Friday short takes: ElliQ companion robot launches, Tunstall pilots chronic condition support in Ireland, Walmart Better(s)Up, TytoCare surveys virtual primary care, Microsoft closes $19B buy of Nuance

March 18, 2022 | by

ElliQ, a small size companion robot, was officially launched this week by its developer, Intuition Robotics. From the release, it’s a national launch but concentrated in senior-rich south Florida. ElliQ responds and ‘learns’ by voice commands and through a connected tablet. It has gained some notice for its unusual shape (like a small lamp), animation in place, and initiating conversation that resembles chit-chat. Behind this is interactivity–the companion part–checking in to say “good morning,” pointing towards sleep, but also informing family or friends that you’re OK and helping track appointments and medications. We noted at the end of January that Michael Cantor, MD, JD is their chief medical officer, as well as CMO of Uber Health. Intuition release, Fast Company profile of an ElliQ beta tester, aged 81.

It’s a day late for St. Patrick’s Day, but Tunstall Healthcare piloted with several agencies in County Wexford, Ireland, in a 12-week proof of concept test of remote monitoring support of 50 patients with three chronic conditions: heart failure, diabetes, and chronic obstructive pulmonary disease (COPD). The 2021 telehealth intervention measured the impact on the patient’s clinical condition and wellbeing; in-person use of health services; ascertaining patient and clinician perceptions of the intervention and technology; and an analysis of the cost-effectiveness of the intervention. The trial used the myMobile patient app and the triageManager clinical management software platform. Participating in the pilot: Age Friendly Ireland, Integrated Care Programme in the HSE, Wexford General Hospital, Tunstall Emergency Response and Wexford County Council-Age Friendly Programme. THIIS. Also in the same publication is a Tunstall take by Gavin Bashar, Tunstall UK & Ireland managing director, on aging in place with technology support.

In another expansion of Walmart into healthcare, they’re partnering with behavioral health-coaching platform BetterUp in a program dubbed ‘BetterUp for Caregivers’. The app will be offered exclusively through Walmart’s Wellness Hub. Caregivers can access support via BetterUp’s live group coaching circles hosted by a BetterUp coach. Release, Mobihealthnews

TytoCare’s quick survey found that their 300 users via a major insurer preferred more access to virtual primary care, which isn’t much of a surprise. Going through the numbers:

  • 67% felt they would be more likely to stay with their health insurer long-term as a result of being offered remote physical examinations (always catnip to insurers!)
  • 66% of users would consider a digital-first plan
  • 87% of respondents indicated they are pleased by health insurers who offer technology for remote visits
  • Much of this is a reaction to delayed in-person primary care: 90% of members wait an average of six days to see their primary care physician. Over 45% wait between 1-2 hours or more. 

And in the It’s About Time Department, Microsoft’s $19 billion purchase of Nuance Communications closed after the UK cleared the acquisition. It was our Really Big Deal of 21 April 2021. Nuance is a cloud and AI-based speech recognition company with well-known brands Dragon and PowerScribe. Becker’s. 

Thursday news roundup: Walmart hiring 50K workers including health, Anthem name-changing, GE Healthcare-AliveCor partner, IPO for Komodo Health amid slowdown?

March 17, 2022 | by

In the midst of war, inflation, and the contradiction of a tight labor market, it’s somehow reassuring that Walmart needs to hire 50,000 new workers–and fast, by end of April. According to reports, some of those new hires will be bolstering the health and wellness areas. In the past, Walmart has hired heavily in their in-store pharmacies. Many of these jobs are lower-end–delivery drivers for direct-to-fridge InHome groceries, in-store workers, and supply chain staff. One higher-level worker area that points to health is global tech, creating offices in Toronto and Atlanta, with Walmart planning jobs for 5,000 engineers, data scientists, analysts, and tech experts. Additional hires will go to increasing its advertising business which is based in the New York metro area. Especially for those high-skill positions, six weeks is not quite plausible in this market. But you have to admire them for trying. CNBC, Becker’s

Anthem changing its name–again. Health insurer giant Anthem, Inc. has announced a renaming to Elevance Health. According to the release, the name is a combination of elevate and advance, presumably for health but as they say in their release, vaulting beyond healthcare into the rarefied air of ‘whole health’. It also reflects vaulting beyond the health plan business, as they fully savor the rarified air of healthcare diversification like fellow giants UnitedHealth Group, Centene, and CVS Aetna.

