News roundup: Veradigm facing Nasdaq delisting, UpHealth files Chapter 11, Virgin Pulse-HealthComp $3B merger, MidiHealth’s $25M Series A, Inbound Health’s $30M Series B

Veradigm way out of compliance with Nasdaq, faces delisting. Nasdaq apparently is facing the end of its patience with Veradigm (the former Allscripts) and is moving to delist the company from the exchange as of 20 September. Veradigm plans to appeal to the Nasdaq Hearings Panel to gain an additional 22 days. Starting in March, the company has attributed to a massive financial software flaw the delay of its annual report for 2022, a restatement of FY 2021, and reporting of their 2023 Q1 and Q2 financials to the Securities and Exchange Commission (SEC). All these are required by Nasdaq for listing. After multiple extensions begged from Nasdaq since June, whether 22 days will make any difference is doubtful. Veradigm closed today at $13.38. Stay tuned. Release, Becker’s Health IT, TTA 23 Aug

UpHealth filed Chapter 11 bankruptcy, to reorganize. The company claims this was not due to operational shortfalls, but to a court decision that found that the company owed investment bank Needham & Company $31 million in fees as a result of its November 2020 SPAC [TTA 26 Nov 2020]. The company release is unusually coy but states that the Chapter 11 was necessary to “mitigate the financial impact of the trial court’s decision” and was not the result of operation nor will affect operations. This was a more complicated than usual SPAC that merged the public entity, GigCapital2 Inc., with UpHealth Holdings and Cloudbreak Health to create a $1.3 billion (at that time) digital health company with care management platforms and virtual care infrastructure plus behavioral health services. The stock on NYSE stopped trading with the bankruptcy on 19 September and is currently at $0.98 from a 2021 peak of $28. Another cracked SPAC.  MarketWatch, HIStalk.

In more cheerful funding news:

Employer wellness platform Virgin Pulse and benefits analytics platform HealthComp to merge. The $3 billion deal creates a combined entity that will improve outcomes and lower costs for primarily self-insured employers and members through the Homebase for Health platform. Chris Michalak of Virgin will serve as CEO of the combined entity upon anticipated closing in Q4. The merger is backed by New Mountain Capital, Marlin Equity Partners, Blackstone, and Morgan Health, with New Mountain Health to be majority owner. FierceHealthcare, Healthcare Dive, Virgin release

MidiHealth backed by GV (Google Ventures) in $25 million Series A. MidiHealth focuses on female menopause and midlife transitional care in a direct-to-consumer model. Investors Frederique Dame and Cathy Friedman from GV are joined by current investors Felicis, Semper Virens, Icon, 25M, and Operator Collective, for funding to date of $40 million. The menopause/women’s health segment is one of the few bright spots of the current wobbly healthcare funding scene. MidiHealth recently inked a deal with fertility benefits company Progyny to widen their scope to midlife care for US employers.  Release, FierceHealthcare

And it’s a $30 million Series B for Inbound Health. Based in Minneapolis, the company assists hospitals and health systems to offer acute and post-acute/skilled nursing facility-level care in the home. Funding was led by HealthQuest Capital with participation from existing investors Flare Capital Partners and McKesson Ventures for total funding to date of $40.25 million. The new funding will assist expansion into new markets including further development of the company’s clinical programs, the next evolution of its proprietary technology and advanced analytics platform, and the continued build-out of customized operating assets focused on supply chain, labor, and logistics. Hospital-to-home is another one of the few bright spots this year.  Release, Axios

Cano Health’s dismemberment: Texas, Nevada primary care centers sold to Humana’s CenterWell for $66.7M, more to come

Are we nearing the final episodes of “Cano Health”, the telenovela? New CEO Mark Kent has gotten busy in the past five weeks since his permanent CEO appointment. The first and most important action he has taken is to generate cash in the nick of time to comply with their debt covenants coming due in September. The sale of their Texas and Nevada operations to CenterWell Senior Primary Care, a unit of Humana, for $66.7 million, includes $35.4 million in cash to be paid at closing. According to their release, this brings their unrestricted cash reserves up to $109 million, which will enable it to remain in compliance with the covenants under its debt instruments due at the end of Q3, including the financial maintenance covenant under the Credit Suisse credit agreement. $80 million will be drawn down to repay a portion of its $120 million revolving credit facility by the end of Q3 2023–September.

