Weekend reading: 23andMe updates, a view at variance from the former co-founder, and a deeper historical analysis

March 28, 2025 | by | No Comments

23andMe passes the ‘First Day Motions’ test in Federal bankruptcy court. On Wednesday, 23andMe received permission from the court to, during their Chapter 11:

  • Pay employee wages and benefits
  • Compensate certain vendors and suppliers in the ordinary course of business for goods and services
  • Enter into the term sheet of the $35 million debtor-in-possession financing agreement (DIP Facility) with JMB Capital Partners
  • Begin the process of selling substantially all of its assets* through a Chapter 11 plan or pursuant to Section 363 of the US Bankruptcy Code.

The court also approved the bidding procedures that take place over the 45-day clock that started with the bankruptcy petition on 23 March. Bidding is conducted by the company and Moelis, their independent investment banker.

  • Qualified bids must agree to comply with 23andMe’s consumer privacy policy and laws regarding treatment of customer data.
  • Any sale transaction involving the transfer of customer data requires court oversight and regulatory approvals.

Additional first day orders on the Kroll (claims agent) website are the retention of two law firms, Goodwin Procter LLP and Lewis Rice LLP by the Special Committee of the board of directors, and the continued use of cash management systems, intercompany transactions, honoring certain prepetition obligations, and priority on administrative expense to postpetition intercompany claims against debtors.

The next step is the ‘Second Day’ hearing that follows up on financing, with the entry of an order approving the DIP Facility and ‘additional requested relief’ that isn’t specified in the 23andMe release. 

*Given that thousands, perhaps tens or hundreds of thousands of a reported 14 million users, are deleting as much data as they can from the 23andMe database, what will the value of that genetic database be? Regarding that database, will there be a third-party ‘guard’ on that database appointed by the Court?

The TTA summary of the bankruptcy 24-26 March  This Editor likened the 23andMe implosion to that of Theranos–a watershed event that forces a rethinking of how we treat the privacy of customer medical data not covered by HIPAA, such as genetic data, as we approach (or try to approach) the mountain called ‘personalized medicine’.

23andMe’s co-founder, Linda Avey, essayed in LinkedIn yesterday that 23andMe was a missed opportunity to create a grand genomic dataset that would combine blood work, deeper gene sequencing, and wearable date culminating into actionable insights. The data is now fragmented among many holders.  In her conclusion, she was polite but unsparing: “Without continued consumer-focused product development, and without proper governance, 23andMe lost its way, and society missed a key opportunity in furthering the idea of personalized health. The 14+ million people who bought into the concept deserve to see their data moved to a secure platform with new leadership and vision. Consumers, however, should be careful sharing their data if they don’t trust its secure and ethical use”.Ms. Avey, a scientist and venture investor, was forced out of the company in 2009.

23andMe’s failure is more significant than Theranos as an example of reality versus the hype. Theranos was a near-straight up fraud with blood labs that didn’t work. 23andMe had a technology that worked and could with accuracy your ancestry and genetic risk factors, though the latter got them into trouble with the FDA with a cease-and-desist in 2013 [TTA 2 April 2014] that they didn’t emerge from till late 2015. But ancestry and genetic risk are ‘one and done’ readings. It’s not an ongoing business model. How do you get members to return and pay for more tests, even if they lose money? How do you get investors? Pivot to research and ‘therapeutic development’. The reality, as Anne Wojcicki herself admitted, is that there’s no money in diagnosis and prevention. “No one makes money in healthcare by keeping you healthy” and  “There’s no profit motive for people to get this information. A doctor does not make money if they give a diagnostic”–and this was said by her in 2019.

So how did the company become valued at $6 billion by 2021? Work the story, work the hype around preventative healthcare to get more venture rounds and then a SPAC facilitated IPO. “Personalized healthcare”.  A “research platform powered by engaged customers”.  While the real money was in selling the data to Pfizer, Genentech, and GSK–and that started back in 2015. All couched in ‘personalized healthcare’ and research.

Far, far more on this is over at AI Health Uncut, Sergei Polevikov’s Substack site. Grab your cuppa and/or lunch. It has more financial facts, particularly around 23andMe’s early years, and the botched opportunity of the Lemonaid acquisition. Everyone is a loser when it comes to 23andMe, except the Lemonaid founders who walked away with $100 million in cash (but lost $300 million in stock). It comes to the sad and numerically relentless conclusion that 23andMe was actually bankrupt since 2018. It was chasing ‘an impossible dream’ and was dishonest about its business model. The end result was that public trust in health tech erodes again–and that investors and founders trust each other a lot less. (And Mr. Polevikov also dubbed 23andMe another Theranos.)

Editor’s note: AI Health Uncut may be paywalled. I encourage our Readers to support Sergei’s work on Substack–for a modest annual subscription amount, you gain full access to his work, past and present, charts, videos, and articles.

News roundup: Walgreens settles 10 year running false claims suit for $5M; UniDoc to buy AGNES Connect; launches from Klarity Health, Tunstall UK, HSE Ireland; VITAL WorkLife survey finds yawning gap in clinician/management mental health perceptions

March 27, 2025 | by | No Comments

Walgreens continues to tidy its accounts. The ten-year-old whistleblower-initiated Federal lawsuit charged that Walgreens violated  anti-kickback statutes for Medicare and Medicaid was settled for $5 million on Tuesday. The claim was that patients at the Cook County Health & Hospital System’s Ruth M. Rothstein CORE Center were induced to fill prescriptions at Walgreens’ specialty pharmacy by waiving copayments, an inducement that violated the False Claims Act. The lawsuits were filed in the Federal District Court for Northern Illinois by Sarah Castillo Baier and Rita Svendsen Baier in 2014, then by the Department of Justice and the state of Illinois filing their joint complaint four years later in 2018. The settlement will be divided between the two whistleblowers and the US and Illinois governments. This is Walgreens’ second settlement in the last month and pocket lint compared to the first; their $595 million bill for settling the $1 billion PWNHealth/Everly Health arbitration award came due at the end of February. Crain’s Chicago Business

UniDoc signs agreement to buy AGNES Connect from AMD Telemedicine. The Canadian ‘doc-in-a-box’ remote virtual clinic company has agreed to acquire the AGNES Connect business line, software, and customers to its present H3HealthCube product (right). Their NEIL Connect software for the HealthCube was already built on the AGNES Connect telemedicine clinical exam platform. Interestingly, UniDoc is acquiring the use of the AMD Telemedicine name for AGNES along with related goodwill and trademarks, for which they are paying a low US $175,000 in cash plus a revenue share. The Canadian Securities Exchange may have to approve, but the closing is expected shortly. The H3Health Cube was recently placed in Italy and Ukraine [TTA 13 Feb]. Release

This week’s three launches are:

  1. Klarity Health launches Kiwi Health. Telehealth and independent private practice management platform Klarity Health’s new Kiwi Health is designed as an an all-in-one marketing and communications tool. It provides practices with SaaS tools to set up and promote an online presence in 30+ clinical directories, professional website management, patient intake and scheduling, a patient portal, loyalty, and engagement. Klarity has operations in 40 states with practices serving over 100,000 patients while retaining 94.3% of its doctors–all on a slim raise of $12.5 million. Release
  2. Tunstall Healthcare UK introduces Communicall Digital. This fully digital warden call system is designed for supported housing and retirement communities including extra care environments. It enables residents not only to summon assistance through its alarm feature, but also to manage door entry and room-to-room video calls through a simple touchscreen system. The system also reports resident activity to care staff through the Central Management Platform. It is fully compliant with the UK’s digital transition requirements to the industry-standard BS8521-2 (NOW-IP) protocol. THIIS
  3. Ireland’s Ministry of Health launches the Health Service Executive (HSE) Health App. The initial release will enable Irish residents to access and store their health information including self-declared medications; view a list of medicines received through the Irish Drugs Payment Scheme or Medical Card Scheme; their European Health Insurance Card (EHIC); their medical Long-term Illness (LTI), Drugs Payment Scheme (DPS) and GP Visit cards; flu and COVID-19 vaccination records; maternity service appointments, and information on HSE services. Additional features will be rolled out during 2025. Ireland Department of Health release

Meanwhile, clinicians and their leadership stand waaaay far apart on burnout and workplace mental health. A study from VITAL WorkLife, a mental health provider for healthcare workforces including physicians and nurses, finds that there’s a Grand Canyon of a perceptual gap between clinicians and healthcare employer leadership.