The parent company of Anthem Blue Cross Blue Shield plans, Anthem owns non-Blues Amerigroup, Integra Managed Care in NY,  pharmacy benefits manager IngenioRx, plus a $25 million investment in digital health hub Sharecare. Plan and product names, along with organizations will not change at this time–these are major changes that usually require state department of insurance approvals.

To this Editor’s Gimlet Eye, the coined name Elevance feels pharmaceutical and not in a good way–it’s very close to an old anti-depressant, Elavil. A return to WellPoint, a name the company had up to 2014, would have accomplished the same ends. But there’s always the shock of the new, the opportunity to change the tired signage, and behind this, someone making a point for themselves. Undoubtedly the shareholders will agree at the 18 May annual meeting, since they always do, and it will start to be used–presumably with a logo and new graphics they don’t have now–at end of Q2. Another gimlety view–it takes a certain myopia to announce a name change given what’s happening in the world. Healthcare Dive

In time for HIMSS, GE Healthcare and AliveCor, developer of the KardiaMobile ECG, announced their partnership to transmit KardiaMobile 6L data directly into GE Healthcare’s MUSE Cardiac Management System for clinical evaluation. MUSE is used by 87 percent of the top cardiac hospitals in the US. The direct integration of KardiaMobile 6L data that is taken anywhere into the MUSE workflow and then into an EMR, targeting atrial fibrillation but also other cardiac monitoring, is a big validation and win for AliveCor. Release

Analytics software company Komodo Health is preparing an IPO as early as this summer. Goldman Sachs and SVB Securities are rumored to be the lead bookrunners. Timing will depend on markets and financing. Komodo completed last March a $220 million Series E for funding to date of $314 million [TTA 25 Mar 2021]. With a valuation now topping $3 billion, Komodo may be the ‘IT’ company of healthcare IPOs in a market much tamer than last year’s Wild West Rodeo. What they do isn’t easy to explain, but they feed their 325 million patient encounter database drawn from EHR, pharma, lab, and government data into proprietary software to map patient journeys, providing analytics on more than 325 de-identified, real-world patient insights. These are used to drive better health outcomes across therapeutic areas. The primary markets for their data are life sciences and pharma for R&D, clinical trials, and medical affairs, but are seeking to expand to providers and payers.

Other IPOs rumored to be on tap are Included Health (the former Grand Rounds/Doctor on Demand) [TTA 20 Oct 2021] and Tempus Labs in precision medicine.

What can be the long-term drivers of remote patient monitoring growth?

March 10, 2022 | by

Is it as simple as getting simpler to use devices to collect long-term data that picks up trends and provides feedback that motivates to users? That is the surprise at the very end of this pre-HIMSS Healthcare IT News interview with Dr. Waqaas Al-Siddiq, chairman, CEO, and founder of Biotricity, a biometric monitoring and telemedicine company incorporating devices into monitoring systems for cardiac and pain management. Those of us who have worked for RPM companies know the variety of devices typically used by those monitored for chronic conditions can be stunning–and most of them aren’t easy to use for those with sight difficulties or mobility problems. Pain monitoring is especially tricky and subjective. Gaps in use are to be expected, even as these systems have become more mobile and smartphone connected. The popularity of continuous glucose monitoring (CGM) monitors such as the Dexcom G6 and Abbott’s Freestyle Libre system is a predictor–make it simple, eliminate something unpleasant, provide easy feedback, and you have a winner.

