When Epocrates first opened up shop in 1998, it was entering what, at the time, seemed to be a niche market – providing medical reference tools on PDA’s. Turns out, what they were really doing was catching the leading edge of a transformation in medical information technology, largely powered by developments in the consumer telecommunications industry. And they have now ridden that wave into a wildly successful IPO yesterday. And in the setting of an otherwise relatively anemic market and modest gross economic growth, their success is only that much more impressive.

After the first IPO attempt in 2008 was put on hold in the setting of a collapsing global economy, the company refiled with an initial plan to raise $75 million. According to Bloomberg Businessweek, Epocrates (EPOC) made an offering of just over 3.5 million shares at an initial price of $16, demonstrating a fair amount of optimism on the part of the company given that analysts expected somewhere between $13-15. According to Reuters, not only did they raise nearly $90 million in capital, the EPOC ticker symbol spent the entire day with a green arrow next to it as it gained over 20% in some pretty high volume trading considering the size of the company. While this is obviously great news for Epocrates, its also has some pretty big implications for the mHealth industry as a whole.

A huge IPO. A $15 million acquisition of Modality. A recent partnership with Pfizer. Epocrates has made some big moves lately. For a company that lost money last year, that may be surprising. But as Francis Gaskins, president of IPOdesktop.com, puts it in an interview with Reuters,

They have a million doctors (registered as users) and a lot of those are free apps, so they will want to monetize those eyeballs and that’s what people think will happen here.

So if Mr. Gaskins is right, investors are basically betting more on the audience being catered to than the products themselves. Given that Epocrates has a product used by 45% of US physicians, is planning on launching an EMR service, and is may be heading in the direction of a formal nationwide medical alerting system, that’s a bit surprising if true. What it suggests is that other future innovators in mHealth may be supported in large part by industries trying to reach clinicians – pharmaceuticals, device manufacturers, advocacy groups, etc – rather than the actual clinicians themselves. While this is not inherently a bad thing, it does mean that as the mHealth sector continues to expand, it will be important to take some of the same steps that academic medical institutions, medical literature, and others have taken to maintain their own integrity given potentially conflicting interests.

And on a complete aside, just over a million privately held shares were sold in the IPO as well. So while there are probably a lot of people celebrating at Epocrates right now, I’m guessing there are a few that are celebrating just a tad more than everyone else.