  • 79% of clinicians feel unsupported — while 95% of leaders believe they are addressing healthcare worker burnout
  • 80% of clinicians believe that it’s urgent to address to address mental health challenges in their organization–but only half of the leadership agree
  • Over 70% of clinicians believe that their leadership considers organizational mental health a low-priority issue
  • 98% of healthcare leadership believe that they make workplace mental health a priority, while only 39% of clinicians agree–and believe that organizational performance is far more their concern.
  • 92% of healthcare leadership believe that existing programs are well tailored to organizational needs–but only 16% of clinicians agree. 33% disagree and an addition 51% find themselves in the ‘middle’. 

The online survey of 210 healthcare professionals across the US was taken over a three-week period in January 2025, with a cross-section of healthcare functions including leadership level medical, nursing, HR, and wellness staff, as well as clinicians. The full survey is available for download at this link. Release

Perspectives: As police step back from mental health calls, telepsychiatry steps forward

March 26, 2025 | by | No Comments

TTA has an open invitation to industry leaders to contribute to our Perspectives non-promotional opinion and thought leadership area. Our hot topic today is community mental health crisis response, and the role that telepsychiatry can play in an integrated approach to  prevent crises from escalating. Today’s contribution is from Andy Flanagan of Iris Telehealth. As CEO, he drives strategy, operations, and culture, leveraging his extensive healthcare and leadership experience. A four-time CEO with a background in global health tech, he holds degrees from Northwestern and the University of Nevada, Reno.

Law enforcement is stepping back from mental health crisis response. Sacramento County Sheriff recently announced deputies will no longer respond to non-criminal mental health calls, citing a recent Ninth Circuit Court ruling that questioned police involvement where no crime has occurred.

Sacramento isn’t alone. In Austin, Texas, the police union president declared that “the Austin Police Department must stop responding to mental health calls,” as reported by Fox 7 Austin.

Law enforcement is underequipped for mental health crises. But who should respond instead? How do we build a system that connects people in crisis with appropriate care?

The answer lies in creating integrated crisis response systems that combine trained mental health professionals, community resources and telepsychiatry to ensure people in crisis get immediate access to appropriate care, regardless of location or timing.

The current crisis

In Austin alone, police responded to 34,000-52,000 mental health calls annually since 2020. Nationally, the burden is immense, with behavioral health-related emergency department (ED) visits doubling from 2011 to 2020, now reaching approximately 47 visits per 100 people.

When law enforcement withdraws from mental health response, this pressure shifts to already strained emergency departments. Without alternative systems in place, people experiencing mental health crises have nowhere to turn except hospital EDs, leading to overcrowding, extended wait times and less-than-optimal care environments for behavioral health needs.

First responders face an impossible task. Most receive minimal mental health training — often just 40 to 120 hours — compared to the years of specialized education mental health clinicians receive. This gap creates dangerous situations like the DeSilva case that prompted the Ninth Circuit ruling.

A better approach

Communities are discovering more effective models for mental health crisis response. The nationwide 988 Suicide and Crisis Lifeline provides immediate access to trained counselors, while integrated crisis response systems — like Austin’s approach of offering mental health services as a 911 option — show promising results. When Austin callers select mental health services, they’re connected with Integral Care clinicians who conduct assessments, provide support and deploy mobile crisis teams when needed. According to Fox 7 Austin, 87% of these calls are resolved without police involvement.

Specialized mental health professionals are the cornerstone of these systems. These experts bring the right training and perspective to de-escalate situations, connect individuals to appropriate resources and provide trauma-informed care. Unlike law enforcement, their approach centers on therapeutic intervention rather than control and containment.

Technology bridges access to specialized services. Telepsychiatry enables immediate access to mental health expertise, even when providers aren’t physically present. Digital platforms can connect crisis responders with psychiatrists for real-time consultation, ensuring appropriate assessment and care planning from the first point of contact. This is particularly valuable for rural communities with provider shortages, where in-person mental health specialists may not be readily available.

The role of telepsychiatry

Telepsychiatry platforms connect patients directly to behavioral health expertise before crises escalate. Today’s technology enables immediate access to qualified mental health professionals through smartphone apps, community centers and EDs. Modern systems incorporate AI-driven analytics to optimize patient scheduling and resource allocation without replacing clinical judgment.

The benefits are immediate for patients who receive specialized care within 30-45 minutes versus traditional ED visits taking 2+ hours. Healthcare providers gain psychiatric expertise without maintaining 24/7 in-house specialists, addressing a critical gap where 54% of U.S. hospitals have no psychiatrists available for ED and inpatient consultation services. When telepsychiatry is effectively implemented, health systems experience reduced boarding times, lower admission rates and improved emergency department throughput. One hospital avoided more than $1.7 million in boarding costs with a 281% return on investment, while another reduced psychiatric patient length of stay by 70%.

Technology works best when enhancing human expertise, not replacing it. A recent Iris Telehealth survey found 41% of respondents would feel comfortable receiving treatment recommendations from AI-powered mental health tools, and 33% would leverage these tools if integrated into services they already use (think telehealth platforms or primary care visits).

As law enforcement rightfully steps back from mental health crisis response, we must step forward with integrated solutions that combine human expertise and technology. Telepsychiatry represents one critical piece of a comprehensive approach connecting people in crisis with appropriate care.

For Perspectives editorial and additional opportunities such as supporting TTA through advertising, contact Editor Donna.

Breaking: 23andMe files for Chapter 11 bankruptcy–whither customer data and security? An impact similar to Theranos?

March 24, 2025 | by | No Comments

The exploding plastic inevitable comes to its inevitable end. 23andMe’s board filed for a Chapter 11 bankruptcy with the Eastern District of Missouri (!) Federal bankruptcy court on Sunday night (Case 25-40976). Anne Wojcicki, CEO, 49% controlling shareholder, and board member, stepped down from the CEO position, but remains on the board. Interim CEO is Joseph Selsavage, 23andMe’s chief financial and accounting officer,  according to their SEC Form 8-K filing.

In their announcement, 23andMe will, with court approval, actively solicit asset sales over a 45 day period.

Anne Wojcicki’s final non-binding proposals on 10 and 11 March were rejected by the Special Committee of the board of directors evaluating asset sales and now the bankruptcy.

Anne Wojcicki’s statement on X early on Monday morning was of a piece with her statements as 23andMe entered its death spiral starting in 2023. “We have had many successes but I equally take accountability for the challenges we have today. There is no doubt that the challenges faced by 23andMe through an evolving business model have been real, but my belief in the company and its future is unwavering.” In her post, she also said that she would bid for assets sold by the company. 23andMe has not issued any further statement or response to their former CEO’s comments.

The Chapter 11 versus 7 filing means that 23andMe will continue to operate as it sells assets and eventually shuts. It will be up to the board–including Ms. Wojcicki–and the bankruptcy judge regarding the disposition of the company’s assets, which include teleprescriber Lemonade and the large 23andMe genetic database. Those assets and liabilities essentially cancel each other out: $100-500 million in assets and the same in liabilities, according to the filing.

And about that large genetic database–the California attorney general Rob Bonta has already advised California 23andMe registered users to delete their data and request their samples to be destroyed. However, as previous articles have discussed, your data remains–de-identified, which the AG’s statement doesn’t go into in its “reminder” (more like a press opportunity for a 2026 reelection bid?). Mercury News  See today’s update for how-tos–and experiences in deletion.

23andMe has stated that it will not change the way that consumer data is stored or safeguarded, and will continue to operate as usual through the Chapter 11 process. They published an ‘open letter’ blog for customers that positions them as finding “a partner (Editor’s emphasis) who shares our commitment to customer data privacy and allows our mission of helping people access, understand and benefit from the human genome to live on.” which is frankly, misleading.

Perhaps the Chapter 11 is saving Ms. Wojcicki from a tremendous financial mistake in buying out the rest of the common shareholders, though the filing wipes out her investment in the company. It will be interesting to see the court’s comments on the ownership of what at its peak was a $6 billion-valued public company. CNBC  

This story is developing, but has developed ‘legs’ like Theranos in terms of mainstream impact. When YouTube tarot card readers are covering it….   

Updates 25-26 March   

MedCityNews yesterday recapped the various Wojcicki-led efforts to take the company private as Readers have been following, with the interesting addition that by 10 March, at least one minority shareholder, Zentree Investments, felt slighted. Zentree then bought more Class A stock to boost its ownership stake to 13%. (I wonder how they woke up on Monday.) Unfortunately, there were no further insights on why New Mountain Capital retreated from its short-lived offer to buy 23andMe with Ms. Wojcicki that went sideways by 28 February.  (Perhaps someone found something that led to the mutual conclusion of ‘Are we crazy?’)

The first hearing before the bankruptcy court, the Debtors’ First Day Motions, will be tomorrow, Wednesday 26 March, in St. Louis before the Honorable Brian C. Walsh. 

There is no hint of a pre-packaged bankruptcy leading to a reorganization of the business in any of the materials linked below.

