TTA’s summer of bombshells 6: Babylon’s UK fire sale, CVS Health and Optum layoffs, FTC Hates M&A, Cano Health’s telenovela continua, more!

August 25, 2023 | by

 

 

A news-filled August starts to wind down with grim resolutions and reorganizations. Babylon Health’s collapse much in the news with a speedy sale of its UK assets, a slow US Chapter 7, and Babyl Rwanda’s 2 million left in lurch. Even the giants are laying off thousands to please Mr. Market after toting up their shopping sprees. Certainly, it’s clear that FTC Hates M&A. At Cano Health, the telenovela continues with the interim CEO becoming permanent. Will he salvage it? Part it out? Tune in next month!

Your Editor will be off until mid-September for new news and opinion. We all need a breather. Enjoy our ‘best of’s’ until then.

Advance notice to Readers–be back in September!
Short takes: FTC’s Lina Khan’s vendetta on tech, employers disillusioned with virtual care, telepsychiatry cuts LOS and inpatient ED, Lotte’s AI-assisted telepsych diagnostics, ThymeCare’s $60M Series B (Why Cassandra is warning you!)
Babylon Health UK operations on fire sale–buyers to be announced Friday 25 August (UK wrapping quickly, US slowly, and Rwanda?)
Mid-week roundup: Babylon Rwanda update, CVS Health laying off 1,700+, Optum laying off too, Veradigm’s third non-compliance Nasdaq notice, AireHealth auctioning assets, Viome’s $86M raise + CVS retail kit deal (Going sideways to please Mr. Market)
Cano Health appoints interim CEO as permanent; founder Hernandez steps down from board (Mark Kent will need to be Clark Kent)

The bombshells don’t let up as Babylon Health is now in US Chapter 7 bankruptcy as well as UK receivership. Cano Health is likely the next there. DOJ and FTC delay UHG’s Amedisys buy. DocGo’s big NYC contract gets flakked up. Amazon Pharmacy does diabetics a solid with automated couponing. And there’s some bright spots with a pick of future unicorns, a big Italian investment in Philips, and Access Group’s Oysta buy. Plus weekend reading on the next unicorns and how streaming TV is like healthcare.

Weekend reading: Forbes picks the next $1B startups, is TV streaming analogous to the future of healthcare? (Yes, there may be unicorns, and the fracturing of TV and healthcare)
Week-end short takes: Amazon Pharmacy automating couponing of insulin and supplies, Mendaera imaging/robotics wins $24M, Access Group acquires Oysta (UK)
Babylon Health files for US Chapter 7 bankruptcy, winding down Babyl Rwanda and ending care for 2.8 million users (Hull loss for Babylon. Parting out starts 12 Sept)
Mid-week roundup: DocGo in NY migrant service trouble, more DOJ scrutiny of UHG-Amedisys buy, Exor now $2.8B lead investor in Philips (DocGo’s big contract brings big headlines in NY, UHG’s Amedisys delay a taste of things to come)
Cano Health at precipice of bankruptcy after disastrous Q2, lays off 700 (Waiting to hear from the Cano 3)

The summer of bombshells continues into August. The largest crater is left by Babylon Health’s merger collapse and US shutdown. Some optimism in Q2 financial reports but layoffs at larger companies surprise. Few surprises in KPMG’s healthcare M&A report. Bright Health may survive, as Clover and Oscar pivot too. And last week’s Big News of HIMSS and Informa has settled into Not Much Change and perhaps better. At least for now.

Healthcare M&A hit a 3 year low in Q2 2023, to the surprise of none: KPMG (Many reasons why-and we add a few observations)
Babylon Health shuts US operations, goes into UK receivership (At the end of the runway and into the lights)
Mid-week short takes: Amwell lowers 2023 outlook, DocGo goes up, Imprivata + PFH win Ireland HSE contract, Oracle Health’s Nashville move, layoffs at 23andMe, Doximity
Living to fight another day: insurtechs Bright Health, Clover Health, and Oscar Health report improved Q2s, H1s (updated) (Bright still at brink, but Clover and Oscar pivoting)
Babylon merger with AlbaCore and MindMaze collapses, selling UK and transitioning US businesses, bankruptcy anticipated (The deal fell apart fast)
More details on the HIMSS-Informa partnership on HIMSS24-Global Health Conference & Exhibition (Net-net–not much change and perhaps improvements)

This week’s Big News was the confirmation of the HIMSS deal with Informa–not a sale but a ‘partnership’–developing. CVS having some profitability problems and restructuring, minus 5,000–as is Oracle Cerner. Meanwhile, Congress tightly reins in Oracle Cerner EHRM in appropriations bill. And now you can run to Amazon Clinic without (much) concern about your privacy!

Short takes: CVS’ $1.12M Q2 net income loss, forecast spurs 5,000 layoffs; Signify’s in-home kidney exams; Indonesia’s Halodoc $100M D; FeelBetter raises $5.9M; Medicare breach hits 612,000 beneficiaries (When you spend like CVS, something’s gotta give)
House appropriates $1.9B for Oracle Cerner VA EHR modernization, $5.2B for telehealth, plus other technologies; Oracle lays off more Cerner staff (Congress reins in VA+Oracle Cerner)
Done (and split) deal! Informa to “manage” HIMSS Global Health Conference & Exhibition (updated) (It’s a partnership. Really!!)
More thoughts on the pending sale of the HIMSS Global Conference (Developing)
Amazon Clinic announces 50-state rollout 1 August. Were the privacy issues fixed? (Maybe, at least in disclosures)

Another few bombshells go off while a heat wave descends. It looks like the annual HIMSS conference won’t be HIMSS anymore. Another ‘David’ faces ‘Goliath’ in the Dorsata vs. athenahealth lawsuit. The FTC/HHS-OCR noose tightens on third-party ad tracker use. Positive earnings news from Teladoc, GE Healthcare, Talkspace, a lot of fundings–plus Nextech sold for $1.4B.

Legal roundup: Dorsata sues athenahealth, provider group on trade secret theft, Nevada terms Friday Health Plans (Dorsata as another ‘David’)
Close of week short takes: Q2 earnings up for GEHC, Talkspace; UnitedHealth invests $11M in SDOH; fundings for two AI startups, K4Connect, UpLift, Family First
Informa PLC to acquire HIMSS Global Health Conference and Exhibition (A ‘landmark’ love-it-or-hate-it conference to change hands)
Mid-week news roundup: $105M senior debt to Headspace; Nextech bought for $1.4B; Teladoc’s Better(Help) Q2 boosts 10%; Peppermint’s online ‘clubhouse’ for seniors, PathAI lays off 87
FTC, HHS OCR scrutiny tightens on third-party ad trackers, sends letter to 130 hospitals and telehealth providers

It may be summer, but the bombshells keep dropping. FTC and DOJ dropped draft merger guidelines on antitrust–in addition to HSR premerger notification–that will have far-reaching consequences. We update the demise of Friday Health Plans (another 30K members in the lurch), the Cano Health telenovela, hacking from Russia to UK to US, buys, financing, class action lawsuits, and an order in the ongoing AliveCor-Apple antitrust suit that slaps Apple down hard.

Another antitrust shoe drops: FTC, DOJ publish Draft Merger Guidelines for comment–what are the effects? (New restrictions not good for founders, managers, VCs)
Mid-week roundup: Colorado terms Friday Health Plans; Cano 3 continue to savage board; Amazon Pharmacy layoffs; hacking attacks: QuickBlox, Barts Health; Phreesia buys MediFind; financing pops for K Health, Amino
Legal roundup: Teladoc class-action suit dismissed; NextGen EHR $31M Federal settlement; significant AliveCor-Apple antitrust ‘spoiliation’ update; class action suits filed against HCA, Johns Hopkins

We looked at the first half’s digital health funding (back to 2019), the trend to unnamed and down rounds, two up rounds, two layoffs, three mixed pictures of telehealth effectiveness, it’s an almost-wrap at MHS for Oracle, and Amazon’s dodgy approach to your privacy. Early-stage company financing and managing your financials? We have some advice.

News roundup: MHS Genesis EHR completes US rollout, telehealth selective savings by disease, CarePredict’s $29M funding, Amazon Alexa *Spying on You* (Confirming telehealth unevenly bends the curve)
Thursday short takes: Fold Health VBC $6M round, Vivalink’s RPM in Burma rural health, Vytalize adds two to board, layoffs at TytoCare, IntelyCare (The roller coaster continues)
“Hope is not a business model”–advice from two VCs, with a bit more advice on basic banking (We unpack good advice for early-stage companies)
Mid-week roundup: telehealth success in opioid use disorder treatment, Epic sees fewer followup visits from telehealth vs in-office, telehealth usage slightly lower, HCA data theft may affect 11 million
Rock Health’s first half funding roundup adjusts the bath temperature to tepid, the bubbles to flat (2020-22 an aberration)

A short week in the US with the holiday wasn’t short of news. Bright Health and Molina made a $600M deal for California plans–as long as Bright stays solvent thru Q1 2024. Insurtechs proved to be disruptive but not innovative enough. And a potpourri of news from FDA requesting comments on home care tech, Japan, Alertacall on funding. A new mental health company targeting seniors is born while an old one struggles.

