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

(more…)

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 | No Comments

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 | No Comments

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. 

Theranos’ denouement: Holmes and Balwani lose their appeals

March 5, 2025 | by | No Comments

It’s been two years since Theranos was in the news. In April 2023, both Elizabeth Holmes and Ramesh ‘Sunny’ Balwani started serving their lengthy sentences for multiple charges of fraud (11 years, 3 months and 12 years, 9 months respectively, generally reduced to 85% of sentence). Last week, the three judges of the US Court of Appeals for the Ninth Circuit in San Francisco ruled to uphold both trials on investor fraud and the award of $452 million in restitution. The original verdicts were made in separate trials in the US District Court for the Northern District of California by Judge Edward Davila, but the appeals were considered together. [TTA 12 June 2024]

Neither appeal of the separate trials proved that any errors were significant enough, nor any testimony excluded, that would provide grounds to overturn the verdict.

The key issues centered on legal errors made by the District Court in allowing certain witnesses’ testimony to veer into ‘expert territory’, which is an error, but that “any error was harmless”. For instance, both defenses concentrated on Kingshuk Das, MD, the final Theranos lab director who worked there March 2016 to June 2018 and voided two years of Edison Lab tests. He testified about his experience at Theranos (fact witness) but in court was allowed to express his opinion as a scientist though he was not qualified by the court as an ‘expert witness’. That is a separate procedure that involves a special qualifications hearing (Daubert hearing) that did not take place with Dr. Das. The appeals panel found that Dr. Das should have been qualified as a expert witness and would have easily done so. Not doing so was an error that was not challenged by Holmes’ team at the time. But the court’s error was harmless. Dr. Das’ testimony on the Edison devices’ reliability and accuracy was supported by other testimony. The testimony regarding the device was one of many other misrepresentations made to investors that the jury had to review. 

Another issue was the CMS report on the labs, issued in January 2016 after much of the deception had already taken place. Holmes’ appeal team argued it should have been excluded as misleading to the jury. It was admitted into evidence as relevant to Holmes’ state of mind, intent, and knowledge about the labs’ conditions. The District Court did not “abuse its discretion” in permitting it for that limited purpose.

Holmes’ team also challenged the exclusion of statements from Sunny Balwani about “owning” the Theranos financial model.

Regarding restitution, the conclusion in the ruling summary was direct: “The panel concluded that any error was harmless because the district court’s factual findings compel the conclusion that the victims’ actual losses were equal to the total amount of their investments.”

The very tough decision was written by Judge Jacqueline H. Nguyen. Her fellow judges were Mary M. Schroeder and Ryan D. Nelson. The decision PDF is here. (It seems quite readable, but was not fully read by this Editor.)

Their chances for further appeal, either in the Ninth Circuit with a larger panel or by the US Supreme Court, as “very unlikely” for the first and “almost inconceivable” for the second, according to Stanford Law professor Robert Weisberg, quoted in the Mercury News.

This Editor recommends a review of the Reddit thread by mattschwink, “Annotating the 9th Circuit review of Holmes appeal”, which was (again) of great assistance in summarizing the appeal issues. He also confirmed for me that Sunny Balwani was moved from the limited facilities at Terminal Island FCI to Lompoc FCI, north of Santa Barbara and a stone’s throw from Vandenberg Space Force Base. Thank you, Matt, again! Press coverage has been minimal: Mercury News, AP, BBC

Immediately preceding the 9th Circuit Court’s decision was a People cover puff piece on Elizabeth Holmes. You may be able to read it all the way through without being amazed at her manipulation and lack of contrition on defrauding investors and patients. It doth make much of her claims that she was sexually abused not only at a college party but also in her years with Sunny Balwani, for which she is in therapy there. She is continuing to research and write patents for new healthcare inventions, presumably between law clerking, advocacy, teaching French, and weekend family visits. The Bryan FCI does not, even in her description, sound like ‘It’s Been Hell and Torture’. (Perhaps she’s seeking a Federal pardon?) More than likely, she will be enjoying the facilities and the visits until April 2032. And then there is the $452 million restitution to somehow scrape up.

No “equal time” exclusive interviews with Sunny Balwani, of course.

