes anyway. That is what Tom Hale meant by "the luxury of choosing our own timing." Oura is profitable and does not need money to survive. Buyers wanted a discount, insiders refused to offer one, neither side budged, and the deal was withdrawn. ## Lessons for Founders and Investors If you are a founder, an IPO both raises capital and rewards early investors. How you allocate between those two purposes sends a signal to every buyer. The strongest position in any fundraising process is not needing the money. Oura could walk away because it was profitable. This is the same principle we discussed in our Hugging Face video: raise from a position of strength, and you earn the right to say "no." If you are an investor, look at the allocation before the hype: how many shares are new, how many belong to insiders, and where the company's own proceeds are going. Source: Oura Withdraws Its $2.2 Billion IPO: The Real Truth Behind It — kernelangus420 (https://www.youtube.com/watch?v=5MAZKCm-Oe4)