Dr. Al-Siddiq points out that we are at the early stages of monitoring for chronic disease. People with COPD, sleep apnea, and atrial fibrillation right now don’t have CGM level monitoring. There are also patients who are sent home from the hospital with no monitoring devices at all and won’t (or can’t) visit a doctor’s office. RPM organized at discharge, set up with a nurse, and connected to a doctor’s office would be ideal if the offices adopt a cohesive monitoring approach. But Dr. Siddiq adds the feedback to the user to trigger motivation, which to this Editor has been a missing element. 

So much of this is dependent on device and system design–clinical quality monitoring that’s easy to use and almost forgettable in everyday life, that provides feedback (reward experience), and that provides quality data that doesn’t overwhelm the clinician. A familiar trio to those of us who’ve been in the RPM Wars. 

Thursday news roundup: Cigna deploys over $12B for investment, Cerner’s Feinberg to Humana board, Teladoc on Amazon Alexa, admitting Livongo problems, and XRHealth VR therapy scores $10M

March 3, 2022 | by

Cigna’s opportunity piggybank just added $12 billion+. It’s a combination of selling off non-core businesses, share repurchasing authorization, and redeploying funds to areas such as capital investment and Cigna Ventures. This includes:

  • $5.4 billion after-tax from the sale of its international life, accident, and supplemental benefits businesses in seven countries
  • $450 million invested in Cigna Ventures, its innovation investment arm
  • An expected $7 billion for share repurchase this year from a $10 billion authorization. To date this year, Cigna has already repurchased $1.2 billion of shares.

The Cigna Ventures funding will go towards three announced areas: insights and analytics; digital health and experience; and care delivery and enablement. Originally formed in 2018 with $250 million, they now have seven VC partners and 15 direct investments, including Arcadia, Babyscripts, Cricket Health, Ginger, Omada, and RecoveryOne. 

Buried in the release is this: “…the company is not currently contemplating large-scale mergers or acquisitions” which would seem to put a tight lid on the long-rumored acquisition of parts or all of Centene [TTA 28 Jan]. (Too much wake turbulence?) But following on this, “The company intends to continue making strategic investments in innovation through targeted bolt-on or tuck-in acquisitions” which fits sell-offs, as well as investment in early-stage companies through Cigna Ventures. Also FierceHealthcare

Insurer Humana’s board expands to 14 with the addition of David Feinberg, MD, the current CEO of Cerner and future executive of Oracle, provided the merger is approved. He joins the current seven independent directors on the Humana board. Last week, Starboard Value LP, an activist investor hedge fund, reached an agreement with Humana to appoint two Starboard-backed board members starting next month and retire two incumbents. Humana limped through last year with a $14 million Q4 loss and Medicare Advantage losses to both traditional rivals and insurtechs. With over 25 years in healthcare management including CEO positions at Geisinger Health System and three divisions of UCLA Health, it’s a smart move. Release, FierceHealthcare

“Alexa, I want to talk to a doctor”–and that doc will be through Teladoc. Amazon customers with supported Echo devices, such as an Echo, Echo Dot, and Echo Show, will now be able to access Teladoc and a virtual care session 24/7. Initially it will be voice-only with audio/video to come. The release states that visits may be free through insurance or $75 direct pay. It did give a much-needed lift to Teladoc shares, which have been hammered by 76% in the past year, on the announcement and in the past few days, feeding the usual rumor mill that Amazon may be writing a check for Teladoc shares.

Teladoc has finally admitted via its annual report (SEC 10-K) that the Livongo acquisition has not been all beer and skittles. It impacted its indebtedness (page 35) and on page 52, significant insecurities on the integration of the two companies, well over a year after the acquisition.

