Walgreens’ misery level rises some more: Federal court affirms $987M award to PWNHealth/Everly Health. Plus selling $295M in Cencora shares, drawing down to 6%.

February 12, 2025 | by

Walgreens’ Mound of Misery grows ever higher in two more ways. The US District Court for the District of Delaware ruled yesterday that last year’s arbitration award of $987 million to PWNHealth stands.

Walgreens originally contracted exclusively with PWNHealth’s Everly Health Solutions’ telehealth physician network in April 2020 to order Covid-19 tests that consumers requested through the Walgreens website. PWN/Everly had, with its network, the ability to administer nationwide Covid-19 testing including labs and follow-up. However, Walgreens in 2021 started to divert tests to their own pharmacists, while continuing to use the Everly trademarked logo and displaying that testing would be done by PWN/Everly’s network. This breached the exclusive Master Services Agreement (MSA) with PWN/Everly. Walgreens terminated the MSA effective 1 June 2022. PWN/Everly on 10 June 2022 then initiated the arbitration with the American Arbitration Association alleging breach of contract, a violation of the Latham Act on trademarks, plus additional breaches and violations. In March 2024, the arbitrator awarded PWN/Everly $987 million. This was 12 times the contractually specified $79 million in damages. Arbitration text and decision in Jus Mundi

Immediately after the arbitration, Walgreens filed suit in Delaware to vacate the ruling on the grounds that it contravened the contract’s cap on damages and that the arbitrator’s decision was “egregious and improper”.

The Federal judge in yesterday’s decision upheld the arbitration decision, finding that the arbitrator had the authority to interpret the contractual language and determine damages. The judge found no evidence that the arbitrator exceeded his authority or showed bias. Walgreens is, of course, appealing the decision in the US Court of Appeals for the Third Circuit. In its Securities and Exchange Commission (SEC) filing, Walgreens stated that it disagrees with the court ruling but that the appeal may take another two years. “There can be no assurances as to the outcome”. PWNHealth, of course, is “pleased with the court’s well-reasoned decision confirming the arbitration award.” Reuters, Crain’s Chicago Business, FierceHealthcare  

Walgreens needs some fast cash. One investment that they have been gradually cashing out is their interest in Cencora, a drug distributor originally called Amerisource Bergen. Last Thursday’s drawdown involved Cencora repurchasing about $50 million worth of its stock from Walgreens, with Walgreens selling about $265 million worth of additional shares. Deducting $20 million in early settlement fees, the net proceeds were $295 million. Walgreens (WBA) states that it will be used primarily for debt paydown and general corporate purposes. WBA’s stake in Cencora has been reduced to 6% from the earlier 10%. Walgreens has been steadily cashing out its Cencora interest with three sales in 2024 totaling 5% of shares [TTA 7 July 2024].  Release, Healthcare Dive, Crain’s Chicago Business

Given January’s Department of Justice (DOJ) civil suit over improper dispensing of opioids and and other unlawful medications over more than a decade, with possible penalties in the billions, Walgreens’ Mound of Misery is approaching Chicago’s Willis Tower (the former Sears Tower) heights.

News roundup: NHS announces EDITH breast cancer screening trial, Sword Health reveals mental health move in AI-first push, Evolent Health changes up board, Highmark’s enGen tech drops 208

February 6, 2025 | by

Over 700,000 women to be screened using AI-assisted radiology. The NHS announced on World Cancer Day (4 February) a massive trial of EDITH—Early Detection using Information Technology in Health. The intent is to reduce to one the number of radiologists needed to review a patient’s mammogram, freeing up short radiology resources, cutting waiting lists, and speeding early detection of breast cancer. The Department of Health and Social Care initiative that builds on smaller AI-enabled screening trials is part of the 10 Year Health Plan/Plan for Change. EDITH is backed by £11 million of UK Government support via the National Institute for Health and Care Research (NIHR). 30 testing sites across the UK will be used to screen women 50 to 71 already scheduled for their every-three-year exam. It’s not clear from the information if different AI assists will be used. Breast cancer in the UK affects 55,000 women and 400 men annually, second only to prostate cancer. The UK.Gov release and the Daily Mail article do not state the start nor the end of the EDITH trial, nor locations.

Virtual MSK provider to employers Sword Health leaked at JP Morgan on mental health, AI-first ambitions. CEO Virgílio Bento confirmed to STAT that they are going “AI-first” for their care models. Their ambition is to be known as an “AI care company that is going to reinvent all care delivery models that are 100% labor intensive.” The first area to get the Sword treatment is mental health, using their proprietary tablet model utilized for physical therapy. Talk therapy was derided by Mr. Bento for low-acuity conditions like anxiety, and he promised a model that would be “very disruptive.” Others ‘ripe for reinvention with AI’ are speech care, GI care, and cardiac care. His POV is that AI will enable us to move away from human-first health care. Sword Health raised in June 2024 a jumbo round of $130 million and now is valued at around $3 billion, then ‘put the sword’ to 17% of its clinicians. It has plump coffers and is rumored to be prepping for an IPO [TTA 13 November 2024].