It strikes this Editor that, in the words that Orson Welles wrote for his character and that of Marlene Dietrich in ‘Touch of Evil’ that both Holmes’ and Balwani’s futures ‘are all used up’. That is, they will emerge from their respective prisons and live on, but as to any role in medical research, the parade will have long passed them by.

Postscript: The Mercury News published a rather anodyne interview with one of her prosecutors, John Bostic, who is now in private practice as a partner with Cooley in the Bay Area. It’s brief but interesting as to why he was chosen–he was a molecular biology major in college–which helped him to understand the technical aspects of Theranos and make them understandable to judge and jury. The strongest evidence against her? “There was evidence that Holmes knew some things that she was saying were not true, and there was also some evidence of document altering that I think was very easy for the jury to understand.” The one notable takeaway was that Silicon Valley and technology companies shouldn’t ‘fake it till they make it’, which is a lesson they’ve already learned.

Breaking: 23andMe sale bids slide from $2.53 per share to $0.41 to none in 11 days, as board rejects CEO’s offer

March 4, 2025 | by | No Comments

23andMe’s future growing dimmer by the day. Last week before Friday, 23andMe seemed to have a fighting chance. The 20 February Schedule 13D filing proposed a take-private offer for $2.53 per share, or $74.7 million, a small premium above their Nasdaq CM trading price, with CEO and controlling shareholder Anne Wojcicki joined by investor New Mountain Capital (NMC) [TTA 27 Feb]. Evidently that offer went sideways before the board of directors’ Special Committee could even consider it. By Friday 28 February, a week later, New Mountain withdrew from the acquisition bid for unspecified reasons. On Sunday 2 March, Ms. Wojcicki offered instead to the board her non-binding all cash bid of $0.41, or about $12 million. This would acquire the current outstanding shares not owned by Ms. Wojcicki (or not rolled over by current shareholders).  Amended Schedule 13D 

It took about “24 little hours” for the 23andMe board and their advisers to unanimously reject that offer, stating that at $0.41, it represented an 84% decrease to the prior $2.53 offer made with New Mountain Capital. Release.  It is one cent above Anne Wojcicki’s offer made back on 31 July 2024, which matched the price of the shares at that time. No one involved had any comments. (Share price today: $1.37)

So the genetic data/testing/telemedicine company returns to Square Zero. One can only speculate why NMC withdrew so quickly, on what they saw after a bid that made them run, not walk, to the exit. One wonders how Anne Wojcicki would offer not only a misfire of a bid, but also counter with a ridiculously low bid that she had to know would be rejected. Then again, one wonders what the board’s options really are, given the parlous state of their cash reserves. Will this be the second board that throws up their six hands and resigns? CNBC, Business Insider

Breaking: Sycamore Partners’ $10B deal for Walgreens may close this week–reports (Updated for debt financing details)–Sale confirmed on Thursday

March 4, 2025 | by | No Comments

All that ‘deck clearing’ could be leading to a ‘deal deal’. Late Monday reports in both The Wall Street Journal and Bloomberg News (both paywalled) confirmed last Thursday’s and CNBC’s report the week prior [TTA 27 Feb, 19 Feb] that Sycamore Partners and Walgreens Boots Alliance were getting verrrry close to a deal for WBA. The numbers: $11.30 a share to $11.40 a share, cash, or about $10 billion. Today’s price for WBA shares ticked up to $11/share, giving it a market cap of about $9 billion.

The deal, if on, could be announced as early as this coming Thursday.

As Thursday’s reports intimated, the Sycamore plan would 

  1. Take Walgreens private on closing
  2. Split WBA into three parts or more. Sycamore would keep the US retail side, and sell or spin off the rest. 

WBA’s holdings include the Boots chain in the UK, the Boots beauty brands such as No. 7, US drugstore chain Duane Reade, and the rest of US Healthcare: VillageMD, CityMD, Summit Medical, and CareCentrix. Those sources allegedly familiar with the advanced discussions said all of those could be sold or spun off. VillageMD is already on the block. Sycamore had already lined up the financing based on earlier reports.

Mum was the word from both Walgreens and Sycamore; talks even at advanced points can derail in this Perils of Pauline (left above) scenario. Analysts weren’t jumping for joy either. From MarketWatch: “Last week, Deutsche Bank analyst George Hill warned that Walgreens’ stock had run up too high in acquisition anticipation, giving a $9 price target. “The deal strikes us as incredibly complicated and unlikely to be consummated at a premium to the current share price,” Hill said in a note.”

