Short takes: Papa Health’s $150M Series D, Hinge Health’s $600M Series E, Teladoc’s revenue up 81% but continues in the red

Senior care provider Papa Health gains a Series D of $150 million, for a total of $240 million. Home care and older person support continues on its hot streak, after the blockbuster Honor-HomeInstead and Humana-Kindred at Home acquisitions plus smaller ones like ModivCare-VRI, Walgreens investment in CareCentrix, and Sharecare-CareLinx. The company’s valuation is now estimated at $1.4 billion. Papa’s technology connects older people with trained Papa ‘Pals’ for companionship and light home work through to Papa ‘Docs’ who serve to coordinate that person’s care. Their business model is to contract with payers such as Aetna and WellCare to offer its service as a benefit. They claim that they have added over 25 health plans as partners in the past seven months. This funding round was led by SoftBank Vision Fund 2 with participation from TCG, Tiger Global Management (which seems to have a bottomless bucket of funding), Canaan, Initialized Capital and Seven Seven Six. Mobihealthnews, Papa release

But Papa should envy Hinge Health, with its $600 million Series E for a total of $1 billion. In January, they had a $300 million Series D [TTA 14 Jan]. Their valuation is now boosted to an eye-blinking $6.2 billion, up from $3 billion. Tech and musculoskeletal seem to be a hot match, with Hinge’s virtual MSK Clinic for back and joint pain care and rehab including access to physical therapists, physicians, health coaches, and wearable sensors to guide exercise therapy. Existing investors Coatue and Tiger Global led the round, with new investors Alkeon and Whale Rock taking a $200 million stake.   FierceHealthcare 

Teladoc’s strong Q3 growth outstripped Wall Street’s forecast, but the competition is ever more fierce–and it continues in the red. Teladoc’s Q3 revenue grew 81%, to $522 million from $289 million prior year, beating a projection of $517 million by Zachs. Organic revenue growth (excluding acquisitions) was 32%. 2021 is now projected to be $2.02 billion, up 85% compared to 2020 revenue, and a 2022 projection of $2.6 billion. However, Teladoc continues to lose money, with an $84.3 million Q3 loss compared to $36 million in last year same quarter. Teladoc stated that it was primarily attributable to increased stock-based compensation and amortization of acquired intangibles, usually the case with acquisitions. Their stock value logically has taken a hit.

As previously reported, Teladoc has entered into the primary care sector with Primary360, now being pitched to health systems as a white-labeled “virtual front door” in addition to existing agreements with Aetna and Centene for 2022 exchange plans in four states. But as FierceHealthcare notes, the competition is equally hot, with care startups such as One Medical, Oak Street Health, Privia Health, and Forward. Accolade, which is a benefits platform, is acquiring PlushCare, and payers are setting up their own virtual-first primary care.

What’s next for telehealth? Is it time for a correction?

crystal-ballThe boom may be over, between shrinking visit volume and a pileup of providers. Is a correction in the cards? The flood of funding that started in 2020 and has not abated was kicked off by the pandemic and a massive shift to telehealth visits in March/April 2020 from a barely-above-plant-life number in January/February.

Post-pandemic, the shift corrected.

  • The peak of 69% of visits tracked by Epic in April had tailed off to 21% as early as May 2020 [TTA 2 Sept 20].
  • National commercial claims data via FAIR Health was lower. They tracked its peak also in April 2020 at 13%, falling continuously monthly: May to 8.69%, 6.85% in June, 6% in August, and 5.61% in October [TTA 9 Jan].
  • By mid-year 2021, the claims numbers continued to lose altitude: June 4.5%, July 4.2% (FAIR Health monthly report).

Despite the numbers, telehealth companies raised $4.2 billion of a total $15 billion in digital health funding in the first half of 2021, according to Mercom Capital Group, a global communications and research firm. So…what’s the problem with les bon temps rouler?

CB Insights notes the increased specialization of new entrants and, as this Editor has noted previously, the blending and crossing of business lines.

  • Companies like Heal, Dispatch Health, and Amazon Care will send a clinician to your house for a checkup–no running to your urgent care.
  • Kidney disease? Monogram Health. Musculoskeletal pain? Hinge Health. Child with an earache or fever? Tyto Care. Check symptoms first? Babylon Health.
  • Telemental health has gone from cocktail party repellent to the belle of the ball, concentrating on cognitive remote therapies. For the past year, it moved to more than half of all telehealth claims, with currently over 60% of procedure codes–and it’s consolidating. AbleTo was bought by Optum, Ginger bought by Headspace, SilverCloud by Amwell.