Provider management services organization (MSO) Evolent Health adds to board, announces new chair. Rick Jelinek, who joined the board as an independent director in 2023, will be moving to the chairman position, succeeding Cheryl Scott. This will be effective at the 2025 Annual Meeting, date TBD. Mr. Jelinek is currently managing partner of Czech One Capital Partners and previously was a CVS Health executive VP. Added to the board is a new independent director, Brendan Springstubb. He is currently principal of Bedell Canyon LLC an advisor to public equity investment firms primarily in healthcare. Previously, he was a principal at one of Evolent’s major shareholders, Engaged Capital, LLC. The release also announced the planned addition of another independent director before the annual meeting.

Also upcoming: Evolent’s Q4 and year 2024 earnings call on 20 February, which should be interesting.

Starting in August last year, Evolent and Engaged Capital were moving towards a sale of part or all of the company. The number booted about was $4 billion for the package; interested parties were rumored to be Elevance, TPG, KKR, and Clayton, Dubilier & Rice (CD&R). At that time (late August), their stock on Nasdaq had hit a high of above $32. As late as early November, it traded at $25 then cracked after 7 November. At today’s close, it traded at $10.37. What happened on 7 November was the announcement of a poor Q3 due to a huge increase in medical costs that greatly affected their managed care organizations and required them to lower their guidance for the remainder of the year. The release emphasizes the skills now existing on the board in creating value for shareholders. 

And on a down note, Highmark Health’s enGen health tech subsidiary lost 208 people at the end of January. enGen provides technologies for health plans and providers in a ‘payvider’ model for operations, utilization management, provider data and reimbursement, and payment integrity. Last year in March and May, 277 were laid off from their 12,000 person workforce. enGen serves about 50 Blue and non-Blue plans with 20 million members. Highmark Health, based in Pittsburgh, is a Blue Cross Blue Shield and serves central/western Pennsylvania, including Philadelphia in the east, and parts of western New York State. Pittsburgh Business Times

Teladoc to buy Catapult Health in all-cash, $65 million deal

February 6, 2025 | by

Teladoc lets loose with the cash, snaps up Catapult Health to get into preventative health services. Teladoc’s agreement with Catapult to acquire them for $65 million is their first significant purchase move by Teladoc since the $18.5 billion Livongo buy in 2020 and the first for new CEO Chuck Divita, who joined Teladoc last year. The strategy, as alluded to at the JP Morgan conference, is to widen the product breadth to deepen impact on healthcare outcomes.

Catapult is positioned significantly earlier in patient health than Teladoc, as their Virtual Checkup sends at-home diagnostic kits to employees or health plan members to return as a form of an annual checkup, for instance. The kits test for blood glucose, cholesterol, and blood pressure, plus BMI calculated by height and weight. If a condition is diagnosed, a virtual consult with a licensed provider is scheduled, and the employee is directed into an appropriate program or to their primary care provider. Employers and plans get data on the patient/member group to refine approaches and close care gaps. Earlier diagnosis and management save both employers and payers money–a claimed $1,400 over a three-year period.

The integration into Teladoc is logical as the ongoing patient management is planned to be steered to Teladoc and its programs/providers. Catapult at present has no app–their management approach is 1:1 on a video consult scheduled between the employee/member and Catapult’s provider.

Compared to the Livongo buy, Catapult is snack-sized. The deal is $65 million in cash, with an additional $5 million contingent earnout consideration. The transaction was 2.2 times Catapult’s trailing 12-month revenue through Q3 2024. Closing is expected to be this quarter. Catapult is private and over 15 years raised a modest $26.4 million from exiting investors Jeffrey Smith, Michael Woods, University of Colorado Health, and Health Enterprise Partners. As is becoming standard, there is no transition mentioned of Catapult employees, including CEO David Michel, except for a statement that it will operate within the Integrated Care segment of Teladoc. Catapult is based in Dallas and claims 3,500 employers and other organizations that cover 3 million lives.

Will Teladoc do better than they did with integrating Livongo? In the release, Teladoc stated that Catapult clinicians “will be able to directly enroll eligible members into Teladoc Health’s diabetes, hypertension, pre-diabetes and weight management programs, and seamlessly refer them to Teladoc’s virtual mental health therapists and primary care providers.” One can only hope that this integration goes better than Livongo’s. Former CEO Jason Gorevic touted it as seamless as late as mid-2022, but it turned out to be a potholed road with Livongo’s execs taking the money and running, then gradually losing (or cutting) most of its operational expertise in the chaos. Teladoc also aggressively leveraged Livongo and Teladoc’s longitudinal capabilities at the wrong time to the wrong markets 1) during an economic downturn and 2) to buyers not wanting their ‘premium spread’ but preferring less comprehensive but targeted solutions from competitors that were easier and cheaper to implement. The point of Catapult Health was, after all, to save employers money. We’ll see if a new Teladoc crowd has learned that hard lesson and to move softly, softly on the upselling. CNBC, Healthcare Dive, FierceHealthcare    For a more in-depth look at Teladoc’s and Amwell’s struggles in a changed market, see our 9 April 2024 article on What Happens Next in telehealth.

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