From the Form 8-K and the Kroll case summary (Kroll is the claims agent for the company):

  • 23andMe has agreed with a lender, JMB Capital Partners Lending, LLC, to obtain up to $35 million in a senior secured term loan credit facility (DIP Facility). The debtor-in-possession financing from JMB is to pay for the Chapter 11 administrative costs and for working capital. This is subject to the bankruptcy court’s approval.
  • Subsidiaries of 23andMe (such as Lemonaid) will continue to operate. Lemonaid Health and two pharmacy operations are listed as  debtors in the filing.
  • On 21 March, Joseph Selsalvage was paid a retention cash bonus of $500,000 for his services through 31 December this year or 23andMe’s emergence from bankruptcy, whichever is earliest. If he leaves before the end of the retention period or is terminated for cause, the entire amount will be clawed back. The only exceptions are death, disability, or departure for ‘good reason’ as defined in the retention agreement.
  • The board was increased to five members, adding Thomas B. Walper as a non-employee member of the board and the Special Committee (formed for buyers) through the 2027 shareholders meeting. He will be paid $35,000 per month. Mr. Walper is a partner at Los Angeles’ Munger, Tolles & Olson LLP and specializes in bankruptcy law.
  • Any transaction will be subject to customary regulatory approvals, including, as applicable, the Hart-Scott-Rodino Act and the Committee on Foreign Investment in the United States.

From the 23andMe release:

  • The Special Committee rejected Anne Wojcicki’s final bids in the amended Schedule 13D made on 10 and 11 March.  
  • The company in the Chapter 11 will sell substantially all of its assets in a Section 363 sale.
  • Matt Kvarda, a managing director at Alvarez & Marsal, was appointed as chief restructuring officer.
  • First day motions (tomorrow) include requesting from the court authority to pay employees and certain vendors, reducing operating expenses such as real estate leases, and resolving all outstanding legal liabilities stemming from their October 2023 cyber incident.

Since 23andMe’s database includes personally identifiable information and Lemonaid stores medical information as a prescriber of various remedies, it is possible, but to be confirmed, whether Federal entities such as HHS will be involved in approvals of asset sales that have patient information. Those who submitted their tests for genetic analysis are not covered by HIPAA and in fact signed away many of their privacy rights in their submission. 

Information on deleting your user records if you used 23andMe, or you know someone who needs to know how:

Contrary to what many would like to have or to believe, 23andMe retains parts of user information after user deletion, such as: genetic information, date of birth, and gender “as required for compliance”; deletion request information “including but not limited to, your email address, account deletion request identifier, communications related to inquiries or complaints and legal agreements.”

Despite this, deleting your account is the wisest move, according to every expert this Editor has read.

Basically, you are deleting your account, revoking any research consent, and destroying any samples they may have retained. Simple, eh? Not quite! Step-by-step how-to guides are available on ZDNet (simplest) and TechCrunch (scroll to the end). This Editor cannot test as she never used 23andMe. Arundhati Parmar of MedCityNews‘ experience in attempting this process is chronicled in a LinkedIn video and on TikTok.  Expect website crashes, slow responses at best, and more than a few hitches.

New  FierceHealthcare’s Dave Muoio riffs on the data privacy issues which can be summarized as a “data stewardship crisis”. The few protections that members/users have are based on consumer protection laws. 23andMe’s privacy policy, as noted above, was explicit about the minimal protection they offered and that they had the right to access, disclose to others, and sell your genetic information:  “your Personal Information may be accessed, sold or transferred as part of that transaction and this Privacy Statement will apply to your Personal Information as transferred to the new entity. We may also disclose Personal Information about you to our corporate affiliates to help operate our services and our affiliates’ services.” Mr. Muoio reached out to experts at SOCRadar, QuantHealth, the Future of Privacy Forum, the Holland & Knight law firm, Pixel Privacy, and others. The consensus is that state and Federal safeguards are wholly inadequate.

Editor’s opinion:

23andMe’s cavalier attitude during their 2023 data breach, caused by their sloppy security (well documented by others and analyzed in our article here with previous articles linked within it) but blamed by their management on members reusing passwords, was symptomatic of a certain arrogance and attitude. By 2023, the company was already in trouble. Why would anyone believe that they’d be any less cavalier about personal genetic information?

Will this be another ‘watershed’ event like Theranos? The level of mainstream consumer media coverage the 23andMe bankruptcy has received reminds this Editor of the demise of Theranos. But here, there is no glamorous young founder in a black turtleneck jetting about and working in a Silicon Valley high-tech lab perpetrating a fraud. Here, the founder and key shareholder is a mature wealthy woman who kept a fairly low profile, the technology worked, the consumer business broke fresh consumer ground and, for its time, getting your genetic information and ancestry was a popular concept. GSK’s five year deal was completed–not renewed, but no lawsuits ensued. What was way off was its $6 billion valuation in 2021 after its SPAC and IPO.

Its faltering wasn’t news like Theranos or (for that matter) Walgreens either. The concatenation of failures along the way, save for the 2023-24 data breach/hacking which was news and drove away customers by the carload, was hardly noted at all. Yet suddenly. every one who ever dealt with 23andMe is anxious about their DNA being sold, with rumors of nefarious buyers like Bill Gates and from China popping up with notorious frequency.

We’ll see if this leads to change in genetic privacy laws and policies.

Short takes: interesting takeaways from the Veradigm earnings call, VA cuts ~6 EHRM contracts; mergers for DispatchHealth-Medically Home, Wysa-April Health

March 21, 2025 | by | No Comments

The Veradigm earnings call following the 2022 financial release had to be…interesting, perhaps in what wasn’t said. HIStalk’s reporter took away several key points succinctly; a full reading at their site is recommended (scroll down). In brief:

  • “The financial impact of the internal control failures was $239 million in asset reduction and $46 million in fees.”
  • The company will not be current on its financial reporting until 2026
  • The core provider and life sciences businesses went wobbly
  • ScienceIO, bought in February 2024, generated no revenue. The AI/LLM acquisition was touted as being incorporated into other business lines, trimmed with jargon.

The accumulation of things that just aren’t tucked, tied, and moving forward gives the impression of uncertainty. And uncertainty is a bad place to be in a billion-dollar business. Veradigm consists of a complex mix of businesses. Yet the CEO, Tom Langan, is still ‘interim’ after 10 months which affects the leadership. Months ago, the company was for sale, yet all the interested bidders who could have well afforded Veradigm took a pass. Now they are facing a ‘standalone future’.  Right after that announcement, an activist investor intervened and is now calling the shots on board members [TTA 19 Mar, 22 Feb]. Stay tuned….

VA cutting contracts, including six EHRM sub-vendors–a wrench in the EHRM works? According to this Federal News Network report, the total number of canceled contracts, originally announced as 875 contracts, was later reduced to 585. Included in the cuts were at least six small contractors tied into the EHR Modernization (EHRM) with Cerner. While VA is ‘walking back’ the termination of some of these EHRM contractors working on essential pieces such as interoperability and HIPAA compliance, these small, generally veteran-owned companies with specialized workers have already laid off staff. What’s really telling is the statement from FNN’s source, which this Editor doubts you’d hear outside of government or a huge global company: “For every FTE in government, there’s maybe two, three, even four support resources that are assisting. The government is just there for decision-making. The groundwork, and all the other work, is being done by this contract support team. Right now, they’re just trying to do damage control.” In addition, 24 on the EHRM team either were laid off or took the buyout. Having once worked for a contracting RPM company for the Veterans Health Administration which had its contract terminated after over 10 years, this Editor can testify to 1) the devastating effect and 2) the specialized skills of people making up these support teams.  Hmmmm….

Hospital-at-home DispatchHealth and Medically Home to merge, effective mid-year. Terms of the transaction, headquarters location, and employee transitions were not disclosed. According to Healthcare Dive, Jennifer Webster, CEO for DispatchHealth, will lead the combined organization under the DispatchHealth name. Both offer same-day in home medical care, recovery services, and hospital-level care at home. DispatchHealth, headquartered in Denver, raised $403.2 million through a March 2021 Series D. Medically Home in Boston raised $197 million through a January 2022 Series D. They don’t have investors in common, unusually for mergers of late. Medically Home focuses on health systems and physician groups for serious and complex care decentralized management, while DispatchHealth base is with insurance companies, value-based entities, as well as health systems. Coverage for the combined entity is stated as nearly 40 health systems, as well as most major health plans and value-based care entities, with 2,200 employees, over half in frontline care. Release. 