Our failure to meet the challenges involved in successfully integrating the operations of the two companies or to otherwise realize any of the anticipated benefits of the merger, including additional cost savings and synergies, could impair our operations. In addition, the overall integration of Livongo post-merger will continue to be a time-consuming and expensive process that, without proper planning and effective and timely implementation, could significantly disrupt our business.

Healthcare IT News and HISTalk

VR physical therapy has remained a “we try harder” area of telehealth for several years, with a lot of initial promise in treating returning veterans with PTSD in de-escalating symptoms but having a hard time getting takeup. XRHealth, an early-stage company offering VR-driven physical, occupational, and speech therapies, gained a $10 million venture round backed by HTC, Bridges Israel impact investment fund, AARP, and crowdfunding on StartEngine.com and existing investors. According to Crunchbase, this is par for their course since 2016; their total of $35 million has been in pre-seed, seed, grant, crowd, and venture funding. Based in Brookline, Massachusetts with R&D in Israel, it is good to see them progress, having ‘been there and done that’ with two early-stage health tech firms.

However, their release does them a great disservice. It is, frankly, 90% nonsense in trying to position them out of the gate as “the gateway to the healthcare metaverse” and “growing the open ecosystem and providing greater access to care while reducing costs. Interoperability is key…”. This Editor had to go to their website to find out what they do. As a marketer and reporter, the First Rule of Press Releases is say what the news is, what the company does, and why it’s important in the first two paragraphs. The rest is reinforcement and expansion, with the spokesperson quote part of that and never in paragraph #2. Additional advice: don’t pick up a word now branded by Facebook (Meta). Hat tip to HISTalk

Predictions, predictions, for weekend reading: is telehealth usage shrinking or growing? It depends on your perspective.

February 26, 2022 | by

crystal-ballTwo very divergent views on the future of telehealth were published this week. Bloomberg Intelligence on the economics side is seeing nothing but blue skies for telehealth for the next five years, while predictive analytics shop Trilliant Health crunches their numbers and sees the opposite picture. Trilliant predicts the downward trend, which they first observed in their mid-2021 [TTA 30 June 2021] healthcare report, will continue except in the select area of mental health. Here are their predictions:

In Bloomberg Intelligence’s Digital Reshaping the Health-Care Ecosystem report, their projection is that telehealth by 2027 will be at minimum $17 billion of healthcare revenue. Their target numbers are $20 billion and 15% of outpatient visits with a three-year compound annual growth of 25%. This is based on claims trends they see (we don’t–see our reports on FAIR Health’s claims data) as well as revenue consensus by public telehealth companies such as Teladoc. However, as the report puts it, it cannot completely account for telehealth acquisitions by larger managed-care companies or the extension of telehealth across existing consumer and patient platforms which if anything would increase the picture. 

  • The ‘flywheel’ effect of the pandemic raised awareness of telehealth by both patients and providers
  • Payers have moved aggressively to incorporate telehealth as their members demand it: CVS Aetna with Teladoc, UnitedHealth with NavigatorNOW, Cigna with Oscar (which has $0 co-pay virtual health plans in many states), Cigna-MDLIVE, and others.
  • The ubiquity of mobile phones, smartphones and apps

From the report: “Virtual care will [increasingly] become the norm, we believe, after the pandemic pushed patients away from in-person visits. A reversion to old practices and business models appears impossible to us after the pandemic forced meaningful change across all the key constituents.”  The rest of the report covers international growth in remote patient monitoring, such as continuous glucose monitors (CGM) ($12 billion) and implantable and wearable cardiac monitors, based on similar corporate projections.

