Breaking: Will telehealth extensions survive past 31 March? ATA addresses rumors.

February 21, 2025 | by

The answer is “we’re working on it”. As Readers recall from the blur that the final Federal budget extension turned out to be, cut down from an elephantine 1,547 pages to 118 pages, three telehealth provisions from the American Relief Act (ARA), of a total of six in the elephant version, were approved through 31 March [TTA 19 Dec]:

  • The Special Diabetes Program (Sec. 3102)
  • Telehealth flexibilities (Sec. 3207)
  • Hospital care at home (Sec. 3208)

A more extensive explanation of the above three that were extended, and the provisions that were omitted, is available here from law firm McDermott Will & Emery.

The American Telemedicine Association‘s advocacy arm, ATA Action, has sent out an email to media rebutting current rumors that the telehealth flexibilities will not be extended. They affirm that President Trump and his team are working with Congress to extend telehealth flexibilities. Since there is no link as of yet on ATA’s site, your Editor is doing what she never does, which is to print a release verbatim deleting only the ‘about’ section–because of its importance. The ATA release as PDF:

ATA ACTION ADDRESSES RUMORS REGARDING TELEHEALTH EXTENSIONS

 WASHINGTON, D.C., FEBRUARY 21, 2025 – ATA Action, the advocacy arm of the American Telemedicine Association, addressed today’s rumors, mistakenly claiming that telehealth services will not be extended past the March 31 deadline.

“Despite today’s rumors, our conversations on Capitol Hill confirm that President Trump and his team are actively working with Congress to extend vital telehealth flexibilities beyond the looming March 31, 2025, deadline,” said Kyle Zebley, senior vice president, public policy, the ATA and executive director, ATA Action. “Telehealth is a bipartisan success story, delivering affordable, safe, and effective care to millions of Medicare beneficiaries. In 2020, the Trump administration acted swiftly to expand telehealth access, a move that has since enjoyed broad support across Congress and the Biden administration. Telehealth must always remain a bipartisan issue.

“We commend both Administrations and Congress for their leadership and urge them to make telehealth flexibilities permanent or extend them for as long as possible. Medicare beneficiaries deserve access to care that is convenient, effective, and uninterrupted,” Zebley added. “Patients, providers, and policymakers across the aisle recognize its value, and ATA Action remains committed to preserving and strengthening this support. We stand ready to work with all lawmakers and the administration to keep telehealth accessible and ensure it remains a cornerstone of modern healthcare. We cannot afford to let access to telehealth expire on April 1.”

The next few weeks will tell, now that RFK, Jr. is now confirmed at HHS. And Congress will be pressed to address not only the budget, but also the scorching hot button of extending previous tax cuts to help jumpstart the economy.

News roundup 21 Feb: UHG offers buyouts to 30K before layoffs (updated); more inside the Transcarent-Accolade deal; Hims acquires NJ testing company; layoffs bite inside HHS; in fundings, Vitalchat gains $6M, Frontera seeds at $32M, Harrison.ai $112M (AU), Abridge’s $250M

February 21, 2025 | by

UnitedHealth Group ends an annus horribilis with more horribilis. UHG offered early this week 30,000 employees their “Voluntary Resignation Severance Program” or VSRP. If the employee accepts between 24 February and 3 March, the program offers anywhere from 7 to 30 weeks severance, based upon tenure and salary grade; they’ll receive their termination date on 17 March with all released by 1 May, as of now. A wrinkle: their managers must approve of their taking the package, which could set up a situation of being released later involuntarily. UHG has 420,000 employees and oddly, is still posting available positions but they may be ‘ghost’.

Reports have been compiled by employees posting largely anonymously across social media and websites such as Reddit, Facebook, LinkedIn, TikTok, and TheLayoff.com. The buyout offer, according to reports, is concentrated in the benefits operations area. According to CNBC’s sources, benefits oversees multiple subdivisions that help manage customer service, claims, enrollment, customers’ insurance benefits, and more. As is typical with voluntary severance offers, the whip is that if employees do not take the VSRP, those laid off later will receive a reduced package.  There is no information about additional benefits, such as 401(k) and incentive vesting, or healthcare benefits–the last ironic for a healthcare company.