Cano’s Texas and Nevada clinics serve approximately 15,000 patients. CenterWell’s acquisition fits their corporate growth strategy in adding 25 to 50 clinics per year. FierceHealthcare

In August, Cano admitted that their liquidity was insufficient to cover the next 12 months, initiating a 17% staff downsizing and exits of their California, New Mexico, and Illinois operations by the fall, reducing their coverage by 5,000 members and 17 medical centers. They also announced a restructuring of their core Florida operations [TTA 15 August].

But…there’s more. Axios reports that Kent and Cano are continuing to work with financial advisers JPMorgan and Oppenheimer on a full-bore breakup of the company. JPM is advising on a whole-company sale, while Oppenheimer is advising on a breakup. Remaining are the Puerto Rico operation and their Medicaid business in Florida. Axios 

Earlier this month, Cano declared that it would work with the NYSE to regain compliance with the Listing Rule that requires stocks to trade above $1.00. Cano was notified on 11 September since it traded below $1.00 for 30 days. The Cano stock closed today (28 Sept) at $0.28. Actions mentioned in their release include their announced business strategy of reorganizing their business and a reverse stock split that has to be approved by shareholders at a meeting to be determined. However, their largest shareholder, InTandem Capital Partners, LLC, which controls ITC Rumba, LLC, is in favor of the reverse stock split. NYSE has a six-month deadline for this. 

Once again, not a peep from the Cano 3 (resigned directors Barry Sternlicht, Elliot Cooperstone, and Lewis Gold). Perhaps they have resigned themselves to writing off their 35% of near-worthless shares in their collective portfolios.

Given the above timelines, Q3 reporting due next month, and end of year looming, CEO Kent will need to be Clark Kent (the Daily Planet disguise of Superman) to pull Cano Health either to survival as a smaller entity, as stated in their press releases, a sale in toto of what remains–or a complete parting-out.

Short takes: Intuition Robotics gains $25M funding, Akili Interactive abandons digital Rx therapeutics, NextGen goes private for $1.8B, ATA’s DC advocacy ‘fly in’ + launches new tools on disparities

Catching up on the catchup…

Israel-based Intuition Robotics raised $25 million. The unlettered round closed at end of August with $20 million in venture capital plus $5 million in venture debt. According to the release, the funding was led by Woven Capital, the growth fund of Toyota, with participation from Toyota Ventures, OurCrowd, Western Technology Investment, and additional investors. Intuition Robotics is the developer of ElliQ, an interactive desktop companion robot targeted to older adults and those with assistive needs, last covered in their 2.0 update last December and their involvement with New York’s Office for the Aging [TTA 25 May 22 and WSHU]. The Area Agency on Aging of Broward County, the Olympic Area Agency on Aging, and California’s Agency on Aging in Area 4 have also worked with Intuition Robotics on distributing the companion to older adults in their programs. According to the company, older adults who successfully engage with it average over 30 daily interactions with ElliQ and reduce the devastation of loneliness for 95% of users. 

Akili Interactive exits prescription digital therapeutics (PDT), pivots to consumer, drops 40% of staff. Much like Better Therapeutics and the now sliced-up Pear Therapeutics, the company realized that PDT was not a winning strategy for its interactive video game-based therapy for adults with ADHD. The EndeavorOTC version, released in June, is available via a subscription (SaaS) through the Apple App Store and the Google Play Store for $24.99 for a monthly plan or $129.00 for an annual plan. According to their release, Akili will pursue regulatory approval for over-the-counter labeling of its treatment products. Akili is yet another cracked SPAC facing a reckoning, currently trading on Nasdaq at $0.66 from its debut in August 2022 at $14 with a quick fall to $4.   HIStalk 15 Sept, Rock Health Weekly Newsletter

NextGen acquired by private equity firm Thoma Bravo for $1.8 billion, ending 41 years of public market trading. The offer price is $23.95 per share in cash, an over 46% premium to the Nasdaq share price on 22 August. NextGen Healthcare is an EHR with population health and practice management features designed primarily for specialty medical practices. NextGen went public as Quality Systems an eon ago in 1982Release, FierceHealthcare

