The table stacks–and clears: fundings for RadAI $60M, The Helper Bees $35M, Bicycle Health $16.5M. Walgreens suspends stock dividends after 91 years. And has Transcarent zeroed out 98point6? (updated)

February 5, 2025 | by

February is the real opening of the New Year’s Casino. Investors place their bets–and the dealer’s stick clears the losers.

RadAI’s Series C racks up $60 million. The generative AI radiology company gained an oversubscribed round led by Transformation Capital, with participation from existing investors Khosla Ventures, World Innovation Lab, UP2398, Kickstart Fund, OCV Partners, Cone Health and others. It follows a $50 million Series B in May 2024 and boosts the company’s value to $525 million. RadAI’s two products to speed radiology workflows and findings are Rad AI Impressions, their first product, and Continuity for interpretation and follow up for potential new cancers. RadAI claims that their platforms are used by radiologists performing about 50% of all US medical imaging. In July 2024, it partnered with Bayer to bring its capability to Bayer’s Calantic Digital Solution customers.  Release, Mobihealthnews

The niftily named The Helper Bees nabbed $35 million in a Series C. This was a tidy amount for the formerly unsexy independent aging technology sector, led by Centana Growth Partners, with support from Silverton Partners, Impact Engine, Northwestern Mutual Future Ventures, and Alumni Ventures. The Austin, Texas-based company works through 43 health plans (payers) by providing national access to non-medical products and services such as in-home caregiving, home modifications, groceries and meals, pest control, housekeeping, lawn care, and transportation, closing significant care gaps in senior care and enabling aging in place. They support long-term care plans and Medicare Advantage. Their total funding is $54 million. Release, Mobihealthnews

Bicycle Health pedals to a $16.5 million raise, profitability. Bicycle’s telehealth platform for opioid use disorder (OUD) treatment has had its downs (a May 2024 layoff of 15% of staff) and ups (a $50 million Series B in 2022). Their latest up is turning profitable on an EBIT­DA and net in­come ba­sis as of Q4. In the middle is the just-announced unlettered down round led by existing investor Questa Capital, with participation from all other existing investors including SignalFire, Frist Cressey Ventures, City Light Capital, InterAlpen Partners, Valeo Ventures, and Hustle Fund, as well as new investor JSL Health. Added to the C-level roster are CFO Manu Kuppalli and COO Andy Thomas, with a background in brick-and-mortar behavioral health. Release, Endpoints, Mobihealthnews

On the loser’s side of the table

Walgreens suspends their quarterly dividend for the first time in 91 years. The rationale for ending the shareholder payments made since 1933 was announced late last Thursday “as management continues to evaluate and refine its capital allocation policy consistent with the company’s broader long-term turnaround efforts”. The admission was blunt: “The company’s cash needs over the next several years, including with respect to litigation and debt refinancing, were important considerations as part of the decision to suspend the dividend.” The share price promptly took a hit going from $11.43 at market close on Thursday to closing today (Tuesday) at $9.84, not exactly a desired result. Walgreens’ days as a ‘widows and orphans stock’ are long over. 

  • The litigation is a serious matter, with the Department of Justice (DOJ) filing a civil suit 16 January in Illinois over improper dispensing of opioids and other unlawful medications over more than a decade, in violation of the Controlled Substances Act (CSA).
  • The WBA Q3, announced mid-January, widened its net loss to $265 million. 
  • Walgreens is in the midst of closing 1,200 locations to get out from under real estate.
  • The rest is not much different than other retail–in-store theft, pharmacy sales erosion, and retail sales going online or elsewhere.
  • Mistakes such as buying VillageMD (and doubling down with Summit Health and CityMD) made it 10x worse.

Will this put the brakes on a sale? Certainly Sycamore Partners and other interested parties now must rethink their pricing and timing, though it may be positive if it improves WBA’s cash position. [TTA 10 Dec 2024, 8 January]   Release, CNBC, AP 

Did Transcarent, after paying $100 million for 98point6’s virtual care platform in 2023, just pull the plug on the service? This tidbit from a commenter on HIStalk News 2/5/25 indicates that Transcarent may have. Exhibit 1 is a notice from Allegheny College (PA), a service customer for about two years, on their blog that students and staff were notified on 19 December that the service was going out of business. The college is searching for a replacement telehealth service. The Allegheny page is also showing up high in Google Search results.

Transcarent has a live 98point6 page with FAQs about the service and buttons for downloads on Google’s and Apple’s respective App Stores. There is no notice on Transcarent’s 98point6 page, but their last blog posting mentioning 98point6 was October 2024. On Google’s App Store, the last update is listed as 5 June 2024, which is unusual for a telehealth app. The app ownership is credited to Transcarent so it is not a leftover from the original company. According to the HIStalk commenter, most staff was laid off by April 2024. (As we reported in our 8 May 2024 report, 98point6 had only 100 on staff, and the number of those laid off was unknown.)

Confusing matters is that 98point6 continues as a platform, but not as a telehealth service. After they sold their virtual care service to Transcarent [TTA 9 Mar 2023], they announced a pivot into licensing its real-time and asynchronous software to third parties, including Transcarent. Less than a year later, 98point6 bought the remaining assets of telehealth provider Bright.md not sold to Evernorth’s MDLIVE–17 asynchronous telehealth provider customers [TTA 19 Jan 2024]. We have reached out to Transcarent’s press office for confirmation. They are welcome to reach out to TTA (email Editor Donna).  Update: as of 14 February, there has been no response from their corporate communications folks. 

This just in #2: Masimo board director Bob Chapek resigns

February 1, 2025 | by

Cleanup on Aisle 3! Another episode in the Continuing Masimo Drama is that Bob Chapek has resigned from their board of directors. His letter, dated 30 January, was standard and did not cite a reason for his departure, other than stating that his resignation did not reflect any disagreements with the company. It was attached to a Masimo filing with the SEC, as is required when there is a change in the board.

Mr. Chapek’s resignation from the board and the audit committee is effective as of the next Masimo annual shareholders meeting. That date is not yet set but is typically in June or during the summer. 

Mr. Chapek was appointed to his directorship one year ago in January 2024. He is the former CEO of the Walt Disney Company, a post he held from 2020 to 2022 after a steady rise in multiple executive positions from 1993. After a controversial tenure, he was ousted by the board with his predecessor, Bob Iger, replacing him as CEO.  

During the proxy fight in September that ended in the ouster of Joe Kiani, both Chapek and another director, Craig Reynolds, actively urged Quentin Koffey of Politan Capital to avoid a war by not offering Politan-backed board candidates. Koffey did so anyway and won decisively against two Kiani-backed candidates. In October, board members Wendy Lane and Timothy Scannell were added. New CEO Katie Szyman joins them as of 12 February.

The sole remaining director from pre-Politan control times is Craig Reynolds. Appointed after Bob Chapek in March 2024, Mr. Reynolds does not currently sit on any committees. Previous to retiring, he was COO of Respironics then Philips Respironics, and sits on boards of other medical device companies. Big hat tip to Strata-gee today.