On social media, the betting is that UHG is only the first payer to institute layoffs, with the decline in Medicare Advantage payouts and reductions in ACA subsidies. Other factors: AI (per the last earnings call, they are replacing many customer service functions with AI programs) and offshoring. This is not going to be a great year for any payer, if you work for one, and their suppliers/partners. HealthPayerSpecialist (hat tip to Mansur Shaheen via LinkedIn), FierceHealthcare, PYMNTS.com, Minneapolis Star-Tribune   A followup article by Mr. Shaheen with UHG interviewing employees and accessing company information is here. Another reason why is that UHG’s attrition rate, for various reasons including company response to the Brian Thompson murder and their higher pay rates, was much lower than forecast.

Updates on the Transcarent deal for Accolade. Contained in the latter’s SEC Schedule 14A, an announcement of a stockholder meeting (virtual) and preliminary proxy statement, are more tidbits in the runup to the deal with Transcarent:

  • Transcarent’s merger sub was formed on 3 January, indicating this deal has been on the table for some time
  • In April 2024, Accolade was considering acquiring a strategic company (unnamed). That company rejected the offer and instead offered to buy Accolade by May. Later that month into August, a special committee and outside advisors considered competing purchase offers, well over 16.
  • Transcarent’s original offer was made at end of July, was unsolicited, and an August proposal was rejected. A second proposal was rejected in September based on financing.
  • In October, after business reverses, Transcarent submitted another bid for shares at $7.25 and was delayed by the special committee 
  • Between that date and year’s end, the other proposals faded away for a variety of reasons.
  • Transcarent’s final offer was $7.03 per share and accepted in January.

Regarding transitioning incentives in the deal, expected to close in Q2:

  • It can be terminated by 7 October. If Accolade terminates it, the payment to Transcarent is $19.8 million. If Transcarent terminates, the fee to Accolade is $29,950,000
  • Top management (Rajeev Singh, Stephen Barnes, Robert Cavanaugh, and Richard Eskew) shares will accelerate in vesting. Some top management such as CEO Singh will enjoy retention bonuses.
  • It describes treatment of employee benefits such as restricted and performance stock units (RSU, PSU) being converted to cash and that other benefits for continuing employees will be cut over for a year.

Also Endpoints News

Hims & Hers buys a testing lab in NJ.  The acquisition of Sigmund NJ LLC, also known as Trybe Labs, in Kearny NJ will support at-home blood draws and more complete and affordable whole-body testing. The acquisition was self-financed and not disclosed. Hims, a telehealth prescriber for GLP-1, ED, hair loss, migraines, and anti-depressants, in the release pointed out that the Trybe Labs buy will enable them to serve high-impact clinical categories including low testosterone, perimenopausal, and menopausal support for patients and providers. Through using a blood lancet, they will test for hormone levels, cardiac risk, stress markers, cholesterol, liver function, thyroid function, and prostate health. Mobihealthnews, Endpoints News

Layoffs within HHS are extensive–and as of a court action today, going through. Most of those eliminated by DOGE (Department of Government Efficiency) are probationary hires–in their first year–and some in year two. Those released at HHS include 1,300 at the Centers for Disease Control and the National Institute of Health (unknown but expected to be upwards of 600). Those released will have a month’s severance but will end work on Friday 14 February. Some probationary NIH employees will be retained. Cuts include CDC and other HHS contract workers and include dozens at the Vaccine Research Center housed at NIH. The current acting principal deputy director, Nirav Shah, will be departing on 28 February as will Renee Wegrzyn, the appointed head of Advanced Research Projects Agency for Health (ARPA-H), which performs biomedical research in conjunction with the private sector established in 2022 by the last administration. Ironically, reviewers of Elon Musk’s Neuralink project and other brain-computer interface companies were among the 20 fired at FDA’s Office of Neurological and Physical Medicine Devices.

