AliveCor v. Apple latest: Federal court tosses AliveCor suit on heart rate app data monopolization

February 14, 2024 | by

Apple wins one, but the other and more important AliveCor antitrust/IP cases go on. Judge Jeffrey White of the US District Court for the Northern District of California dismissed one of the many lawsuits between AliveCor and Apple. This one goes back a few years when AliveCor provided a cardiac app to the Apple Watch. The claim is that Apple’s 2018 changes in algorithms reading heart rates in the watchOS5, upgrading from the “Heart Rate Path Optimizer” algorithm (HRPO) to the “Heart Rate Neural Network” algorithm (HRNN), hurt a third-party app provider like AliveCor with their SmartRhythm app designed for the HRPO. The AliveCor argument in the 2021 lawsuit was that Apple should have made the earlier algorithms available, and that Apple violated California’s Unfair Competition Law. Apple’s argument was that the HRNN was more accurate, this was a genuine improvement that provided better data, and that third parties had no right to interfere in Apple’s design and business decisions. Since it was a summary decision, we do not know the details of Judge White’s reasoning. 

AliveCor’s full statement, provided by AliveCor, is:

AliveCor is deeply disappointed and strongly disagrees with the court’s decision to dismiss our anti-competition case and we plan to appeal. We will continue to vigorously protect our intellectual property to benefit our consumers and promote innovation. The dismissal decision does not impact AliveCor’s ongoing business; we will continue to design and provide the best portable ECG products and services to our customers.

Separately, the ITC’s findings that Apple has infringed AliveCor’s patents still stand. Both the ITC and U.S. Patent Trial and Appeal Board (PTAB) appeals will be reviewed at the United States Court of Appeals for the Federal Circuit in the coming months. In other recent developments, the PTAB recently ruled in AliveCor’s favor by instituting Inter Partes Review (IPR) of Apple’s patents and a stay of Apple’s countersuit.

We welcome any comments provided by Apple. Both AliveCor’s and Masimo’s suits go on in various courts.

Reuters, 9to5 Mac   Most recent AliveCor v. Apple coverage: spoilation split decision, ITC final determination

Facing the Music of the New Reality: Amazon Pharmacy & One Medical restructure; Walgreens shakes up health exec suites again, cashes out $992M in Cencora; new takes on NeueHealth; Cue Health, Nomad Health layoffs

February 14, 2024 | by

Amazon delivers a Dose of Reality in shrinking Pharmacy, One Medical. Using the “realigning some resources to help accelerate our efforts” meme, there are about 115 to 400 staff who will be ‘transitioned’ out of their present jobs, according to sources (Business Insider, Seeking Alpha). Areas affected were not disclosed. However, the Amazon division likely taking the hardest hit is One Medical, according to these sources.

  • Amazon has already announced that One Medical must reduce operating losses by $100 million this year. A large step they are taking is to close One Medical’s corporate offices in New York, Minneapolis, and St. Petersburg, Florida, reducing its San Francisco office space to one floor. They cited to industry publications that most employees are remote workers.
  • Unsurprisingly, Amazon is targeting major cost reductions. Fixed operating costs that are currently at 41% of total revenue will be reduced to 20% by 2028. Cost per patient visit will be reduced from $372 in 2023 to $322 in 2024, from $372 in 2023.
  • Legal, finance, and technology teams will report to Amazon’s healthcare business structure
  • Operating areas will increase from four to seven, reporting to a new head of operations
  • CFO Bjorn Thaler will move to a new position focused on growth initiatives, reporting to VP of Health Services Neil Lindsay

At the time of the acquisition, industry thinkers were wondering what Amazon would do with the money-losing One Medical clinics, for which they paid $3.9 billion but never turned a profit and lost $420 million in 2022, its last year of independent operations. Neither membership nor revenue has been reported since the 2023 closing. In 2022, One Medical had 700,000 patients, 8,000 company clients and 125 physical offices in 12 major US markets including NYC, Los Angeles, Boston, and Atlanta. Amazon has been promoting One Medical online and on TV, most aggressively to its Prime members with promotional membership pricing. 

Amazon has aggressively cut tens of thousands of jobs and costs since 2023 in its Audible, Prime Video, Twitch and Buy with Prime units, and completely shut down Halo, its entry in fitness bands and sleep trackers. It has also been aggressively challenged on patient privacy and cross-using information by the FTC, most recently around Amazon Clinic.

Not mentioned in reporting was the FTC and DOJ scrutiny One Medical’s acquisition received between Amazon’s offer and the closing. The two agencies declined to move at that time [TTA 23 Feb 23], but FTC is continuing to build its case against Amazon–and One Medical may be a factor. For context on Amazon’s situation, Readers may want to review last December’s assessment of Amazon to date, Has Amazon lost its ‘edge’ in healthcare? Or finally seeing reality?   FierceHealthcare, Healthcare Finance, Healthcare Dive

Walgreens’ Reality includes C-suite reshuffles, scaring up cash. The new president of US Healthcare and EVP reporting to CEO Tim Wentworth is Mary Langowski. She is currently CEO of Solera Health. Her prior experience at CVS was as EVP and chief strategy and corporate development officer. Moving to an advisor position is the current president, John Driscoll. US Healthcare includes VillageMD, Summit Health/CityMD and CareCentrix. In addition, Manmohan Mahajan was appointed as permanent CFO, having held the position on an interim basis from July. Elizabeth Burger was named as EVP and chief HR officer from a similar position at industrial Flowserve, replacing Holly May who departed in November and is now with Petco. Crain’s Chicago Business, FierceHealthcare

Slipping under this was a further sale of Walgreens’ position in Cencora, the former AmerisourceBergen, a highly diversified pharmaceutical distributor. The sale of approximately $942 million of Cencora common stock was subject to the completion of the Rule 144 sale, and included a concurrent share repurchase by Cencora of approximately $50 million for a total to WBA of $992 million. WBA’s position is now 13% versus 15%; partnership and board representation remains in place. From the WBA release, “Proceeds to Walgreens Boots Alliance will be used primarily for debt paydown and general corporate purposes, as the company continues to build out a more capital-efficient health services strategy rooted in its retail pharmacy footprint.”

Is NeueHealth creating its own Reality? At the end of January, Bright Health Group faded to black and relit as NeueHealth, its value-based care medical practice division, and moved its HQ from poky, cold, failing Minneapolis to Doral, Florida. It sold or closed all its health plans in a heap of losses, most of which have bills coming due via CMS Repayment Agreements which come due on or before 14 March 2025. Most of the industry is shaking its head in wonder that NeueHealth has made it this far.

The discussion in MedCityNews is worth reading. It includes Ari Gottlieb of A2 Strategy who points out that the company is $1.4 billion in debt to the likes of investors Cigna Ventures, New Enterprise Associates, and CalSTRS. They owe $89 million to Texas to cover risk liabilities for its shuttered ACA plans. Over $100 million remains in escrow from the Molina sale to cover obligations from its Medicare Advantage plans. Mr. Gottlieb predicts that NeueHealth will be drained and go bankrupt before the Feds come calling in March 2025. Another analyst, Tyler Giesting, director of healthcare and life sciences at West Monroe, takes a sunnier view that NeueHealth is in a sector, value-based care, that payers are interested in and will buy into, as long as the practices perform. This Editor will reiterate her wonder at NeueHealth’s management maneuvers. They’ve managed to play multiple ends against the middle and tie masterful Gordian knots (pick your analogy) to stay alive until, they hope, 2025 and better times. 

