Friday’s really quick takes: Oracle-Cerner starts Federal reviews, Curve Health, Signify buys Caravan, and a gaggle of single name companies!

February 11, 2022 | by

The long and winding road of Federal scrutiny–and other legal actions–begin for Oracle and Cerner. To be expected, the first hurdle is a review under the Hart-Scott-Rodino Act, by the Federal Trade Commission (FTC) and the US Department of Justice (DOJ). This should conclude by 22 February. The Securities and Exchange Commission (SEC) is also reviewing. As is routine in takeovers of public companies, there are seven civil filings by ‘supposed’ Cerner stockholders in either the District Court for the Southern or Eastern District of New York, their favorite venue, all claiming lack of information. Expect more. Kansas City Business Journal (which may be paywalled), Becker’s Health IT

New York-based newcomer Curve Health scored a $12 million Series A from Morningside Ventures with participation from Alumni Ventures and Recover-Care Healthcare, as well as returning investors Lightspeed Venture Partners, IDEO, Inflect Health, and others. Total funding is now $18 million (Crunchbase). Curve Health specializes in ‘virtual hospital’ telemedicine for skilled nursing facilities (SNFs) and community paramedicine, along with billing and health information exchange. Last July, they partnered with CareConnectMD, a California-based provider group that delivers value-based care for people living in nursing homes via its High Needs Direct Contracting Entity (DCE). Curve’s founder, Tim Peck MD, previously founded Call 9, a telemedicine/onsite service for nursing homes, which closed in July 2019 [TTA 15 May 2020] Release

Signify Health, a senior home care and value-based care provider, is acquiring ACO organizer and management services provider Caravan Health in a $250 million cash/stock deal with contingent additional payments of up to $50 million based on performance. Caravan’s founder and the current CEO will be joining Signify. It’s a move that may bolster Signify, which has had a few valuation challenges, because it expands Signify’s provider base and expands its current narrow episodes of care area (the former Remedy) into additional advanced payment models. Release, Mobihealthnews

Short short takes on single-word company news….

Expressable’s remote speech teletherapy platform closed a $15 million Series A funded by F-Prime Capital and including existing investors Lerer Hippeau, NextView Ventures, and Amplifyher Ventures. The new funding will go towards national expansion. FierceHealthcare  Hat tip to this Editor’s former colleague Amy VanStee, who recently joined them.

Balanced is a new digital platform for exercise coaching targeted to older adults. Users can modify based on assessed fitness level, input injuries, health conditions, and fitness goals. They added to an early seed round to total $6.5 million in seed funding, led by Founders Fund and Primary Venture Partners, with participation from Lux Capital and Stellation Capital. Cost for unlimited use is a gentle $20 per month. Given yesterday’s near-implosion of that expensive must-have of the aggressively fit and heavily dripping, Peloton, is fitness getting real?  Mobihealthnews

AndHealth, founded by the CEO plus veterans from CoverMyMeds, now has $57 million from Francisco Partners, with participation from the American Medical Association’s venture capital arm Health 2047, Kirkland & Ellis and Twofold Ventures. AndHealth specializes in Virtual Centers of Excellence (VCOE) programs for migraine and autoimmune disease reversal programs as an employer-sponsored benefit. Release

Berlin-based Ada extended its Series B by $30 million for a total of $120 million. Ada partners with major pharma for its AI-assisted symptom assessment app. TechEU

Nurx is merging into Thirty Madison. Nurx is primarily a provider of birth control, women’s and sexual health meds via telemedicine, while Thirty Madison specializes in telemedicine for chronic conditions. Thirty Madison was valued at over $1 billion after its Series C round in June. Nurx’s lines will be added to Thirty Madison’s menu which includes Keeps (hair loss) and Evens (GI issues). FierceHealthcare

Femtech’s huge potential global healthcare market–but needs to connect with payers and employers

January 17, 2020 | by

‘Femtech’ is one of those newish umbrella terms that corrals health tech that enables women to manage their health better. Most of women’s health products cluster in birth control, fertility, pregnancy, and early maternity, with little outside this area or for older women. A number have gotten substantial funding rounds–in Q3, Nurx (birth control, $52M), The Pill Club ($51M, ditto), and Cleo (pregnancy and post-partum coaching, $27.5M). Rock Health

Research2Guidance has dug a little deeper in its new study,
The Global Market Of Digital Women’s Health Solutions 2017-2024  and discovered 3,000 app-based solutions, 151M annual downloads and millions of active users globally. 20 percent of US women in the femtech core demographic use a health app, and R2G projects global market revenue will reach $297 million. Global market expansion is likely to be greatest in countries like India and China

What femtech lacks, according to R2G’s Ralf Jahns, is validation. Those 3,000 companies haven’t quite concentrated on their user case and benefits which could lead to validation and payer/employer reimbursement. And strategies haven’t quite jelled yet.

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

July 25, 2019 | by

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.)

The Theranos Story, ch. 60: becoming a Cautionary Tale of Silicon Valley Ethics

May 8, 2019 | by

It’s just weird. It’s just a bit surreal. When you see someone have this situation and pretend that everything is normal. It’s so bizarre.–Erika Cheung, former Theranos lab associate, whistleblower

Will health tech learn its lesson? As in Chapter 58, we are now in Full Retrospective on Theranos, with Cautionary Tales abounding. One of the better ones is from one of the two young whistleblowers profiled in John Carreyrou’s ‘Bad Blood’, Erika Cheung. She was the young (23) lab associate who saw patient samples from Walgreens and other patients constantly fail quality controls, finally reported it to regulators when nobody listened, then quit. The interview in STAT is refreshing. Ms. Cheung’s contrast of what she saw on the lab bench and in her encounters with Ms. Holmes versus the wide-eyed hype of Elizabeth Holmes in Fortune and Forbes circa 2014 is worth the read, along with her restart at 28 in Hong Kong founding an accelerator, Betatron, and a non-profit with fellow Theranos whistleblower Tyler Shultz, Ethics in Entrepreneurship, to try to pin the Jello On The (Shady) Wall that embodies Silicon Valley Ethics. Also Mobihealthnews on Ms. Cheung’s appearance at The Atlantic’s Pulse event. (The Atlantic still has a pulse?–Ed.)

Cautionary Tales continue, with the recent examples of Nurx, an e-prescriber specializing in women’s health, storing returned birth control pills in a closet shoe organizer and illegally remailing them to new customers (NY Times) and uBiome, a company that sells tests that sequence the bacteria of the body’s microbiome, on fraudulent billing that triggered an FBI raid. Both companies raised significant funding of late: Nurx over $41 million and uBiome over $100 million. The Silicon Valley rules–fake it to make it, and move fast, break things–once again blowing back on what may be good companies. The temptation may be too great for these health tech startups, something reflected on in this CNBC article.

TechCrunch, which breathlessly hyped Theranos back in the day, while duly noting and linking to the programs on How Theranos Fell, puts on its hair shirt for Dear Hollywood, here are 5 female founders to showcase instead of Elizabeth Holmes. Interestingly, one is not Anne Wojcicki of 23andme.