Over in Telemental Health Land, Wysa and April Health are merging. Wysa primarily features an AI LLM chatbot for cognitive behavioral therapy, targeted to individuals and employers, while April Health partners with primary care providers for behavioral care management with live managers. The Wysa chatbot in 2022 received FDA Breakthrough Device Designation for use by patients 18 years old and older with a diagnosis of chronic musculoskeletal pain, depression and anxiety. April Health has already integrated the Wysa chatbot with its services for LifePoint Healthcare and The Newton Clinic (affiliated with MercyOne). Terms of the transaction, headquarters location, and management transitions are not disclosed. Wysa has raised about $35 million in funding, with the last round in 2023, while April Health has seed funding only. Release, Behavioral Health Business, Mobihealthnews 

News roundup: NHS England to be abolished, absorbed into UK DHSC, while IT glitch shorts 5,200 from screenings; Veradigm *finally* files 2022 financials (updated), VA-Oracle EHR now promises 13 installs in 2026

March 19, 2025 | by | No Comments

The semi-independent entity of NHS England is scheduled to be absorbed by the UK Government within two years. Formed in 2012 under the David Cameron-led Government, NHS England (formally the NHS Commissioning Board) with the enactment of the 2012 Health and Social Care Act reforms, will now be directly controlled by the Department of Health and Social Care under the Secretary of State for Health and Social Care, Wes Streeting, who said, “We need more doers and fewer checkers, which is why I’m devolving resources and responsibilities to the NHS frontline.” The intent, according to Prime Minister Starmer’s announcement on 13 March, is to institute a centralized model that eliminates over-regulation, duplication, and slashes the £200 billion it currently takes to operate semi-independently. 

NHS England staff were warned of cuts up to 50%, and incoming chair Dr. Penny Dash, said in an agency statement that she will “work to bring together NHS England and DHSC to reduce duplication and streamline functions.” NHS England has doubled staff since 2010 when it peaked in user satisfaction and waiting times, declining ever since. Healthcare IT News

NHS England has a guide here on ‘what you need to know’ about the two-year abolishment announcement and key points from both the Starmer and Streeting speeches along with answers to MPs’ questions. Notably, “integrated care boards (ICBs) and provider trusts have been told to make further cuts, with ICBs asked to make 50 per cent reductions in their running costs by Q3 2025/26 and trusts being told to cut their “corporate services” budgets back to pre-pandemic levels.” The greatest concerns center around cuts to frontline staff though budgets are for now in place.

Separately, an IT glitch in NHS England’s GP patient registrations meant that 5,261 people weren’t notified of routine screenings. When GP practices did not fully complete patient registrations, the IT admin error meant their information was not passed into NHS screening program systems. Thus the reminders were not sent out for routine bowel, breast and cervical cancer, and abdominal aortic aneurysm screenings. This apparently started in 2008 but wasn’t identified till last year. It’s estimated that 10 patients may have died since that time. Digital Health UK

Veradigm files its delayed 2022 financials, at long last–and still unaudited. These were the infamous financials that delisted the company from Nasdaq due to a software problem that was reported that year. It made subsequent years non-auditable though the company reported profit on its complex operations. Veradigm stock fell, it failed to sell itself for the estimated $1 billion last year to one of the five most interested bidders [TTA 31 Jan], and now is essentially controlled by an activist investor, Kent Lake PR LLC, which has added four independent board directors [TTA 22 Feb]. The 2022 financials plus restatements of 2021 and 2020 financials were filed in their SEC Form 10-K. 2022’s net loss was $86.4 million, 2021’s net income was $139.7 million, and 2020’s was $696 million. Non-GAAP income per share was for the respective years ($0.77), $1.01, and $4.37. Now for 2023 and 2024….  Veradigm release is a long read

Updated: Healthcare Dive confirmed Veradigm’s flat revenue projection for 2025. Two new board directors and a chairman were appointed: Jonathan Sacks, a partner at Stonehill Capital Management, and Bruce Felt, CFO at cloud software company Domo on the board, and Lou Silverman as chairman. Mr. Silverman joined the board last month and replaces Greg Garrison, who last month announced his retirement after the 2022 financials were filed. Under the agreement with investor Kent Lake PR LLC, all had to be approved by them [TTA 22 Feb].

The Department of Veterans Affairs (VA) will roll out the Oracle EHR to a planned total of 13 sites in 2026. The announcement last week added nine sites to the previously announced four sites in Michigan. The additional nine will be announced later this year. VA also announced that the complete deployment and presumed replacement of VistA will be as early as 2031. On Oracle’s part, the EHR is being moved to the cloud (Oracle Cloud Infrastructure/OCI) with the first phase completed this year and full migration by end of 2026. 

Two statements closing the VA’s release are interesting (Editor’s emphasis in bold); interpreting them, deployments will be regionally implemented and procedures standardized for each, versus the extremely customized approach taken with the first six deployments:

VA is pursuing a market-based approach to site selection for its deployments going forward. This will enable the department to scale up the number of concurrent deployments, while also enabling staff to work as efficiently as possible. 

VA will adopt a standard baseline of products, workflows, and integrations aligned with subject-matter-expert recommendations. The standardized national baseline will ensure successful Federal EHR implementation, accelerate deployments, simplify decision-making, and support future optimizations.

Healthcare IT News, TTA 26 Feb on the most recent Congressional hearings

Breaking: Stefano Pessina to near-double stake in Walgreens after Sycamore Partners takeover–reports

March 18, 2025 | by | No Comments

Another ‘go big or go home’ move by Signor Pessina. The Financial Times reports this afternoon from “people familiar with the matter” that Walgreens Boots Alliance chairman Stefano Pessina will nearly double his 17% stake in Walgreens to 30%, once the take-private sale to Sycamore Partners closes.

Sr. Pessina will be providing cash for the deal by voting 100% of his shares in favor of the transaction, then reinvesting all cash received. According to the FT, his current stake in the listed group is worth as much as $2.1bn which is a handsome chunk of change in this leveraged buyout–and also makes the LBO possible. A sale and take-private also benefits his spouse and business partner Ornella Barra, who heads up the WBA international business.

The $10 billion equity deal could be worth up to $23.7 billion if assets like VillageMD are divested, with the value of net debt, capital leases, and other items are figured in, along with spinoffs, closures, and carveups [TTA 11 Mar]. Those spinoffs are likely to include Boots in the UK, Shields Health Solutions in specialty pharmacy, other international operations, and even Walgreens’ US pharmacy business. Crain’s Chicago Business

The FT in an accompanying article points out that common shareholders are receiving a 63% bump on their current shares’ value. Bondholders who bought in better days, and saw their bonds fall to 65 cents on the dollar, may either have the bonds left outstanding or Sycamore may have to pay it off at par value.

One can only hope for Sr. Pessina that ‘go big or go home’ works out better here than it did with the buys of VillageMD and Summit Health/CityMD.

Editor’s note: expanding on an earlier comment that she offered to Walgreens in reviving a retail model, taking into account how shopping habits have changed even for those of us preferring to shop in person, and reaching out to those who are less able to shop or are far away:

  • Put in or run pharmacies and related health and beauty aids (HBA) sections/aisle in supermarkets, which are already expanding their pharmacy/HBA operations. This could be branded or ‘white label’. One stop shopping. Many supermarkets have their own (Stop & Shop, Publix), but many (e.g. Acme, many Shoprites) don’t have.
  • Create mobile delivery of prescriptions and HBA through mobile vans, pop-ups, and delivery services to homes, senior centers, FQHCs, clinics. Ordering would use voice, text, and online.

Can kicked down road: telehealth flexibilities extended to 30 September

March 18, 2025 | by | No Comments

The Friday-passed Continuing Resolution extended telehealth flexibilities once again. This CR extension of a ‘flat’ budget kicked the can once again by extending all existing telehealth provisions until the end of the Federal fiscal year, which is 30 September.

The parts extended are:

  • Medicare telehealth flexibilities for synchronous telehealth, enabling telehealth visits to occur from a wider range of locations, including the patient’s home, and permits additional qualified provider types to deliver virtual care. This includes RHCs and FQHCs (see below) (2207)
  • The Acute Hospital Care at Home Program that allows Medicare-certified hospitals to furnish inpatient-level care in patients’ homes. (2208)
  • The Special Diabetes Program, without expansion. (2102)

The CR also extended funding for community health centers  and teaching health centers that operate graduate medical education programs (2101). However the disparity in funding telehealth versus in-person for rural health clinics (RHCs) or federally qualified health centers (FQHCs) for telehealth, added under the CARES Act 2020, remains.

It does not include an expanded diabetes program, first dollar coverage for High Deductible Health Plan-Health Savings Accounts (HDHP-HSA), telehealth as an excepted benefit, and expanded and in-home cardiopulmonary rehabilitation services, previously covered in earlier budgets.