This just in: Veradigm gives up on finding buyer, brings in ‘strategic advisory’ firm for “standalone” future

January 31, 2025 | by

Veradigm no longer for sale–it’s standing alone for the foreseeable future. Late yesterday’s announcement by Veradigm’s board of directors committed Veradigm, for the time being, to going forward as a whole concern and formally ended their search for “strategic alternatives” a/k/a an asset sale. The board has now moved to a different kind of  “strategic” planning, contracting with an unnamed strategic advisory firm. They will advise the board on operational improvements and organizational alignment for profitable growth, long-term success, and driving stockholder value. Their CEO, Tom Langan, is still listed as “interim”. There is no indication that a permanent CEO will be named.

Background. Despite the November rumors that the company was close to a sale by Thanksgiving, none of the “finalists”, listed by the sources as McKesson, Oracle, and private equity bidder Thoma Bravo, finalized any bids. The release reveals that 30 parties submitted confidentiality agreements and five submitted preliminary, non-binding indications of interest. There were no final proposals. The price, estimated at about $1 billion, may have put them off. It apparently was too big to buy and too difficult to separate.

As previously noted, in an uncertain market, Veradigm, the former Allscripts, stands out as apparently healthy but unwieldy with a wide scope of desirable healthcare data services and systems. What makes the company unattractive is years of financial reporting problems due to a still unsorted software problem dating back to 2022, which led to its Nasdaq delisting last February due to its inability to be audited and file required financial reports. It’s trading at $5.40 over the counter (MDRX), sinking by half since last year, yet it has been profitable (though unaudited). Veradigm’s board in the release disclosed that it will provide in mid-March updated fiscal year 2023 and preliminary fiscal year 2024 estimated unaudited financial ranges plus a business and audit update. After that, they plan to resume a cadence of financial reporting and guidance.

Two days earlier, board member and Audit Committee Chair Beth Altman resigned on 28 January. Interestingly, the release specified in the all-important first paragraph that it was for “health reasons”, “not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices” and wished her well. Ms. Altman joined the board in 2020. She was formerly a managing partner at KPMG in San Diego and holds two other long-term board positions, according to her LinkedIn profile. She will be replaced by Greg Garrison, a previous Audit Chair. Parties interested in joining the board can contact Veradigm.

ModernHealthcare

News roundup: UnitedHealthcare names new president, Neuroflow buys Quartet Health, Owlet intros Owlet 360

January 31, 2025 | by

The inevitable conclusion to a tragic event. UnitedHealth Group veteran Tim Noel was named this week to the CEO position of UHG’s UnitedHealthcare health insurance division. Mr. Noel replaces Brian Thompson, who was murdered on 4 December 2024 as he entered the New York Hilton to join that morning’s UHG Investor Day. Mr. Noel is a UHG veteran in several positions since 2007, most recently as head of Medicare and retirement plans at UnitedHealthcare, including Medicare Advantage, covering 13.7 million lives. The division’s plans cover over 50.7 million lives and is the largest US insurer. His promotion was unusually not announced in a press release, nor was his photograph or bio supplied to press–the new policy. 

He will certainly have his work cut out for him in lifting a shaken unit as well as negotiating the skyrocketing costs of Medicare Advantage. The comparisons will be inevitable, as well as reminders of Mr. Thompson’s death and the revival of public anger at UnitedHealthcare as the trials of Luigi Mangione proceed forward this year. For Mr. Noel, this diminished announcement must have a mixture of regret and sadness. Healthcare Dive, CNBC, Healthcare Finance News, FierceHealthcare

Behavioral health analytics and management workflow platform provider NeuroFlow acquires Quartet Health. Quartet, which is also in behavioral health but focusing on enablement and delivery, will expand NeuroFlow’s capabilities in referral and care navigation. Transaction cost nor management transitions were disclosed. NeuroFlow is based in Philadelphia, Quartet in NYC. NeuroFlow will be supporting Quartet’s existing payer and provider customers including Independence Blue Cross. Closing is expected in the next few days. NeuroFlow Release

Last week, Iris Telehealth separately acquired innovaTel telepsychiatry, owned by Quartet Health since 2021. Quartet’s announcement covers both acquisitions. Quartet had raised $267 million over seven rounds of funding. NeuroFlow has only $58 million in funding listed on Crunchbase. It is not known why Quartet sold itself and innovaTel. Behavioral Health Business

Telehealth ‘for the bassinet set’ Owlet announces subscription service Owlet 360. The $5.99/monthly service, initiated and billed through the Dream App, uses data generated by Owlet’s Dream Sock, Dream Duo or Cam 2. It provides information to parents comparing their baby’s information with data collected from other Owlet babies–a surprising 1.7 million. The additional information on their app is designed to expand parents’ knowledge of their baby and his or her environment:

  • Monitoring key health metrics by tracking daily and weekly trends for pulse rate, oxygen level, movement, and comfort temperature.
  • Compare health and sleep data to the vast Owlet infant health data set, offering meaningful context and reassurance.
  • Understand sleep and gain daily insights and guidance on sleep patterns.
  • Track comfort temperature to let parents know if their baby is too warm or too cold and to adjust the sleeping environment.
  • Watch, share, and save more video clips of precious moments or important notifications, like when their baby is moving or crying is detected.
  • View sleep environment insights like temperature and humidity trends in the room.

Basic monitoring information on pulse rate, oxygen, wakings, and sleep trends remains free of charge. Release

23andMe running low on cash, considers sale, “strategic alternatives” by Special Committee

January 31, 2025 | by

Cash-poor 23andMe considers other strategic alternatives, including a sale. The latest unsurprising development in 23andMe’s story is the admission, by their new board of directors, that 23andMe now does not have enough cash to continue for the next 12 months. They are now considering the following strategic alternatives: a possible sale of the company, business combination, sale of all or part of the Company’s assets, licensing of assets, restructuring, or other strategic action. Leading the search will be a Special Committee composed of three independent directors. Release

This announcement was paired with their 28 January report of Q3 financials that revealed their incredible shrinking liquidity: $79.4 million as of 31 December versus $126.6 million on 30 September (Q2), and $216.5 million on 31 March (Q1). This is after staff layoffs of 40% or more, closing of operations such as drug discovery and therapeutics, offloading real estate, and attempting to find outside funding. The dismal conclusion: “Accordingly, management has determined that there is substantial doubt about the Company’s ability to continue as a going concern.”

Q3 consumer services revenue was only $39.6 million versus prior year’s $42.9 million. There was a last payment from GSK under their now terminated research agreement of $19.3 million. Q3 net loss was $26.8 million.  While carrying no debt, their accumulated deficit is $2.4 billion. Release

The new Special Committee is composed of their three independent directors, Mark Jensen, Andre Fernandez, and Jim Frankola. They are also the only board members other than CEO Anne Wojcicki. Meetings should be uncomplicated. Moelis & Company LLC is the financial advisor and Goodwin Procter LLP is the legal advisor. If “Special Committee” and “alternatives” sound familiar, the previous board also formed a Special Committee to investigate alternatives last summer. Wojcicki’s $0.40/share buyout offer (before the reverse stock split) was roundly rejected on 2 August 2024. By September, the seven independent directors resigned rather than continuing with the ” protracted and distracting difference of view with you (Wojcicki) as to the direction of the Company.”