So for the Major League–Teladoc, Amwell, Doctor on Demand, Grand Rounds, and MDLive–what does this mean? If this interview with Teladoc’s CIO is an example, they plan to segue to a ‘hybrid’ model of virtual quick response plus integrating providers into a continuing care model with patients, creating a relationship with history and familiarity. A model that’s very much dependent on IT, analytics, and connecting with willing providers. But in this free-floating sea of verbiage, it didn’t come into misty focus till the very end, when he mentions Primary360 [TTA 7 Oct] and a virtual primary care team. (And let’s not forget Babylon360 along similar lines.) He finally sketches a view of all the connections to conditions coming together on a very far horizon. 

One can say it’s a cloudy crystal ball, indeed. FierceHealthcare, HealthcareITNews (Teladoc CIO interview)

News and deals roundup: Strive Health’s $140M for kidney care, coalition lobbies for more home telehealth, codes removed from PFS, Hinge Health buys Enso, HelloSelf £5M raise, Tyto Care adds

Strive Health, which is integrating digital health and analytics into the much-needed area of chronic kidney disease management, secured a $140 million Series B round of funding led by CapitalG, Alphabet’s independent growth fund. Another new investor, Redpoint, joins current investors NEA, Town Hall Ventures, Ascension Ventures, and Echo Ventures. Strive’s total funding at this point is over $223 million. Strive’s model is the improvement of renal disease through managing specialized patient care delivery with payers and providers, with data analytics integrated into a patient care model focused on the home, e.g. telehealth and home dialysis. Financially, they take risk on chronic kidney disease (CKD) and end-stage renal disease (ESRD) patients. Current contracts are with Humana, Blue Cross and Blue Shield of North Carolina, Independence Blue Cross, SSM Health, and Conviva Care Centers.   Release, FierceHealthcare

Speaking of home telehealth, the Moving Health Home coalition, formed by lobbyist Sirona Strategies, has onboard a founding group of companies that are generally competitive with each other: Amazon Care, Amwell, hospital systems Ascension Health and Intermountain Health, risk-based senior care group Landmark Health, Signify Health, and big Series D winner Dispatch Health [TTA 4 March]. Their stated intent is to influence policy to expand reimbursed home health care and advance the usage of home-based health based on evidence of effectiveness and cost savings. STAT,  MHH release

Meanwhile, back in DC, CMS says “oops!” on four telehealth codes inadvertently included in the Medicare Physician Fee Schedule (PFS) [TTA 3 Dec 20]. The 3 March Federal Register notice removes four codes listed in the temporary Category 3, which will remain in place through the end of the year as the pandemic public health emergency (PHE) has gone into 2021. Becker’s Hospital Review:

1. 96121: Neurobehavioral status exam by physician or other qualified health professional
2. 99221: Initial hospital care
3. 99222: Initial hospital care
4. 99223: Initial hospital care

Hinge Health acquires Enso. Enso developed a high-frequency pulsed, non-invasive, drug-free musculoskeletal (MSK) pain therapy which has been branded and added to Hinge Health’s MSK offerings. Product website. In January, Hinge Health raised $300 million in a Series D [TTA 14 Jan] as a rumored prelude to an IPO and made some management changes in preparation for same [TTA 27 Feb]. Terms and management alignments were not disclosed. Release

UK’s HelloSelf has raised a £5.5 million Series A funding round from OMERS Ventures. HelloSelf provides digital therapy and access to “the UK’s best clinical psychologists”. HelloSelf enters a crowded field of behavioral therapy providers, with SilverCloud Health dominant in the UK with the NHS. HelloSelf is concentrating on the B2B segment with employers. This Editor notes the much lower raises UK companies enjoy even in this hot area. Mobihealthnews

Tyto Care added Spectrum Health, a western Michigan health system, for live 24/7 video consults using Tyto Care’s exam kit. Release

Comings and goings: Babylon Health, Seniorlink, Hinge Health

At Babylon Health, the US-based C-suite is now larger with the additions of Paul-Henri Ferrand, briefly of financial platform Brex and previously Google Cloud, as Chief Business Officer, Stacy Saal of Amazon as Chief Operating Officer, and Steve Davis from Expedia Group as Chief Technology Officer. Mr. Ferrand will lead business development, sales, marketing, and customer success efforts; Ms. Saal operational initiatives and goals; and Mr. Davis technology and data. They will concentrate on US growth plans plus refining and leveraging Babylon 360.  Babylon release

Seniorlink, a Boston-based provider of professional coaching, emotional and financial support services for caregivers through Medicare Advantage and Medicaid in nine states, and the developer of the Vela care coordination app, appointed Matt Marek as President and Chief Operating Officer. He comes from Further, a service company for healthcare spending accounts. He will be concentrating on strategy and increasing US growth and partnerships.  Release

Having raised $300 million in a January Series D [TTA 14 Jan] as a prelude to a rumored IPO, San Francisco-based Hinge Health has made some major management changes. Jim Pursley, longtime Chief Commercial Officer at Livongo Health who departed after the Teladoc Health acquisition, is now President. Lex Annison, formerly of Google, is now Chief Operating Officer. And their new CFO, Ron Will, comes from the financial world, most recently from Ripple, and apparently has experience with mergers. On their management roster, Hinge now has two presidents–Gabriel Mecklenberg, a co-founder, and Mr. Pursley. Hinge provides digital solutions that treat chronic musculoskeletal (MSK) conditions to the provider market. Hat tip to an industry insider.   