The challenge remains for the next fiscal year beginning 1 October, and to be debated this summer, to make these Federal telehealth expansions permanent. Telehealth user organizations, their providers, digital health developers, commercial health plans, and investors then can make long term projections based on permanence. That would provide much-needed stability to this part of the industry. ATA/ATA Action Release, Healthcare Brew, FierceHealthcare, 

There are three Congressional bills that make telehealth services permanent but again they separate telehealth into multiple parts and are not comprehensive. From the National Law Review today:

1. Telehealth Modernization Act of 2024 (H.R. 7623) This bill seeks to permanently extend certain telehealth flexibilities that were initially authorized during the COVID-19 public health emergency.

2. Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act of 2023 (H.R. 4189; S. 2016) This bill proposes to expand coverage of telehealth services under Medicare, aiming to remove geographic restrictions and expand originating sites, including to allow patients to receive telehealth services in their homes.

3. Preserving Telehealth, Hospital, and Ambulance Access Act (H.R. 8261) This bill aims to extend key telehealth flexibilities through 2026, including provisions for hospital-at-home programs and ambulance services.

The debate around these services is separate from the debate around teleprescribing controlled substances, which are under the Drug Enforcement Administration (DEA) and Health and Human Services (HHS). These are debated in this week’s and last week’s Perspectives.

Perspectives: Telehealth Expands Access to Addiction Treatment and Specialized Care, But Navigating Regulations Remains Key

March 18, 2025 | by | No Comments

TTA has an open invitation to industry leaders to contribute to our Perspectives non-promotional opinion and thought leadership area. Telehealth extensions, especially for controlled substances, are hot topics and here is another Perspectives on this topic. Today’s contribution is from Nate MacLeitch, CEO and founder of QuickBlox, an AI communication platform. He is a seasoned business leader with deep expertise in telecom, media, software, and technology, having held leadership roles at WIN Plc (now Cisco) and Twistbox Entertainment (now Digital Turbine). He also advises and invests in startups and holds degrees from UC Davis and the London School of Economics.

Telehealth’s really made a huge difference in who can get good medical care. By enabling health system leaders to connect more patients to doctors, 91% now report having a telehealth program in place.

Even so, accessibility to prescriptions and proper healthcare remains a critical issue in the US. A systematic review of 185 studies found that 54% of cases indicated how disability or chronic health conditions create barriers to medication access. Race contributed to 28% of reported barriers, while income and education levels were factors in 30% of the studies. Furthermore, half identified a lack of available treatment or healthcare practitioners as a significant structural barrier.

The Drug Enforcement Administration’s (DEA) recent announcement to make permanent three telehealth regulations increases access to vital medical services—particularly addiction treatment, specialized care, and care for veterans. Here’s what telehealth providers need to know.

The DEA’s latest ruling

Telehealth is a necessary avenue to solve accessibility barriers, however, it comes with its own challenges. Patient safety and preventing the diversion of medications into the illicit drug market are at the heart of the DEA’s amendments. See the three latest rules below:

Expansion of buprenorphine treatment via telemedicine encounter

The allowance of initial buprenorphine prescriptions via telephone consultations for up to a six-month supply addresses a critical need in combating opioid addiction. This removes a major barrier for individuals seeking treatment, particularly in rural or underserved areas.

Practitioners must note that the requirement for subsequent in-person visits ensures a balance between accessibility and safe patient care. Further telemedicine prescriptions following this period may be permitted but will first require an in-person visit to a medical provider.

Telehealth platforms should be designed to facilitate these initial consultations, seamlessly integrate with existing healthcare systems, and automatically notify patients and practitioners when the six-month window is completed.

Special registrations for telemedicine and limited state telemedicine registrations

The introduction of special registrations for telemedicine, including the ability for medical practitioners to prescribe Schedule III-V controlled substances without prior in-person evaluations, significantly broadens the scope of telehealth. This helps patients struggling with conditions such as sleep disorders, diarrhea, and anxiety to receive ongoing medication management.

For Schedule II medications, which are more addictive and prone to diversion to the illegal drug market, the DEA established an advanced telemedicine prescribing registration. Certain Schedule II medications are prescribable via telehealth but require the medical practitioner to be board-certified in one of the following specialties: psychiatrists; hospice care physicians; physicians rendering treatment at long-term care facilities, and pediatricians.

While the DEA currently only allows certain types of doctors to use telehealth to prescribe controlled medications, it asks the public to comment on any needs and reasons for expanding this list. The agency’s consideration in making it easier to use telehealth for treating complicated health problems is a good sign for the future of virtual healthcare.

In the meantime, telehealth providers can help clients and partners identify practitioners’ certifications and monitor and restrict prescription types based on their associated authorities within the platform.

Continuity of care via telemedicine for Veterans Affairs patients

The clarification regarding continuity of care for Veterans Affairs patients via telemedicine is a welcome development. By extending the provider-patient relationship established during an initial in-person visit to all US Department of Veterans Affairs (VA) practitioners using telehealth, the VA is streamlining care coordination and improving veterans’ access to required medication.

Telehealth providers must support secure communication and data sharing between platforms and the VA system, further enhancing the continuity of care for veterans.

How automatic notifications can help

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Breaking: telehealth nutrition provider Foodsmart taps former Amwell COO Kurt Knight as CEO

March 18, 2025 | by | No Comments

Kurt Knight to head up ‘food as medicine’ Foodsmart telehealth. Foodsmart, a telehealth nutrition and food planning/delivery service targeted to insurers and employers, announced that Kurt Knight, a former Amwell chief operating officer, has been named as their new CEO. He replaces as CEO the current founder/CEO Jason Langheier, MD, MPH, a physician who founded the company based in San Francisco in 2010. Dr. Langheier will remain on the board and as chief science officer. Their Zipongo platform personalizes dietary needs based on biometrics and health history.

Limited information on the executive change is paywalled at Endpoints today, but the LinkedIn post by reporter Ngai Yeung recaps most of the news. Of note in her post and article is that 75% of Foodsmart’s customers are Medicaid members or lower-income workers. With cuts in Medicaid funding to states being considered at the Federal level (in both the preceding and current administrations), this might look like an unsteady base. Mr. Knight believes there is more room for Medicaid plan expansion. They claim that more than 40% of its patients who are food insecure become food secure through the program. Foodsmart also serves health systems and enterprise customers, with financial backers in both. 

Kurt Knight was chief operating officer (COO) of Amwell from October 2019 to end of 2024, ending 13 years there in multiple positions. The COO position was consolidated into the chief financial officer (CFO) position now held by Mark Hirschhorn [TTA 23 Oct 2024]. From March 2022 and currently, he is a partner at investor SpringTide Ventures in Cambridge, Massachusetts. His post on LinkedIn also announces the change. 

Foodsmart’s funding since 2012 exceeds $314 million. Last year, they added a tiny $10 million Series C plus a jumbo venture round of $200 million through the UN-linked Rise Fund last year, a big bet on ‘food as medicine’. Additional investors include Memorial Hermann, Advocate Aurora Health, 62 Ventures, the Mayfield Fund, and Intermountain Healthcare. Crunchbase, FierceHealthcare

News roundup: MSK is ‘it’ with Hinge Health’s IPO filing, Vori Health’s $53M raise, Dario Health’s 33% revenue increase; CoachCare buys VitalTech, ModMed investor sells majority stake, Health NZ uses Excel–only; Holmes gets rehearing extension

March 14, 2025 | by | 1 Comment

Companies in MSK therapies (and more) were the ‘IT’ this week:

Hinge Health’s IPO filing this week the talk of healthcare finance. In the teeth of a roiling market (for no good reason at all in C), Hinge’s SEC S-1 filing of a preliminary prospectus has many agog. Hinge had a 33% 2024/2023 revenue growth to $390 million and $468 million in billings, 2,250 employer clients and approximately 20 million contracted lives as of the end of last year. Net loss was reduced substantially, to $11 million from 2023’s $108 million.

Not disclosed in the filing are the number of Class A shares on offer (on the NYSE under HNGE) or the pricing range. According to FierceHealthcare’s and TechCrunch’s IPO specialist source at Renaissance Capital, Hinge Health could raise $500 million in its IPO. It already has substantial funding through 10 rounds, the last 2021’s Series E of $400 million, totaling $826 million .(Crunchbase) Its backers who are prepping for a partial or full exit are 8% shareholders Coatue, Tiger Global Management, Whale Rock Capital Management, Bessemer Venture Partners, Insight Partners (19%), and Atomico (15%). Founders Daniel Perez (CEO) and Gabriel Mecklenburg (director) own 18.9% and 8.2%, respectively. It is one of the largest and most successful in a highly crowded market in MSK therapy and virtual physical therapy, with Sword Health its largest competitor–and also talking IPO. And like others, it has diversified into other medical areas: pain management (Enso) and female pelvic health.