The bottom line: Anne Wojcicki is the decider–no one else. She holds 22.5% of the company’s outstanding Class A common stock and 59.2% of outstanding Class B common stock (according to analyst TD Cowen), reportedly giving her 49.99% of the voting power. Other than Lemonaid, there’s nothing to throw out the hatch to lighten the load [TTA 22 Jan]–and why no one is stepping up to buy a company with a foothold in telehealth remedies including GLP-1 is a mystery. Research partnerships such as Discover23 with Lifebit are slow and limited revenue generators. Their October 2023 data breach lawsuits in the US and Canada are still pending, though in December there was a preliminary conditional approval by the US District Court for Northern California for a $30 million settlement.

This Editor, recalling Wojcicki’s December interview with Gayle King with statements about 23andMe that seemed to emit from an Alternate Universe, and the fact that not only the board but also the operations of the company have shrunk to near-nothing, has concluded that she will close 23andMe’s doors before conceding control–and buy the genetic database out of the bankruptcy.

Also MedTechDive and Medical Device Network

Round 2: Masimo former CEO Kiani counters Masimo lawsuits in New York, Delaware (updated)

January 30, 2025 | by

As expected, Masimo’s former CEO has filed to dismiss two lawsuits brought against him by Masimo’s new management. These were filed in the US District Court for the Southern District of New York on 23 January and in Delaware Chancery Court on 17 January.

The Southern District New York lawsuit by medical device manufacturer Masimo alleges that Joe Kiani and RTW Investments, plus 10 individuals and associated RTW entities, formed a group that violated Federal securities laws by manipulating last year’s Annual Shareholder Meeting vote on directors’ seats through a secret ’empty voting’ scheme that acquired 19% of shares [TTA 15 Nov 2024]. Kiani and RTW did this without filing a Schedule 13D as a group. Masimo is requesting an injunction based on 1) their forming a group to secretly manipulate the shareholder vote and 2) that this purported group continues and will cause ‘actual and imminent injury’ to Masimo.

RTW was already and remains a significant shareholder–it is a $6.5 billion hedge fund. The Kiani filing claims that contacting RTW before the shareholder meeting was routine, as CEOs do all the time with shareholders. The claim that Kiani’s contact of RTW meant that they acted as a group is ‘untenable’ and goes against established practice and case law. Masimo, now controlled by Politan Capital Management, in their suit claims “actual and imminent injury” by this “group” requiring injunctive relief. However, the vote went against Kiani and his directors on 19 September 2024 ending their efforts. Kiani is seeking dismissal on the grounds that 1) there was and is no Kiani-RTW group thus no need for a Schedule 13D filing and 2) with the September vote, any prospect of injury is over and, with RTW’s reduced shareholdings, future harm is hypothetical and speculative.

Kiani resigned from Masimo on 19 September 2024, the day of the Annual Shareholders Meeting, “for good reason” after losing his board seat and control of the company to Politan. The new board placed him on indefinite leave, named an interim CEO, in October expanded the board by two directors, then formally terminated him on 24 October ‘for cause’, invalidating the terms of his latest $400 million severance agreement.

The SDNY filing requests dismissal and alternatively, transfer to the US District Court for the Central District of California. Both Masimo and Kiani reside in Orange County.

Kiani’s Delaware Chancery Court filing requests dismissal of Masimo’s charges against the severance agreement as filed in the improper venue. Alternatively, it should be transferred to the earlier Kiani lawsuit against Masimo filed on 19 September 2024–immediately after the shareholder meeting loss–in California State Court [TTA 15 Nov 2024]. Masimo is incorporated in Delaware.

At this point, there is no estimate of when either court will rule on these filings.

These filings are separate from the SEC investigation of the “empty voting” scheme claim and whether Kiani and RTW formed an insider group in the proxy fight [TTA 6 Dec 2024, hat tip Strata-gee], but cover much the same ground as the SDNY lawsuit.

Disclosure: This Editor received both filings and information from a strategic communications representative of Joe Kiani. The interpretations and summaries of the filings are your Editor’s. Mr. Kiani’s counsel’s statement is below:

“Politan continues to waste Masimo shareholder resources on a scorched-earth campaign to avoid paying Mr. Kiani what he is rightfully owed after delivering enormous value to shareholders and patients during his 35-year tenure at the helm of the company he founded in his garage. Immediately after being forced out of Masimo following Politan’s hostile takeover, Mr. Kiani anticipated that the Politan-led Board would try to withhold his severance benefits, and he brought a lawsuit in California to enforce his contract. As detailed in that complaint, Mr. Kiani has an unambiguous contractual right to the compensation he is seeking under his 10-year-old employment agreement, which was approved by shareholders in seven different votes and stemmed from a prior agreement entered into 30 years ago. The misplaced and meritless lawsuits subsequently filed by Masimo in Delaware and New York are part of a coordinated effort to circumvent Mr. Kiani’s lawsuit and evade jurisdiction in California, and they should be dismissed. We are confident that when these matters are fully litigated, the facts will demonstrate that Mr. Kiani is entitled to his severance compensation.”

Editor’s note: information on the SDNY filing has been revised after a closer reading of the contesting claims.

Updates: ATA on telehealth policy priorities, UHG investor group demands denied care report, DOJ sues Walgreens on illegal Rx dispensing, VA nominee supports Oracle EHR deployment, RFK Jr. HHS nomination hits Senate

January 24, 2025 | by

ATA urges nine telehealth priorities for the Trump Administration’s consideration. Acknowledging that HHS expanded Medicare telehealth flexibilities at the start of the pandemic in 2020 in the previous Trump Administration, the American Telemedicine Association’s list is long and detailed.

#1 was to withdraw last week’s Drug Enforcement Administration’s (DEA) proposed rule, “Special Registration for Telemedicine and Limited State Telemedicine Registrations”. This would create a framework for the remote prescribing of controlled substances that in ATA’s view, would create “untenable restrictions and significant barriers to care”.

The remaining eight include flexibilities that were part of the 2020 rules.

  1. Permanently Allow for the Remote Prescribing of Controlled Substances
  2. Work with Congress to Make Permanent the Medicare Telehealth Flexibilities
  3. Ensure Affordable Telehealth Services for the Commercially Insured
  4. Ensure Affordable Telehealth Coverage for Part-Time, Contracted Workers Who Don’t Qualify for Health Care Coverage
  5. Ensure All Provider Home Addresses Remain Confidential
  6. Expand the Medicare Diabetes Prevention Program
  7. Reinstate Virtual Cardiopulmonary Rehabilitation Programs
  8. Release Updated Regulatory Guidance on Medicare Telehealth Flexibilities

Additional details are in the ATA Action letter to President Trump and Vice-President Vance and the ATA release.

An institutional investor interest group demands a report on delayed and denied care from UnitedHealth Group. This takes the form of a proposal for the 2025 proxy that the UHG board of directors prepare a report on these practices that create increased costs and ‘macroeconomic risks’.  The proxy is usually filed in April for a meeting that is typically in June. UHG will respond at that time it files the proxy.