More Reality delivered in two layoffs in once-hot companies that thought pandemic les bon temps rouler would last forever:

  • San Diego-based Cue Health, a biotech company that produced Covid-19 tests, is laying off another 245 employees. This adds to the 884 workers in primarily San Diego laid off last year. Cue grew to over 1,500 employees when it got the first FDA approval for its 20-minute molecular test kits to supply the US government, the NBA, Google, and other large companies. Cue IPO’d in September 2021 at $200 million and $16/share, with a valuation of $3 billion. Its shares on Nasdaq are today at $0.25. The company also offers a test for mpox (monkeypox) and is seeking FDA approval for its RSV and Flu test kits. San Diego Union-Tribune
  • New York City-based Nomad Health, a healthcare staffing service that took advantage of the pandemic demand for travel nurses but had not fully transitioned into other temporary healthcare workers, released 17% of staff, from 691 to 572 employees. Nomad was reeling not only from lower demand but also correspondingly lower rates. It raised $200 million to date from investors such as Adams Street Partners and Icon Ventures. Forbes

And the final Reality is how healthcare companies, from providers to digital health, are phrasing what seems to be endless layoffs. Euphemisms such as rightsizing, org change, involuntary career events, corporate outplacing, and offboarding are all being used to sweeten for public consumption that a lot of people, hired so eagerly in 2020-22, are losing their jobs. From the Bloomberg article (paywalled), “They somehow seem to believe that if they use language that is more vague and less emotional, that people won’t get as upset,” said Robert Sutton, PhD, professor of management science and organizational behavior with Stanford University School of Engineering. Instead, euphemisms tend to have the opposite effect. Becker’s  This Editor has been both a survivor and a victim of same, being in marketing which is always vulnerable. Contract and consulting work, which anticipate a stronger market, are like the Sahara–few and dry water holes. Expect layoffs and a dead market for experienced talent to be a major factor in this year’s US elections, despite the reported low unemployment numbers (that no one believes anymore).

2023 was buying time, 2024 is face the music time: Rock Health

February 8, 2024 | by

Rock Health’s year-end wrapup, which usually makes a splash, didn’t this year. It was released this year in conjunction with the JP Morgan Healthcare Conference in the week after New Year’s, which almost guaranteed it would fly below the radar.

Another analogy: if you were doing aerobatics, 2023 for digital health was maintaining a flat spin from altitude if you could (left/above), 2024 would be getting out of the flat spin and into level flight before you and the ground had a meeting, so to speak.

Rock Health’s summary of 2023 was minus their typical frothiness:

  • It was back to 2019 across the board, as if 2020-21 never happened.
    • Full year 2023 raised $10.7 billion across 492 US deals. It was the lowest amount of capital invested since 2019, which finished with $8.1 billion across 413 deals. By comparison, 2022’s total was $15.3 billion across 577 deals.
    • Q4 2023 was the lowest funding quarter since Q3 2019, with an anemic raise of $1.9 billion across 122 deals.
  • M&A was left for dead, unexpectedly so from their earlier projections. (Note to Rock Health–it could be the negative attitude toward deals emanating from Washington)
  • A and B stage companies had trouble raising money in the usual lettered way. 81% of currently active venture-backed startups that raised a round in 2021 didn’t raise a labeled one in 2023. Some resorted to ‘extensions’ that further diluted existing ownership or unlabeled rounds that left more questions about when the next raise was going to be. Unlabeled rounds hit an all-time record of 44% of total raises, double that of 2022. (This Editor notes that there were no analyses of C and D rounds, because there were so few.)
  • “Silent rounds” of financing happened but were hard to gauge–and because they were inside, didn’t measure the attractiveness or competitiveness of the company in the real market. It was pure, simple survival of the company and the investment.
  • Startup shutdowns, in their view, were no higher than usual–less than 5% of venture-backed US digital health companies (i.e., have raised >$2M).

In this Editor’s view, the percentage does not capture the prominence of the startup shutdowns: Babylon Health, Quil Health, Pear Therapeutics, OliveAI, Smile Direct, Cureatr, SimpleHealth, The Pill Club, Hurdle. It also doesn’t count Amazon shutting down Halo, Cano Health’s parting out before this week’s bankruptcy, as well as Bright Health’s (now NeueHealth) divestitures and shutdowns through 2023 leading to their becoming a very different company in 2024. 

For 2024, Rock Health is seeing:

  • The return of labeled raises (A, B, C etc.) In their view, many companies will not be able to manage this without moving into ‘hot’ areas like obesity care (cue the Ozempic), value-based care enablement, or AI. Those that can’t will either have ‘down’ rounds or close (see this week’s closing of Astarte Medical in the NICU segment because they wouldn’t integrate AI).
  • M&A will increase, with acquirers buying low among the now cash-strapped companies. This Editor would add that both DOJ and FTC will have their say about this, having published new Merger Guidelines in December.
  • Publicly traded companies will ‘recalibrate’, which is a polite way of saying a lot of companies will face delisting. As of 31 December 31, 2023, at least 17% of public digital health companies trading on the NASDAQ or NYSE were noncompliant with listing standards. This Editor notes that 23andMe is the latest cracked SPAC in jeopardy. Some will rally, the strongest may IPO. BrightSpring Health IPO’d on 26 January, Waystar’s is pending. 

Their sobering conclusion. Too many companies were created in the last few years of the boom. “2024 will be a year of recalibration and consolidation. Some startups will rally, finding that high capital efficiency and exceptional offerings pay off to secure them their next major fundraise. Others will need to make the tough call to wind down operations or accept lower-than-hoped-for M&A offers, particularly in saturated segments.”

At last, Rock Health and TTA have met on similar ground. This Editor’s take back in December. From ‘Signs of the next phase in 2024’:

“…the board is being cleared of the also-rans and never-should-have-beens. They are like dead plants and brush that need to be cleaned out so that new growth can happen. We are cycling through some of them already as we move to a New Reality and winding this up.”

Additional TTA views on 2024: The New Reality permeating JPM, and Peering through the cloudy crystal ball into 2024

Another icy bucket: who is liable when a healthcare AI system fails?

February 7, 2024 | by

When AI contributes to patient injury, who will be held responsible? That is the question that an article in the New England Journal of Medicine (NEJM, 18 Jan, subscription required). It examines over 800 cases, pulling out the most relevant information on the 51 cases with software creating physical injury.  If you are in a healthcare provider or vendor legal department and strategic sourcing, this article deserves your greatest scrutiny.

AI and even software represent a relatively new area of tort law (an act or omission that leads to injury or harm). Responsibility is not clear because there is a lack of clear direction in existing case law, plus cases involving AI are few to date. The study reviews aspects of AI that may elevate or minimize risk. Ultimately, it comes down to minimizing risk in the adoption of AI tools as it was in clinical decision support systems and EHRs–because not adopting them may eventually be construed as malpractice. 