Short takes: FDA seeks feedback on home care tech; Japan care homes piloting AI; Author Health’s $115M bet on senior mental health; Alertacall’s Batchelor on ‘right fit’ finance support; Headspace in the wrong (layoff) space again
Why the ‘insurtechs’ didn’t revolutionize health insurance–and the damage they may have done (Back to the legacy payers)
Bright Health to exit insurance business, selling California plans to Molina for up to $600 million–contingent on surviving to 2024 (A dicey proposition all round)

Wrapping up June before the US Independence Day holiday next week had its own fireworks. Most far reaching–the changes spearheaded by FTC for HSR premerger notifications that will only quadruple the work. Babylon Health completing its going private arrangement with AlbaCore. Amazon delays Clinic rollout for three weeks facing tough data usage questions from senators. More pleasant looks at rural telehealth on a bucolic Irish island and supermarket trolley heart monitoring. Happy 4th!

Ireland’s Clare Island as multimodal rural telehealth and telemonitoring testbed (Very rural health on Ireland’s west coast)
FTC, DOJ float enhanced information requirements for HSR premerger notification filing process–what will be M&A effects? (More dampers on a down market?)
Embedding ECG sensors to a supermarket cart (trolley) handle as ‘first-line’ screening for atrial fibrillation (Bringing monitoring to everyday life)
Mid-week roundup: Optum buying Amedisys home care for $3.3B; Clover Health settles 7 shareholder lawsuits around SPAC non-disclosures; Walgreens cuts 2023 outlook, stock plummets 11%
Amazon Clinic delays 50-state telehealth rollout due to Federal data privacy, HIPAA concerns on user registration, PHI–is it a warning? (Amazon better heed it)
Babylon Health to go private with AlbaCore in planned ‘Take Private Proposal’, combine with MindMaze (Merging two very different companies)

Of continued interest: 

Mid-week update: Cano Health CEO finally booted, interim named; further information on Oracle Cerner layoffs (The Cano telenovela continues!)

Perspectives: How robust patient scheduling and intake enable better patient access to cancer care – a UK case study 
‘Warning flare’ study: will pandemic-induced digital health solutions get renewed by hospitals in 2023-4, or will they churn? (Get cracking with your account relationships)
‘The Future of AI and Older Adults 2023’ now published (Laurie Orlov’s latest analysis)

VA awards four remote patient monitoring companies to share in $1B Home Telehealth contract (Medtronic wins again plus 3 newbies)
Watch your cash burn! Now 31 months average for startups between Series A and B. Now what do you do? (Cautionary advice for startups)

Perspectives: How AI and ML can accelerate the growth of telemedicine across the globe (Thoughtful take on the up-and-downsides of both)

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Advance notice to Readers–be back in September!

August 24, 2023 | by

Your Editor’s Two Weeks In Another Town (apologies to Irwin Shaw). Editor Donna will be on holiday starting next week for some much-needed R&R, away from the hot stove of her laptop for articles until mid-September. (Given what is happening in health tech, I think we ALL need a break!) The 25 August weekly alert will be the last till then, except for a ‘best of’ edition.

This will also give Editor Emeritus Steve Hards the opportunity and time to do some much-needed maintenance on our website, including our X (formerly Twitter) messaging (Elon Musk’s curveballs) which is off-piste and on our email platform, ‘in the clear’. 

Just so you don’t forget us, our Alert subscribers will receive a Saturday ‘best of’ email with back articles of interest on 2 and 9 September. Have a happy rest of Summer and see you in September!

Short takes: FTC’s Lina Khan’s vendetta on tech, employers disillusioned with virtual care, telepsychiatry cuts LOS and inpatient ED, Lotte’s AI-assisted telepsych diagnostics, ThymeCare’s $60M Series B

August 24, 2023 | by

FTC, the new three-letter Headache for Healthcare. Your Editor has been closely following the Federal Trade Commission (FTC) and Department of Justice (DOJ) changes to antitrust filing processes and merger guidelines. She has been alarmed by the weaponization of the previously fast-asleep 2009 Health Breach Notification Rule against ad trackers to collect quick fines from GoodRx and Teladoc/BetterHelp and creating new policy. In fact, she has been feeling a bit like Cassandra shouting into a Category 4 hurricane. Comes along City Journal, published by the Manhattan Institute think tank, that delves deep into the belief system of FTC chair Lina Khan. In a phrase, she has an ax to throw at businesses that seek to expand or sell through M&A, based upon her subjective philosophies about antitrust that often conflict with established case law.  The article features where she and the FTC commissioners routinely overstep guidelines and recusals, plus get reversed in Federal court. Khan’s nemesis is Amazon. Beware, Bezos. Our articles on the FTC follies, such as the changes to the HSR premerger notification filing process and the Draft Merger Guidelines, so you can Share The Alarm:

Healthcare M&A hit a 3 year low in Q2 2023, to the surprise of none: KPMG (scroll down to last paragraphs)

FTC, DOJ float enhanced information requirements for HSR premerger notification filing process–what will be M&A effects?

Another antitrust shoe drops: FTC, DOJ publish Draft Merger Guidelines for comment–what are the effects?

Just in time for the downturn in digital health funding, employers are becoming tired of telehealth hype. Virtual health may have been touted too loudly as a cost and time-saving panacea to enterprises, ‘transformative’ in and of itself. In the Business Group on Health’s omnibus survey of employer healthcare, they have concerns including a lack of integration among solutions. They are also less confident that it will impact health delivery: from 85% of employers in 2021, boosted artificially by the pandemic, it dropped to 74% in 2022 and 64% in 2023. Employers are also demanding more of partnerships and vendors for value and cost–and demanding reporting on metrics such as health equity. 152 large companies with 19 million workers were polled between 1 June and 18 July.  Business Group release, FierceHealthcare

Telepsychiatry can help hospitals with emergency mental health, as well as shorten length of stay on med-surg floors and the ICU. Allina Health, a health system in Minnesota and Wisconsin, implemented Iris Healthcare, a telepsychiatry service to cover the shortage of psychiatrists and more fully utilize psychiatry in other areas. Psychiatric patients in the ED were staying the longest on average. With telehealth support, the length of stay (LOS) decreased by 25%–from 12 to 9 hours. Behavioral health is now part of ED evaluation and it moved 63% of patients to an outpatient plan from 55% plus shortened LOS in Allina’s Med-Surg and ICU floors by half a day. HealthcareITNews

South Korea’s Lotte Healthcare is partnering with iMediSync to create new AI-utilizing evaluation tools. iMediSync has EEG screening capability for diagnosing neuropsychiatric disorders like Alzheimer’s disease that Lotte will integrate into their mobile health app, Cazzle. Cazzle then creates personalized health recommendations for users. The South Korean market is unusual in that the rate for accessing mental health services is only about 1/10th of the population, yet mental illness is growing. Mobihealthnews 

To end on a positive funding note, ThymeCare scored $60 million in a Series B round. This was led by Town Hall Ventures and Foresite Capital with participation from existing investors Andreessen Horowitz Bio + Health, AlleyCorp, Casdin Capital, and Frist Cressey Ventures. ThymeCare is a platform for those diagnosed with cancer to better understand their diagnosis and recommend personalized interventions and care navigation to patients to quickly connect them to care with its platform, Thyme Box. It utilizes data analytics to crunch information from payer, EHR, and health information exchange sources. FierceHealthcare

Babylon Health UK operations on fire sale–buyers to be announced Friday 25 August (updated)

August 23, 2023 | by

Quickly and softly, softly, Babylon Health’s UK operations are being sold. The sale will include the proprietary tech stack. If you planned to bid, the deadline passed on Monday 21 August. Winning bids will be announced on Friday 25 August at the latest.  Update: As of 29 August, the bidders have not been announced.

The rush is due to the extreme position that Babylon Health’s operations are in. A UK shutdown is likely without a quick sale. Their UK business is with Bupa insurance, a little left with the NHS, some B2B, and GP At Hand/direct to consumer. Business consultancy Alvarez and Marsal are running the sale, presumably as part of the UK receivership.

Bidders, who were invited by letter, may include Bupa, Vitality, tech companies HealthHero and Cera–and even CEO Ali Parsa, which might lead to questions by customers or the court. Kry/Livi stated to press that they were not bidding. Customers Bupa, with a contract to 2025, and the NHS may have a say in the eventual deals.

The proceeds of the sale are projected not to exceed the $300 million debt owed to AlbaCore Capital nor its last $34.5 million tranche. Other debtors and vendors will be left in the proverbial lurch. Sifted.eu, Becker’s

The sale does not include the US operations that are included under the Chapter 7 liquidation which is still in the filing of documents stage. Babylon US, which generated most of Babylon’s revenue, has already shut down. Close to half its business was with Centene entities such as Ambetter and WellCare, which terminated their contracts on 8 August, the day after the collapse of the AlbaCore deal. The only operating part of Babylon is the Meritage Medical Network, a medical practice IPA. Next steps start tomorrow, Thursday 24 August, for documentation of its secured and unsecured debtors and summaries of assets and liabilities. Babylon’s creditors will meet on Tuesday 12 September.

