TTA’s Autumn Action 2: a Digital Health 150 Hot List, Bubble Watch, WOT for TB, EHR alla voce, and latest on Theranos

 

As the Big Chill of Autumn sets in, there’s a new Hot List of Digital Startups, an IPO for the Bubble Watch, a fresh term for your lexicon, and a voice-activated EHR in your future. And Theranos’ Elizabeth Holmes can’t pay her legal bills. (Sigh)

CB Insights names a Top 150 of digital health startups (Quite attention-getting)
WOT with Proteus found equal to or better than DOT in TB medication adherence trial (Wirelessly Observed Therapy a new add to the lexicon)
The Theranos Story, ch. 61: Elizabeth Holmes as legal deadbeat (Priorities, priorities)
Health tech bubble watch: Alphabet-backed One Medical reportedly prepping for 2020 IPO (Letting the IPO dust settle?)
Does healthcare need a new EHR system? A major health system thinks so. (Allscripts gets a Northwell boost, alla voce)

We reflect in this fall season on the overuse of AI versus machine learning terminology–and why the TEC/telehealth boats aren’t rising with the market tide.

The confusion within TEC/telehealth between machine learning and AI-powered systems (AI is trendy, but trendy is not necessarily good when non-techies are buying your system)
If the market’s expanding, where’s the telecare and TEC boom? (A question we’ve been asking for years.)

Editor Charles jumps on the Analogue versus Digital Soapbox. (One of our most commented articles)

Telecare – time to sweat the analogue assets, not dump them (Editor Charles asks that you do your homework before you cart in that shiny new digital kit and throw the old out the window)

Summer may be winding down but activity is winding up. Doro acquires Invicta, Amazon’s PillPack hits a data wall, Humana first payer to join CTA. Judge Leon finally blesses CVS-Aetna’s merger after 9 months. And events, including Digital Mental Health at the RSM 23 Sept.

News and event roundup: Amazon PillPack, Humana joins CTA, NH’s telemedicine go, Fitbit Lives Healthy in Singapore, supporting Helsinki’s older adults, events
Shock news: the CVS-Aetna merger officially approved after 9 months (Judge Leon’s Final Judgment delivered. But what about future healthcare mergers?)
Doro AB acquires Invicta Telecare from Clarion Housing, increasing to nearly 200,000 users (UK) (Consolidation continues)
Digital Mental Health for Adults – a one day conference at the RSM on 23 September 2019 in London (Sponsored by the RSM)

Being contrarian, we consider that AI and machine learning may be doing real damage both in its workings and in the quality of all that medical data being fed into it. Regrettably, telemedicine in nursing homes looks like a permanent failure. And CMS takes the lead in the PFS with three new telehealth codes on opioid treatment.

A realistic look at why telemedicine isn’t succeeding in nursing homes (It should, but it’s the economics of the business)
Are AI’s unknown workings–fed by humans–creating intellectual debt we can’t pay off? (Building dangerous error upon error with bad data, destroying theoretical thinking–and that’s for starters)
CMS’ three new proposed telehealth codes, changes on inclusions, in 2020 Medicare Physician Fee Schedule (US) (CMS takes initiative in opioid treatment)


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Telehealth & Telecare Aware: covering the news on latest developments in telecare, telehealth, telemedicine and health tech, worldwide–thoughtfully and from the view of fellow professionals

Thanks for asking for update emails. Please tell your colleagues about this news service and, if you have relevant information to share with the rest of the world, please let me know.

Donna Cusano, Editor In Chief
donna.cusano@telecareaware.com

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Health tech bubble watch: Alphabet-backed One Medical reportedly prepping for 2020 IPO

Another health tech company tests the IPO waters. One Medical, a primary care medical clinic group that digitizes the office experience by offering mobile apps with online scheduling, virtual consults, and same-day appointments–for an annual fee of $200 plus your insurance–is prepping for an IPO filing early next year. The sure sign is that it’s hired banks including J.P. Morgan and Morgan Stanley.