Cases involving medical software and AI have generally clustered around three situations. From the study:

  1. Harms to patients caused by defects in software that is used to manage care or resources. Typically, plaintiffs bring product-liability claims against the developer.
  2. Physicians having consulted software in making care decisions (e.g., to screen patients for certain conditions or generate medication regimens). In cases of harm, those physicians’ decisions are evaluated against what other specialists would have done–standard of care.
  3. Apparent malfunctions of software embedded within devices, such as implantables, surgical robots, or monitoring tools. Plaintiffs may assert malpractice claims against physicians and hospitals, alleging negligent use, installation, or maintenance of these devices, including human error in reprogramming. Plaintiffs may also sue developers, alleging defects in manufacturing, design, and warnings.

Moving ahead, the study’s recommendations on weighing liability risk against the benefits of adoption of AI in direct patient care with a “human in the loop” (not fully autonomous software) are, from the study:

  • Resist the temptation to lump all applications of AI together. Some tools are riskier than others.
  • The hallmarks of risk are: low opportunity to catch the error, high potential for patient harm, and unrealistic assumptions about clinician behavior
  • In tools that can create high risk, expect to allocate substantial time and resources to safety monitoring and gather considerable information from model developers and implementation teams. Lower risk tools should be monitored in a more general, lower-touch way. 
  • Organizations can bargain, in a buyer’s market, for terms that minimize purchasers’ liability risk. Licensing agreements should, for instance, require developers to provide information necessary for effective risk assessment and monitoring, including developers’ assumptions regarding the data that models will ingest, processes for validating models, and recommendations for auditing model performance.
  • Purchasers should also insist on favorable terms governing liability, insurance, and risk management in AI licensing contracts–in other words, indemnification. If developed in-house, ensure that you have adequate insurance to cover claims.
  • Apply lessons learned from older forms of decision support. Courts examine whether the recommendation was evidence-based and whether the physician should have heeded it for the patient in question.
  • Document, document, document
  • Legal defenses for AI require different expertise and expert witnesses than typical malpractice cases.
  • It also may be prudent to inform patients when AI models are used in diagnostic or treatment decisions–informed consent

POLITICO commentary 

First healthcare IPO: BrightSpring debuted at less than projected, but holding value

February 7, 2024 | by

First out of the gate, but a slower break than expected. Home health, pharmacy, and eldercare services provider BrightSpring Health IPO’d on 26 January (the day after we wrote about it, grrr). BTSG has the distinction of being the first healthcare IPO in a year and the first in 2024 to go public. As noted on 25 January, the offering was initially pegged at $15 to $18 per share on the Nasdaq Capital Markets, then later cut back to $13 which would have meant a raise of $633 million. Instead, it opened at $12 for a lower raise and fell fairly quickly to $11, near which it has stayed since then. From the looks of it, investors don’t trust healthcare companies, even in home health, pharmacy, and eldercare services and not technology, after the spectacular bust of over 90% of the companies that IPOd and SPACd from 2020 into 2022. Perhaps we should be content that at least it has not plunged as others did!  FastCompany

Mid-week short takes: Ireland’s HealthBeacon bought by Hamilton Beach (!), Ambience AI raises $70M, VA to develop VR mental health app with Mynd Immersive

February 7, 2024 | by

Dublin’s HealthBeacon PLC has been sold to Hamilton Beach Health. HealthBeacon is an app platform/device/injection care management system that integrates with patient support programs to remind them to inject their medications on schedule. Since its formation in 2021, Hamilton Beach Health has marketed the HealthBeacon Smart Sharps Bin in the US. HealthBeacon was founded in 2013, currently has 50 employees and operates in the UK, Europe, North America, and Australia. Acquisition cost was not disclosed, but HealthBeacon’s current investors over 10%, according to their investor page, are Cantor Fitzgerald Ireland Client Nominees Limited, Oyster Capital Investments Limited, James Joyce (CEO), and Canaccord Genuity Wealth Management.

Kieran Daly, a co-founder of HealthBeacon, will run day-to-day operations reporting to Rob George, VP of Hamilton Beach Brands, now Global General Manager. This Editor had surprisingly never heard that Hamilton Beach, associated more with kitchen appliances, had a Health division among the mixers, electric kettles, and garment steamers. Release

Ambience Healthcare raised a healthy $70 million Series B. It was led by Kleiner Perkins and OpenAI Startup Fund. Ambience Healthcare is (naturally) in the hot healthcare AI sector with four applications (soon to be five) described as an ‘operating system’ for the end-to-end patient journey through nearly all specialties and integration with six major EHRs. Current deployments are with UCSF, Memorial Hermann Health System, John Muir Health, The Oncology Institute, GI Alliance, Midi Health, and Eventus WholeHealth. Results claimed are reduction in documentation time by an average of 78%, improvement in coding integrity, and at least a 5X return on investment. Release

VA to develop VR extended reality (XR) mental health app with Mynd Immersive. Mynd’s market has generally been in senior and post-acute care as a digital therapeutic using the HTC Vive VR glasses and programming ranging from speech, cognition, and behavioral therapies to recreation and pleasant distraction. Mynd is used by the VA in 100 long-term care facilities across the country. The new VA/Mynd partnership is targeted to Vietnam veterans to provide them with virtual journeys created specifically for Vietnam veterans via a project titled “Virtual Vietnam: A Path to Peace.” As this generation is now reaching their senior years, old conditions such as PTSD and new ones such as isolation occur, reviving or exacerbating Vietnam War memories. The Virtual Vietnam project is a three-year cooperative research and development agreement. Healthcare IT News, VA/Mynd release  TTA 9 Nov 23 on Mynd’s recent study on effectiveness with Stanford University’s Virtual Human Interaction Lab. 

Two Must Reads: Is AI the next hype bubble replacing crypto–and capable of great harm?

February 7, 2024 | by

crystal-ballTwo articles that consider the current state of AI to read and ponder. On one hand, far less than what it’s hyped to business–especially healthcare–and on the other, more malevolent with great potential for harm.

The first article by Gintaras Radauskas in Cybernews confirmed this Editor’s misgivings on exactly what is artificial intelligence (AI) and the unrealistic expectations around it. It seems that a lot of the thinking around AI is doubletalk–gibberish, as he put it, leading off with analyzing a recent interview of Sam Altman of Microsoft-backed OpenAI and its chatbot ChatGPT. 

“To me, AI looks like a solution to a problem that’s not a problem – or, actually, a non-solution to the very real problems that are not going away.”

  • He draws parallels to cryptocurrency, which was widely hyped in the past few years as a secure alternative currency that was off the dollar and global bank grid. Even large banks, financial institutions, and big VCs like Sequoia Capital were sucked in. And real people did lose real money–famous football quarterback Tom Brady to African and Indian students.

This Editor knew the high and nonsensical point of the bubble was when she was in her local Shoprite perhaps two years ago and after checkout, next to the NJ Lottery machine and containers of sidewalk deicer, there was a machine that would convert my very real US greenbacks to crypto. The end of the bubble was the FTX bankruptcy in November 2022, then the arrest followed by last year’s trial and conviction of FTX’s Sam Bankman-Fried. Gaining little notice was that FTX was itself hacked and drained in a SIM-card swapping scheme in late 2022 before its collapse that emptied the accounts of 50 people. Those three perpetrators were indicted earlier this month. CNBC

  • When crypto imploded, ChatGPT took its place in the TechWorld Hype Universe. Bank of America terms it a ‘defining moment–like the internet in the ’90s’. For those of us who were around then, there were bulletin boards (!), multiple platforms (AOL), something called search engines (AltaVista, Dogpile), and lots of websites that surfaced and then went under the waves. A lot of money changed hands and a lot of parties were thrown before the dot.com bust. Unlike the internet boom, AI is already dominated by the tech giants like Microsoft (OpenAI) and Google (Bard, now Gemini) so it’s actually less of a risk for the large companies eager to use it.