HHS employs more than 80,000 people across multiple agencies and has a budget of $1.8 trillion. NIH alone has 20,000 people and has a $47 billion annual budget. STAT, Mobihealthnews

Funding highlights include a stunning seed round:

  • Vitalchat, a provider of in-patient virtual nursing and procedural telehealth, closed a $6 million Series A round. Investors were led by Green Harvest Capital Industries (GHC Industries). Two of their principals will join the Vitalchat board: Ankit Patel, GHC’s CEO, and Saagar Parikh, co-founder/principal. The new funds will be used for product innovation, market expansion, and deeper AI integration into clinical workflows for its AI-assisted virtual sitters. Release
  • Frontera Health’s seed round of $32 million was a return to 2020’s Big Raises. It was co-led by Lux Capital and Lightspeed Venture Partners, with Bison Ventures, Menlo Ventures, and Inspired Capital participating. Frontera specializes in autism services, including virtual autism diagnosis and assessments, as well as in-home and center-based ABA therapy. It uses what they call ‘digital phenotyping’ to analyze interactions and behaviors, providing real-time cognitive reasoning and objective data points for clinical assessments. Behavioral Health Business noted substantial raises by other companies such as Anna Health and Prosper Health, along with private equity (PE) investments.  Release, Mobihealthnews
  • Down Under, Harrison.ai’s Series C totaled $112 million in a Series C funding. It was led by Aware Super, ECP, and Horizons Ventures. It provides medical imaging diagnostic support in radiology and pathology, including workflow solutions. Harrison is opening a US headquarters in Boston to expand their US business. It already has clients in APAC, EMEA, UK, and US, where it has 12 FDA clearances. One of their CT brain algorithms has FDA Breakthrough Device Designation and Medicare reimbursement through the New Technology Add-on Payment (NTAP).   Release, Mobihealthnews
  • Abridge raised an old-school level $250 million Series D investment. This was co-led by Elad Gil and IVP, with a long list of participants including Bessemer Venture Partners, California Health Care Foundation, CapitalG, CVS Health Ventures, K. Ventures, Lightspeed Venture Partners, NVentures (NVIDIA’s venture capital arm), Redpoint Ventures, Spark Capital, and SV Angel. Abridge’s platform converts patient/clinician conversations into structured clinical notes in real time using (guess) generative AI. Funding will be used to further develop AI capabilities and commercial growth to support broader applications. It claims 100 of the largest and most complex healthcare systems in the US, from rural systems to children’s hospitals, leading academic systems, and nationally recognized cancer centers, Release

“It’s alive!” Walgreens’ deal with Sycamore Partners may be back on the table: report

February 19, 2025 | by

Resuscitated, according to Tuesday reports. CNBC’s David Faber, currently co-anchor of CNBC’s morning “Squawk on the Street”, said Tuesday (yesterday) that the take-private deal of Walgreens Boots Alliance by Sycamore Partners and possibly other entities, has gone from “dead” to “alive” in his books.

The Walgreens deal was reported, but called “rumors and speculation” by Walgreens in December right before the Christmas blackout [TTA 10 Dec 2024, 8 Jan]. It withered like sycamores do in a cold 2025 winter, when Walgreens piled up Heaping Helpings of Misery in the following weeks: January FY25 results, suspending its dividend, and arbitration awards, civil settlements, and penalties.

Yet…a little-noted report local to Chicago noted that as of January’s end, Sycamore had been approaching private credit firms trying to put together debt financing for a deal. Whether this was for WBA or another deal is unknown. But Sycamore is no newcomer to this. Crain’s Chicago Business

There isn’t much (right now) beyond Mr. Faber’s call in the news coverage, and certainly no comments by either WBA or Sycamore. But his show and his persona–a 30+ year veteran of CNBC known for his insider savvy and calls–are influential enough to drive the stock up a dollar from $9.70 to $10.98 on Tuesday. The price lingers on through today at $10.86.

What also lingers? The sheer difficulty of Sycamore pulling off a complicated and pricey deal with WBA. It is not one of the VC elite with a ton of money from limited partners aching to invest. But what it has is a track record in putting together complex deals and saving debt-ridden retailers before, notably with Staples in 2017 and more recently Chicos FAS and Playa Bowls. Its focus is retail and e-commerce, making it an odd (but not too odd) partner for Walgreens. It might be interested in kicking up a downsized retail operation and in Boots’ thriving retail/e-commerce business in the UK, leaving the healthcare/VillageMD, pharmacy, and PBM ownership to others. It’s led to speculation that their interest might be a cherry-pick as part of a breakup team. But, as mariners know, the wise sailor knows that it’s any port in a storm.  Crain’s Chicago Business, Yahoo! Business

Two Must Reads: What’s Glen Tullman’s real game with Transcarent and the Accolade buy? (updated) Plus an extra helping on the VC ‘mafia’ and Hippocratic AI.