And…the American Telemedicine Association (ATA) celebrates the third annual Telehealth Awareness Week (17-23 September) with a telehealth advocacy ‘fly in’ to meet with Congressional offices and Members in Washington DC on 18-19 September, plus their three tools to eliminate disparities in telehealth services developed by ATA’s Advisory Group on Using Telehealth to Eliminate Disparities and Inequities. They are a Digital Infrastructure Disparities Score and Map, an Economic and Social Value-Added Calculator, and a toolkit with all ATA and advisory group-developed resources. Releases 19 July (fly-in) and 18 Sept (disparities tools)

Walgreens trying to reboot “healthcare transformation” momentum, looking for new CEO, settling with Theranos litigants

A $4.7 billion makeup for chairman Stefano Pessina. In the race among CVS Health, Walmart, and Amazon, something is not clicking with Walgreens Boots Alliance (WBA). WBA was a late entrant in the diversification race but they certainly went big when they did, acquiring VillageMD, Summit Health, and CityMD plus at-home care provider CareCentrix and specialty pharmacy Shields Health Solutions. But the results have been disappointing. Their Q3 reported in June was negative [TTA 28 June]. Roz Brewer, appointed as CEO 2 1/2 years ago for her expertise in retail operations at Starbucks and Sam’s Club, was also tasked with making Mr. Pessina’s healthcare diversification strategy, started in 2020 with VillageMD, a reality. Billions were spent, including a full $5 billion purchase of VillageMD along with their purchase of Summit Health and CityMD, plus CareCentrix. With no healthcare experience, she had to learn and execute from scratch–an adventure that ended on 31 August with her resignation. CNBC

How now, Stefano? Ms. Brewer’s temporary replacement is Ginger Graham, the lead independent director and a pharmaceutical veteran as former president and CEO of Amylin Pharmaceuticals plus group chairman in the office of the president for cardiology medical technology company Guidant. She will serve only until another CEO, now with healthcare background, is chosen. Mr. Pessina has an outsize vote in the choice as a 17% shareholder, engineer of the company, and himself CEO for five years after merging Alliance Boots with Walgreens in 2014.

Two other options for WBA are to go private, which Mr. Pessina has done before in 2007, but one that involves taking on heavy debt loads in addition to a high level of existing debt. Unlike 16 years ago, at 82 he has limited time to recoup the value of his personal 17% share. The other is to find an acquirer willing to pay a premium for the company higher than the current share price. That acquirer due to antitrust could not be a competitor like Walmart, but possibly a healthcare provider or a health insurer. But given the current attitudes at FTC and DOJ, even that approach may fall into the very wide Antitrust Net [TTA 11 Aug and previous].

WBA’s troubles are coming at a bad time, with CVS Health and Amazon also struggling with perhaps too-aggressive approaches in a down market, especially for healthcare.

The analysis in Crain’s Chicago Business (PDF) is worth your time–see pages 1 and 39.

Update  The class action lawsuit by customers who purchased Theranos blood tests at Arizona-located Walgreens, originally filed in 2016, was settled two weeks ago. Walgreens will pay $44 million into a fund for affected customers. There are two levels of individual payments. One group of customers will receive double the cost of their Theranos tests, plus an additional $10 base payment. Then there are members of a Walgreens Edison subclass, presumably more damaged, who will receive an additional $700 to $1,000 for medical battery claims. The plaintiffs’ memorandum has additional detail to be approved by the US District Court in the District of Arizona. There was also a settlement with Sunny Balwani that involves the successor company, Theranos ABC, but none with Elizabeth Holmes. MedTech Dive   Hopefully the new CEO will avoid the Fear of Missing Out (FOMO) that powered Walgreens’ involvement with Theranos.

Could DocGo be another Babylon Health or Theranos? CEO resignation may be only the start of their troubles.

Another ‘fake it till you make it’ healthcare enterprise? Only a short month ago, things were fair and warmer for DocGo. They had recently transitioned from a mobile Covid-19 testing company under various contracts back to their original purpose–a telehealth/RPM, mobile urgent care, disease management, and medical transportation provider, with mobile vans covering the NYC metro. Founded in 2015 by Stan Vashovsky, now chairman, new CEO Anthony ‘Al’ Capone had successfully leveraged their mobility into a $425 million no-bid contract with New York City to provide medical services and more for over 19,000 migrants flooding into the city and being housed in the surrounding upstate counties. The company also plumped that they were up for a multibillion-dollar Federal contract with the US Customs and Border Protection agency.