But then why are these large companies not on board yet? “Only 3.8% of businesses reported using AI to produce goods and services, according to November’s Business Trends and Outlook Survey. It’s safe to say we’re very, very far away from mass adoption and use of AI.”

Perhaps it’s this. AI has already been parodied as a highly sophisticated long-form autocomplete tool. Your Editor has experimented with generative AI via Microsoft’s Bing. Example: an article on a non-healthcare topic, antique auto restoration. It was largely but not entirely accurate. But it was written at about a fifth-grade level in a style that was flat and uninteresting–the dumbing-down of the value of copy to inform and persuade continues. (Companies look at writers and marketers as an expense to be eliminated, not managed. As a marketer from the start of my career, and who worked for or with some of the best-known US agencies renowned for creativity, I would not recommend that career path to anyone today.) 

  • And finally, the ultimate use of AI is to get rid of people. That is what automation does. And while it can increase accuracy, speed, and take away drudgery in tasks like healthcare billing and coding, healthcare is about people–and while it can make it appear more responsive, when the humans are gone, will only the chatbots be left, with coding that endlessly replicates itself, like the automated phone menus that leave you in the ether with your questions unanswered–except it’s your diagnosis or information that your doctor’s trying to obtain? And what happens to the professionals trained to do these tasks and who already use automation tools to do their work? What happens when AI picks up and propagates a wrong treatment or surgical technique? This is not quite the analogy of the blacksmith and horseshoes or film versus video. We are ill equipped to deal with the societal effects of training people for jobs that no longer exist and concentration of technology into a very few companies.

And if we leave these tasks to AI without human intervention and supervision, what will happen?

The second article, linked to in the first, could be titled after the 1960s movie ‘Experiment in Terror’. Imagine asking AI about you. It tells you you’ve died and gives links to your obituary. Alexander Hanff, a founder of IT companies, computer scientist, and privacy technologist did. And ChatGPT repeatedly told him he was dead, complete with fake links to his obit in the Guardian and very convincing text. Now imagine you’re applying for a job, a loan, a mortgage, or a passport. The AI tool tells the employer, the bank, and the Feds that you’re dead. Hanff was already warned by a professional colleague who conducted the same exercise and received a bio back with false information. This deep fakery, origin unknown and undiscoverable, is huge potential for harm. Conclusion:

“Based on all the evidence we have seen over the past four months with regards to ChatGPT and how it can be manipulated or even how it will lie without manipulation, it is very clear ChatGPT is, or can be manipulated into being, malevolent. As such it should be destroyed.” ®

Hanff has company with Steve Wozniak of Apple on this [TTA 5 May 2023]. Read this one all the way through. And be scared. The Register

News roundup: Cano Health files Ch. 11 bankruptcy, delisted (updated), Walgreens lays off more, Allina Health outsources 2,000 RCM jobs to Optum

February 6, 2024 | by

Cano Health’s telenovela moved to a Delaware court, where it filed for Chapter 11 bankruptcy. This prearranged voluntary Chapter 11 was filed on Sunday 4 February in the US Bankruptcy Court for the District of Delaware. Based on this Editor’s reading of their release, it’s a prepackaged reorganization of this beleaguered primary care provider. It also promises an exit by Q2 2024. It features several parts that have to be approved by the Court in short order:

  • A Restructuring Support Agreement (the “RSA”) with major lenders (the “Ad Hoc Lender Group”). They hold approximately 86% of Cano’s secured revolving and term loan debt and 92% of its senior unsecured notes. The RSA provides for the conversion of nearly $1 billion in secured debt to a combination of new debt and full equity ownership in the reorganized company. (See below as to what that means for Class A shareholders.)
  • Securing liquidity via a commitment for $150 million in new debtor-in-possession financing from certain of its existing secured lenders. 

In addition, Cano itemized several ‘first day’ motions to ensure continuity of operations–these also have to be approved by the Court: 

  • Paying associate wages, including for its doctors and nurses, without interruption
  • Continuing operations and honoring obligations to its affiliate physician groups
  • Ensuring patients at its clinics continue to receive quality value-based healthcare
  • Seeking authority to pay the existing pre-petition claims of certain vendors that are critical to the health and safety of Cano Health’s patients and critical to the operation of the Company’s medical centers.
  • Cano has authority to continue making ordinary course payments for all authorized goods and services provided on or after the filing date.

Earlier actions by their CEO laid groundwork for this reorganization through selling off operations and divesting staff. In September, they sold their Texas and Nevada operations to CenterWell Senior Primary Care, a unit of Humana, for $66.7 million, and exited California, New Mexico and Illinois late last year, with Puerto Rico winding up this quarter. Cano also cut 21% of staff (842 people) by November .

No comfort for their common Class A shareholders, though. Shareholders approved a 1 share for 100 reverse share split to buoy price last December, though the NYSE had notified Cano on 29 December of delisting based on their market capitalization not meeting their standards. Cano’s shares stopped trading as of last Friday at $2.30. What is usual, and signaled by the RSA conversion, is that common shareholders–probably including the infamous Cano 3 who owned about 35% of the shares–will receive bupkis, nada, zip, zero in the reorganization.

Update: The NYSE delisted Cano Health’s (CANO) stock late on Monday, citing the RSA conversion. Press release, Healthcare Dive.  The Class A shares are now listed OTC (the ‘pink sheets’) under CANOQ at $0.70. Shareholders are wholesale unloading with the day’s volume over 580,000 compared to the previous average of 340,000 shares.

Cano remains for sale during this process according to the release.

Here’s the 36-page filing, courtesy of Industry Dive. Healthcare Dive. FierceHealthcare dubbed this a ‘spectacular collapse’ (which it isn’t–that was Babylon Health) but includes some speculation from Ari Gottlieb, a principal at A2 Strategy Group whom this Editor has quoted before, that since Humana has a stake in and partnered with Cano, they should simply pick up what’s left. However, Humana may not be in a cash position to do so, given its recent losses in its Medicare Advantage business that also helped to sink Cano (partly paywalled). The local take in the Sun-Sentinel.

Less drastic but equally, more signs of the times:

Walgreens laid off 145 more staff, primarily in corporate. This follows on November’s 5% corporate layoff. No WARN notices have been filed and all are mum on what areas or states are affected. Nor is there any confirmation that this will be the end. Speculation is that more store closings are in the offing and once leaned down, Walgreens Boots Alliance will be sold off or parted out, with Shields Health Solutions perhaps the first on the block [TTA 25 Jan]. Healthcare Dive, Becker’s

Allina Health, a 10-hospital non-profit health system based in Minneapolis, Minnesota, is outsourcing 2,000 IT and revenue cycle management jobs to Optum. Happily, this is being done as a transition on 5 May from Allina to Optum with no layoffs or shift in workplace, as of this time. Rationale given is to trim needed expenses and ‘deliver on emerging spaces’, whatever that means.   Star-Tribune

*Updated for Cano Health delisting and additional information on Walgreens’ layoffs.