February 19, 2025 | by

Make some time over the morning cuppa or lunch for a brilliant investigative report on Transcarent and Glen Tullman. Arundhati Parmar over at MedCity News pulls aside some of those Great Oz curtains, surveys the scene, then asks the questions that few have dared to. Such as:

  • Is Transcarent’s model not working? Are they successful or not?
  • Or are those corporations and benefits consultants so hidebound, so powerful, so exclusive, that they forced Glen Tullman to buy into the traditional care navigation model–and he is a Victim of the System?

Those of us in the healthtech/digital health industry have looked with amazement, mixed with dismay, at Mr. Tullman. The amazement is the powerful voice he has among us, reinforced by his investment funds. The dismay comes from the $18 billion sale of Livongo to Teladoc in the palmy days of 2020. As we reported, even then it was regarded as a dubious move. It then became a case study in What Not To Buy–Or Do. From Mr. Tullman’s and his management’s perspective, Teladoc’s offer proved to be Grand Theft Auto. In other words, a heist to end all heists. For Teladoc, it was a disaster. Mr. Gorevic, as we know, is gone and Teladoc is rebuilding. In many ways, Teladoc has never recovered and may never. 

Mr. Tullman, who founded two VCs, 7wireVentures and most recently 62 Ventures, after selling Livongo almost at once founded Transcarent with a vision that it would do the job through software that human corporate care navigators and benefits consultants couldn’t do–take out all these middlemen and deliver to both companies and their employees better quality healthcare at a much lower cost. It would also turn the PMPM (per member per month) pricing scheme into a risk-sharing model based on use. He made the rounds at every conference pitching against traditional care navigators, including the most prominent, Accolade.

Last month, he and Transcarent made a substantial offer to buy, yes, Accolade, for $621 million [TTA 8 Jan]. Publicly traded and struggling for years, recently losing major accounts, Accolade was on the block–yet its model is so different than Transcarent’s that it feels like double vision. In fact, this deal had been in the works since last July–initiated by Glen Tullman. Why?

A clue from one of Ms. Parmar’s sources, most of whom have had to be anonymous for obvious reasons:

“He is an amazing storyteller and amateur magician. But like any story and magic trick, sometimes it’s hard to tell what is real and the trick doesn’t work. ”

Ms. Parmar’s path to answering these questions is top notch, and this Editor invites you to read it, start to finish–and return to it again. When you finish it, you’ll not only know about Transcarent’s current business realities, but also learn a great deal about how companies regard care navigation plus the economics. The discrepancy, as always, is between the ‘vision’ and reality. Is he in it for the mission, or has reality bitten? Is Glen Tullman a Hypocrite or a Victim of the System He Aimed to Disrupt? (I also want to commend MedCity News for publishing this)

Update: See Ms. Parmar’s video on LinkedIn regarding the response to her article. Of note: 1) the complete lack of response from Transcarent’s corporate communications team*. 2) If you want investigative journalism, you have to be willing to be a source, so when you see something wrong, you have to reach out. That means risk. (*No surprise to this Editor, who directly contacted Transcarent’s corporate comms team to clarify whether 98point6’s telehealth service, purchased for $100 million, still was operating–no reply to this simple ‘layup’. TTA 5 Feb)

Our ‘extra of the day’ is from AI Health Uncut. Sergei Polevikov, publishing on Substack, puts on the scuba gear and dives deep not only into Hippocratic AI, which promotes AI agents for various types of healthcare contact requirements, but also its key funder, General Catalyst and its head, Hemant Taneja. For starters: Hippocratic AI is the most expensive AI company on Planet Earth if viewed as valuation x revenue multiple. Mr. P brings the numbers and the heat.

If you’ve looked at fundings in the past two years, versus the ‘olden days’, and wonder why the same names always seem to pop up, it is because VC fundings have become concentrated among very few companies. As this Editor noted in the Rock Health 2024 results, of 391 VC funds, 30 raised 75% of all US committed capital. Nine of those funds accounted for 50% (Pitchbook). Sitting at or near the top is General Catalyst, which has moved into wealth management and through HATco, owning hospitals such as Summa Health. But there are other reasons as well, and Mr. Polevikov gets into the murk.  It’s another one for a long cuppa or lunch. And it is part one of two, upcoming!