The group proposing the report is the Interfaith Center on Corporate Responsibility (ICCR). ICCR represents 300 faith-based institutional investors, such as asset managers, pension funds, and foundations, with over $4 trillion in invested capital. This institutional shareholder action is in the aftermath of the Brian Thompson assassination, which revealed widespread consumer anger about UnitedHealthcare’s practices in high rates of claims denials, including their use of AI in the review process, and prior authorizations to restrict utilization. UHG ignores this at its peril. By the time proxies are released and the shareholder meeting occurs in June, the trial of the assassin may be underway, putting this issue back in top news.  ICCR release, Healthcare Dive

Walgreens’ Mound of Misery gained a few hundred cubic yards with a lawsuit filed 16 January by the Department of Justice (DOJ) over improper dispensing of opioids and and other unlawful medications over more than a decade. The civil lawsuit filed in the US District Court for the Northern District of Illinois alleges that Walgreens and subsidiaries dispensed millions of unlawful prescriptions, violating the Controlled Substances Act (CSA). Since Walgreens then sought reimbursement from Federal healthcare programs, they violated the False Claims Act (FCA). The time frame is from August 2012 to the present. Specific allegations include that Walgreens pressured pharmacists to fill prescriptions despite clear ‘red flags’, in excessive quantities, and lacking a legitimate medical purpose and that they ignored the pharmacists and their own internal data. One of the red flags were prescriptions for the ‘trinity’ of an opioid, a benzodiazepine and a muscle relaxant. There are also four different whistleblower actions against Walgreens under the qui tam (on behalf of the government) provisions of the FCA that have been consolidated. If successful, Walgreens could face civil penalties of up to $80,850 for each unlawful prescription filled in violation of the CSA, plus treble damages and applicable penalties for each prescription paid by Federal programs in violation of the FCA. Timing and Walgreens’ response are not yet available. This lawsuit could be a massive stumbling block to the rumored Walgreens/WBA sale.  DOJ release, Healthcare Finance 

The VA Secretary nominee recommits to resuming the 2026 rollout of the Oracle Cerner EHR. Former House Representative for Georgia Doug Collins told members of the Senate Veterans’ Affairs Committee at his nomination hearing Tuesday that he would look at the Oracle Cerner EHR deployment with ‘fresh eyes’ and that “there’s no reason in the world we cannot get this done.” On 20 December, the VA formally stated that they were starting planning now for deployment in four Michigan facilities — Ann Arbor, Battle Creek, Detroit, and Saginaw–for implementation by mid-2016. He was critical of what has transpired to date in the limited deployment as ‘not acceptable’ and pointing out that VA facilities needed modernization of their computer systems. But perhaps a little overoptimistically, he’d like to see a faster implementation in 2016, though it should be done properly and not rushed. NextGov/FCW, Healthcare IT News

And in the Warp Speed World that is now DC, Robert F. Kennedy Jr. is scheduled to testify next Wednesday (29 January) before the Senate Finance Committee on his nomination as Health and Human Services Secretary. At HHS, he would supervise the Food and Drug Administration (FDA), Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH). He has promised major reforms including food safety and chemical additives, as well as the relationships between FDA and pharmaceutical companies. Healthcare Dive  Meanwhile, during the transition, HHS froze external communications or work-related appearances by staff. This is fairly standard procedure until review procedures are set up, but apparently no one planned for this in advance. This has derailed two conferences (AFCEA HIT Summit and the HHS Industry Summit) that were scheduled for this month and February. Exceptions to this are ‘mission critical’ and emergency communications. NextGov/FCW

2024 another ‘down round’ for US digital health funding, with smaller deals and earlier stages: Rock Health

January 24, 2025 | by

US 2024 digital health funding explored some new lows, yet again. Plainly put, despite some perking up at the end of the year, 2024 was not a righting of 2023’s wobbly year when looking at the key metrics. It was more like a stabilization to 2019 levels with the pandemic period standing out in sharp relief as an aberration. Let’s see what this all means….

2024 by the numbers:

  • Year totals were $10.1 billion across 497 deals, versus 2023’s $10.8 billion across 503 deals
  • 63% of 2024’s funding rounds were labeled–up from 2023’s 57%
  • Average deal size shrank to $20.4 million from $21.5 million
  • 86% were seed, Series A, and Series B rounds
  • Series C and D fundings shrank in the wash to median sizes of $50 million and $55 million respectively—well below 2023’s $62 million and $58 million. Mega deals dwindled to 17 or 21% of overall sector funding from 2023’s 32% in 2023 and 38% in 2022.
  • M&A activity hit a 10-year low at 118 deals.

We’re back to 2019 in absolute dollars. Using the pre-pandemic year of 2019 as a benchmark, Rock Health factors in three years of inflation to calculate that 2024’s funding is back at 2019 levels. While 2024 outperformed in current dollars 2019’s $8.2 billion across 425 deals, knocking off $0.18 on each dollar (worth $0.82 in 2019 value) brings 2024’s total to $8.3 billion in 2019 dollar value–essentially flat.

Why is this happening? Rock Health is attributing this to:

  • More attractive Davids versus the Goliaths: earlier-stage startups are not encumbered by the inflated valuations of later-stage funded ventures. The later-stage Goliaths which are not in something resembling profitability are now faced with down or stalled rounds. They, or their key investors, may seek buyouts or ‘shotgun marriages’–or shut down. In Rock Health’s view, this may restart M&A activity. (From this Editor’s perch, it already has–check General Catalyst’s portfolio condensing.)
  • Fewer investors concentrating the available capital. Of the 391 VC funds, 30 raised 75% of all  US committed capital. Nine of those funds accounted for 50%.(Pitchbook) Editor’s note: it’s not clear if this accounts for private equity funders.
  • If you are tired of seeing Andreessen Horowitz (a16z) and General Catalyst (GC) in funding announcements, that is because they have between them about 20% of committed LP funding. Their dominance means unusual control over the direction of companies and their technologies. For instance, GC has HATco which as earlier reported, just entered a partnership with AWS to develop AI tools for its portfolio companies like Commure and Aidoc. This standardization means more control over ‘transforming healthcare’–and (as Rock Health doesn’t mention), over their investments in terms of costs, IP, and their business practices.

AI enablement was 2024’s hot button. It accounted for $3.7 billion, or 37% of the year’s sector funding, in 191 deals. There’s a discussion in the article about how foundational AI models for healthcare are gigantic large language models (LLMs) trained on vast data sets, which is why the seemingly low barrier to AI entry is in reality very high and can be dominated by a few Goliath players. The Davids need to work some niches and carefully consider their positioning.

2024’s leading value propositions and clinical indications. Still top in value props is disease treatment; moving up dramatically, disease monitoring. Funding is increasingly concentrated among the six top value propositions, now at 85%, 10 points higher than previously. In clinical indications, mental health takes home the prize as the five-year champ at #1, with cardiovascular and oncology following. Weight management and obesity was the comer, moving in one year from #8 to #4. Expect to see this move up even more in 2025. Clinical indication funding was less concentrated but nearly doubled, with the top six taking 48% of sector funding versus 28% in 2023.

Rock Health 2024 Report. Also Healthcare Dive

Funding/M&A roundup: DarioHealth’s $25M, Innovaccer buys Humbi AI, Percipio Health launches with a $20M Series A, Iris Telehealth buys innovaTel

January 23, 2025 | by

DarioHealth pulls another multi-colored rabbit out of the hat. This time, it’s a $25.6 million private placement of 25,605 shares of convertible preferred stock at $1,000 per share “to extend Dario’s cash runway and bolster its financial position enabling the Company to continue executing its current strategic plan”.  The raise is from existing investors with the rest from ‘accredited healthcare investors’ and healthcare sector executives who can presumably hack their way through the terms and conditions of the placement.