Readers following the WBA story have noticed the “cleanup on aisle 5” activity going on for the past few weeks. The PWNHealth/Everly Health near $1 billion arbitration award against Walgreens for breach of contract was settled for $595 million last week versus appealing [TTA 26 Feb]. Other ‘straws’ were VillageMD/CityMD’s recent settlements with New York State and the Department of Justice [TTA 12 Feb], and the suspending of Walgreens’ stock dividend after 91 years.

It’ll be either on, off, or still being discussed by the end of this week. Crain’s Chicago Business

Update/Breaking: Sycamore is squaring away at least $12 billion of debt financing with HPS Investment Partners and Ares Management Corp. notably vying for the privilege. Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., UBS Group AG and Wells Fargo & Co. are also working on financing proposals, according to Bloomberg News. Different parts of WBA’s business would receive loans, such as HPS leading a $2.5 billion first-lien term loan to specialty pharmacy Shields Health Solutions and a $4.25 billion combination of short term loans and bonds to finance Boots. It’s one large and complex package for Sycamore. For so many specifics to leak out, the deal is likely very near, either end of week or next. Crain’s Chicago Business, 

Updated Thursday–the Walgreens-Sycamore sale is agreed to. Details to come.

These just in: drug compounders sue FDA over semaglutide scarcity removal; Sycamore’s Walgreens buy plans begin to show

February 27, 2025 | by

What the telehealth prescribers can’t do, the compounders are. A major drug compounder association, the Outsourcing Facilities Association, along with member North American Custom Laboratories, LLC, both based in Texas, filed suit yesterday (24 February) against the FDA to vacate the final action removing semaglutide, the active ingredient in GLP-1 drugs, from the shortage list. The FDA announced that it was being removed from the shortage list effective April-May, after months of compounders legally creating semaglutide-based weight loss drugs as permitted during the shortage. This was certainly good news for Novo Nordisk, the pharmaceutical company that developed and markets Ozempic and Wegovy [TTA 25 Feb].

The compounding was a boon for telehealth providers such as Hims and Hers, Ro, 23andMe (Lemonaid), Future Health, Weight Watchers, Lark, and many others. It allowed them to customize injectable formulations for customers on weight loss programs at a far lower cost than standard branded products. The FDA allows this only during times of shortage (compounded by Section 503A pharmacies and Section 503B outsourcing facilities as “essential copies” of FDA-approved drugs). Exceptions are also made if the standard drug is in some way inappropriate for the patient who then medically requires a customized version, e.g. with adjusted dosage, method of dosing, or added/deleted ingredients, but these are not ‘mass’ circumstances or situations. 

Among the grounds presented in the suit against the FDA are that the shortage is still going on with delays in prescription filling, leading to patient harm; that FDA’s delisting was arbitrary without the required notice with public comment nor was it published in the Federal Register; and that it is ‘arbitrary and capricious’. Novo Nordisk has admitted publicly that supply constraints could still exists. 

Continued ‘customization’ is vital to telehealth prescribers’ revenue, while branding is vital to the pharmaceutical developers undercut by compounding. In 2024, Hims alone earned $225 million in revenue from compounded semaglutide and other GLP-1 type drugs. Both Novo Nordisk and Lilly (Zepbound) have pushed back on the compounders on safety and risk, along with lower prices in new delivery types such as vials versus autoinjectors.

The suit was filed in the US District Court for the Northern District of Texas. Biopharma Dive

More intriguing details if Sycamore Partners takes Walgreens Boots Alliance private. Financial Times reported via Reuters that according to the usual “people familiar with the matter”, Sycamore’s plan is to separate WBA into three parts, like Gaul: US retail pharmacy, Boots UK, and US Healthcare (VillageMD, CareCentrix, and Shields Health Solutions). They would have distinct capital structures. There’s minimal information beyond that. Sycamore is not expected to have difficulty financing the take-private, and WBA chairman Stefano Pessina is expected to have an ownership stake. The news drove WBA shares up today about 5% and 10% in the last five days. But the news seems to be moving along. VillageMD’s on the market is assumed but it is not certain any sale would complete in time. Crain’s Chicago Business