I encourage our Readers to support Sergei’s work on Substack–for a modest annual subscription amount, you gain full access to his work, past and present, charts, videos, and articles. (I did, and have noted his site among Websites We Like.) The link above may be paywalled as a result for non-subscribers. [Disclaimer: through commenting in this article, I pointed out GC’s move into GC Wealth, and my short news item is linked.] He also recently posted a lively panel discussion video with Alex Koshykov, Matthew Holt, and James Wang.  

2025 is proving to be a year of massive change in healthcare. It may be a year of comeuppance for those we’ve regarded as all powerful and fearsome. Yes, the cliché ‘sunshine is the best disinfectant’ is true, but a good dose of hydrogen peroxide, boric acid, or Lysol helps.

News roundup 2: RFK Jr. confirmed as HHS Secretary, new MAHA commission formed; Amwell narrows loss by 68%; HEALWELL (CA) nears close of Orion Health (NZ) buy; Summer Health buys Caraway; Spectrum.Life (IE) plans to double users; 2025 NY Digital Health 100 announced

February 14, 2025 | by

Robert F. Kennedy, Jr. was confirmed this morning as US Health and Human Services (HHS) Secretary. The Senate vote was fairly standard for President Trump’s appointees, along party lines (with one exception) in a 52-48 vote. Secretary Kennedy survived bare-knuckle committee hearings (and a family ‘diss’ from cousins) to put into place measures to Make America Healthy Again (MAHA) as promised during the 2024 presidential campaign. Today’s presidential Executive Order also makes Secretary Kennedy the leader of the MAHA Committee, which, according to a White House statement will be “tasked with investigating and addressing the root causes of America’s escalating health crisis, with an initial focus on childhood chronic diseases.” such as autism and fatty liver disease, plus adult asthma and the causes of the low US life expectancy.  The EO’s four policy directives focus on reversing chronic disease through:

  1. transparency on health data to “avoid conflicts of interest in all federally funded health research
  2. prioritizing “gold-standard research on why Americans are getting sick” in all federally-funded health research
  3. working with farmers to ensure food is healthy as well as affordable
  4. expanding health coverage and treatment options “for beneficial lifestyle changes and disease prevention.”

The timeframe is short: 100 days to produce an initial assessment, and 180 days to produce a strategy to improve child health. All this and learn HHS too. Next up in hearings: Mehmet Oz, MD as CMS Administrator, expected to face far less flak.  FoxNewsDigital

Amwell straining to get weller, financially. Still in the red but improving by about 68%, Amwell’s full year 2024 net loss was $212.6 million on $254 million in revenue versus 2023’s net loss of $679.2 million, which included a non-cash goodwill impairment charges of $436.5 million. Taking away the one-time charge though, the loss improvement was $31 million.

Q4 had a strong 36% improvement in subscription revenue versus prior year, driven by the implementation of a 22-month joint contract with technology firm Leidos to digitize the Military Health System (MHS). However, this contract expires in July and given cost-cutting in Washington, is not assured of renewal. Leidos is already in negotiation with the Department of Defense for a three-year extension. In cost reduction, Amwell reduced R&D expenses by 29% and looks at further cuts for 2025 of 10%.

For 2025, Amwell forecasts revenue in the range of $250 to $260 million, including the previously announced divestiture of Amwell
Psychiatric Care, about $30 million) with adjusted EBITDA loss between $55 to $45 million. Positive cash flow is not forecast until 2026. But Amwell’s share price, in such a hole that the NYSE threatened delisting a year ago, has bounced from below $8 in January to closing at $11.73 today (13 February).  Amwell 2024 financial report, Healthcare Dive

HEALWELL AI one step closer to closing its purchase of Orion Health. HEALWELL needed consent from New Zealand’s Overseas Investment Office of New Zealand (OIO) to proceed with the purchase announced in December [TTA 19 Dec 2024]. HEALWELL is an artificial intelligence company focused on preventative care through the early identification and detection of disease while Orion’s products–Orchestral, Amadeus, and Virtuoso–are data exchange, patient record, and analytics platforms that benefit clinicians and patients. The complex buy totaled NZ$200 million/CA$165 million (US$115 million) for 100% of Orion’s private shares. CA$86 million will be paid in cash and the balance will be paid in HEALWELL stock plus CA$20.5 million in a 3-year performance-based arrangement. The companies are now on track to complete the sale by 1 April. Newsfile release