Their objective by the end of 2025 is to have an operational positive cash flow run rate from “high-margin, scalable recurring revenues across our B2B and pharma channels.”  With the private placement, Dario has a $40.6 million cash position. Their last raise of $22.4 million, also a private placement, was timed with their complex $30 million (maybe) Twill telementalhealth acquisition in February 2024.  DarioHealth release, Mobihealthnews

That strategic plan has changed substantially since 2022, when Dario branched out from MSK therapies to clinically-based interventional care management solutions through apps and consults in cardiometabolic and behavioral health. In 2023, their revenue dropped to $20.4 million to the prior year’s $27.7 million with a slightly reduced net loss of $59.4 million from $62.2 million. This was attributed to changing from a B2B to a B2B2C model. By Q3 2024 the strategy at least on the revenue side seemed to be working, with YTD revenues at $19.4 million, a 16.1% increase over prior year, but an increased loss of  $46.1 million. Release.

Earlier this month, Dario jumped on the GLP-1 prescribing bandwagon with prescribing capabilities announced through a collaboration with MedOrbis. Release

Innovaccer makes third acquisition in a year, Humbi AI. The AI-enabled data analytics company for payer and provider intelligence will combine Humbi AI’s actuarial software, services, and analytics with their Healthcare Intelligence Cloud. Humbi’s data includes Medicare and Medicaid data covering over 200 million lives. Purchase price, funding, and management transitions for the small Tennessee-based company were not disclosed. San Francisco-based Innovaccer, which earlier this month raised $275 million in a rare Series F, purchased Cured and Pharmacy Quality Solutions (PQS) in 2024. Release, FierceHealthcare

Percipio Health launches with a $20 million Series A and a veteran crew. The Plano, Texas-based startup RPM company has developed an app-only platform that monitors health conditions without the use of peripheral devices. It works by collecting multiple health signals daily through vision-based AI biomarkers for vitals and medication monitoring and vocal AI biomarkers for brain health assessments, among others. This provides predictive clinical intelligence for clinicians to assess and provide proactive care for rising and high-risk patient populations. Co-founders Eric Rock and David Lucas co-founded Vivify Health, a RPM platform now owned by Optum and earlier  MEDHOST, an emergency department medical records and workflow solution now part of HealthTech Holdings. Percipio’s raise came from investors including UPMC Enterprises, WAVE Ventures, Labcorp, and First Trust Capital Partners, LLC.  Release

Iris Telehealth acquires innovaTel by Quartet. Iris specializes in providing behavioral health services to health systems and community health clinics. innovaTel adds telepsychiatry staffing through its national network of qualified psychiatrists, psychiatric nurse practitioners, and licensed clinical social workers. According to the release, Iris also becomes one of the largest telepsychiatry providers in the US. Psychiatric service coverage has been moving towards a crisis point for years, with the Federal Health Resources & Services Administration (HRSA) calculating that nearly 160 million Americans live in areas designated as having a mental health provider shortage.  Psychiatry is also the third oldest specialty, with doctors’ average age at 55 (Psychiatric Times).  Purchase price, funding, and management transitions were not disclosed. Release

Perspectives: Three Strategies to Bring Digital-First Care to Patients Through Telehealth

January 22, 2025 | by

TTA has an open invitation to industry leaders to contribute to our Perspectives non-promotional opinion and thought leadership area. Today’s contribution is from Jessica Wagner, Chief Operating Officer at RXNT, who leverages extensive customer insight, product expertise, and organizational experience to address challenges in the healthcare industry. With a background spanning roles in product management, sales, and marketing, she is dedicated to delivering software solutions that simplify operations for healthcare organizations, enabling them to focus on patient care. Wagner holds a Master’s in Technology Management from Georgetown University and a Bachelor’s in Philosophy from Palm Beach Atlantic.

This article highlights the findings of their recently published report, “Tracking the Impact of Technology on Patient Satisfaction Within the US Healthcare System”, available for download here.

Today’s patients expect flexible, convenient, digital-first healthcare experiences. Telehealth can address many of these needs by reducing travel time, eliminating long waits, and allowing remote consultations. However, if practices fail to communicate telehealth’s availability and benefits, patients may remain unaware or skeptical.

Our 2024 survey report uncovered that difficulty scheduling appointments (42%) and long wait times (38%) are two leading causes of patient dissatisfaction—barriers that telehealth can help overcome by offering quicker and more flexible access to care. On top of that, over half of patients surveyed believe introducing more technology would improve their healthcare experience, and 35% say they’d consider switching providers for better digital services.

When telehealth flexibilities are a core component of your business strategy, it shows patients you’re committed to facilitating the modern, seamless care experience they expect. Here are three steps your practice can take to make this happen:

1. Promote Telehealth Services on Your Website’s Landing Page

Your website is your digital front door. When patients land on your homepage—new or existing—they should see whether you offer telehealth and how they can access it. Showcase telehealth with a bold call-to-action button, short explanatory text, and clear benefits:

  • Explain “Why Telehealth?”
    Use bullet points or a concise paragraph to clarify common patient questions and the benefits of telehealth, such as reduced travel time, minimized exposure risks, and convenient, timely appointments from anywhere.
  • Highlight Ease of Scheduling
    2 in 5 patients say it’s hard to get in touch with healthcare professionals for appointments. Highlight that your telehealth booking process is designed to be quick and simple with no phone tag necessary.
  • Offer Patient Testimonials
    If available, share—in a HIPAA-compliant manner—a testimonial or quote from a patient that shows how telehealth saved time, money, or both.

2. Update Online Profiles and Manage Reviews; Include Your Telehealth Services

Patients increasingly rely on online reviews and listings to find providers they can trust. Ensure that Google My Business, Healthgrades, WebMD, Yelp, and more reflect your telemedicine appointment options so that potential patients know you’re ready to meet their digital preferences.

  • Emphasize Digital Convenience
    Fifty-five percent of patients prefer using a mobile application to manage appointments. On each profile, detail how you make remote care accessible, whether via a proprietary app or a web-based portal.
  • Mention Text and Email Reminders
    Nearly 9 in 10 consumers say they find text notifications valuable. If your practice utilizes text reminders for telehealth, call it out under the “Services” section or description.
  • Provide Easy Booking Links
    Link directly to your telehealth scheduling tool to simplify the process. The fewer clicks it takes, the more likely patients are to book a virtual consultation.

3. Offer Telehealth for Every Applicable Client Appointment

Sometimes, patients need an extra nudge to try telehealth. Encourage staff, particularly receptionists or schedulers, to mention remote appointments whenever it’s clinically appropriate.

  • Alleviate Communication Woes
    Poor communication with healthcare providers is the top complaint among unsatisfied patients. To combat this, telehealth platforms often include built-in messaging features that give patients a direct line of communication to manage care and help reduce missed connections.
  • Showcase Time Savings
    Highlight how telehealth can minimize time off work or away from family. The more you can personalize these perks, the greater the likelihood that patients will opt in. As an example, write something like, “Have your appointment from home in 15 minutes.”
  • Normalize Telehealth as a Standard Option
    Even in routine appointment reminders or automated messages, include “Switch to a telehealth appointment!” prompt. Present virtual care as routine to foster acceptance among those who might otherwise only consider in-person visits.