The UK fire sale also does not include Babyl Rwanda, a semi-independent unit that is engaging with the Rwandan government to find a buyer. There is no further information available on other operations in India or other countries. 

Most recent coverage on Babylon in TTA: 23 August, 17 August, 10 August, 8 August

Mid-week roundup: Babylon Rwanda update, CVS Health laying off 1,700+, Optum laying off too, Veradigm’s third non-compliance Nasdaq notice, AireHealth auctioning assets, Viome’s $86M raise + CVS retail kit deal

August 23, 2023 | by

It’s another jump into the unknown between bankruptcies, layoffs, and funding raises for the Lucky Few. Emblematic of this year as we prepare to wind up this Crazy Summer in the next few weeks.

Rwandan government scrambling to keep Babyl services going. According to a local website, The EastAfrican, on 7 August “Health Minister Sabin Nsanzimana convened a meeting with the head of Babyl’s operations in Rwanda, Shivon Byamukama, to formulate a contingency plan to mitigate the impact of the company’s bankruptcy.” The Rwanda Ministry of Health is trying to secure the Babyl Rwanda operation that serves 2.4 million Rwandans (not Babylon’s 2.8 million, but still close to 20% of population) and employs over 600 people–doctors, nurses, call center agents, and software developers, Babyl is maintaining normal daily operations for now while Babyl Rwanda’s managing director, Dr. Shivon Byamukama, told the publication that the Rwanda operation is in active discussions with potential investors and partners either as a standalone entity or in partnership with another body. One wonders where the $2.2 million in funding from the Bill & Melinda Gates Foundation went.

CVS Health is starting to wield the knife on its promised (to investors) 5,000-person layoff, starting with at least 1,200 in October. The bulk of the layoffs will be in Connecticut and Rhode Island, both home to much of the Aetna operations. State labor departments in Rhode Island and Connecticut have already received WARN notices from CVS that over 1,200 employees in those states will be terminated effective 21 October. In other states, WARN notices have been filed for another 580 also effective 21 October.

  • The Woonsocket, RI headquarters and a neighboring office in Cumberland will lose 770 workers. 198 live in RI, the others are remote workers reporting to RI-based supervisors.
  • 306 employees are based at the insurer’s headquarters in Hartford, Connecticut. An additional 215 work remotely but are supervised out of the Connecticut offices, for a total of 521.
  • Other employees will be terminated in New York (167), Plantation, Florida (288), and Arizona (134), according to notices filed in each state.
  • Updated 24 Aug: another 825 across four additional states. In NJ, 207 employees at multiple locations starting 15 November. In Texas, 167 employees in Richardson and Irving; in Pennsylvania, 157 employees at an Aetna office in Blue Bell; in Illinois, 294 employees in Chicago, Buffalo Grove, and Northbrook starting 21 October.  Becker’s
  • CVS refused to disclose other layoffs to Healthcare Dive in other states where the number fell below WARN notice requirements

These positions include assistants, data engineers, customer care pharmacists, actuary executives, corporate vice presidents, project managers, program managers, and managers/directors of network development. While these constitute only 2% of CVS’ overall workforce of 300,000, it is cold comfort to those affected, many of whom have worked years for Aetna or CVS.   Becker’s  

The timing is revealed in the Becker’s Payer Issues article: When CVS acquired Aetna, “its agreement with state insurance regulators included a promise to keep employment levels at Aetna and its subsidiaries at 5,300 for at least four years after the closure of the deal. The employment levels reflected staffing as of Oct. 1, 2018, and the agreement expired in 2022.” Notice the similarities in the numbers.

In the interim, CVS went on an acquisition binge of $18.6 billion, buying Signify Health and Oak Street Health only months apart in strategic moves to buy up practices and network extenders such as ACOs in value-based care and home health.

  • Oak Street Health and its 169 practices do not project profitability until 2025–maybe–and clocked an over $500 million loss last year [TTA 4 May]. In the views of many on the Street, Oak Street was a $10 billion waste.
  • No one knows if Signify Health is profitable or not with practices and home health, but that company took a bath on Remedy Partners in Episodes of Care models and wound down that business right before the auction. CVS Health got caught up in a four-way bidding war only a year ago (in a universe that feels quite far away) that topped out at over $8 billion in cash. Ill-considered in retrospect?

CVS Health is already dealing with 2023 and 2024 projections that are downtrend: increased Medicare Advantage costs, higher drug utilization, and lower consumer spending expectations affecting retail operations. Mr. Market does not ignore Where The Money Comes From, and the piper that is paid comes from where it usually does–the people working for the company.

Optum not immune from layoffs either. Optum Health’s MedExpress Urgent Care clinics are eliminating registered nursing positions at nearly 150 facilities as part of a larger group of layoffs at Optum. MedExpress’ RNs are circulating an online petition protesting the change as ‘negligent’. Social media has also posted about gradual current layoffs at UnitedHealth Group and Optum building to major layoffs affecting worldwide operations. There are no WARN filings so these are suspected to be below the 50-100 WARN threshold (number and time period e.g. 6 months may vary by state) but cumulatively across UHG substantial. Becker’s    Becker’s updated coverage today 23 August

Veradigm’s ‘problem’ with Nasdaq continues. The former Allscripts still has not filed an annual report for 2022, nor Q1 or Q2 financial reports, with the Securities and Exchange Commission (SEC) which are required for Nasdaq stock listing under Nasdaq Listing Rule 5250(c)(1). TTA previously reported in June that Veradigm is not reporting because they had a software flaw that affected its revenue reporting going back to 2021. This has been going on since March. Veradigm has requested multiple extensions from the exchange and are set to ask for another. Veradigm stock closed today at $12.89, which is well out of the usual trouble, but an accounting software problem this long unresolved from a software company specializing in practice EHRs and practice management software…does not compute. Healthcare Dive, Business Wire

AireHealth auctioning off assets. This respiratory health company based in Winter Park, FL founded in 2018 developed a FDA-cleared nebulizer with Bluetooth functionality plus AI and machine learning software to generate predictive data on patients’ clinical conditions. The online auction of patents, software, hardware, and intellectual property for the company’s remote patient respiratory care platform will be held by Florida-based Fisher Auction Company. Apparently, there was no bankruptcy filed but the early-stage company decided to shutter anyway and sell assets. Mobihealthnews

On the other hand, gut health is hot and Viome scored a Series C of $86.5 million for a total $175 million raise plus gut testing in 200 CVS locations. Lead investors are Khosla Ventures, Bold Capital, and WRG Ventures. With the raise, Viome announced the launch of its Gut Intelligence Test in 200 CVS locations. Online, the Gut Test retails for $149 on current sale. Viome also markets oral and throat tests plus a ‘full body’ test in the $200+ range. The gut test is not currently FDA-cleared, though its saliva-based oral and throat cancer test received FDA breakthrough device designation in 2021. They claim that its RNA sequencing technology that utilizes AI and advanced algorithms to analyze the world’s largest gene expression data from over 600,000 samples, was originally developed out of research from the Los Alamos National Laboratory, “is clinically validated, fully automated, exclusively licensed by Viome [to analyze] biological samples at least 1,000 times greater than other technologies.” Release, Mobihealthnews, TechCrunch

Cano Health appoints interim CEO as permanent; founder Hernandez steps down from board

August 22, 2023 | by

Cano Health made the obvious, and perhaps the only, choice. Interim chief executive officer Mark Kent was  appointed both as permanent CEO and joined the company’s board of directors. Founder Dr. Marlow Hernandez, the founding and former CEO up to 16 June when Mr. Kent was appointed, immediately stepped down from the board.

Mr. Kent has a strong background as an RN, as well as a senior executive in hospitals and as a founder of three startup healthcare management services organizations (MSOs) for Florida primary care providers in value-based care, most recently as CEO of Care Management Resources, Total Health Medical Group, and Your Partners In Health. Before then, he was a regional president of Humana. From his LinkedIn profile, he sounds like an accomplished and interesting executive. Another interesting facet: he runs investments for his Florida-based family office Kent Capital Investments which maintains investments in the above MSOs and others. Turning around a company staring at the abyss,  laying off 17% of staff and exiting states right and left in a restructuring, and successfully selling what’s left is another matter. It is not disclosed whether Kent Capital has an investment in Cano Health or if there are ties between the practices and Cano. The Care Management Resources website displayed on LinkedIn or in a routine search is not to be found.

The company release does not refer to any other members of the board, the Cano 3, or Dr. Hernandez’ future, though he is a shareholder. The Cano 3, who hold 35% of near-worthless shares in their collective portfolios (resigned directors Barry Sternlicht, Elliot Cooperstone, and Lewis Gold), remain silent. Healthcare Dive   Previous coverage of Cano Health: 15 August includes restructuring; 21 June

TTA’s summer of bombshells 5: Babylon’s Chapter 7, Cano Health’s disaster, Feds delay UHG-Amedisys, DocGo takes flak, Access buys Oysta, Exor’s $2.8B buoys Philips, future unicorns, more!

August 18, 2023 | by

 

 

The bombshells don’t let up as Babylon Health is now in US Chapter 7 bankruptcy as well as UK receivership. Cano Health is likely the next there. DOJ and FTC delay UHG’s Amedisys buy. DocGo’s big NYC contract gets flakked up. Amazon Pharmacy does diabetics a solid with automated couponing. And there’s some bright spots with a pick of future unicorns, a big Italian investment in Philips, and Access Group’s Oysta buy. Plus weekend reading on the next unicorns and how streaming TV is like healthcare.