Surprisingly, Hinge Health was first incorporated in 2012 as a private limited company in England and Wales. It was incorporated in Delaware in 2016. Release, Mobihealthnews

One of Hinge’s competitors, Vori Health, scored a $53 million Series B funding round. New Enterprise Associates (NEA) led this round along with previous investors  AlleyCorp, Intermountain Health’s Intermountain Ventures, Echo Health Ventures, and Max Ventures, bringing their total funding since 2020 to $109 million. Vori’s model is physician-led with patients working with a virtual care team organizing care from diagnosis to therapy, prescriptions, labs, and imaging. They claim results of 91.6% of patients reporting clinically significant pain improvement, 78-90% reduction in elective orthopedic surgeries, a 42% decrease in opioid utilization, and up to a 68% reduction in depression and anxiety among patients. The funding will be used to deepen its value-based care initiatives (including evolving toward models with two-sided population health risk), invest in advanced data analytics for more precise targeting of high-risk members, and enhance its AI-powered technology platform and clinical programs to benefit patients, employers, and health plan partners. Release, Mobihealthnews

Another competitor which has considerably branched out from MSK is Dario Health. Their 2024, marked by the dizzyingly funded acquisition of Twill telementalhealth [TTA 29 Feb 2024] bumped up in full-year by 32.9% to $27.0 million, from $20.4 million in 2023. Net loss was reduced to $42.7 million from 2023’s $59.4 million. While still in MSK, Dario has branched out into diabetes, hypertension, weight management including GLP-1 therapy with MedOrbis, and behavioral health in-person and app based management in a B2B2C model for members of health plans and other payers, self-insured employers, providers, and consumers. Back in January, they completed a $25.6 million private placement of 25,606 shares to extend their cash runway. Release, Mobihealthnews

NYC-based CoachCare is acquiring Carrolton, Texas-based VitalTech. Both companies monitor chronic conditions via remote patient monitoring (RPM) and are about the same size. Acquisition cost was not disclosed. VitalTech CEO Jeh Kazimi and the under 50 person VitalTech staff will be joining CoachCare. CoachCare claims that they cover 200,000 patients in 3,000 locations. Release

Investor Warburg Pincus sells majority stake in ModMed to Clearlake Capital. The investment was not disclosed, but reports indicated the valuation of the EHR and practice management system company is estimated now at $5.3 billion. Summit Partners and ModMed cofounders Daniel Cane and Michael Sherling maintain a minority share. ModMed has been for sale on and off since 2022, most recently in January, but was looking at acquisitions last fall. Original reporting was from the Financial Times. Axios, Bloomberg Law, Release

And you think you might be behind the times? Health New Zealand likes to keep it simple…very simple. They run all their financial management on a single Microsoft Excel spreadsheet. HNZ spends NZ $28 billion and replaced 20 district health boards to consolidate their efforts, increase efficiencies, and reduce costs. According to their health minister, HNZ operates an estimated 6,000 applications and 100 digital networks. The Deloitte survey found at least five major issues, from hard-coded financial data making updating and sourcing difficult to do and trace, to simple human errors. Is that all? So if you need a chuckle… TechRadar

And even more head-shaking is Theranos’ Elizabeth Holmes challenging the courts, yet again. A report through Reddit, posted by legal maven mattschwink, tells us that she, through her attorneys, two days after the Ninth Circuit upheld both her and Sunny Balwani’s verdicts [TTA 5 Mar], filed on 26 February to extend the time to file a motion for a rehearing. It was granted on 3 March. The filings are noted on the public site Court Listener. Given the track record of these courts, the likelihood of a rehearing by a larger panel in the Ninth Circuit or even by the US Supreme Court on finding some kind of error in both the original verdict and appeal is akin to a snowball lasting in the Bryan, Texas prison courtyard on July 4th. But she does get attention.

Sycamore Partners taking on 83% debt in financing their Walgreens leveraged buyout–some observations

March 13, 2025 | by | No Comments

An analysis cited in HealthExec of the Walgreens buy from the SEC 8-K filing indicates that Sycamore Partners’ offer is a near-classic leveraged buyout, with Sycamore taking on much more debt than they have assets in their funds. Sycamore is taking on 83% debt, according to the Private Equity Stakeholder Project (PESP) SEC filing analysis. In 2024, PEs took on average 41% in debt.

  • Sycamore’s fund used for the $2.5 billion equity commitment, Sycamore Partners III LP, had at the end of 2024 only $1.29 billion, according to Pitchbook.
  • As this Editor closed yesterday, Sycamore pulled rabbits-out-of-hats to finance the WBA buy. There are at least 15 financial companies involved. The PESP article breaks it down by amount identifying combined investors and lenders. This total is $22.5 billion, with the debt financing alone far higher than the Crain’s Chicago Business report TTA referenced on 4 March.
  • An overview: $5 billion in revolving credit, a a senior secured first-in-last-out term loan facility of $2.5 billion, a $1 billion receivables purchase facility, another senior secured asset-based revolving credit facility of $850 million, another senior secured asset-based revolving credit facility of $2.25 billion, a bridge facility of $2 billion, a preferred equity generating gross proceeds of $1.25 billion, another a senior secured term loan facility in an aggregate principal amount equal to $2,500 million, and a few more billions in bridge loans and loans secured by real property.

To quote the PESP (excerpted from their full statement):

“This leveraged buyout tactic saddles private equity-owned companies with substantial debt, often draining resources that could otherwise be invested in innovation, workforce development, or adapting to market changes.

Instead, companies under private equity ownership must channel much of their revenue toward servicing this debt, leaving them vulnerable to financial distress and bankruptcy.

Sycamore Partners, in particular, has demonstrated problems at the portfolio companies it has owned. Under Sycamore Partners’ ownership, multiple companies, including Belk and Nine West, have filed for bankruptcy.”

Editor’s Note: This Editor shares the PESP’s concerns and adds her own POV.

  • Taking it from the last part, rescuing retail is high-wire-level risk and doesn’t have a lot of successes. Sycamore actually has a few–Staples, Playa Bowls, Ann Taylor, and some others. They also have their share of failures.
  • On LBOs: They happen most when money is scarce and deals resemble hundred-piece jigsaw puzzles. My salad days ‘grad school’ was at a well-remembered airline (right) that was part of the Deregulation Boom. These were largely products of the Golden Age of LBOs in a similarly cash and inflation-strained time, the early 1980s. (I was that little dot on the sidelines.) My next 13 years were spent in a company, Avis, that had previously been acquired and LBO’d so frequently that their only recourse was employee-ownership (ESOP). In both cases, opportunity only went to those willing to take real risks.
  • What happens later is a mixed bag. Avis could not go the distance as an ESOP and to shorten a complicated story, was acquired, then spun off, and back again. New York Air was merged into Continental and out of existence except in fond memory and a few people still with United Airlines or in the industry. Many LBOs, as the PESP notes, end with strapped companies barely hanging on, merged out–or bankrupt. So do many IPOs, particularly the blank-check/SPAC variety. And ESOPs don’t have an easy time either, as later happened with Avis.
  • But the question I have for the PESP: did Walgreens, having been LBO’d a few times itself, sinking under bad decisions, legal actions, and a mountain of debt and general misery, have any alternatives–and what would they be? An ESOP the size of Avis’ is uncommon today, though there are a few hundred annually. Shrinking a retail footprint to profitability is an unlikely strategy, especially for a public company. It looks bad to analysts and shareholders.

If there are alternatives that come up for WBA’s management, the 8-K notes that there is a 35-day ‘go-shop’ period, where WBA is free to seek other buyers. There are also heavy termination fees after this point and allowances for modifications up to 6 March 2026.

Does Sycamore have a path to profitability–even short-term survival–for the pharmacy and base retail operation?There are 310,000 employees across 12,500 retail pharmacy locations in the US, Europe, and Latin America who deserve an answer from Walgreens’ management, beyond the platitudes of press releases. 

Update: Wojcicki increases 23andMe per share offer to $2.94 from $0.41–but there’s three contingency ‘catches’, and more

March 12, 2025 | by | 1 Comment

Will the 23andMe board go for this offer? Can this bulb be relit? There are two additional SEC Schedule D amended filings (#11 and #12) made on 10 and 11 March that sweeten the $0.41 per share all-cash deal just rejected by the 23andMe board [TTA 4 Mar]. The total value is now increased to a total of $2.94–but the additional $2.53 per share is made up of ‘catches’ called ‘contingent value rights’ or CVRs. These payments to shareholders are not immediate, but dependent on future performance and revenue milestones. In addition, and going unmentioned, are $50 million in operational financings, both pre and post-closing.