Sell NHS medical records to fund AI, biotech? Not quite what’s in the Blair-Hague report. (updated)

February 2, 2024 | by

A ‘sale’ not quite what the press reports. The former political rivals of the 1990s and early 2000s, Sir Tony Blair and Lord William Hague, joined forces again last week to release their third report.  “A New National Purpose: Leading the Biotech Revolution”, the third joint report available on Lord Hague’s website, would be to capitalize on what they described as “the fastest and most far-reaching [technological] revolution in the history of human civilisation” to make Britain a world leader in developing “gene therapies, of discovering new antibiotics and of building molecular factories.”

The three major points of the report are:

  1. Formation of a new laboratory, the Laboratory of Biodesign, to focus on the invention of new biotechnology, biomolecules, and therapeutics that are at too early a stage for commercial investors.
  2. Establishment of an NHS Data Trust (NHSDT, pages 33-36),designed for public benefit, with a controlling stake owned by NHS England and additional investments from companies. 
  3. For scaling up biotech, an expansion of the work of the British Business Bank, improved rules for Venture Capital Trusts and consideration of scale-up grants where companies will list in Britain. The recommendations go further into reforms in venture capital funds and capital markets.

#2 is the point making the headlines in the Independent and Sky News. The reports do not explain that the sale of the NHS medical records would be done through the NHSDT.  It would negotiate data-sharing agreements with external organizations and be capable of joining profit-sharing arrangements, while guarding that data would not be sold to third parties and be strictly anonymized. The plain language of the recommendation: “Provide research entities with access to the anonymised data in return for financial profit, which would benefit the NHS. This could happen via a range of mechanisms, varying from direct financial payment to negotiating cost-price access for the NHS to any medicines developed based on the data provided.” (page 35) Profits would be reinvested into the NHS. The analogy is to the for-profit parts of the BBC.

The report goes on to stress producing high-scale companies that stay in the UK, versus the current situation of exporting technology to the US. It also proposes a Biosecurity Task Force “to keep Britain and the rest of the world safe from biotech accidents and bad actors.”

It also addresses how the UK should address a future pandemic as a national security issue (pages 55-58) and restructure the UK Health Security Agency.

In AI, the report recommends the formation of the MediMind laboratory network that would work towards relieving pressure on the NHS through creating personalized AI doctors. This would be done in partnership with industry and the NHS. Last June’s report concentrated on AI.

(Update 2 Feb, Editor’s note: It dismays me again that professional reporters writing for reputable news websites misinterpreted the report as advocating the straight-up sale of NHS medical data. All one had to do was what this poor Yank marketer/writer did–search within the report, past the executive summary, into that section. But ‘selling NHS data’ is more ‘clickbaity’. 

Unfortunately, this Editor believes that these reports will be read, filed, and the same mistakes will be made, putting the UK further behind the proverbial 8-Ball…standard operating procedure.

Open forum below for our UK (and elsewhere) Readers.)

23andMe data breach may have targeted those of Jewish and Chinese heritage; company valuation crashes (updated)

February 2, 2024 | by

23andMe’s hole gets deeper. And deeper. As more dots are connected on their data breach–and financial situation.

Part 1: The data breach that exposed 6.9 million records at genetic testing and data company 23andMe isn’t only being fought in the courts as to who to blame (customers recycling already corrupted passwords versus a site vulnerability to brute-force hacking). It appears the hackers had specifically targeted people with Chinese or Ashkenazi Jewish heritage. Worse, 23andMe is not addressing that. The evidence was there as early as October.

  • 1 October: an unknown person posts on the 23andMe subReddit that they had customer records, posting a sample of the stolen data. Supposedly this is how 23andMe found out that their user data had been hacked and stolen. (Editor’s note–this zero-trust breach beggars credibility in a tech-oriented company.)
  • 6 October: 23andMe’s blog post announcement of the initial 14,000 records hacked in their customer base, which later grew to 6.9 million records revealed through the links to MyHeritage, in adding functionality to Family Tree, or sharing their information by opting into 23andMe’s DNA Relatives feature. 
  • 6 October: Wired’s reveal that earlier in that week, a hacker posted on BreachForums a data sample of what they claimed were 1 million records exclusively on those of Ashkenazi Jewish heritage, plus hundreds of thousands of records on those of Chinese heritage. By Wednesday, the hacker was selling what was claimed as 23andMe profiles with information on display name, sex, birth year, and details on genetic ancestry results, but not raw genetic data. Pricing was between $1 and $10 per account depending on number purchased.
  • By December, 23andMe was squarely blaming users for reusing passwords (credential stuffing), even if they created a unique password, and denigrating their right to demand legal accountability from 23andMe on their lax security procedures. [TTA 6 Dec 23, 19 Jan]

None of the contacts that 23andMe has made with users since October, including the letter sent to breached users (via TechCrunch) refers to any specific ethnic group targeting. 

World events made this targeting and timing very important. The brutal attack by Hamas in the south of Israel was the very next day after the breach was disclosed, 7 October. It killed 1,200 civilians, with over 200 hostages. Israel declared war on Hamas in Gaza which still goes on, as do the demonstrations against Israel and overt anti-semitism. Given the targeting evident in this breach of individuals with information for sale, by 11 January Representative Josh Gottheimer (CD-5, NJ) sent a letter to the director of the FBI to investigate the hacking, specifically because the information could be purchased via sites used by hackers to merch this type of information–and used to target Jews globally.

Third-party data included in the hack? There is also the possibility that DNA information from third parties such as Sequencing entered 23andMe’s database. In Illinois and other states, this type of sharing is illegal without specific consent. This information could also have been stolen without the knowledge of the individual. This has sparked additional class action lawsuits. The Times of Israel

Part 2: 23andMe is in poor shape financially. Like all too many companies that went public in 2021, 23andMe is a cracked SPAC that debuted in February 2021 above $16, with a company valuation of $6 billion, and now is trading on Nasdaq at $0.73 which gives the company a negligible value. Revenue is upside down and the company is torching through the $1.4 billion it raised both in the market and through private investment. The WSJ’s estimate in a far-reaching article is that it is 80% gone. Founder Anne Wojcicki’s stock has supervoting privileges which means she effectively controls the company, not the shareholders.

Both Ancestry (remember them?) and 23andMe had ups and downs from 2015 but the hype, especially after the Theranos implosion that year, was stunning. Genetics became The Next Big Thing That Would Save Health Tech. The large flaw–the market for genetic testing for ancestry and/or health is a ‘one and done’, which TTA predicted back in 2020 and earlier. Wojcicki guessed early on that a revenue model lay in selling de-identified genetic information to pharma. But their five-year exclusive deal with GSK ended last year and led to an 11% layoff [TTA 10 Aug 23]. Subscriptions for lifestyle counseling starting at $200 and exceeding $1,100 never took off. Growing their $4oo million Lemonaid buy from fall 2021 into a more robust and integrated telehealth platform never happened. Her long-term bet was moving into drug discovery using all that DNA data, but only two drugs of 50 have reached early-stage human trials.