One Medical, backed by Alphabet, has 72 primary care practices in nine major US cities. It currently has a valuation of $1.5 to $2 bn based on private share sales and investment firm estimates. In 2008 it raised $220 million in a 2018 round led by The Carlyle Group for a total raise since 2007 of $408 million, backed by Alphabet’s GV venture arm and VC firm Benchmark. From an initial emphasis on individual enrollment and a ‘lite’ version of concierge medicine, it recently has concentrated on self-insured employers, corporate health plans, and service areas such as mental health and pediatrics. A big question for investors will be its valuation–tech or healthcare?

One Medical would join IPO brethren such as Health Catalyst, Livongo, Phreesia, and Change Healthcare, all of which had fairly strong openings and initial growth but have rollercoastered since then. Still, smaller IPOs such as Progyny, a company that manages fertility benefits for employees at large firms, have filed to IPO by the end of the year. Fierce Healthcare, CNBC, Business Insider

Health tech bubble watch: Rock Health’s mid-2019 funding assessment amid Big IPOs (updated: Health Catalyst, Livongo, more)

Updated for IPOs and analysis. The big time IPOs add extra bubbles to the digital health bath. Rock Health’s mid-year digital health market update continues its frothy way with a topline of $4.2 bn across 180 deals invested in digital health during the first half of 2019. 2019 is tracking to last year’s spending rate across fewer deals and is projected to end the year at $8.4 bn and 360 deals versus 2018’s $8.2 bn and 376 deals.

This year has been notable for Big IPOs, which have been absent from the digital health scene for three years. Exits come in three flavors: mergers and acquisitions (43 in their count so far), IPOs, and shutdowns (like Call9). IPOs are a reasonable outcome of last year’s trend of mega deals over $100 million and a more direct way for VCs to return their money to investors. So far in 2019, 30 percent of venture dollars went to these mega deals. (Rock Health tracks only US digital health deals over $2 million, so not a global picture.)

Reviewing the IPOs and pending IPOs to date:

  • Practice intake and patient management system Phreesia closed its NYSE IPO of 10.7 million shares at $18 per share on 22 July. The company earned approximately $140.6 million and the total gross proceeds to the selling stockholders were approximately $51.6 million for a value over $600 million. The market cap as of 26 July exceeded $949 million with shares rising past $26. Not bad for a company that raised a frugal $92.6 million over seven rounds since 2005.  Yahoo Finance, Crunchbase
  • Chronic condition management company Livongo’s picture is frothier. Their 22 July SEC filing has their IPO at 10.7 million shares at $24 to $26 per share offered on NASDAQ. This would total a $267.5 million raise and a $2.2 bn valuation. This is a stunning amount for a company with reportedly $55 million at the end of its most recent reporting period, increasing losses, and rising cash burn. Livongo raised $235 million since 2014 from private investors. Crunchbase 
  • Analytics company Health Catalyst’s IPO, which will probably take place this week on NASDAQ with Livongo’s, expects to float 7 million shares. Shares will be in a range of $24 to $25 with a raise in excess of $171 million. Their quarterly revenue is above $35 million with an operating loss of $9.8 million. Since 2008, they’ve raised $377 million. IPO analysts call both Livongo’s and Health Catalyst’s IPOs ‘essentially oversubscribed’. Investors Business Daily, Crunchbase
    • UPDATE: Both Livongo and Health Catalyst IPOs debuted on Thursday 25 July, with Livongo raising $356 million on an upsized 12.7 million shares at $28/share, while Health Catalyst’s 7 million shares brought in $182 million at $26/share.  Friday’s shares closed way up from the IPOs Livongo at $38.12 and $38.30 for Health Catalyst. Bubbly indeed! Investors Business Daily, Yahoo Finance
  • Change Healthcare is also planning a NASDAQ IPO at a recently repriced $13 per share, raising $557.7 million from 42.8 million shares. With the IPO, Change is also offering an equity raise and senior amortizing note to pay off its over $5 bn in debt. The excruciating details are here. Investors here are taking a much bigger chance than with the above IPOs, but the market action above will be a definite boost for Change.
  • Connected fitness device company Peloton, after raising $900 million, is scheduled to IPO soon after a confidential SEC filing. (UPDATED–Ed. Note: Included as in the Rock Health report; however this Editor believes that their continued inclusion of Peleton in digital health is specious and should be disregarded by those looking at actual funding trends in health tech.) Forbes