On 6 March, Ms. Wojcicki updated her offer as follows (see Item Number 4, ‘Purpose of Transaction’, on page 5 of both filings):

  • The original $0.41 cash for current outstanding shares not owned by Ms. Wojcicki (or not rolled over by current shareholders)
  • Plus three contingent value rights (CVRs) representing the potential (Editor’s emphasis) to receive an additional $2.53 per share total, based on specified revenue milestones for fiscal years 2026, 2027, and 2028.

The CVRs and milestones are contained in Exhibit 4, an email dated 6 March on pages 8-9, attached to Amendment #11. The CVRs would be payable in cash upon the achievement of the following milestones out to calendar 2028:

  • One CVR for $0.67 per share, payable if the Company’s revenue in the fiscal year ending March 31, 2026 exceeds $224 million;
  • One CVR for $0.84 per share, payable if the Company’s revenue in the fiscal year ending March 31, 2027 exceeds $295 million; and
  • One CVR for $1.01 per share, payable if the Company’s revenue in the fiscal year ending March 31, 2028 exceeds $367 million.

There’s more. Also in Amendment #11’s Exhibit 4, Ms. Wojcicki would provide an additional $30 million in unsecured financing for operations through the closing of the transaction, at a 7% interest rate and a maturity date after the closing. This was apparently part of the earlier offer but not viewable in the Schedule 13D, Amendment #10. This will be capitalized by $117 million in equity, new capital, the CVRs, and loans detailed in Appendix A, page 11.  

This is further sweetened in Amendment #12, pages 8-9. In an email marked Exhibit 5 responding to board requests, reiterating the cash offer, the CVRs, and the $30 million in pre-closing financing, Ms. Wojcicki adds that the $30 million loan “will not require immediate payments by the Company”. She then adds an additional $20 million to fund 23andMe operations, with the caveat that it will “be offset dollar-for-dollar by any future financing I am able to raise” which this Editor interprets as that she’ll be paid back by future raises. One last flourish: she commits to $15 million of “annual operating expense reductions to focus on the core business and increase the likelihood of returning future value to shareholders.” There is also an increase in capitalization to $137 million detailed in Appendix A, page 11, deleting $75 million in CVRs, substituting the same amount from ‘cash from operations’, and adding $20 million in additional equity commitments.

Will this be enough for the three-person board? Or will this be rejected, again? Stay tuned!   SeekingAlpha, Yahoo Finance/GuruFocus

Is this a smart deal for a smart woman? It seems to this Editor, who is not even remotely a sophisticated VC nor plays one on TV or YouTube, that Ms. Wojcicki is doing backflips to save a company that even she admits (in Exhibit 5) is near to bankruptcy.  Because she is the controlling shareholder, it’s likely that the strategy of letting the company go into Chapter 7 and buying up the desired assets (a lá Pear and its CEO/founder Corey McCann) is unattractive, possibly impermissible by the bankruptcy court–and humiliating. It also may not be workable, as the company’s major asset is a database of personal genomic information that users cannot claw back or provably deidentify [TTA 8 Nov 2024] but would be attractive to other buyers–even if litigated. As to 23andMe’s future, the whole area of genomics now has multiple competitors including Big Pharma. There were reasons why GSK walked away from their foundational deal with the company. AI can work with current data, there’s no consumer hook to capture additional data, and the whole shebang is incredibly capital intensive. Are these revenue projections even feasible? 

23andMe may have used up all its future–and Anne Wojcicki could be throwing away what remains of her fortune.

Perspectives: How the DEA Telehealth Extension Impacts Patient Access to Opioid Use Disorder Treatments & Buprenorphine Prescriptions

March 11, 2025 | by | No Comments

TTA has an open invitation to industry leaders to contribute to our Perspectives non-promotional opinion and thought leadership area. Telehealth extensions, including those for controlled substances, are hot topics and before the US Congress today. Today’s contribution is from Dr. Beth Dunlap, a board-certified addiction medicine and family medicine physician and the medical director at Northern Illinois Recovery Center. With extensive experience in addiction medicine at all levels of care, her clinical interests include integrated primary care and addiction medicine, harm reduction, and medication-assisted treatment. She completed medical school, residency, and fellowship at Northwestern University, where she continues to serve on the faculty of the Department of Family and Community Medicine.

Telemedicine flexibilities for buprenorphine, the controlled substance recognized for its high safety profile in treating opioid disorder (OUD), will live to see another year after being re-extended through December 31, 2025. That is, for now.

Federal regulators first leveled the access playing field to buprenorphine in 2020, in response to the COVID-19 Public Health Emergency. The pandemic-friendly policy change allowed buprenorphine administrators to prescribe the substance via telehealth, waiving the previously required in-person patient evaluation.

Renewals granted by the Drug Enforcement Administration (DEA), and the Department of Health and Human Services (HHS), have since kept telemedicine flexibilities for controlled substances alive.

With these protections in place, the treatment landscape for opioid use disorder looks bright, but one overturned ruling from the incoming Trump Administration could change everything.

Buprenorphine hasn’t always been as widely accessible as it is today.

It wasn’t too long ago when buprenorphine prescribers had their hands tied, with regulations like the Ryan Haight Online Pharmacy Consumer Protection Act of 2008, a previous DEA-enforced statute that prohibited them from prescribing buprenorphine over the internet.

Things changed once the DEA dialed back on their telemedicine restrictions in March 2020, permitting providers to prescribe buprenorphine via telehealth platforms and waiving the required initial in-person visit.

Later-released studies that analyzed patient data for “low-threshold” buprenorphine treatment programs, many of which were offered at COVID-19 isolation sites and out of mobile vans, revealed that telemedicine showed much promise in successfully engaging patients from different socioeconomic backgrounds. This included rural residents, veterans, and homeless individuals seeking continued buprenorphine-based treatment.

Such telehealth programs were reported to have high patient engagement numbers in the areas of acceptability and feasibility. For instance, many feasibility studies reported a 60% or higher rate of continued engagement after 30 days of initial prescription.

There are a couple of downsides to telehealth-administered buprenorphine, and that’s patient selection and monitoring. Telemedicine is most appropriate for patients who do not have a lot of unmet psychosocial needs, and who can stabilize, manage meds appropriately, and otherwise have more recovery-related resources.

It may also not be a good option for patients who are struggling with multiple substances or have unmet medical or psychiatric needs.  So, it is not the appropriate care setting for everyone.  However, there are many pros to it, including accessibility, convenience, and lower access barriers than some in-person options.

Policy extensions have bought the DEA more time to rethink telemedicine’s future.

After receiving public feedback on a set of newer proposed telemedicine rules, the DEA and HHS have since worked diligently to release more permanent regulatory updates.

To justify their decisions on how to regulate buprenorphine prescriptions moving forward, these federal agencies have largely leaned on evidence-based studies published in scientific journals. Expanded access to treatment services through telehealth is likely one of the reasons why the country has seen a recent drop in overdose death rates, among other factors.

In one study that assessed patient retention rates for an urban buprenorphine treatment program, the patient show rate increased from 74.1% for prior routine in-person visits to 91.7% for telehealth visits. In another study that focused on patient experiences with buprenorphine telehealth treatments, 84.5% of participants reported having overall positive outcomes.

I am hopeful that DEA will recognize that the current rules have allowed greater access for patients seeking treatment for substance use disorders and mental health, and move to make permanent access to buprenorphine via telehealth.

For Perspectives editorial and additional opportunities such as supporting TTA through advertising, contact Editor Donna.

The $10 billion Walgreens take-private deal with Sycamore: what you need to know

March 11, 2025 | by | 1 Comment

Gimlet EyeWalgreens was too big to fail entirely–but made too many mistakes and remained in too many dying segments. The Gimlet Eye credits Walgreens for making a good deal with private equity firm Sycamore Partners before the wheels came off completely, as has happened to all too many retail-based enterprises.

The deal:

  • The equity value will be $10 billion: $11.45 per share in cash that represents a roughly 8% premium to the stock’s closing price on Thursday ($10.63). Of course, with a deal on the table, shares are up today (10 March) and closed at $11.30.
  • There is an up to $3 bonus per share to shareholders when the VillageMD holdings, including CityMD and Summit Medical, are sold, termed “Divested Asset Proceed Right” or “DAP Right”. This assumes that VillageMD will be sold.
  • How Walgreens is positioning it in their release is a total value of $23.7 billion, which would include net debt, capital leases, present value of opioid liability and Everly settlement, less fair value of all equity investments. (Slightly confusing?)
  • Closing is anticipated as Q4 2025, subject to the usual shareholder approvals (minus WBA chair and 10% owner Stefano Pessina as well as shareholders affiliated with Sycamore Partners) and regulatory approvals–a Federal and state-by-state process. Once closed, Walgreens will be private.
  • Stefano Pessina will hold a share in the company. No other transitions are mentioned at this time.
  • Headquarters will remain in Chicago.