Whether 23andMe will climb out of this crater, both financial and data security, as they did several times in early days, is to be seen. But Wojcicki’s personal brand apparently remains in great shape, unlike their data security. Also Futurism

*Updated 2 Feb for additional references, content, and copy editing

Short takes: Orion digital pain therapeutic to be commercialized by Newel Health; Verma to head Oracle Health; CVS to shut 25 LA-area MinuteClinics

February 2, 2024 | by

Orion Health licenses its chronic pain therapeutic to Newel Health. Orion’s ODD-533 (Rohkea), classified by FDA and the EU MDR as software as a medical device (MDSW or SaMD) will be developed, manufactured, and commercialized by Newel. Newel, located in Salerno, Italy, designs and commercializes digital medicine and digital therapeutics (DTx) for the US and EU such as Soturi, a digital therapeutic app for Parkinson’s Disease [TTA 23 Feb 23], Orion, located in Espoo, Finland, develops primarily human and animal pharmaceutical products. Orion release

Oracle wastes no time in finding a new Oracle Health head, Seema Verma. Conveniently in-house, the former head of the Center for Medicare and Medicaid Services (CMS) from April 2017 to January 2021 joined Oracle in April last year as senior VP in charge of life sciences.  As executive VP, she will oversee both Oracle Health and life sciences as general manager. Verma’s appointment was announced internally in December, according to Bloomberg. In January, Oracle Health’s general manager, Travis Dalton, announced his departure effective 1 March to join MultiPlan as CEO and president. Verma’s government experience will come in handy, as she has the difficult situation of the stalled Millenium EHR at the VA as well as finalizing the Military Health System rollout, ensuring interoperability–as well as growing the faltering hospital EHR business. By combining the positions, Oracle also eliminates one large C-suite salary. Becker’s

And confirming signs of softness in the clinic business [TTA 24 Jan, JPM’s new reality], CVS announced the closure of 25 MinuteClinics in the Los Angeles area. Closing date is 25 February. They will retain 11 MinuteClinic locations in the Los Angeles area, including an on-demand virtual care practice. Clinics are losing out to virtual care and for more immediate needs, urgent care. This follows Walgreens’ closure of a planned 60 VillageMD adjacent practice locations and softness in their CityMD clinic group. List of 25 closures (LA Times), Becker’s

2023’s global cyberattack disaster: healthcare #3 in weekly attacks, 10% of organizations ransomwared–report

February 1, 2024 | by

An average of 1,100+ cyberattacks per organization per week. Let that sink in.  While it represents only a 1% increase over 2022, and averages are well…averages, this is a lot to handle for any organization even if nowhere near the weekly average.

The report from Check Point Software Technologies, Ltd. an Israel (Tel Aviv HQ) and US-based IT security organization, is depressing reading for any company, especially for healthcare. (Editor’s note: Check Point’s data is derived from ThreatCloud AI, their intelligence engine.) Many of the large numbers are boiled down to averages per organization per week.

  • In terms of general cyber attacks globally, healthcare is #3 with an above-average 1,500 per organization per week attacks on average, right behind #2 government and military, with education far ahead, #1, with 2,046 per organization per week. It was up 3% versus 2022.
  • Retail and wholesale attacks are up 22% annually–a cautionary note for healthcare organizations engaging in retail operations.
  • Regionally, APAC (1,930 attacks) and Africa (1,900 attacks) led with increases at 3% and 12% respectively.

We not only must be concerned with ransomware–but mega-ransomware. These include zero-day exploits (a software flaw exploited by the hacker/ransomwareiste before the vendor or developer finds it). Rather than being content with encrypting data and demanding bitcoin for its release, the hyper version is now data theft followed by extortion campaigns threatening public disclosure of the stolen data, such as by MOVEit and GoAnywhere. Not mentioned here is another vector–business associates and vendors, using ‘social engineering’ tactics to steal passwords and other secure information to gain access into the larger system [TTA 24 Jan] 

  • 10% of global organizations were targeted by a ransomware attack, up 3 percentage points from 2022
  • Healthcare again was above average, #3 with 12% of organizations experiencing attacks. Government/military was #2 with 16% and education/research with 22% of organizations. 
  • The Americas went up from 5% in 2022 to 9% in 2023. APAC and EMEA were higher and also increased

Advice they give on security is logical: robust data backup, cyber awareness training, up-to-date patches, stronger user authentication, implementing anti-ransomware solutions, and utilizing better threat prevention. Can healthcare do this while leaning out IT, fighting collapsing margins, and transforming care delivery?

News roundup: Musk’s Neuralink implants first human BCI; Cigna’s $3.7B MA sale to HCSC; no Amazon deal for iRobot; DispatchHealth-Instacart food Rx; 5 India health tech fundings (updated)

February 1, 2024 | by

Elon Musk first out (again) with a human brain-computer interface (BCI). Announced Monday by Neuralink, founded by Elon Musk, is the first human implant of a BCI. No details in the tweet beyond “recovering well’ and “promising neuron spike detection”. The device is a cosmetically invisible implant (N1) in the part of the brain that plans movements. It interprets neural activity, sending a signal to a computer or smartphone through thought. The N1 device, containing several dozen threads holding over 1,000 electrodes, is implanted by a R1 robot. FierceBiotech, MM+M Online

The subjects of the PRIME study are likely those recruited last fall after the FDA approved proceeding with a clinical trial. A blog post on the Neuralink website recruited adult volunteers with quadriplegia–paralysis of the arms and legs caused by a cervical spinal cord injury or amyotrophic lateral sclerosis (ALS). Earlier, Neuralink raised $280 million in a Series D led by Founders Fund. FierceBiotech 8 Aug 2023  There were difficulties, however. Within the past two years, Reuters reported 1,500 animal deaths over four years of research that attracted the attention of the Department of Transportation (DOT) (!) and the Department of Agriculture’s inspector general. FDA held up approval of human clinical trials until last year.

Research and companies in the BCI race have been making news since at least 2016 but have not reached clinical trials. In 2022 Synchron had an oversubscribed Series C of $75 million for the Stentrode blood vessel device (in clinical trials) and Synchron Switch BCI devices [TTA 17 Dec 22]. Last year, Precision Neuroscience raised $41 million in a Series B [TTA 28 Jan 23]. Their focus is on treatment of neurological illnesses and events such as stroke, traumatic brain injury, and dementia. Of course, one could debate implant ethics, but not for these limited uses right now.

To no one’s surprise including the relatively low price of $3.7 billion, Cigna sold its 600,000-member Medicare Advantage business to HCSC, beating out Elevance (the former Anthem). Cigna is also selling its supplemental benefits and Medicare Part D plans, along with CareAllies, a subsidiary that assists primary care practices with value-based care in Medicare and commercial plans. Together, they cover 3.6 million people, but the now-money-losing MA business represented only 2% of the total MA market. Closing is expected to be in 2025, subject to the usual regulatory approvals. HCSC currently operates in five states and this marks a major growth opportunity for them, if they pass state and Federal scrutiny.