Rock Health itself raised the ‘bubble’ question in considering 2018 results. Their six points of a bubble are:

  1. Hype supersedes business fundamentals
  2. High cash burn rates
  3. High valuations decoupled from fundamentals
  4. Surge of cash from new investors
  5. Fraud or misuse of funds
  6. Unclear exit pathways

This Editor’s further analysis of these six points [TTA 21 Jan] wasn’t quite as reassuring as Rock Health’s. As in 2018, #2, #3, and #6 are rated ‘moderately bubbly’ with even Rock Health admitting that #2 had some added froth. #3–high valuations decoupled from fundamentals–is, in this Editor’s experience, the most daunting, as as it represents the widest divergence from reality and is the least fixable. The three new ‘digital health unicorns’ they cite are companies you’ve likely never heard of and in ‘interesting’ but not exactly mainstream niches in health tech except, perhaps, for the last: Zipline (medicine via drone to clinics in Rwanda and Ghana), Gympass (corporate employee gym passes), and Hims (prescription service and delivery).

Editor’s opinion: When there are too many companies with high valuations paired with a high ‘huh?’ quotient (#3)–that one is slightly incredulous at the valuation granted ‘for that??’–it’s time to take a step back from the screen and do something constructive like rebuild an engine or take a swim. Having observed or worked for companies in bubbles since 1980 in three industries– post-deregulation airlines in the 1980s, internet (dot.com) from the mid-1990s to 2001, first stage telecare/telehealth (2006-8), and healthcare today (Theranos/Outcome Health), a moderate bubble never, ever deflates–it expands, then bursts. The textbook #3 was the dot.com boom/bust; it not only fried internet companies but many vendors all over the US and kicked off a recession.

Rock Health also downplayed #5, fraud and misuse of funds. It’s hard to tell why with troubles around uBiome, Nurx, and Cleo in the news, Teladoc isn’t mentioned, but their lack of disclosure for a public company around critical NCQA accreditation only two months ago and their 2018 accounting problems make for an interesting omission [TTA 16 May]. (And absurdly, they excluded Theranos from 2018’s digital health category, yet include drones, gym passes, connected fitness devices…shall we go on?)

Rock Health’s analysis goes deeper on the private investment picture, particularly their interesting concept of ‘net liquidity overhang’, the amount of money where investors have yet to realize any return, as an indicator of the pressure investors have to exit. Pressure, both in healthcare and in early-stage companies, is a double-edged sword. There’s also a nifty annual IPO Watch List which includes the five above and why buying innovation works for both early-stage and mature healthcare companies. 

(Editor’s final note: The above is not to be excessively critical of Rock Health’s needed analysis, made available to us for free, but in line with our traditionally ‘gimlety’ industry view.)

News roundup: CVS-Aetna still on hold, blockchainers Change acquires PokitDoc, Teladoc’s COO resigns under insider cloud, Clapp joins Cricket

Federal Judge Richard Leon of the Washington, DC District Court is taking a consideration break on the integration of CVS and Aetna, after holding it up on 3 December. The Department of Justice (DOJ) originally recommended that the merger was legal under anti-trust law after Aetna divested its prescription drug plan to WellCare and both companies’ settlements with several states. Judge Leon, reviewing under the Tunney Act requirement that the merger meet the public interest, is waiting for the DOJ to respond to further steps that CVS has taken to keep the companies separate. According to Seeking Alpha, CVS will take “constructive measures on pricing and sensitive information” and that an outside monitor would be brought in to monitor the companies commitments. Hartford Courant