Last week’s (and prior) reports of the three-part carveup of WBA’s assets have, so far, not been confirmed. 

Our Readers have been tracking the multiple and cumulative mistakes that Walgreens has made, including:

  • Maintaining an expensive retail footprint…then doubling down on it in 2020 by integrating into their retail footprint a co-located primary care group practice, VillageMD. Then Walgreens backed VillageMD in buying Summit Medical and CityMD. This Editor estimated, based on public information, that Walgreens sank north of $10 billion into VillageMD since their initial investment of $1 billion in 2020 [TTA 22 Feb 2024]. WBA wrote down in their Q2 2024 $5.8 billion of the investment.
    • Retail context: They not only bought Duane Reade in 2010, but also they bought 1,932 Rite Aid stores in March 2018 for $4.38 billion. 
  • It got caught in the Theranos fraud, investing $140 million but able to claw back about $44 million before the collapse.
  • Pulling a fast one on PWN/Everly Health on their Covid testing contract that just cost them $595 million [TTA 26 Feb]
  • Improper dispensing of opioids and other unlawful prescriptions that violated the Controlled Substances Act (CSA). Since Walgreens then sought reimbursement from Federal healthcare programs, they violated the False Claims Act (FCA). This has now resulted in a Department of Justice civil lawsuit filed in the Northern District of Illinois [TTA 24 Jan]. This could be billions in penalties that someone has to pay.
  • Pharmacist labor actions affected Walgreens’ already unsteady pharmacy operation.

One mistake of omission that industry opiners have pointed to was not buying a pharmacy benefit management (PBM) company, although that could be a dodged bullet as PBMs are now under Federal attack.

Too many habits have changed along with their economics. Prior to 2020, only a seer could have truly forecast that retail pharmacies could be displaced as they were by Amazon Pharmacy (which used to be a small player called PillPack), nor CostPlus, Walmart, and the teleprescribers such as Ro and Hims. The pandemic got retail customers accustomed to using online shopping and home delivery for even the smallest of items like toothpaste. Multiple small HBA (health and beauty aids) brands are profitably and directly sold on YouTube and elsewhere. Another nail in retail–shoplifting and related crime drained profit. For shoppers, stores became threatening, not comfortable, places to spend a little time browsing, going in for milk or cough syrup and walking out with cards, printer ink, candy, shampoo, and ice cream. Another change that few mention is how major supermarkets have also added pharmacies along with expanding aisles of vitamins and major brand HBA, at competitive prices.

Unlike CVS, Walgreens stores tend to be (at least locally to this Editor, meaning NY and NJ), barnlike, oddly organized, hard to browse, and harshly lighted locations with a few registers concentrated in a cattle chute design. CVS is generally (not always) easier to browse and slightly better organized especially at checkout with self-check and register options, as is their pharmacy experience. CVS also benefits from having insurer ties and Minute Clinics in many locations.

What’s ahead for Walgreens? Right now, it has 12,500 retail pharmacy locations across the US, Europe and Latin America with 310,000 employees. Neither Walgreens nor Sycamore is talking, which is reasonable, but the Gimlet Eye can make certain educated guesses. Certainly by 2026 there will be major changes in their retail footprint. Their 5,000 scheduled store closures may look miniature compared to what is coming, with the smallest volume or least well located stores going first and likely what is left of Duane Reade closed. Staff will be cut accordingly and one can anticipate difficulties on their pharmacy side which has already seen some unrest in staffing and management. As earlier noted [TTA 4 Mar], expect sell offs or spinoffs of other assets such as CareCentrix, Shields Health Solutions, the 6% left of their Cencora shares, Boots No. 7 beauty, and Boots in the UK.  

It’s hard to be assured that in a year or two, there will be many local Walgreens (or Boots) to run into for a prescription or Band-Aids, given the generally unsuccessful track record of retail PE and the trends noted above. Sycamore Partners in that area is well regarded, especially in how they turned around Staples, Talbots, and others. But given the rabbits-pulled-out-of-hats in how Sycamore put together their funding and debt financing for Walgreens, and the economics of the private equity model of profitability and ROI in covering management fees, debt service, and asset selloffs–it will be an interesting time for those of us who are healthcare observers. CNBC, MedCityNews, Yahoo Finance (CNN)

More on Sycamore’s 83% debt level in financing the Walgreens deal, and what that could mean, here.

Masimo updates: optimism around healthcare despite ’24 losses, former CEO Kiani files notice in California on compensation owed

March 6, 2025 | by

Masimo’s hurricane of change apparently hasn’t been an ill wind–at least in their investors’ view. Masimo, a medical device company with an audio brand unit, Sound United, had another year in the red. A net income loss of $304.9 million is usually enough to send investors and analysts into paroxyms of despair, but that didn’t happen on the Q4/FY24 investor call on Tuesday 25 February. Au contraire. Based on Ted Green’s excellent reporting on his audio business website, Strata-gee, the analysts were “thrilled”–and the stock climbed, ending $10 up today in a downer of a market. What gave them hope was a brand new CEO, Katie Szyman, with an impressive track record from BD and Edwards Lifesciences, CFO Micah Young, and the general energy of the team that contrasted sharply with previous management calls. Moreover, under that negative number was good news and a cleanup on Aisle 5 that Ted ferreted out from the large pile of SEC-filed documents:

  • Sound United, the giant barnacle on the Masimo ship, is well on its way to a sale. They have already written down $304 million for all remaining goodwill, the sale “is in the later stages of the process” and may be wrapped as early as Q1. Sound United will no longer be reported on for 2025, so forward reports will be only the healthcare portion of the business.
  • The $1.4 billion healthcare business grew 10% in constant currency (9% versus 2023). Importantly, based on 2024 performance, the forward business picture is excellent: the incremental value of new contracts was $432 million, they shipped over 232,000 technology boards and monitors, pulse oximetry consumables were up 14%, co-oximetry & hemodynamics consumables grew 13%, capnography & gas monitoring consumables grew 27%, and brain monitoring consumables grew 19%. In fact, all healthcare numbers were up versus 2023.
  • A strategic realignment that prioritized projects, reviewed the product portfolio, wrote off R&D, and had corresponding layoffs/severance charges was completed by December, resulting in charges of $128 million against Q4. 
  • Ancillary businesses (my term) have been wrapped up or disposed of: Willow Laboratories (formerly Cercacor Labs), Masimo Foundation, Like Minded Media Ventures (LMMV), and Like Minded Laboratories (LML).

This Editor invites you to read more from Ted on the results as well as profiles of Ms. Szyman and Mr. Young. Ms. Szyman’s statement on why she was there and her purpose was the kind you’d wish your CEO would deliver. After complimenting the interim CEO Michelle Brennan, Mr. Young, and COO Bilal Muhsin on their plan in refocusing on healthcare:

“[I]n the big two weeks that I’ve been here, honestly, I think that Micah and Bilal know this business really well, and they’re the ones that put together the plan. So, I have a lot of confidence in the plan that was put together and the ability to drive profitable growth going forward. I think the area that I’m going to be focused on for the next quarter is really trying to better understand how to expand our leadership position in our core markets. And then, second, focusing on the healthcare innovation – this company has great technology and great innovation, and now that we’ve narrowed it down to the Healthcare space, I’ll be working with the team to build out how we actually execute on commercial excellence on soo many of these great innovations that we have. 

This is all a good start–and Mr. Market seems to be happy. Now to deliver on their value proposition. Masimo earnings release

On the legal front, it’s hardly been wrapped up. Former CEO Joe Kiani submitted a Private Attorneys General Act (PAGA) Notice (PDF attached) to the California Labor & Workforce Development Agency (LWDA) for  multiple Labor Code violations concerning wages, multiple stock options, and severance owed to Mr. Kiani under his employment agreements. The PAGA Notice alleges the six Politan directors acted in bad faith, first to force Mr. Kiani out of Masimo, then to “devise a post-hoc and pretextual termination for “Cause”” under his employment agreement over the following month. This follows on the Delaware Chancery Court January filing requesting dismissal of Masimo’s charges against the severance agreement as filed in the improper venue–Delaware, not California [TTA 30 Jan]–but takes a different approach direct to the LWDA.  It’s notable in being filed not only against Masimo but against the six board members. The penalties reaching back to the directors could total over $100 million in statutory penalties – 65% of which would be payable to California. There is no projection on how quickly the LWDA would act nor if their decision once reached could be appealed. Developing. Disclosure: This Editor received the PAGA Notice and information from a strategic communications representative of Joe Kiani. The interpretations and summaries of the filings are your Editor’s.