Update: Some speculation remains that now that Cigna has agreed to sell the MA and other businesses, a Humana buy may be more of a go–at a reduced price given Humana’s recent earnings difficulties. This feels, to this Editor, like whistling in the dark. Prima facie, it ignores two factors: the major stumbling block was their respective strengths in pharmacy benefit management (PBM) though with different focuses, and that Cigna, having rid themselves of a money loser in MA, would buy it back and take on short term pain just to get bigger. Perhaps the two, because they seem to like dancing with each other, may partner in some areas like home health or other services, but for now the regulatory landscape is waaaay too hostile to mega-mergers in healthcare and the shareholders feel the same. Why buy the cow, etc.? MedCityNews  Further evidence? The CEO bragged about the sale as moving towards a leaner and more focused organization (the new catchphrase) on the 2 February earning call, as well as their interest in providing services via their Evernorth unit to MA providers, such as tying pharmacy services to the MA plans for four years after the HCSC buy. Healthcare Dive

iRobot sale to Amazon fails due to “no path to regulatory approval”, company lays off 31% of staff. In more bad news for Amazon, regulatory disapproval by the EU finally put paid to the deal for the Roomba maker. The EU found that Amazon’s ownership would have restricted competition in the robot vacuum cleaner category by restricting access to Amazon’s marketplace. This is no different than the FTC and DOJ in the US which blocked it for two years. Amazon will pay iRobot a $94 million breakup fee, which the latter will need as their market capitalization has crashed to $400 million from the $1.7 billion original sales price.  iRobot is reducing staff by 350, its CEO is also stepping down immediately, and they are concentrating now on margin improvements, restricting lines of business, and reducing R&D. CNBC  Consider this Lina Khan’s first ‘scalp’ in her War on Amazon.

DispatchHealth, an in-home care provider, has a new partnership with Instacart, a food delivery service, to directly address nutrition needs for their advanced care patients being treated at home.  Dispatch provides same-day, urgent medical care; hospital alternative care; and recovery care. With Instacart Health, Dispatch creates meal plans and medically tailored meals through shopping lists on Instacart that can be delivered direct to home. Payment must be made by the patient or if their Medicare Advantage plan permits. Food is a significant part of social determinants of health (SDOH) and Dispatch has found that 33% of their patients struggle with this and 22% have serious food insecurity. Orders can be made by phone, phone app, or website. McKnights Home Care, Mobihealthnews, DispatchHealth release   DispatchHealth has also experienced recent layoffs of 88 employees. Home Health Care News

And now for something completely different. India has been buzzing with several fundings in digital health. The roundup’s from Mobihealthnews with additional information from other sources:

  • CureBay, a rural-focused e-clinic from visits to lab tests and prescriptions with 90 locations, scored another Rs 620 million ($7.5 million) in funding as part of a Series A round led by Elevar Equity. IndianStartUpTimes
  • Mental health platform Amaha raised over Rs 50 million ($6 million) in an extended Series A funding round. The app-based treatement platform connects members with clinicians and psychiatrists. It also acquired the Delhi NCR-based Child and Adolescent Mental Health Institute, Children First, that has been providing support to 12,000+ families since its inception in 2008. Release
  • Healspan, an insurance tech startup that manages cashless health insurance claims for 60 hospitals, raised Rs 1.2 million (over $100,000) in pre-seed funding from a round led by startup accelerator PedalStart. ExpressHealthcare India
  • FlexifyMe, a chronic pain digital therapeutics platform with AI-powered patient scanning, gained pre-seed funding from angel platform ah! Ventures Angel Platform. Based in India but with operations in the US and Dubai, their therapy addresses back pain, cervical pain, spondylosis, and other conditions via what they term a unique combination of online physiotherapy, yoga therapy, and AI. BiospectrumIndia  In October, they had raised $1 million from Flipkart Ventures. Times of India
  • Docosage, described as an AI-driven health solutions provider with a telehealth consult, e-prescribing, lab testing, and genetic studies platform, also has an undisclosed amount of pre-seed funding from an individual angel investor. The funding will be used for strategic partnerships by exploring collaborations with hospitals, clinics, insurance companies, and incorporating tech advancements to enhance product features. ExpressHealthcare India 

*Updated 2 Feb for additional analysis around Cigna MA sale to HCSC and copy editing

Short takes: Humana’s big MA loss (updated); Medicare telemental care bill back in Senate; HHS releases cybersecurity performance goals; Texas Healthcare Challenge hackathon 23-24 February

January 26, 2024 | by

Humana apparently surprised Wall Street with their Q4 losses, driven by escalating Medicare Advantage (MA) costs.  While revenues ($26.5 billion) for MA’s second largest plan provider were up from prior year’s $24 billion, MA expenses drove an adjusted Q4 loss of $361 million under the insurance segment. From Humana’s earnings statement: “The sector is navigating significant regulatory changes while also absorbing unprecedented increases in medical cost trends. We believe the elevated MA medical costs are an industry dynamic, not specific to Humana, and that they may persist for an extended period or, in some cases, permanently reset the baseline.” On the earnings call, their CFO cited increased inpatient costs, especially for short stays, and more spending in outpatient surgeries and supplemental benefits–trends that Humana expects to continue into 2024 and even into 2025. Home health under CenterWell were tidily profitable and growing. Perhaps MA’s sector problems were the reasons why Cigna, selling off their MA plans, backed out of their acquisition/merger? Q4 press release, management remarks, Becker’s, Healthcare Dive

Updated Humana announced the appointment of a President of Enterprise Growth, David Dintenfass, to spearhead customer growth and retention. His background is not healthcare but Fidelity Emerging Growth Markets, with previous stints at Procter & Gamble and Bank of America. This assumes that the cost problem can be grown out of. Expect more departures and arrivals to roil Humana, as their current CEO moves to a planned retirement transition later this year and has already laid off staff in January.  Healthcare Dive

A bipartisan Senate bill proposes to continue coverage of virtual-only telemental health for Medicare beneficiaries. The ‘Telemental Health Care Access Act of 2023″ is sponsored by four Senators: Bill Cassidy, R-La., Tina Smith, D-Minn., John Thune, R-S.D., and Ben Cardin, D-Md. and is designed to make permanent the pandemic waiver of in-person requirements that expires at the end of 2024. The senators cited rural health and overall access to mental healthcare. Mental health remains the leading claim line for telehealth. Healthcare Dive, draft bill

The Department of Health and Human Services (HHS) published voluntary cybersecurity performance goals for healthcare and public health organizations. These fit within the HHS 405(d) Program and Health Sector Coordinating Council Cybersecurity Working Group’s Healthcare Industry Cybersecurity Practices as well as the NIST Cybersecurity Framework and the Cybersecurity and Infrastructure Security Agency’s National Cybersecurity Strategy. (Whew!) The two voluminous sets of goals, Essential and Enhanced, directly address common attack vectors against U.S. domestic hospitals as identified in the 2023 Hospital Cyber Resiliency Landscape Analysis. As noted earlier this week, there were 116 million patient records exposed in 2023 data breaches, doubling that in 2022.