Summer Health buys Caraway. Summer is a text service that connects parents with pediatricians for urgent care through texting and converts doctor’s and clinical notes into lay language via generative AI. Caraway served a different market–Generation Z women between 18-29 for mental and reproductive health. What they did share was one investor: the powerful 7Wire Ventures. Was this another Shotgun Merger? While Caraway enjoyed an initial funding of over $10 million plus $16 million during the 2023 slump, apparently it had ceased business in December and took its website offline. How Summer positions it is that it now can serve children, teens, and young adults. In addition to its 50-state DTC direct pay service, it will pick up Caraway’s insurance contracts. There are no references to purchase price or workforce transitions. Other than the release, there’s no reference to Caraway services on the Summer website. Summer had a Series A raise of $11 million last April.    Summer release, Behavioral Health Business  Hat tip to Mario Aguilar of STAT Health Tech’s newsletter.

Following up on Ireland’s Spectrum.Life.  They ended their 2024 serving 1.5 million users and project 3 million in 2025 in Ireland and the UK. Spectrum.Life now has 300 employees in Dublin and Manchester delivering digital health, mental health, and wellbeing for employers and employees in the workplace, insurers, and educators. Last year it was listed as #41st in Deloitte Ireland’s 2024 Technology Fast 50 Awards. Release.

And a bit closer to the Editor’s home is the latest New York Digital Health 100. Named by Digital Health New York (DHNY) and in its sixth year (oh, the changes!), the list has 48 new startups (which is illustrative of the churn in the NY digital health scene) these 100 companies raised about $4 billion, with over half going to biotech (26%), care delivery (24%), and mental health (13%) companies. A download of the full report and lists is available at the above link.

News roundup: PSI awarded $156M contract for VA EHR testing; $50M for Fay nutrition; General Catalyst’s wealth management expansion; UniDoc’s HealthCube debuts in Ukraine

February 13, 2025 | by

VA awards Planned Systems International a potential five-year, $156.1 million contract to support the VA’s EHRM (Electronic Health Record Modernization). The Independent Enterprise Testing and Support Services (IETSS) contract supports the EHRM-IO (Integration Office) team that is restarting the transition from VistA to the Oracle Cerner EHR. PSI will test and evaluate software, infrastructure, and environments, plus the operations of the independent verification and validation test center and test center environments hosted in VA Enterprise Cloud. It covers PSI’s project management, test and evaluation support, testing and technology support, test systems engineering and implementation support, and test process and quality management support. The five-year contract, as is typical with Federal contracts, is for an initial year then renewable for four 12-month terms. Another confirmation that EHRM-IO is moving forward on their plan announced before Christmas 2024, when the VA formally stated that they were planning for deployment in four Michigan facilities — Ann Arbor, Battle Creek, Detroit, and Saginaw–for implementation by mid-2016 [TTA 8 Jan]. GovConWire

Food as medicine is catching on. San Francisco-based Fay has scored a $50 million Series B round, led by Goldman Sachs with participation from previous investors General Catalyst and Forerunner, bringing their investment since 2024 to $75 million. The fresh funding will pay for growth and network expansion. They are claiming a valuation of $500 million.

Fay at present has a network covering most states of 2,300 registered dietitians (RDs) that integrate through Fay’s platform with major payers including United Healthcare, Aetna CVS Health, Blue Cross, Anthem, Cigna, Optum, and Humana, plus large employers such as Amazon, Microsoft, and Pepsi. The RDs provide personalized, in-person or virtual nutrition and lifestyle counseling to members or employees at little to no cost, while the platform automates processes such as insurance claims, scheduling, and patient follow-ups for the RDs. In addition, Fay can help RDs build their private practice and get credentialed with insurance. Over half of Americans struggle with diet-related chronic conditions (Frontiers in Public Health). Fay is in an especially sweet spot, as nutrition and quality of food, with the pending confirmation of Robert F. Kennedy, Jr. as HHS Secretary, is front and center. Release, MedCityNews