DocGo’s stumbles starting in July continuing into August in both medical and non-medical services to migrants housed upstate put them on the press radar, notably the capital’s paper of record, the Albany Times-Union, in the weeks after their bright Q2 report [TTA 10 Aug, 16 Aug].

On 14 August, some basic checking by the Times-Union uncovered that Mr. Capone’s masters in computer science from Clarkson University not only was never granted but also he never attended Clarkson, according to the university. This degree claim was included in the SEC filing and touted to investors by him as an MS in computational learning theory, a subset of artificial intelligence. His undergraduate degree from SUNY Potsdam was not confirmed by that university or by his spokesperson. Mr. Capone had worked for DocGo since 2017, previously serving as president, chief technology officer, and CPO, becoming CEO only this year. In nearly six years, no one had checked his credentials.

On Friday 15 Sept, Mr. Capone resigned from DocGo, citing typical ‘personal reasons’. His apology and taking ‘full responsibility’ did not save him. He has been replaced by Lee Bienstock, the company president and chief operating officer.  Mr. Bienstock came to DocGo from Google in 2022 and holds an MBA from Wharton (University of Pennsylvania). Times-Union 15 Aug, Release

But…there’s more.

  • The no-bid NYC contract was contested two weeks ago (6 Sept) by the city comptroller, Brad Lander. Mr. Lander, like a corporate CFO, can send back a contract to a city agency, in this case to Housing Preservation Development (HPD). His review cited insufficient budget detail, possible inadequacy of the vendor to provide services, and a few other important items. Unlike a CFO, Mr. Lander’s office is largely toothless and can’t say no. HPD plans to sign off on it anyway as DocGo is quite tight with Mayor Eric Adams. Mayor Adams spoke at the DocGo in-person Investor Day on Tuesday 20 June about their partnership with the city. Adams has already stated that “We are going to move forward with it.” FierceHealthcare  
  • According to the New York Post and Fortune, New York State Attorney General Letitia James and Gov. Kathy Hochul have launched investigations into the company, focusing on how DocGo could contract for logistical operations to transport, house, feed, and care for these thousands of migrants in New York State, an outcome of DocGo’s failures reported last month by the Times-Union.

DocGo is a public company traded on Nasdaq under DCGO. Share prices fell 12% on Mr. Capone’s resignation but rebounded to about 7% down off off the recent $10 high after their mid-August reporting.  Seeking Alpha  DocGo went public through the then-popular SPAC method with Motion Acquisition in November 2021, raising $158 million in cash at that time. Unlike other SPACs, their share price generally hovered around the introductory $10 pricing and recovered fairly quickly from two bad dips to $6 in May and December 2022. NS Medical Device

DocGo’s response to the AG’s office and to the comptroller, the politics of the New York State and City crisis around thousands of migrants flooding housing, the streets, and schools, whether their contracts continue, and their internal financials will determine DocGo’s viability in the future. For those of us with long memories though, DocGo is repeating a pattern: first Peak Hype Altitude, then the Pileup of Problems on their wings, finally crashing to Total Hull Loss. Those are the ominous parallels with Theranos and Babylon Health.

Echoes of Theranos in Babylon Health? And additional information on GP at Hand.

Was Babylon Health all a fraud, and where would it place on the Theranos scale? There is an excellent article in MedCityNews that if true, exposes Babylon’s technology as, at minimum, far less than ever claimed. From the perspectives presented, their crash was inevitable.

MedCityNews returns to the original debunker, best known to our UK Readers as @DrMurphy11. In February 2020, while Babylon rode a tide of UK hype (not yet in the US), Dr. David Watkins, a consultant oncologist, revealed himself publicly via BBC’s Newsnight [TTA 27 Feb 2020]. He had been documenting Babylon’s chatbot diagnosis problems in GP at Hand to the government’s MHRA (Medicines and Healthcare products Regulatory Agency) and the independent CQC (Care Quality Commission) since 2017. Scenarios offered to the chatbot missed events such as probable heart attack offering instead panic attack (for a female) and gastritis (for a male). According to MedCityNews, Dr. Watkins had earlier debated a Babylon representative in a debate at the Royal Society of Medicine in London, presumably leading to Newsnight host Emily Maitlis interviewing both Babylon’s Dr. Keith Grimes and Dr. Watkins. Dr. Watkins also received emails from past and current Babylon employees confirming that the “AI chatbot”, the Probabilistic Graphical Model (PGM), was not built on any good quality data.