Meeting Patient Needs in a Modern World

Telehealth has become a vital part of modern healthcare strategy. Showcasing its benefits in as many places as possible will highlight its convenience and reinforce your commitment to meeting the changing needs of your patients.

Our survey data suggests that effectively communicating your telehealth offerings can provide a significant competitive edge. In today’s healthcare space, success means delivering it on patients’ terms: where, when, and how they need it.

Masimo names new CEO, new board chair and vice chair. And confirms a fresh direction.

January 22, 2025 | by

After a dramatic 2024, Masimo settles in a new CEO and board. Joining from BD (Becton Dickinson) is Catherine (Katie) Szyman for the top spot and a board seat. With new board positions are interim CEO (since October and the resignation/ousting of Joe Kiani) and independent director Michelle Brennan as chairman of Masimo’s board and as vice chairman, lead independent director from Politan Capital Management, Quentin Koffey. The changes are effective on 12 February.

Ms. Szyman’s background in medical device and related is impressive, especially in joining a $1.5 billion company from a $6 billion one. She was briefly worldwide president of Advanced Patient Monitoring at BD after nine years at Edwards Lifesciences where she was corporate vice president and general manager, Critical Care, their unit for device and predictive analytics software. She is credited with Edwards obtaining the first AI clearance from the FDA for patient monitoring.  Edwards was acquired by BD last September. Prior to Edwards, she was at Medtronic for 24 years, rising from finance to president of their diabetes care unit. She has also held and still is on multiple board positions and is a Harvard MBA. According to the release and Ms. Brennan’s statement, Ms. Szyman will be “prioritizing our pipeline to focus on large opportunities, while developing a clear strategy for bringing our next generation patient monitoring platform to market”, which promises more professional monitoring products.

The double-down on the professional health side is backed by the makeup of the now nine-person board. Ms. Brennan is retired from a global leadership position at J&J. Tim Scannell and Bill Jellison both retired from Stryker as president and CFO respectively. Wendy Lane has extensive financial and investment background. Darlene Solomon was a chief technology officer and VP of Agilent Technologies in life science and chemical research. Strata-gee 21 October 2024. Holdovers from the Kiani era are former Disney CEO Bob Chapek and Craig Reynolds, a former COO of Philips Respironics.

With Ms. Szyman at the helm, one can easily predict that Masimo’s professional vital signs monitoring medical devices won’t stay concentrated in pulse oximetry and more on ‘large opportunities’, perhaps incorporating predictive analytics and AI. More will be changing at Masimo. Under the vague language of ‘alternatives’ and ‘strategic review’, Sound United will be sold, sooner rather than later as it will not be reported in their 2025 financials [TTA 17 Jan]. The release also confirms that the consumer healthcare business that encompasses smartwatches, fingertip pulse oximeter, a wearable thermometer, baby and infant monitors, and ‘hearables’ (the latter two with no product on the website), is on the block. Unless the consumer side can be developed, it’s too competitive. Politan is signaling wants to grow this investment big time.  A hat tip and bow to Ted of Strata-gee today for breaking this.

Straws in the wind? 23andMe considering Lemonaid telehealth sale, announces Discover23 research offering with Lifebit

January 22, 2025 | by

The long jump to Who Knows %&()#$!@ Where continues. 23andMe’s Incredible Shrinking Act continues with reports that their Lemonaid telehealth/teleprescribing unit is reportedly being shopped. The reports originated with sources talking to Business Insider with pickup in other industry publications like PYMNTS. How far the fishing line has been thrown is unclear. 23andMe has not returned calls from either BI or PYMNTS.

23andMe hasn’t much else to throw out the hatch. In lightening their expense load after their disastrous, poorly handled 2023 consumer data breach and subsequent class action lawsuits, the company last year shuttered its therapeutics discovery unit [TTA 14 August 2024]. By the fall, it scrubbed out 200+ employees or 40% of its remaining workforce, and fully closed its therapeutics development unit though it was still running two clinical trials that would have to be wound down. It was touted as saving $35 million annually but when executed cost $12 million in one-time severance and termination-related costs [TTA 14 Nov 2024]. Somehow it survived a mass resignation of the board [TTA 17 Sept]. 23andMe still merchandises its ancestry, health analysis, and the Total Health annual package on a scale from $99 to $999 annually.

Lemonaid entered the hot GLP-1 prescribing and support business in 2024, adding to its quick-diagnosis/quick-prescribing suite of psychiatric, birth control, erectile dysfunction, diabetes, and cholesterol meds. 23andMe bought it during their 2021 steak-and-trimmings days for $400 million in cash and stock, when 23andMe rolled in cash after their IPO at $300/share and was worth $3.5 billion. At the time, CEO Anne Wojcicki touted the integration of Lemonaid with their genetics as “healthcare that is based on the combination of your genes, your environment, and your lifestyle”. Lemonaid lifted them to a $4.8 billion valuation. Today, 23andMe’s stock, after a reverse stock split, closed today at $3.58 for a market cap of $86 million. Ancestry and health genomics proved to be a ‘one and done’ unsustainable consumer business, with the capture of consumer genetic information proving to be controversial. While featuring its 23andMe ownership, Lemonaid continues in its established business model without a breath of genetics.

The value of Lemonaid as a standalone is unknown. But given the competitive teleprescribing sector it’s in with GLP-1 weight loss drugs peaking, it’s likely at or near maximum value to be cashed in.

Anne Wojcicki for the past year has made no secret of her desire to personally buy the company and take it private. From her recent statements about “transforming healthcare” in five years [TTA 4 Dec 2024] and the company’s latest moves, Lemonaid may be, in her eyes, an off-strategy ‘lemon’. Their 8 January announcement of Discover23 was strictly about merchandising their research database cohort and genomic studies for biomedical research and governments (!) through a Trusted Research Environment (TRE) developed by Lifebit, an outside technology company based in London.

The picture to this Editor is of a company deliberately shrinking, moving away from the consumer market as much as possible, and selling its apparently huge genomic database for research purposes as its real and main business. A clever and timely cashout of Lemonaid will satisfy shareholders–and make the company, now worth less, easier for Wojcicki, who holds the controlling shares, to buy. And from there, who knows?

2024 earnings roundup, after a dramatic year: UnitedHealth Group and Masimo

January 17, 2025 | by

UnitedHealth Group’s annus horribilus closed out with a decent, but not up to earlier projections, financial report.

Having opened in February with the massive (and massively expensive) ransomware/hack of Change Healthcare, UHG didn’t have a lot of bright spots. Elevated utilization rates increased expenses; changes in Medicare Advantage reimbursements and the STAR ratings metholodogy changes reduced bonus payments.

Then, in the early, dim morning of their 4 December investor day in NYC, UnitedHealthcare’s CEO Brian Thompson was murdered while entering the New York Hilton Hotel. The manhunt and the controversy set off by the perpetrator’s so-called ‘manifesto’ exploded into a hurricane of severe public criticism on how plans process claims and treat members, a traditional and social media/online storm that only diminished around Christmas and the rise of other news. In literal fear for their lives, health plan executives took the lowest profiles they could manage. 