Speaking of General Catalyst, they are expanding beyond being one of the few dominant venture capital groups in a consolidating investment sector by expanding GC Wealth into a wealth management firm for entrepreneurs and others who have Struck It Rich (or have the potential to) in hot sectors such as AI. Running it out of San Francisco (where else?) is Dave Breslin, a former First Republic Bank executive who headed their private wealth unit. He recently hired several First Republic alums based out of Boston. According to the BBJ, it now has $2.3 billion in assets under management–and clients were invited last year to invest in General Catalyst’s seventh fund.  Founders should think long and hard about having your funder also manage your personal wealth–so it seems to this Editor. Boston Business Journal. Axios previously reported that General Catalyst is quietly exploring selling a share in its holding company. It currently has $32 billion in assets.

The ‘doc-in-a-box’ idea now has a fresh life in very specific uses. Canada’s UniDoc Health’s H3 Health Cubes have some interesting placements with the Italian Government to serve rural areas as a remote virtual clinic in locations such as the Municipality of Aliano’s Territorial Health Center. Also in Italy, the Aiutamoli a Vivere Foundation aid organization will place up to 15 units in Ukraine and the Gaza strip (though one suspects that events have eclipsed the latter placements).

For Ukraine, the H3 Health Cube funded by the Italian Agency for Development Cooperation (AICS), was delivered to a hospital in Yasinya in Ukraine scheduled to reopen on 14 February. It was received in mid-January by the Mayor of the City of Yasinia. along with additional aid such as food and hospital beds. It will connect doctors in that hospital, which treats wounded coming from the war zone as well as the local community, with Prof. Carlo Ventura’s team from I.N.B.B. of Bologna. Another Ukrainian hospital placement scheduled, in partnership with HP Inc., is for Okhmatdyt, Ukraine’s largest children’s hospital. A video of the HealthCube is on the UniDoc website.

This just in: New York State nicks Walgreens’/VillageMD’s CityMD for $14M+ in refunds, canceled debt on improper Covid-19 billing

February 12, 2025 | by

Here’s a few more inches added to Walgreens’ Mound of Misery. New York State’s Office of the Attorney General found that CityMD, now part of Walgreens’ VillageMD, improperly billed patients for Covid-19 tests. The $14 million total consisted of canceling $7 million in outstanding testing bills for over 87,000 patients plus refunds of about $7 million to over 215,000 patients who already paid. The CityMD tests were performed between March 2020 and November 2022. Many of the patients received billing up to two years after date of service, with added billing for late charges. In addition, CityMD will pay $95,000 in penalties to the State of New York for the improper billing with an additional fine of $5,000 per incident for any further billing.

Federal and state laws during the Covid-19 public health emergency prohibited providers and health plans from charging co-pays and deductibles for medically necessary Covid-19 testing and related services. CityMD’s website and staff stated that there would be no out-of-pocket costs for testing. There was also no posted cash price for services, violating NYS law. CityMD also refused to correct bills for individuals with previously issued billing. NYSOAG press release

This follows a $12 million June 2024 civil settlement with the US Department of Justice in the District of New Jersey on false payment claims for Covid-19 testing. The $12.04 million settlement under the False Claims Act resolves CityMD’s claims submitted from 4 February 2020 through 5 April 2022 to the Health Resources & Services Administration (HRSA)’s Uninsured Program that covered testing, treatment, and vaccination costs, reimbursing providers at generally Medicare rates. CityMD did not adequately verify that these individuals had health insurance coverage before submitting their claims to the Uninsured Program, including but not limited to individuals for whom CityMD had health insurance cards on file. This then caused downstream filings by labs claiming Uninsured Program payments based on CityMD information. The settlement includes a $2 million whistleblower payment under the False Claims Act to Steven Kitzinger, a patient of CityMD, who informed the clinic that he was fully insured but was told that CityMD would delete his insurance information. He separately sued CityMD. This will at least cover his legal costs ;-)  CityMD was credited by the DOJ for their voluntary disclosure, cooperation, and remediation. Healthcare Dive, US Attorney’s Office NJ release

To be fair, both incidents of improper and fraudulent billing occurred while CityMD was owned by Summit Medical, before Summit’s acquisition by VillageMD, with a Walgreens investment, announced in the palmy days of November 2022 and closing 3 January 2023. But it will be Walgreens doing the payouts where applicable.

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.