Comings, goings, and more: YouTube goes healthy, COVID vax distribution and EMA hack, IPO/M&A roundup, Japan’s health tech startups highlighted at CES

Short takes on news snippets from just about everywhere. It’s been that kind of a week. (Picture: the famous Raymond Loewy-designed ’49 Studebaker Commander, of which it was joked ‘you can’t tell whether it’s coming or going)

Google-owned YouTube has decided to take a more organized approach to healthcare content with the hiring from CVS Health of Garth Graham, MD, who will serve as its director and global head of healthcare. At CVS, he was chief community health officer and president of the Aetna Foundation. His portfolio will include the development of content from providers including the Cleveland Clinic, the Mayo Clinic, the National Academy of Health, and Harvard’s School of Public Health. It’s seen as a platform for video-formatted health education both US and globally. The importance to Google is evident in the reporting line: Dr. Graham will report to Karen DeSalvo, MD, the chief health officer at Google. One wonders if the next step is the curating (a/k/a demonetizing or removal) of health content not Google-generated. FierceHealthcare, YouTube press release

Some states have done well on COVID-19 distribution. Others haven’t. It apparently doesn’t matter if you’re large or small. In the US, states were given vaccines based on CDC information and consultation with them. The states then designed their own distribution and priorities. Here’s a running tally on Becker’s Hospital Review Meanwhile, back in Hackerville, the European Medicines Agency (EMA) confirmed on 12 January that data relating to regulatory submissions by Moderna, Pfizer, and BioNTech that were on a hacked server was leaked to the internet. Becker’s

In IPO/M&A news:

Centene Corporation is acquiring Magellan Health, a behavioral health, specialty healthcare, and pharmacy management company, for $2.2 billion. Centene continues its transformation into a UnitedHealthcare structured company, with payer programs on one side and health services including population health management, data analytics and other areas of health tech on the other side. Magellan will be operated independently. The deal requires Federal and state review, and is expected to close in second half 2021. Release  Magellan this week announced its lead investment in a $20 million Series B raise by Philadelphia-based NeuroFlow, a clinical behavioral health monitoring system. Philadelphia Business Journal

Amwell announced a public offering of over 11 million shares. The date and pricing for the offering were not mentioned in the release, but at the current share price of $28, this would raise in excess of $308 million. This is on top of their socko IPO last September which raised in excess of $700 million. 

Behavioral therapy continues to be hot, with online behavioral therapy company Talkspace going the SPAC ‘blank check’ route in merging with investor company Hudson Executive Investment. It provides them with $250 million cash. Estimated net revenue is $125 million in 2021, up 69 percent from 2020, creating an enterprise value of $1.4 bn, which is quite a reach. Healthcare Dive, release.

Medicare Advantage payer Clover Health of Jersey City, NJ also went the SPAC route this week with Social Capital Hedosophia Holdings Corp. III, giving it an enterprise value of approximately $3.7 billion. Clover Health styles itself as a health tech company as it analyzes member health and behavioral data to improve medical outcomes and lower costs for patients, many of whom have multiple chronic conditions or are classified as underserved.  Release

Israel’s Itamar Health, which focuses on integrating sleep apnea management into the cardiac patient care pathway, is buying SF-based Spry Health for an undisclosed amount. Founded in 2014, Spry has an FDA-cleared wrist-worn device, the Loop System, that monitors SpO2, respiration rate, and heart rate. Itamar plans to develop a wrist-worn device based on their Peripheral Arterial Tonometry (PAT) immediately, with initial market launch anticipated in 2022. Release

Hinge Health’s Series D raised $300 million and a new valuation of the company at $3 bn. (Remember when $1 bn was a unicorn amount?) Hinge’s specialty is musculoskeletal–a virtual MSK Clinic for back and joint pain care and rehab including access to physical therapists, physicians, health coaches, and wearable sensors to guide exercise therapy. Release

In startup news…Under the radar, Japan has been developing a crop of health tech startups. They were highlighted at this year’s virtual CES by Jetro–the Japan External Trade Organization. Their CES web page has a teaser video and sortable profiles on companies, many of which look very interesting. According to their materials, there are perhaps 10,000 Japan startups but few of them make it out of Japan. This Editor looked forward to their presentation on ‘Turning the Super Aging Society into a Super Smart Society’ yesterday evening, but virtual doesn’t mean that links work or events actually happen, so our reporting will attach some statistics on their super-aging society, as well as a comparison with other countries (PDF).