Weekend reading: Forbes picks the next $1B startups, is TV streaming analogous to the future of healthcare? (Yes, there may be unicorns, and the fracturing of TV and healthcare)
Week-end short takes: Amazon Pharmacy automating couponing of insulin and supplies, Mendaera imaging/robotics wins $24M, Access Group acquires Oysta (UK)
Babylon Health files for US Chapter 7 bankruptcy, winding down Babyl Rwanda and ending care for 2.8 million users (Hull loss for Babylon. Parting out starts 12 Sept)
Mid-week roundup: DocGo in NY migrant service trouble, more DOJ scrutiny of UHG-Amedisys buy, Exor now $2.8B lead investor in Philips (DocGo’s big contract brings big headlines in NY, UHG’s Amedisys delay a taste of things to come)
Cano Health at precipice of bankruptcy after disastrous Q2, lays off 700 (Waiting to hear from the Cano 3)

The summer of bombshells continues into August. The largest crater is left by Babylon Health’s merger collapse and US shutdown. Some optimism in Q2 financial reports but layoffs at larger companies surprise. Few surprises in KPMG’s healthcare M&A report. Bright Health may survive, as Clover and Oscar pivot too. And last week’s Big News of HIMSS and Informa has settled into Not Much Change and perhaps better. At least for now.

Healthcare M&A hit a 3 year low in Q2 2023, to the surprise of none: KPMG (Many reasons why-and we add a few observations)
Babylon Health shuts US operations, goes into UK receivership (At the end of the runway and into the lights)
Mid-week short takes: Amwell lowers 2023 outlook, DocGo goes up, Imprivata + PFH win Ireland HSE contract, Oracle Health’s Nashville move, layoffs at 23andMe, Doximity
Living to fight another day: insurtechs Bright Health, Clover Health, and Oscar Health report improved Q2s, H1s (updated) (Bright still at brink, but Clover and Oscar pivoting)
Babylon merger with AlbaCore and MindMaze collapses, selling UK and transitioning US businesses, bankruptcy anticipated (The deal fell apart fast)
More details on the HIMSS-Informa partnership on HIMSS24-Global Health Conference & Exhibition (Net-net–not much change and perhaps improvements)

This week’s Big News was the confirmation of the HIMSS deal with Informa–not a sale but a ‘partnership’–developing. CVS having some profitability problems and restructuring, minus 5,000–as is Oracle Cerner. Meanwhile, Congress tightly reins in Oracle Cerner EHRM in appropriations bill. And now you can run to Amazon Clinic without (much) concern about your privacy!

Short takes: CVS’ $1.12M Q2 net income loss, forecast spurs 5,000 layoffs; Signify’s in-home kidney exams; Indonesia’s Halodoc $100M D; FeelBetter raises $5.9M; Medicare breach hits 612,000 beneficiaries (When you spend like CVS, something’s gotta give)
House appropriates $1.9B for Oracle Cerner VA EHR modernization, $5.2B for telehealth, plus other technologies; Oracle lays off more Cerner staff (Congress reins in VA+Oracle Cerner)
Done (and split) deal! Informa to “manage” HIMSS Global Health Conference & Exhibition (updated) (It’s a partnership. Really!!)
More thoughts on the pending sale of the HIMSS Global Conference (Developing)
Amazon Clinic announces 50-state rollout 1 August. Were the privacy issues fixed? (Maybe, at least in disclosures)

Another few bombshells go off while a heat wave descends. It looks like the annual HIMSS conference won’t be HIMSS anymore. Another ‘David’ faces ‘Goliath’ in the Dorsata vs. athenahealth lawsuit. The FTC/HHS-OCR noose tightens on third-party ad tracker use. Positive earnings news from Teladoc, GE Healthcare, Talkspace, a lot of fundings–plus Nextech sold for $1.4B.

Legal roundup: Dorsata sues athenahealth, provider group on trade secret theft, Nevada terms Friday Health Plans (Dorsata as another ‘David’)
Close of week short takes: Q2 earnings up for GEHC, Talkspace; UnitedHealth invests $11M in SDOH; fundings for two AI startups, K4Connect, UpLift, Family First
Informa PLC to acquire HIMSS Global Health Conference and Exhibition (A ‘landmark’ love-it-or-hate-it conference to change hands)
Mid-week news roundup: $105M senior debt to Headspace; Nextech bought for $1.4B; Teladoc’s Better(Help) Q2 boosts 10%; Peppermint’s online ‘clubhouse’ for seniors, PathAI lays off 87
FTC, HHS OCR scrutiny tightens on third-party ad trackers, sends letter to 130 hospitals and telehealth providers

It may be summer, but the bombshells keep dropping. FTC and DOJ dropped draft merger guidelines on antitrust–in addition to HSR premerger notification–that will have far-reaching consequences. We update the demise of Friday Health Plans (another 30K members in the lurch), the Cano Health telenovela, hacking from Russia to UK to US, buys, financing, class action lawsuits, and an order in the ongoing AliveCor-Apple antitrust suit that slaps Apple down hard.

Another antitrust shoe drops: FTC, DOJ publish Draft Merger Guidelines for comment–what are the effects? (New restrictions not good for founders, managers, VCs)
Mid-week roundup: Colorado terms Friday Health Plans; Cano 3 continue to savage board; Amazon Pharmacy layoffs; hacking attacks: QuickBlox, Barts Health; Phreesia buys MediFind; financing pops for K Health, Amino
Legal roundup: Teladoc class-action suit dismissed; NextGen EHR $31M Federal settlement; significant AliveCor-Apple antitrust ‘spoiliation’ update; class action suits filed against HCA, Johns Hopkins

We looked at the first half’s digital health funding (back to 2019), the trend to unnamed and down rounds, two up rounds, two layoffs, three mixed pictures of telehealth effectiveness, it’s an almost-wrap at MHS for Oracle, and Amazon’s dodgy approach to your privacy. Early-stage company financing and managing your financials? We have some advice.

News roundup: MHS Genesis EHR completes US rollout, telehealth selective savings by disease, CarePredict’s $29M funding, Amazon Alexa *Spying on You* (Confirming telehealth unevenly bends the curve)
Thursday short takes: Fold Health VBC $6M round, Vivalink’s RPM in Burma rural health, Vytalize adds two to board, layoffs at TytoCare, IntelyCare (The roller coaster continues)
“Hope is not a business model”–advice from two VCs, with a bit more advice on basic banking (We unpack good advice for early-stage companies)
Mid-week roundup: telehealth success in opioid use disorder treatment, Epic sees fewer followup visits from telehealth vs in-office, telehealth usage slightly lower, HCA data theft may affect 11 million
Rock Health’s first half funding roundup adjusts the bath temperature to tepid, the bubbles to flat (2020-22 an aberration)

A short week in the US with the holiday wasn’t short of news. Bright Health and Molina made a $600M deal for California plans–as long as Bright stays solvent thru Q1 2024. Insurtechs proved to be disruptive but not innovative enough. And a potpourri of news from FDA requesting comments on home care tech, Japan, Alertacall on funding. A new mental health company targeting seniors is born while an old one struggles.

Short takes: FDA seeks feedback on home care tech; Japan care homes piloting AI; Author Health’s $115M bet on senior mental health; Alertacall’s Batchelor on ‘right fit’ finance support; Headspace in the wrong (layoff) space again
Why the ‘insurtechs’ didn’t revolutionize health insurance–and the damage they may have done (Back to the legacy payers)
Bright Health to exit insurance business, selling California plans to Molina for up to $600 million–contingent on surviving to 2024 (A dicey proposition all round)

Wrapping up June before the US Independence Day holiday next week had its own fireworks. Most far reaching–the changes spearheaded by FTC for HSR premerger notifications that will only quadruple the work. Babylon Health completing its going private arrangement with AlbaCore. Amazon delays Clinic rollout for three weeks facing tough data usage questions from senators. More pleasant looks at rural telehealth on a bucolic Irish island and supermarket trolley heart monitoring. Happy 4th!

Ireland’s Clare Island as multimodal rural telehealth and telemonitoring testbed (Very rural health on Ireland’s west coast)
FTC, DOJ float enhanced information requirements for HSR premerger notification filing process–what will be M&A effects? (More dampers on a down market?)
Embedding ECG sensors to a supermarket cart (trolley) handle as ‘first-line’ screening for atrial fibrillation (Bringing monitoring to everyday life)
Mid-week roundup: Optum buying Amedisys home care for $3.3B; Clover Health settles 7 shareholder lawsuits around SPAC non-disclosures; Walgreens cuts 2023 outlook, stock plummets 11%
Amazon Clinic delays 50-state telehealth rollout due to Federal data privacy, HIPAA concerns on user registration, PHI–is it a warning? (Amazon better heed it)
Babylon Health to go private with AlbaCore in planned ‘Take Private Proposal’, combine with MindMaze (Merging two very different companies)

Of continued interest: 

Mid-week update: Cano Health CEO finally booted, interim named; further information on Oracle Cerner layoffs (The Cano telenovela continues!)