Health IT software company Change Healthcare acquired assets of San Mateo-based PokitDoc, a healthcare API and blockchain developer. PokitDoc has developed blockchain transaction networks for EHR and identity verification, automatic adjudication and smart contracts. Its APIs are used by Doctor on Demand, Zipnosis, PillPack, and available on Salesforce Health Cloud. Change’s own blockchain platform was developed in 2017. McKesson owns 70 percent of Change. PokitDoc had funding up to $55 million prior to purchase, the value of which was not disclosed. Mobihealthnews, Health Data Management

Teladoc cut loose its COO/CFO after insider trading and sexual misconduct allegations. Mark Hirschhorn resigned on 17 December from the telemedicine company after being instrumental in the company’s recent revenue and visit growth (albeit with a downward spiral on the share value). Mr. Hirschhorn was alleged to have not only have had a sexual relationship with a (much younger) subordinate while married, but also engaged in mutual insider trading…of Teladoc stock. The steamy details of the affair(s) and an equally seamy tale of a whistleblower’s fate are in the Southern Investigative Reporting Foundation’s ‘The Investigator’. For those more concerned about Teladoc’s financial future, a bullish analysis of their stock value and trends is over at Seeking Alpha. Adding to the fire: a class action lawsuit was also filed against Teladoc on behalf of the company’s shareholders, accusing the company of misleading or false statements. Also Mobihealthnews.

And it’s cheering to announce that a respected long-time telehealth executive has found a new perch. Geoff Clapp has joined Cricket Health, a provider of integrated technology around kidney health, as Chief Product Officer. Geoff is an authentic Grizzled Pioneer, having joined early telehealth RPM company HealthHero back in 1998, then their acquirer Bosch Healthcare. He was also founder of Better, which partnered with the Mayo Clinic on providing virtual care coordinators at popular prices for both consumers and health systems. Since then he has consulted for companies as diverse as Telcare (diabetes), Oration (sold to just-acquired PokitDoc), and in venture capital. Congratulations–and happy new year in the new job! Release

Exciting new sessions, more startup funding at #MedMo16 NYC–now 25% off! (updated)

New Venue!
City Winery, 155 Varick Street, New York, NY
9am – 3:30pm (cocktail reception after) Monday 28 Nov; 9am – 3pm Tuesday 29 Nov
Information. Registration. TTA Readers use code Telecare25 for a 25% discount.

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2015/11/MedStartr_red_grey_sm.jpg” thumb_width=”150″ /]MedStartr and Health 2.0 NYC present Momentum, a full two-day conference focused on finding, partnering, piloting, and investing in the best new ideas in healthcare. Here are some updates on this event the Monday and Tuesday after Thanksgiving Weekend:

  • The MedMo16 Mega Challenge is awarding to participating startups in up to three pitch contests showcasing some of the coolest new early stage companies. 20 will be competing for over $750,000 (up from $500,000) in funding. Review the finalists here.
  • 70 speakers, five panels and nine talks from healthcare leaders like Rich Park of City MD (urgent care), Khan Siddiqui of Higi (gamified health kiosks), Regina Holliday of the patient activist Walking Gallery and more, featuring:
    The Unicorn Panel with leaders from some of the hottest companies like Pager (on-demand doctors) and Change Healthcare (revenue cycle management)
    Healthcare Innovation in the Trump Era, moderated by Fard Johnmar
    Ask the VC where we will let the crowd pose questions to leading investors in healthcare

Tickets are regularly priced as below–but our Readers get 25% off the full rates below. Use code Telecare25 when registering:

  • $75 for early stage startup founders, students and patient advocates ($56.25)
  • $155 general – expires 21 Nov–$395 thereafter ($116.25/$296.25)
  • $250 healthcare ecosystem stakeholders, investors and care providers ($187.50)
  • $450 non-healthcare ecosystem stakeholders ($337.50)

Tables and sponsorships available from $750.

MedMo16 is also the kickoff for the MedStartr Venture Fund which adds to the crowdfunding impact of MedStartr–now up to 94 health projects. TTA is a supporter of MedStartr and Health 2.0 NYC and Editor Donna is a MedMo16 event host. Hat tip to Alex Fair of #MedMo16 and MedStartr. Tag #MedMo16 and follow @MedStartr.