UHG’s earnings, while positive overall, reflected this uncertainty with lower Q4 revenue causing them to miss Street estimates. Share price fell over 6% today (Thursday). 

  • UHG’s Q4 revenues were $100.8 billion versus $94.4 billion in the prior year, up 6.8%. Profit of $5.5 billion was flat versus prior year. UHG’s 2024 revenues were $400.3 billion, 7.7% higher than 2023’s $371.6 billion. 
  • Health plan unit UnitedHealthcare’s 2024 revenues were $292 billion, up 6%, with operating earnings of $15.2 billion. US commercial members grew by 2.1 million.
  • Their 2024 medical cost ratio — the percentage of premiums spent on medical care — rose to 85.5%, far higher than 2023’s 83.2%, exceeding analysts’ projections of 84.96% and far above the targeted 80%.
  • Optum’s revenue, affected by the Change Healthcare hack and ransomware payments, still rose to $253 billion, up $26.3 billion or 12% versus prior year. The Optum Insight unit, which includes Change, had revenues of $18.8 billion, declining 1% because of the $867 million loss due to business disruption.

UHG release, FierceHealthcare, CNBC 

UHG also announced:

  • The Optum Rx unit will now pass through 100% of rebates negotiated with drugmakers to their clients–insurers, states and unions. This is up from 98% since 2% have preferred other rebate models. FierceHealthcare
  • UHG and Amedisys filed last week in the US District Court of Maryland to have the November Department of Justice suit dismissed. They cited that the DOJ did not adequately prove that the $3.3 billion acquisition would be anti-competitive. For one, the DOJ did not adequately define or provide detail on the geographic markets that would become be non-competitive. FierceHealthcare  They extended their deal deadline to the end of 2025 last month.
  • Change Healthcare stated yesterday that it has ‘substantially’ completed notifying affected consumers of their breach. Interestingly, if you use a search engine to try to find the breach notice, you’ll have a great deal of trouble–because the source code contains a hidden “noindex” code on the notice. ‘Noindex’ code tells search engines to ignore the web page–and has been there, apparently, since 20 November 2024. UHG has also not publicly disclosed a more exact number of those affected beyond the long-ago estimate of 100 million. TechCrunch   The state of Nebraska has sued UHG, Optum, and Change over the breach [TTA 19 Dec 2024] 

Masimo, ending a dramatic year of its own, now firmly in the control of Politan Capital Management despite flying lawsuits with former CEO Joe Kiani and an SEC investigation announced last month, issued its preliminary 2024 closing financials and their 2025 guidance. What’s hot–their consumer and professional medical devices, including smartwatches, that measure vital signs including pulse oximetry. What’s not–their audio business under Sound United, which is on the block.

  • 2024 healthcare revenue was up smartly by 9% to $1.395 billion. 
  • 2025 healthcare revenue is projected to increase 8-11% in the range of $1.5 billion to $1.53 billion. Non-GAAP operating profit is projected for 2025 at $398 million to $406 million.
  • Non-healthcare revenue (a/k/a Sound United) was $699 million. That declined 10% decline on a reported basis. 
  • Non-GAAP EPS for 2024 was $4.10. 

For 2025, Masimo is ending reporting for the Sound United business nor providing 2025 guidance since they are selling it. The only guidance they are giving is on the healthcare business. If one does the math–selling off Sound United will take out $700 million from their revenue. One more thing…updated results will be postponed until their investor call, delayed until Tuesday, 25 February. Mass Device, Masimo release

Short takes: UK’s Cera raises $150M, $105M for Qventus, Solera Health’s $40M; General Catalyst’s AWS deal, Virta Health hits $100M in revenue, powered by GLP-1 maintenance; VirtuAlly’s JC telehealth accreditation

January 16, 2025 | by

A ‘this-n-that’ roundup, with a flurry of fundings and more.

Larger fundings are really swinging it this month, making it feel a little bit like old times:

Cera raises $150 million for UK/NHS expansion, platform AI development, and upscaling. The $150 million funding is split between equity and debt, via lead investors BDT & MSD Partners and Schroders Capitals, plus Earlymarket, Guinness Ventures, DigitalHealth, and Robin Klein, a private UK investors. Cera has raised a total of $407 million, with their last raise of $302 million in 2022. 

Cera supports a spectrum of in-home health through its proprietary AI-assisted carer platform. Their nurses and other staff carers use the app on phones (primarily) to direct care and monitor patients. AI and ML assists enable caregivers to view and react to changes in condition. Families can also view reporting on the app. The company claims results of daily savings of £1 million for the UK healthcare system, hospitalization reductions of up to 70%, a 20% reduction in patient falls, and hospital discharges that are up to five times faster. It supports an estimated 60,000 daily in-person healthcare visits across UK homes, partners with over 150 local governments, and two-thirds of NHS Integrated Care Systems. They also claim to be EBITDA positive (as of 2022) and free-cash-flow positive from last year. TechFundingNews, TechCrunch

Qventus raises $105 million in a Series D. The investment in the care operations and automation platform for over 115 health systems was led by KKR’s Next Generation Technology III Fund with Bessemer Venture Partners plus new strategic investors Northwestern Medicine, HonorHealth, and Allina Health. Qventus claims to be ‘AI-first’ for automating routine care and record tasks, increasing team productivity up to 50%. The new funding will be used to accelerate the development and commercialization of solutions powered by its AI Operational Assistants into new care settings beyond its Surgical Growth and Inpatient Capacity solutions. Total funding to date is $203 million over 10 rounds. Release, MedCityNews

A $40 million round for Solera Health gets them to a Series E. The insider round was co-led by payer group Health Care Service Corporation (HCSC). It also includes investors Adams Street, Cobalt Ventures, and Horizon Mutual Holdings, Inc. Funding to date totals $112 million. Solera’s HALO platform provides access to hundreds of digital health applications for payers and employers, including apps for virtual specialty care in areas such as hypertension, high cholesterol, diabetes prevention, and weight management, to drive down the cost of care. Also announced was the confirmation of interim CEO John Santelli to the position. He joined Solera after nearly 30 years with UnitedHealth Group, departing as CIO. Release, MedCityNews

When giants meet…new AI models follow, with General Catalyst allying with Amazon Web Services (AWS) to develop AI tools for its portfolio companies. The focus will be on cloud services and generative AI using Amazon Bedrock, the ML application for building generative AI on AWS. This will be used for improving predictive analytics around patient treatment outcomes and insights into factors such as disease progression. Also mentioned are tools based on Anthropic and Mistral AI, along with securely trained health care-specific models. 