Perspectives: How robust patient scheduling and intake enable better patient access to cancer care – a UK case study 
‘Warning flare’ study: will pandemic-induced digital health solutions get renewed by hospitals in 2023-4, or will they churn? (Get cracking with your account relationships)
‘The Future of AI and Older Adults 2023’ now published (Laurie Orlov’s latest analysis)

VA awards four remote patient monitoring companies to share in $1B Home Telehealth contract (Medtronic wins again plus 3 newbies)
Watch your cash burn! Now 31 months average for startups between Series A and B. Now what do you do? (Cautionary advice for startups)

Perspectives: How AI and ML can accelerate the growth of telemedicine across the globe (Thoughtful take on the up-and-downsides of both)

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Weekend reading: Forbes picks the next $1B startups, is TV streaming analogous to the future of healthcare?

August 18, 2023 | by

Will we have any more unicorn startups? Forbes seems to think we will and picked out 25 with TrueBridge Capital Partners. They’re a potpourri of cybersecurity, ID fraud, IT, fashion, financial, farming, and even an aircraft company. Only a few are healthcare-related and Becker’s picked them out:

Chapter, co-founded by Republican Party presidential hopeful Vivek Ramaswamy. uses its database to fit the best Medicare plan options (Medicare Advantage, supplements) to individuals. Unlike brokers, their consultants get paid the same no matter the plan. It’s raised $61 million and has revenue of $15 million.

Medallion does the dog work of verifying medical licenses and enrolling doctors in insurance networks. They have more than 300 customers, including Oak Street Health and VillageMD. It’s raised $85 million   and has revenue of $13 million.

Pendulum Therapeutics is in microbiomes–gut health–and what early usage can produce over a lifetime. Many babies given antibiotics have now been found to be more susceptible to chronic lifelong problems that include asthma, ADHD, diabetes, and celiac disease. Its flagship is a glucose-control pro­biotic for mana­ging Type 2 diabetes. It’s raised $116 million and has revenue of $11 million.

Verifiable verifies the credentials of medical professionals using machine tools. It’s raised $47 million and has revenue of $6 million.

Is there a usable analogy between the TV streaming wars and healthcare’s future? This essay in Becker’s Hospital Review is unusual for them. It draws a line between the fragmentation, redundancy, and overlap in entertainment that streaming services such as Hulu, Disney+, and Netflix have created, to the fragmentation, redundancy, and overlap between health systems and health companies such as Optum, Humana, CVS Health, Walgreens, and even Amazon in taking care away from the hospital setting into clinics and the home, breaking the centralized hold that health systems have had on patients. Too much á la carte, confusing, and fragmented for patients at usually a very bad time, unlike sitting on the couch and wondering which home improvement or celebrity reality show to watch.

Week-end short takes: Amazon Pharmacy automating couponing of insulin and supplies, Mendaera imaging/robotics wins $24M, Access Group acquires Oysta (UK)

August 18, 2023 | by

An automation innovation that will attract diabetics. Amazon Pharmacy, in an attention-grabbing move, is working with several manufacturers to automate coupons that discount diabetic drugs (insulin) and supplies. These will come from 15 diabetes care brands and include some of the most commonly prescribed products from Novo Nordisk, Eli Lilly, Sanofi, Dexcom, and Insulet, such as insulin vials, pens, continuous glucose monitors, and pumps. The coupons are sponsored by the manufacturers and can drive the cost for these supplies to start at $35 a month. The cost of insulin and diabetic supplies has been a major issue, and while manufacturers have offered coupons, actually obtaining them from manufacturer websites can be a complicated procedure. Amazon’s program was applauded by the head of the American Diabetes Association.  Amazon is also offering them for COPD, weight loss medications, and EpiPens. MedCityNews, HealthcareFinance

A notable Series A this week is San Mateo, California-based Mendaera, which developed a robotic system that merges real-time imaging, AI and robotics for minimally invasive care. Still in semi-stealth, their raise is $24 million led by Lux Capital with participation from Founders Fund, Operator Partners, and Allen & Company, LLC. Other investors include Intuitive Surgical and Auris Health founder Dr. Fred Moll and former U.S. Senator Bob Kerrey. They have moved into a new production facility in Silicon Valley. Release, Mobihealthnews

Access Group acquires Oysta Technologies. Oysta, a provider of care technology solutions for safe, independent living in the UK and Spain, will be part of Access Group’s Health, Support and Care (HSC) division that provides software for health, local government, and care organizations. In the UK, Oysta works with local authorities, social care providers, housing associations, care homes, and NHS Trusts. Acquisition cost was not disclosed. Oysta announcement, Access announcement   Hat tip to Adrian Scaife, Business Development Manager for Assure, via LinkedIn

Babylon Health files for US Chapter 7 bankruptcy, winding down Babyl Rwanda and ending care for 2.8 million users (updated)

August 17, 2023 | by

When added to the UK receivership, it looks like total hull loss* for Babylon. Their US bankruptcy was just made public through a Forbes article (hat tip to HIStalk) that Babylon Health filed for Chapter 7 bankruptcy with papers dated Wednesday 9 August. This is two days after shutting their Austin HQ and laying off 94 staffers. This confirms that the US company will be liquidated for the value of the assets, which will be sold through the court and the proceeds distributed to secured creditors. One wonders who will be lining up for the IP and other scraps.

Babylon Inc. and Babylon Healthcare Inc. are the two entities filing Chapter 7. There are hundreds of creditors, but as is typical in Chapter 7 bankruptcy, only the creditors secured by collateral will have some chance of being paid something on the dollar. AlbaCore Capital alone is owed $34.5 million from their recent bridge financing and an earlier $300 million in notes due 2026.

Katie Jennings, the writer, notes that Babylon has three other subsidiaries incorporated in Delaware, none of which filed for bankruptcy. In the filings, Babylon’s assets and liabilities are listed as between $100 and $500 million. She attempted to reach their chief operating officer Paul-Henri Ferrand, the signature on the Chapter 7 filing, but his email bounced. (The COO position was eliminated per the Texas Workforce Commission notice.)

Next steps according to the article in the filing: next Thursday 24 August to document its secured and unsecured debtors and summaries of assets and liabilities. Babylon’s creditors will meet on Tuesday 12 September. Bankruptcy documents are on Pacer and on Inforuptcy (fees required)

Update 18 August: The Healthcare Dive article published today has links to both Babylon Inc. and Babylon Healthcare bankruptcy filings. The precipitating act was that Centene first notified Babylon Healthcare on contract non-renewal on 4 August. On 8 August, after the AlbaCore deal collapsed the prior day, Centene terminated all contracts with Babylon effective immediately, save three contracts with Babylon’s IPA, Meritage Medical Network. The Centene contracts constituted over 48% of their US business in 2022. 8 August SEC Form 8-K

In Rwanda, Babylon Health through its Babyl unit is also winding down virtual care that covers 20% of the country. Babylon has a 10-year agreement with the government of Rwanda to provide virtual primary care services to people in that country, subsidized by $2.2 million in funding from the Bill & Melinda Gates Foundation in a partnership dating back to 2016. By the end of 2022, Babyl reported 2.8 million users, or 20% of that 13.2 million person country, claiming a daily 4,000 medical consults a day, which constitutes an outstanding success by the numbers. But that won’t be preserved in the parent company collapse.

A Monday 7 August email obtained by Forbes states that Babylon will be winding down operations there on a non-disclosed timetable and without a clear path for its 650 employees there. “It is with a heavy heart that we will begin the process of winding down Babyl Rwanda, while in parallel exploring opportunities to find Babyl Rwanda a new home. We have entered into discussions with potential investors and partners and will leave no stone unturned to secure the best possible outcome for our business and Babylonians.” (sic) Regarding layoffs, the email confirmed most of the US layoffs would be immediate, UK employees would largely be retained, and Rwanda and India workers would be told more at team meetings. Employees were warned not to talk to the press and the email was signed ‘Babylon Leadership’.  The Gates Foundation did not comment on whether the foundation had been informed of Babylon’s plans to wind down service.

Previous TTA coverage back to May:

Babylon Health shuts US operations, goes into UK receivership, Babylon merger with AlbaCore and MindMaze collapses, selling UK and transitioning US businesses, bankruptcy anticipated, Babylon Health to go private with AlbaCore in planned ‘Take Private Proposal’, combine with MindMaze, Babylon Health to go private (includes summary of Q1 financials)

This story is developing. *’Hull loss’ describes an aviation accident that results in catastrophic, unrecoverable damage to the aircraft.