Cardiac activists in the UK and Canada (Carolyn Thomas, the “Heart Sister”, also listed in our sidebar) also criticized how Babylon’s chatbot ‘diagnosed’ possible events at the time. [TTA 9 Jan 2020]. 

Hugh Harvey, Babylon’s former regulatory affairs head from 2016 to 2017, was also interviewed on Newsnight in 2020. After the Babylon failure, he spoke to MedCityNews about how the AI software was ‘jury-rigged’ to impress the BBC. After he left, Babylon continued to misrepresent the accuracy of its AI system. “To publicize the accuracy of its AI system, the firm set-up a promotional event where it pitted its system against the Royal College of General Practitioners exam used to assess trainee doctors. Babylon conducted this test itself rather than turning to an independent body, and Harvey claims that the company cherry-picked the questions included in the test….Babylon announced that its AI scored 81% on the exam, surpassing the average score of 72% for UK doctors.” 

What was at stake? Babylon got where Theranos never did. A year later, it went public via a SPAC in October 2021 at a valuation of $4.2 billion, with the SPAC organizer Alkuri providing $575 million in gross proceeds to Babylon, including $230 million in a private placement from investors such as AMF Pensionsförsäkring and Palantir Technologies. Two years later, its total hull loss was valued at $5,000.

Some of that money, more than $30 million, went to buying Higi, a health kiosk placed in supermarkets and drugstores that is still in operation in 6,000 locations that uses Babylon’s technology. By early 2023, Higi had separated itself in its public releases from Babylon. It’s unknown how the US Chapter 7 will affect the Higi operation.

Now the commentaries by Dr. Watkins and Mr. Harvey are based on their experiences from some years ago. Babylon could have then created a reliable AI system in GP at Hand and their other diagnostic technologies. But generally, it’s very hard to fix the aircraft as it’s being flown.  The situation usually winds up in an episode of ‘Air Disasters’ (‘Air Crash Investigation’ in UK). For those who believe that the problems were never fixed, Dr. Watkins’ analogy would apply. “[Babylon founder and CEO Ali Parsa] should spend some time with Elizabeth Holmes”. Ms. Holmes, as we know, is serving her time in Bryan, Texas for about the next 11 years.  That would be an interesting albeit improbable conversation indeed.

Interestingly, over one month later, there’s evidently no one left at Babylon Health who can pull down the website. It’s fully operational save for this banner on the home page:

Babylon’s US 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.

The investor page, including the stock ticker symbol and last price, is intact. Will the last person out the door turn out the lights and turn off the website?

Additional information on GP at Hand (UK)

This Editor while away sought clarification from Alvarez & Marsal’s press office on the status of GP at Hand. GP at Hand is not part of the administration. The ownership contracted with Babylon for the app. According to their website, there are three partners: Dr. Stephen Jefferies, Dr. Matt Noble, and Rita Bright. How this arrangement will continue is not disclosed. 

This dovetails with their response:

  • GP is a completely separate 3rd party partnership that is a GP practice that contracted with the Babylon Group.
  • It therefore hasn’t gone through any insolvency process and is still contracting with Babylon Healthcare Services Limited (which has remained outside of an insolvency).
  • The GP at Hand practice wasn’t part of the deal because it couldn’t be as it’s not part of the Group.

Previously: Babylon Health in UK administration, assets sold to eMed Healthcare Ltd.

Babylon Health UK in administration, assets sold to eMed Healthcare Ltd.

While this Editor is on vacation leave, she also knows that Readers are interested in the outcome of Babylon Health’s administration in the UK. The basic story:

  • The UK administrator appointed by the courts is Alvarez & Marsal, an experienced international advisory services firm. We thank A&M for sending us their release.
  • They are supervising the sale of assets of Babylon Group Holdings Limited (“BGHL”) and one of its subsidiaries, Babylon Partners Limited (“BPL”) (“the Companies”).
  • eMed Healthcare UK Ltd., a new subsidiary of a US company in primarily medical testing, acquired certain assets of BGHL and BPL. 
  • These assets did not include GP At Hand, which apparently is still operating.

More details, including employees to be transitioned and the fate of GP At Hand, to come. The US Chapter 7 will take its time through the bankruptcy court.

TechCrunch, and hat tip to HIStalk.

Advance notice to Readers–be back in September!

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

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)

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., 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

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

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

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

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)

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)

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

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,  

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.