HHS means well, but this is another ‘blood out of a rock’ situation. Health IT departments all over the US, from providers to payers, have had or are facing layoffs in the ongoing clash of business versus technology, which won’t cease because HHS would like it to. HealthcareDive, HealthcareITNews, 

The Texas Healthcare Challenge Hackathon is back! After three years dark, this year’s edition will be held this year 23-24 February in Dallas. Sponsored by the Health Wildcatters, a Dallas-based accelerator in the DFW area, it is open to just about anyone who can apply–you don’t have to code or hack. Friday kicks off with “problem pitching,” where participants form teams around identified issues, with Saturday starting with morning motivation and intensive team hacking, moving to participants developing viable solutions, assessing market potential, creating functional business models, and addressing risks with mentor support from industry experts. The day culminates in team presentations, with judges awarding cash and in-kind prizes to winning solutions. Learn more and apply here (application form is under the numbers, click on “Hackathon Sign-Up”). Sponsorship is the second button.

Midweek updates: Walgreens may sell Shields Health after 2 years; Ventric Health’s home cardiac RPM; Singapore military medical corps upgrades PACES 3 EMR

January 25, 2024 | by

Walgreens reportedly looking to sell Shields Health Solutions, working with advisers on a valuation to raise cash. That valuation may bring $4 billion in a sale. Shields provides specialty pharmacy services and is part of its US Healthcare division. Criticism of the possible sale breaking in Bloomberg 23 January was hardly muted. TD Cowen analysts cited in Healthcare Dive called it “a strange move” to sell what could be Walgreens’ highest margin business with a knock-on effect of slowing a return to profitability. They even proposed that a sale of Boots in the UK might make more sense. A Bloomberg analyst called it “a pointed reversal of the prior CEO’s strategy to diversify” but also stated that “the strategic rationale for owning it remains strong”. It is perhaps the most salable of US Healthcare’s assets, with excellent growth of 27% in its last quarter. WBA bought a minority stake in Shields  in 2019, spent $970 million to take majority control in 2021, and bought out the last 30% for $1.37 billion in 2022.

The impression left by these articles and in FierceHealthcare was that WBA is a “troubled drug-store chain in turnaround mode” (Bloomberg). That isn’t a good look.

Heart failure is a major disease, with 6.5 million in the US diagnosed and joined by 550,000 every year. Ventric Health has a newly FDA-cleared non-invasive cardiac diagnostic system for remote patient monitoring (RPM) that can be used in the home as well as clinical settings. A trained clinician can use Ventric’s Vivio system to perform an evaluation in the home or a clinic that could only previously be done in the hospital. An EKG patch and arm cuff are placed on the patient, connected to a tablet with the Vivio app and its advanced algorithms via Bluetooth, and in under five minutes–two minutes for the data collection and about a minute for the analysis, can evaluate patient heart failure. The portability of the system eliminates a lot of care barriers to cardiovascular health by being more accessible to clinicians and patients in non-hospital settings, reduces time wasted on initial diagnosis, improves support of diagnosed patients, and promotes better outcomes. Healthcare IT News

The Singapore Armed Forces (SAF) Medical Corps upgraded its EMR for the first time in a decade. The SAF’s Patient Care Enhancement System 3 (PACES 3) runs both the Sunrise EMR system and the newly implemented Altera Opal by Altera Digital Health. This is Sunrise’s first upgrade in Asia-Pacific. Soldiers can now access information on their medical history, manage and book their medical appointments. Also upgraded: document management, clinical and financial applications, including enhanced workflows, improved system performance, enabled compliance with regulatory obligations, and improved overall usability. It also connects securely to Singapore’s National Electronic Health Record system and other local health IT infrastructures via internet. The EMR is the responsibility of the Ministry of Defence (MINDEF) of Singapore. Healthcare IT News

Peering through the cloudy crystal ball into 2024 healthcare investment and company health

January 25, 2024 | by

crystal-ballWill 2024 be the mirror image of 2023? This time last year, signs pointed to slow, steady growth after the bubble bath of 2020-early 2022 was followed by failures of tech-leveraged banks (SVB and Signature in March 2023) leading to a mid-year bust [TTA 11 Aug 23]. Some big deals kicked off the year (CVS’ Carbon Health investment, Oak Street mega-buy TTA 16 Feb 23). Then as the year went on, they were followed by sheer turmoil–huge losses and business divestitures (Cano Health, Bright Health, insurtechs like Clover and Oscar), bankruptcies and shutdowns (Babylon, Pear, Quil, OliveAI, Smile Direct, Cureatr, Rite Aid), IP lawsuits (Apple-Masimo, Apple-AliveCor, FruitStreet-Sharecare), C-levels walking the plank (Walgreens, Noom), and big layoffs nearly every week. Cigna and Humana called off merging again, perhaps because Cigna didn’t like what it saw. M&A fell to its lowest level in years and IPOs fell to zero.

To cap the year, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) issued new Merger Guidelines that made the M&A mountain even steeper, and will follow up this year with Pre-Merger Notification guidelines that will make that part even more costly. Both signal hard times for M&A. Add to that the overt hostility the chair of the FTC has to any kind of M&A and the weaponization of the tools government has at hand…..Even early-stage, independent companies which allegedly these agencies are trying to foster don’t catch a break. A change in the tax law hitting hardest in 2023 forces annual expenses in research and experimentation (R&E) to be amortized over five years versus one year which severely affects their financials. (Section 174 explained here)

The crystal ball promises to be more like a Magic 8 Ball this year. Other than a flurry of smaller-scale investments, a rumor of a $5 billion EHR company sale (Netsmart), and predictable layoffs in health systems, the start of the year in healthcare has been fairly (ominously?) quiet.

HealthcareFinance talked to two partners in law firm Akerman’s healthcare practice group to get their take, weaving in some findings from a PWC report: 

  • Buyer interest in acquiring practices and surgery centers
  • Partnerships on rise, for example Amazon’s One Medical with health systems 
  • Smaller hospitals in mid-America will merge as there is “safety in numbers’
  • More investment in life sciences and drug development, especially diabetes/weight loss drugs in the GLP-1 category
  • Anything around AI attracts interest

The two big factors: interest rates (the Federal Reserve has signaled no further increases, and maybe cuts in 2024) and (of course) a presidential election as well as all of the House, much of the Senate, and state gubernatorial offices.

Bubbling under this are reports of two big pending IPOs:

  • Home health, pharmacy, and eldercare services provider BrightSpring Health filed with the SEC on 3 January for a near-billion dollar IPO (publicly released on 17th). This is estimated to raise $960 million, valuing the company at about $3 billion. Common stock will debut between $15 and $18 on Nasdaq under the symbol BTSG. They are also selling 8 million tangible equity units at $50. Proceeds will go from the offerings to repay outstanding debt under various credit facilities and pay penalties associated with terminating its monitoring agreement with Kohlberg Kravis Roberts & Co. L.P. (KKR, the current owner) and Walgreens Boots Alliance. BrightSpring serves 400,000 daily patients and dispensed 34 million prescriptions in 2022. IPO timing is still to be announced. This is the second time the company has filed, abandoning its first attempt in late 2021 as the market softened in 2022. KKR is signalling an exit…will it happen this time? Release, FierceHealthcare
  • Waystar’s IPO is still pending after being announced late last year [TTA 26 Oct 23]. The RCM and payments software company delayed it to 2024 due to an uncertain market at year’s end. Reportedly the roadshows were postponed to December but there has been no confirmation that they took place. Will it happen?

Fasten your seatbelts…it may be a bumpy ride.