First up are the expanding Commure and Aidoc. Their specialized technology solutions like Copilot Suite and aiOS will be integrated with AWS’s AI and data capabilities. General Catalyst, besides investing in many healthcare and digital health companies, will be using this for their separate HATco, The Health Assurance Transformation Corporation. HATco was founded in October 2023 to develop an interoperability model for technology solutions, targeting health systems and payers. Mobihealthnews, Yahoo Finance/Global Data, FierceHealthcare

In the hot nexus of diabetes management and weight loss, Virta Health passed the $100 million in revenue threshold and growth of 60%. It’s remarkable given that Virta specializes in reversing Type 2 diabetes and obesity via nutrition modification and lifestyle changes. They’ve tweaked their approach into what happens after GLP-1 patients go off the drug, though they now manage GLP-1 prescribing for health plans, employers, and pharmacy benefit managers (PBMs). Their off-ramp is modeled after their Sustainable Weight Loss solution, Responsible Prescribing is designed as an alternative to GLP-1 drugs or as an off-ramp for patients moving off them to maintain their weight loss. Release

Virtual nursing provider VirtuAlly has received accreditation from The Joint Commission (JC). This relatively rare status for telehealth is based on continuous compliance with performance standards and commitment to providing safe and quality patient care. VirtuAlly provides 24/7 turnkey virtual nurse-patient monitoring, temporary virtual support, and consulting services. They also have added a new term to our lexicon, “tele-sitting”. Release 

M&A consolidation + integration continues with Health Catalyst-Upfront Healthcare, New Mountain-Access Healthcare and Machinify, SuperDial-Major Boost

January 15, 2025 | by

The early line on 2025 M&A centers around dinner to snack-size deals that consolidate competitors (or potential competitors) and integrate capabilities–one of our Quirky Predictions:

Health Catalyst agrees to buy Upfront Healthcare. The deal between the two will add Upfront’s personalized patient activation and engagement platform to Health Catalyst’s healthcare management services centered on data and analytics, care management, and performance related services for healthcare organizations. No transaction cost was listed in the release, but the Form 8-K of 10 January details an initial payment of $86 million, composed of $41 million in cash and 5.7 million shares of Health Catalyst stock, plus an earnout of $33.4 million. By comparison, last August’s Lumeon Ltd. buy was for $40 million plus a $25 million potential earnout [TTA 15 Aug 2024]. The UK company’s Care Orchestration service is now integrated into the Health Catalyst suite of services which appears to be the plan for Upfront Healthcare’s services and staff. Closing is stated in the 8-K as occurring during Q1 2025 ending 31 March. Health Catalyst release

Private equity New Mountain Capital invests in Access Healthcare–and reportedly seeks to buy. Based in India with offices in Dallas, Access is a revenue cycle management company for about 150 hospitals and non-acute care practices.  Services include medical billing, coding, and accounts receivable management services. It processes about 400,000 transactions annually according to the Access release today. New Mountain’s investment is (again) for an undisclosed amount. Bloomberg reports that according to the usual insiders, New Mountain is negotiating an acquisition of Access for its portfolio in a transaction that could value Access at about $2 billion. This could close in a few weeks.

On Friday 10 January, New Mountain announced that it will acquire Machinify Inc., a provider of AI-powered software for healthcare payments, for an undisclosed amount. It will join a combined payments company serving over 60 health plans formed by New Mountain from earlier acquisitions The Rawlings Group, Apixio’s payment integrity business, and VARIS. The new company will take the Machinify name and have about $500 million in revenue. Closing is anticipated by end of Q1. Becker’s

Our snack-sized deal: SuperDial’s acquisition of MajorBoost. These two AI-intensive phone call automation providers occupy different parts of the healthcare phone call continuum. SuperDial automates provider to payer and RCM outbound healthcare phone calls for insurance verification, provider attestation for health plans, prior authorizations, credentialing, and more. MajorBoost also automates  provider calls to payers through waiting on hold and navigating their Interactive Voice Response (IVR) phone trees. Acquisition cost nor management transitions are not disclosed, but MajorBoost is listed on Crunchbase as pre-seed with only $350,000 in funding. SuperDial is listed as having $4.2 million in funding over three seed rounds. Release

Walgreens’ kicks off FY 2025 with a wider net loss of $265M; shares rise 25% as closures, sales, and cost-cutting continue

January 14, 2025 | by

Walgreens kicked off their FY 2025 on a sad trombone note–yet Mr. Market liked the music. In one of those contradictions that only make sense to Wall Street, Walgreens’s Q1 2025 earnings report, ending 30 Nov 2024 that reported last Friday, was dismal by any reading–but seemed hopeful to market makers who lifted the shares by over 25% as of midday 14 January. 

US retail pharmacy sales and operating losses were the main drags on WBA’s results.

First, the highlights from the earnings release:

  • Operating loss was $245 million, versus $39 million in Q1 2024. The increased loss was due to lower US retail sales and lapping prior year sale-leaseback gains. Another driver was the US Retail Pharmacy Footprint Optimization Program, unexplained in the release.
  • Net loss was $265 million, versus $67 million in Q1 2024, driven by operating losses.
  • It was a dismal quarter for US Pharmacy, which includes the retail stores, despite gains in pharmacy sales of 10.4% due to drug inflation. Retail sales (the front end of the store) decreased 6.2%.
  • A bright spot was US Healthcare, which includes VillageMD, CareCentrix, and Shields, had a smaller operating loss of $325 million, versus same quarter in FY 2024’s $436 million. VillageMD sales increased 9%, CareCentrix increased 16% and Shields increased 30%.
  • Another bright spot was Boots UK’s performance. Their ‘comparable’ pharmacy sales increased 10.9% versus prior year, retail sales  8.1 percent% and grew across all categories. Boots.com sales–22% of total retail sales–were up 30% boosted by Black Friday.

So why did Mr. Market kvell over this and immediately boost the same shares that fell 63% in 2024? Mostly from the earnings call with CEO Tim Wentworth and other C-levels:

  • Results beat the Street estimates (LSEG survey):
    • Earnings per share: 51 cents adjusted vs. 37 cents expected
    • Revenue: $39.46 billion vs. $37.36 billion expected
  • Guidance for FY 2025 estimates adjusted earnings per share at $1.40 to $1.80 per share with revenue in the $150 billion range.
  • CEO Tim Wentworth confirmed that retail locations will continue to close and will accelerate. 70 were closed in Q1 2025.
    • Their goal is to close 1,200 locations from 2024 through 2026, with 450 to 500 underperforming locations to shutter in 2025. Walgreens currently has around 8,500 retail locations.
  • The sale of VillageMD is underway but no potential acquirers were mentioned on the call.  Separately for Summit Health and CityMD, Walgreens is considering “best options” such as sale or restructuring. These units were snapped up by VillageMD in January 2023.
  • They are working to turn around retail sales which are declining due to consumers restricting spending due to inflation and the value in using online retailers.
    • One measure is around labor scheduling being redesigned to improve the in-store experience. Walgreens is launching a new scheduling model in about 200 locations based on store demand patterns.
  • In pharmacy, they plan to roll out digital and virtual check-in for patients plus micro-fulfillment centers for prescription processing.

Interestingly, Walgreens in the US is not promoting online sales–unlike Boots UK which has done well with it.

There was no comment on the reported consideration of sale to a private equity (PE) firm such as Sycamore Partners [TTA 10 Dec 2024, 8 January], which would remove it from the NYSE.

Street analysts are boosting the stock now, but state that they need to see a few more quarters of stable performance to feel more confident about WBA’s future. Whether that will happen and that the US retail/pharmacy picture improves is to be determined. HIStalk, CNBC, FierceHealthcare, Healthcare Dive