Mid-week roundup: DocGo in NY migrant service trouble, more DOJ scrutiny of UHG-Amedisys buy, Exor now $2.8B lead investor in Philips

August 16, 2023 | by

DocGo catching flak over their services to migrants housed in New York State. Officials in Albany County and in the state capital of Albany have criticized DocGo’s health and food services to migrants being given temporary housing in that area. DocGo’s primary contracts for health services are with New York City including a $432 million no-bid contract with NYC. Since the migrants come through NYC and are being housed upstate, DocGo has been put in charge of about 700 migrants temporarily located in the Albany area with housing and services such as medical care, food, transportation, security, and case management. According to county officials, DocGo failed to provide these services. According to the Albany County officials, food was either not delivered or spoiled, and DocGo did not communicate with them since the program started in May. DocGo has denied these allegations and their CEO Anthony Capone has stated that DocGo is working to provide food via local food pantries and ‘culturally sensitive’ meal choices. In addition, they have provided to date over 25,500 meals to Albany area migrants, plus transportation shuttles for both medical treatment and to public transportation. DocGo said it has provided medical care and other services to more than 19,000 migrants in NY since beginning its work in September. Albany Times-Union, Mobihealthnews, WNYT.com  

As we noted only last week, DocGo upped its 2023 financials, buoyed by their large NYC contract. Their latest New York partnership is with EmblemHealth, a NYC and Tri-State area health plan that serves about 3 million members. DocGo will provide in-home services in New York, New Jersey, and Connecticut. Release

The UnitedHealth Group acquisition of Amedisys has run into extra scrutiny from the Department of Justice. Under the Hart-Scott-Rodino Act (HSR Act), a premerger notification has to be filed by both parties with the DOJ and the Federal Trade Commission (FTC). That was done on 5 July. DOJ and FTC responded with a second request for additional information on 4 August (page 16 of their SEC Schedule 14 A filing). What this will do is delay UHG and Amedisys moving forward with the deal until 30 days after they have complied with the second request. Amedisys is proceeding with a shareholder meeting on 8 September for approval of the acquisition.

The second request fits with recent changes to information disclosure requirements proposed by the US Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division in June. These are currently in 60-day public review open to 28 August. Both FTC and DOJ with premerger notification and Draft Merger Guidelines [TTA 20 July] are proposing significant additional information requirements and substantial tightening of what will be acceptable in mergers and acquisitions under new anti-competitive and antitrust guidelines. An educated guess is that DOJ and FTC will be looking at Amedisys’ fit and home health market share effect with UHG’s earlier acquisitions LHC Group and Contessa Health, now in Optum. A preview of coming attractions in M&A?

The buy was announced in June as an all-cash deal for $3.3 billion (over $100 per share). Healthcare Dive, FierceHealthcare

Exor taking a 15% share in Philips with a $2.8 billion stake. Exor is an Italian investment company controlled by the Agnelli (Fiat) family that also has shares in Ferrari, Stellantis, the Economist, and football club Juventus in an overall strategy of investments in healthcare and luxury companies. Exor bought the shares in the open market with the option to buy another 5%. Exor will take a seat on Philips’ board. The Respironics recall affected Philips’ overall business and cut share price by about 70% compared to pre-recall.  Reuters. Hat tip to HIStalk.

Cano Health at precipice of bankruptcy after disastrous Q2, lays off 700

August 15, 2023 | by

Primary care provider Cano Health may follow Babylon Health down the same drain. After announcing a horrible Q2 last week, Cano Health in its press release finally admitted that their “liquidity is not sufficient to cover the Company’s operating, investing, and financing uses for the next 12 months”. 700 people, or 17% of its current workforce, will be laid off during Q3 as part of restructuring.

Cano, or what will be left of it after the following, is officially up for sale either whole or partially, ASAP.

  • Cano will exit three states and one territory: California, New Mexico, and Illinois by the fall which presently have 5,000 members and 17 medical centers. Puerto Rico, with 8,000 members in an unenumerated number of affiliated practices, will wind up as of 1 January 2024. 40% of the layoffs they attribute to the exits, the rest to consolidation of and other downsizing of administrative operations.
  • Downsizing Texas and Nevada medical operations.
  • Massive restructuring in their core market of Florida.
  • Reducing their current 169 medical centers to 136 by the end of year
  • Their Q2 net loss was $270.7 million, adding on to Q1’s $60.6 million net loss [TTA 12 May]. This compares to prior year net loss of $14.6 million, an increase of over $256 million or over 1800 percent. This was attributed to lower Medicare Risk Adjustment (MRA) revenue and higher than expected medical expenses, along with adjustments and higher than forecast interest expenses.
  • Their adjusted EBITDA was equally dismal: $149.7 million, compared to $9.9 million profit in Q2 2022 and Q1’s $5 million,
  • Liquidity is $101 million as of 9 August–not enough to conduct business for 12 months (and an educated guess, to 31 December. Their line of credit (CS Revolving Line of Credit) is fully drawn while they engage in a rather complicated negotiation of something termed the “2023 Side-Car Amendment”. Supposedly this will be paid down ‘significantly’ by September. Despite this, here is the cautionary statement regarding the sale of the company or assets, which would not be in their release unless the company was truly in a deep hole indeed:

The Company has not set a timetable for the conclusion of this process and there is no assurance that the process will result in any transaction.  Cano Health does not intend to comment while it undergoes this process, unless required by law or the Company determines that it would be in its best interests.

Cano stock sank to the $0.40 to $0.45 range from a year ago in October of close to $10.

A stock commentator quoted in Becker’s (Seeking Alpha, paywalled) posits that any sale would be just about impossible without Chapter 11 bankruptcy. Logically, any investor would prefer to pick up assets at a fire sale without the encumbrances of a workforce, as brutal as that sounds. But the value of Cano is in its practices and workforce delivering primary care. Another wrinkle is that Cano is in current CMS agreements on Medicare Advantage and ACO REACH contracts that would have to be assumed. One would also assume that their search for a new CEO to replace interim Mark Kent is also on hold.

Not a peep yet from the Cano 3 (resigned directors Barry Sternlicht, Elliot Cooperstone, and Lewis Gold), but observers expect they will have something to say with 35% of near-worthless shares in their collective portfolios. Medical Economics, Reuters, FierceHealthcare, Healthcare Dive   Our prior coverage on CEO Marlow Hernandez’s ‘step down’ on 21 June has links to earlier stories.

This story is developing and will be updated.

TTA’s summer of bombshells 4: Babylon Health collapses, health M&A at 3 year low, insurtechs may survive, Amwell’s low outlook, HIMSS-Informa settling in, more!

August 11, 2023 | by

 

 

The bombshells don’t stop dropping–and it’s August! The largest crater is left by Babylon Health’s merger collapse and US shutdown. Some optimism in Q2 financial reports but layoffs at larger companies surprise. Few surprises in KPMG’s healthcare M&A report. Bright Health may survive, as Clover and Oscar pivot too. And last week’s Big News of HIMSS and Informa has settled into Not Much Change and perhaps better. At least for now.

Healthcare M&A hit a 3 year low in Q2 2023, to the surprise of none: KPMG (Many reasons why-and we add a few observations)
Babylon Health shuts US operations, goes into UK receivership (At the end of the runway and into the lights)
Mid-week short takes: Amwell lowers 2023 outlook, DocGo goes up, Imprivata + PFH win Ireland HSE contract, Oracle Health’s Nashville move, layoffs at 23andMe, Doximity
Living to fight another day: insurtechs Bright Health, Clover Health, and Oscar Health report improved Q2s, H1s (updated) (Bright still at brink, but Clover and Oscar pivoting)
Babylon merger with AlbaCore and MindMaze collapses, selling UK and transitioning US businesses, bankruptcy anticipated (The deal fell apart fast)
More details on the HIMSS-Informa partnership on HIMSS24-Global Health Conference & Exhibition (Net-net–not much change and perhaps improvements)

This week’s Big News was the confirmation of the HIMSS deal with Informa–not a sale but a ‘partnership’–developing. CVS having some profitability problems and restructuring, minus 5,000–as is Oracle Cerner. Meanwhile, Congress tightly reins in Oracle Cerner EHRM in appropriations bill. And now you can run to Amazon Clinic without (much) concern about your privacy!

Short takes: CVS’ $1.12M Q2 net income loss, forecast spurs 5,000 layoffs; Signify’s in-home kidney exams; Indonesia’s Halodoc $100M D; FeelBetter raises $5.9M; Medicare breach hits 612,000 beneficiaries (When you spend like CVS, something’s gotta give)
House appropriates $1.9B for Oracle Cerner VA EHR modernization, $5.2B for telehealth, plus other technologies; Oracle lays off more Cerner staff (Congress reins in VA+Oracle Cerner)
Done (and split) deal! Informa to “manage” HIMSS Global Health Conference & Exhibition (updated) (It’s a partnership. Really!!)
More thoughts on the pending sale of the HIMSS Global Conference (Developing)
Amazon Clinic announces 50-state rollout 1 August. Were the privacy issues fixed? (Maybe, at least in disclosures)

Another few bombshells go off while a heat wave descends. It looks like the annual HIMSS conference won’t be HIMSS anymore. Another ‘David’ faces ‘Goliath’ in the Dorsata vs. athenahealth lawsuit. The FTC/HHS-OCR noose tightens on third-party ad tracker use. Positive earnings news from Teladoc, GE Healthcare, Talkspace, a lot of fundings–plus Nextech sold for $1.4B.

Legal roundup: Dorsata sues athenahealth, provider group on trade secret theft, Nevada terms Friday Health Plans (Dorsata as another ‘David’)
Close of week short takes: Q2 earnings up for GEHC, Talkspace; UnitedHealth invests $11M in SDOH; fundings for two AI startups, K4Connect, UpLift, Family First
Informa PLC to acquire HIMSS Global Health Conference and Exhibition (A ‘landmark’ love-it-or-hate-it conference to change hands)
Mid-week news roundup: $105M senior debt to Headspace; Nextech bought for $1.4B; Teladoc’s Better(Help) Q2 boosts 10%; Peppermint’s online ‘clubhouse’ for seniors, PathAI lays off 87
FTC, HHS OCR scrutiny tightens on third-party ad trackers, sends letter to 130 hospitals and telehealth providers

It may be summer, but the bombshells keep dropping. FTC and DOJ dropped draft merger guidelines on antitrust–in addition to HSR premerger notification–that will have far-reaching consequences. We update the demise of Friday Health Plans (another 30K members in the lurch), the Cano Health telenovela, hacking from Russia to UK to US, buys, financing, class action lawsuits, and an order in the ongoing AliveCor-Apple antitrust suit that slaps Apple down hard.

Another antitrust shoe drops: FTC, DOJ publish Draft Merger Guidelines for comment–what are the effects? (New restrictions not good for founders, managers, VCs)
Mid-week roundup: Colorado terms Friday Health Plans; Cano 3 continue to savage board; Amazon Pharmacy layoffs; hacking attacks: QuickBlox, Barts Health; Phreesia buys MediFind; financing pops for K Health, Amino
Legal roundup: Teladoc class-action suit dismissed; NextGen EHR $31M Federal settlement; significant AliveCor-Apple antitrust ‘spoiliation’ update; class action suits filed against HCA, Johns Hopkins

We looked at the first half’s digital health funding (back to 2019), the trend to unnamed and down rounds, two up rounds, two layoffs, three mixed pictures of telehealth effectiveness, it’s an almost-wrap at MHS for Oracle, and Amazon’s dodgy approach to your privacy. Early-stage company financing and managing your financials? We have some advice.

News roundup: MHS Genesis EHR completes US rollout, telehealth selective savings by disease, CarePredict’s $29M funding, Amazon Alexa *Spying on You* (Confirming telehealth unevenly bends the curve)
Thursday short takes: Fold Health VBC $6M round, Vivalink’s RPM in Burma rural health, Vytalize adds two to board, layoffs at TytoCare, IntelyCare (The roller coaster continues)
“Hope is not a business model”–advice from two VCs, with a bit more advice on basic banking (We unpack good advice for early-stage companies)
Mid-week roundup: telehealth success in opioid use disorder treatment, Epic sees fewer followup visits from telehealth vs in-office, telehealth usage slightly lower, HCA data theft may affect 11 million
Rock Health’s first half funding roundup adjusts the bath temperature to tepid, the bubbles to flat (2020-22 an aberration)

A short week in the US with the holiday wasn’t short of news. Bright Health and Molina made a $600M deal for California plans–as long as Bright stays solvent thru Q1 2024. Insurtechs proved to be disruptive but not innovative enough. And a potpourri of news from FDA requesting comments on home care tech, Japan, Alertacall on funding. A new mental health company targeting seniors is born while an old one struggles.

Short takes: FDA seeks feedback on home care tech; Japan care homes piloting AI; Author Health’s $115M bet on senior mental health; Alertacall’s Batchelor on ‘right fit’ finance support; Headspace in the wrong (layoff) space again
Why the ‘insurtechs’ didn’t revolutionize health insurance–and the damage they may have done (Back to the legacy payers)
Bright Health to exit insurance business, selling California plans to Molina for up to $600 million–contingent on surviving to 2024 (A dicey proposition all round)

Wrapping up June before the US Independence Day holiday next week had its own fireworks. Most far reaching–the changes spearheaded by FTC for HSR premerger notifications that will only quadruple the work. Babylon Health completing its going private arrangement with AlbaCore. Amazon delays Clinic rollout for three weeks facing tough data usage questions from senators. More pleasant looks at rural telehealth on a bucolic Irish island and supermarket trolley heart monitoring. Happy 4th!

Ireland’s Clare Island as multimodal rural telehealth and telemonitoring testbed (Very rural health on Ireland’s west coast)
FTC, DOJ float enhanced information requirements for HSR premerger notification filing process–what will be M&A effects? (More dampers on a down market?)
Embedding ECG sensors to a supermarket cart (trolley) handle as ‘first-line’ screening for atrial fibrillation (Bringing monitoring to everyday life)
Mid-week roundup: Optum buying Amedisys home care for $3.3B; Clover Health settles 7 shareholder lawsuits around SPAC non-disclosures; Walgreens cuts 2023 outlook, stock plummets 11%
Amazon Clinic delays 50-state telehealth rollout due to Federal data privacy, HIPAA concerns on user registration, PHI–is it a warning? (Amazon better heed it)
Babylon Health to go private with AlbaCore in planned ‘Take Private Proposal’, combine with MindMaze (Merging two very different companies)

Of continued interest: 

Mid-week update: Cano Health CEO finally booted, interim named; further information on Oracle Cerner layoffs (The Cano telenovela continues!)

Perspectives: How robust patient scheduling and intake enable better patient access to cancer care – a UK case study 
‘Warning flare’ study: will pandemic-induced digital health solutions get renewed by hospitals in 2023-4, or will they churn? (Get cracking with your account relationships)
‘The Future of AI and Older Adults 2023’ now published (Laurie Orlov’s latest analysis)

VA awards four remote patient monitoring companies to share in $1B Home Telehealth contract (Medtronic wins again plus 3 newbies)
Watch your cash burn! Now 31 months average for startups between Series A and B. Now what do you do? (Cautionary advice for startups)

Perspectives: How AI and ML can accelerate the growth of telemedicine across the globe (Thoughtful take on the up-and-downsides of both)

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Healthcare M&A hit a 3 year low in Q2 2023, to the surprise of none: KPMG

August 11, 2023 | by

“Is deal making ready to rebound?”–KPMG tries to find the bright side in their new study of healthcare activity. If Q2 reflects the trend, it won’t be this year. See below for what this Editor sees that KPMG doesn’t.

  • There were 245 deals in Q2 2023, 7% below deal volume in Q2 2022 and 41% below the bull market of Q2 2021.
  • Buyers shifted from the financial buyer (e.g. a long-term investor), now at 29% of deals, to strategic buyers who look to expand or augment their businesses at 71%. This is a complete flip from the prior year, where strategic buyers were 37% (98) of a total of 264 transactions.
  • Sectors have also shifted:  42% of deals included physician groups, 27% were IT/digital health sector, 16% were in post-acute care, and 15% involved health systems. The shift away from digital health is pronounced from the palmy pandemic days of 2021 where 737 deals raised $29.1 billion.

There aren’t many big deals on the board in Q2, mostly announced and not closed: CVS Health-Oak Street (closed), Optum-Amedisys, TPG and AmerisourceBergen-OneOncology, Molina-BrightHealthcare’s CA plans, Froedert Health-ThedaCare, and Kaiser Healthcare-Geisinger (forming Risant Health). The last is still to be structured.

KPMG’s reason why for the paucity of deals were the Fed and the continuance of interest rate hikes to supposedly slow inflation (which hasn’t worked much and instead is depressing the economy), the US political situation (turmoil), and what they politely term “uncertainty about the valuations of potential acquisition targets.” Healthcare Dive, Becker’s

“Uncertainty about the valuations of potential acquisition targets” is an understatement. This Editor looks back at that time of  2020 to perhaps Q1 2022 as a binge of insane proportions and self-reinforcing FOMO. Rivers of free-flowing money for any company in digital health–who can blame founders and funders for grabbing their buckets and filling them? The hangover? Equally insane. Of SPACs alone, which were treated like the future of IPOs, nearly all cracked. Valuations of established telehealth companies plunged 70-90%. The money? The river bed is largely dry except for a few puddles and branches. The call for profitability is late.

Racking up reasons why from this Editor’s POV that aren’t in the KPMG analysis:

  • Investors such as VCs and providers no longer have the money because 1) they spent it and 2) can’t raise it. Those who have ‘dry powder’ are either reserving it for a brighter day, cutting back themselves, or deploying it to what they perceived as safer bets such as fintech and biopharma. The deals being made especially in digital health are small. Private equity, family offices, and high net worth investors are mostly staying out of healthcare, or being extraordinarily cautious about both where they invest and how much. More on this: TTA 5 April.
  • A four-bank collapse–Silicon Valley Bank’s failure most notably was a dagger in the heart of West Coast VCs. Add to it First Republic, Silvergate, and Signature in NYC (a favorite of Silicon Alley), plus Credit Suisse being taken over by UBS, all in fairly short order in late winter, ant that will tend to curb anyone’s enthusiasm. It also affected companies that located their cash, investments, and payables/receivables in these banks.
  • High valuations seem to have an inverse relationship to survival. This past year has seen the total ‘hull loss’ of the following former ‘industry darling’ companies: Pear Therapeutics, SimpleHealth, The Pill Club, Hurdle, Quil Health [TTA 11 July], and now Babylon Health.  Teetering on the edge are Bright Health Group and possibly 23andMe. Insurtechs Clover and Oscar are cleaning up frantically, trying to recover. Established companies such as Teladoc and Amwell have taken it in the shins and talk a lot about profitability after years almost proudly not being profitable. Onetime ‘too hot for their shirts’ telemental health is still trying to survive the scandals around Cerebral and Truepill. What remains isn’t favorable: too many companies chasing the same younger group of people who want virtual mental health, plus DEA confusion around Schedule II medication telehealth prescribing [TTA 14 June]. 
  • Big acquirers CVS Health (Oak Street Health, Signify Health) and Walgreens Boots Alliance (VillageMD) are posting down numbers, retrenching, selling units, closing stores, and laying off staff in a matter of months to a year post-acquisition.

And to wrap…there are six letters may sink any revival of M&A: DOJ (Department of Justice) and FTC (Federal Trade Commission), with a commission relishing their activist role. 

  • Draft Merger Guidelines that update corporate merger guidelines originally from 1968 but updated many times since. The 13 Guidelines drafted by DOJ Antitrust and the FTC have the intent to prevent mergers that threaten competition or create monopolies. But reading them, nearly every merger or acquisition other than in a horizontal or conglomerate model will be in violation of one of the 13. [TTA 20 July] 
  • Earlier, the Premerger Notification changes to the filing process covered under the Hart-Scott-Rodino (HSR) Act for transactions over $111.4 million. Again, it raises the height of the mountain and the time required for all transactions other than the smallest. [TTA 29 June]
  • FTC reviving the 2009 Health Breach Notification Rule to clamp down on ad trackers, fining Teladoc’s BetterHelp and GoodRx millions, and sending letters to 130 hospitals and health systems to put them on notice that they are on the radar [TTA 27 July].

This Editor is shocked that this concatenation of Federal actions have not gained the attention they deserve, especially the first–or maybe the legal departments are just working verrry verrry qwietly to register their objections.

Perhaps there will be a bounce in M&A–companies moving to acquire under the wire of both the merger guidelines and the premerger notification changes–akin to what Wall Street calls a ‘dead cat bounce’ (apologies to felines). After they’re in effect, watch for another dead stop in M&A and investor exits until everyone adjusts to the new rules and figures out new workarounds. No one wants to be the first out of the gate in this situation.

(Edited for clarifications)

Babylon Health shuts US operations, goes into UK receivership

August 10, 2023 | by

Babylon reached the end of the runway, smack into the lights and barriers. In the US, Babylon Health shut its Austin, TX headquarters on Monday 7 August, the same date as the announcement of the termination of their merger with AlbaCore Capital and their MindMaze business [TTA 8 Aug]. The required filing of a closure notice with the Texas Workforce Commission came to light late yesterday. The layoff of 94 employees left in the office was immediate and the closure permanent. 

As of this writing, there is no change to their US website, but LinkedIn has many posts from the now laid-off. There are no statements from founder and CEO Ali Parsa.

No transition in the US for users. With the US office closure, there is no service for current contracts such as with Ambetter’s (Centene) commercial exchange product nor with other payers or value-based providers and plans, mainly in Medicaid, which have been using Babylon apps. According to the Forbes article published yesterday, users have found that their Babylon 360 app no longer works and have been redirected to their health plan for assistance.

“When Linda, a patient in New York who requested her last name not be used for privacy reasons, went to login for a scheduled therapy appointment today, she received the following message on her Babylon app, according to a screenshot. “Babylon’s clinical services and appointments are no longer available. For details about your health plan benefits and to find a new provider, contact your health plan.”

It appears that Babylon is putting the responsibility of the “transition” on patients and their insurance companies. An email Linda received from Babylon at 11:02 am ET said: “We know you may have questions about this change. Your health plan’s dedicated Member Services team can assist you. You can find your health plan’s contact information on your ID card.”

In the UK, Babylon has entered UK administration (=US bankruptcy). Its main product is GP At Hand which is still active and up for sale in the dissolution of the company. Last year, it exited its three contracts with NHS Trust hospitals two years into ten-year contracts [TTA 24 Aug 22, Wired], leaving Reading and Birmingham controversially [TTA 24 Aug 2022] but may have had a fourth continue with Hammersmith and Fulham in London, one of its earliest users back to 2018-19. GP At Hand is still active in London with about 100,000 users reported by Pulse but is only enrolling patients in Fulham (West London). No further information on the administration filing but that would likely be with the High Court in London as previously disclosed by Babylon.

It is quite stunning that a company that the UK’s Health Secretary Matt Hancock lauded as the future of healthcare in 2018 and plumped for at every turn, survived a beatdown on BBC Two’s Newsnight in February 2020, successfully went public in a US SPAC two years ago (Oct 2021) at a value of $4.2 billion/$272 per share, that entered the US and bought two large US medical practices, had operations in 16 countries and as of last December had 1,895 employees with 35% (660 people), in the US, has collapsed so completely and thoroughly. As of 4pm EDT today, their market capitalization was just above $425,000.

As to the non-US/UK operations and multiple user services in places like Rwanda and India–their fate is unknown. Perhaps another reason why Babylon, like its Biblical namesake, eventually collapsed.

FierceHealthcare, Computing (UK–may require free signup), BMJ, The Telegraph (via Yahoo Finance)  Our Babylon Health file here.  This story is developing. If you were a Babylon employee, you may email Editor Donna in confidence or leave a public comment below.

Mid-week short takes: Amwell lowers 2023 outlook, DocGo goes up, Imprivata + PFH win Ireland HSE contract, Oracle Health’s Nashville move, layoffs at 23andMe, Doximity

August 10, 2023 | by

Amwell missed Wall Street earnings analyst estimates and lowered its 2023 outlook. Q2 revenue of $62.4 million was a 3% drop versus prior year. Net loss was $93.5 million, added to a nearly $400 million net loss in Q1. Both quarters included goodwill impairment charges totaling nearly $400 million to reflect losses in stock value and market capitalization. Amwell is projecting downgraded revenue between $257 and $263 million compared with earlier guidance of $275 million to $285 million. Their adjusted EBITDA range for the year was also downgraded to lose $160-165 million from $150-160 million. Much of this is due to payer and provider migrations to their new platform, Converge, which will consolidate its offerings plus third-party tools, in a process that is losing providers and reducing visits. Release, Healthcare Dive

DocGo, a telehealth and medical transportation provider, upped its outlooks. First, they reported a tidy bump in Q2 revenue of $125.5 million, up from $109.5 million in prior year. Once known for mass Covid testing which has largely disappeared, which was $28 million in Q2 2022, non-testing revenue grew 53% versus prior year. Revenue is split between transportation ($45 million) and mobile health ($80 million). Adjusted EBITDA was $9.1 million for Q2, rising from $5.6 million in Q1. With $325 million in contracts not fully rolled out and wins with the NYC Department of Housing, their full-year 2023 revenue guidance is now projected to increase from $500-$510 million to $540-$550 million and monitoring over 50,000 patients. Release, Mobihealthnews

Ireland’s Health Service Executive (HSE) awarded a national framework contract to Imprivata and regional partner PFH Technology Group. Imprivata OneSign is a single sign-on (SSO) enterprise access solution for clinicians logging into various systems which eliminates repeated username/password entries. Logins will be via entering their password once per shift and reauthenticating with a tap of their ID badge, potentially saving 50 minutes per shift. Initial rollout will be to the following: Tallaght University, Beaumont, Rotunda, Galway University, Cork University Maternity, National Forensic Mental Health Service, and National Rehabilitation Hospitals. Imprivata release

Oracle Health on the move. Apparently Oracle Health, largely the former Cerner, will be moving to Nashville, Tennessee. This is a commitment that Oracle made in 2021 before purchasing Cerner. Oracle is building a $1.35 billion facility at a riverfront site, planning to locate 8,500 jobs in Nashville by 2031. Nashville has become a southeastern hub of healthcare companies and development. Oracle Health chair David Feinberg, MD and Seema Verma, a SVP there, were at a healthcare meet and greet there last week.  This adds to the de-Kansas City-ing of Oracle and perhaps more attrition among long-time employees. Becker’s

Two healthcare companies reported layoffs and revenue rethinks this week:

  • Genetic tester and data merchandiser 23andMe announced layoffs of 11%. This affects 71 employees primarily in their therapeutics segment, a cut of 47% in that segment and 11% of the company’s workforce. The staff downsizing reflected the end of a five-year partnership in therapeutics development with GSK and adds to April cuts of 75 jobs. The new cuts will be in Q2 of their 2024 fiscal year ending 31 March 2024 which will be by September this year. Revenues also fell in the quarter ending 30 June (their Q1) 6% to $60.9 million from $64.5 million in prior year, with a net loss of $104.6 million. Interestingly, 70% of their revenue is from direct-to-consumer services in genetic testing, subscriptions, and telehealth.  StreetInsider, GenomeWeb
  • Doximity also is laying off 10% of staff, or about 100 people. A digital platform for medical professionals with online networking tools, scheduling, CMEs, secure messaging and telehealth for consults, it is facing slowing growth and renewals among paying customers that include hospitals, health systems, pharmaceutical companies, and medical recruiting firms that purchase subscriptions for services on Doximity. The company adjusted its FY2024 (March end) financials downward to $452 to $468 million and $468 million from $500-$506 million, with adjusted EBITDA for the year to $193-$209 million from $216-$222 million. Release, FierceHealthcare