Trilliant Health’s Trends Shaping the Health Economy: Telehealth (e-doc and downloadable PDF) takes the opposite view–that telehealth usage continues to shrink inversely to in-person visits being restored.  It questions whether the “forced adoption” of telehealth over the past two years (March 2020 to November 2021) has actually changed patient and provider behaviors. Patients used it then, will they continue to use it in the future? It’s nowhere near a norm with the exception of growth in behavioral health. Demographically, utilization is uneven. Highlight findings:

  • Even during the pandemic, only 25.6% of Americans used telehealth over the tracking period
  • 46% of telehealth patients used it only once
  • The total addressable market for telehealth is <1% of the health economy and declining, because most prefer in-person care
  • Monthly usage continues to decline even with Covid variants
  • Primary care visits continue to decline as well, but telehealth does not fill that gap
  • The type of telehealth usage hasn’t shifted much, with audio-video leading the way with over 60% share
  • 57.9% of telehealth visits were attributed to behavioral health diagnoses and is growing in share–and this has not changed pre/post-pandemic
  • Between 2020 and 2021, 79% of telehealth patients had between one and four visits. But less than 3% of telehealth patients
    were “Super Utilizers” with 25 or more telehealth visits. And they’re younger–aged 21-36, female (58%), and live in high income areas.
  • The psychographics of telehealth users is interesting. They are not the ‘Priority Jugglers’ of busy moms and hipsters you’d expect, accounting for 15% of users. 30% are “Willful Endurers” who live in the “here and now” and presumably turned to telehealth when they just couldn’t ignore an illness anymore, followed at 25% by their opposites–“Self Achievers” who are very proactive about their health and wellness.
  • Most niche telehealth entrants are targeting the same discrete markets, like women, who will continue to use telehealth
  • Most providers are not equipped to continue to provide telehealth, versus retail suppliers like CVS, Walmart, and Walgreens
  • Public policy calling for permanent expansion of access is inconsistent with actual low telehealth utilization in the past two years, where in-person visits were limited, Medicare and insurance restrictions were put aside, and providers expanded availability

The report looks at all forms of synchronous and asynchronous telehealth modalities–the latter often lost in the shuffle–concentrating on synchronous audio-video and audio-only, plus asynchronous interactions such as email. This is a 69-page report worth your ponder; there are charts and graphs that lighten the load of their conclusions, which directionally seem to fit what this Editor has been seeing in since last autumn. Hat tip to Sanjula Jain, chief research officer of Trilliant. Also Healthcare IT News

The shoe dropped: DOJ sues to block UnitedHealth Group-Change Healthcare merger. What’s next?

February 25, 2022 | by

To nearly no one’s surprise, the US Department of Justice did what was reported back on 17 Jan: block UnitedHealth Group’s (UHG) bid to acquire Change Healthcare on anticompetitive grounds. Earlier today, the DOJ issued their statement in a release on the joint civil lawsuit with the attorneys general of New York and Minnesota. (This Editor finds the New York AG participation interesting, as Change is HQ’d in Nashville, Tennessee with UnitedHealth in Minnesota. The usual grounds are state interest and commerce.)

The reasons cited will also not come as any surprise to our Readers, as these objections were raised from the start in that the acquisition would give UHG an unfair advantage against their payer competition and squelch innovation. These are from the DOJ release and the complaint filed today (24 February) in the US District Court for the District of Columbia.

  • UHG is the US’ largest insurer and also a major controller of health data. Change is a major competitor to UHG/OptumInsight in health care claims technology systems, which was the basis of the American Hospital Association’s (AHA) objections.
  • The acquisition would eliminate a major competitor to UHG in claims processing. Moreover, Change is “United’s only major rival for first-pass claims editing technology — a critical product used to efficiently process health insurance claims and save health insurers billions of dollars each year — and give United a monopoly share in the market.” It would also give UHG the ability to raise competitors’ costs for that technology.
  • Hospital data accounts for about half of all insurance claims. UHG with Change would have effective control of that ‘highway’.
  • Change is also a major EDI clearinghouse, which facilitates the transfer of electronic transactions between payers and physicians, health care professionals, or facilities. UHG would have control of the EDI clearinghouse market.
  • UHG would be able to view competitors’ claims data and other competitively sensitive information through Change. “United would be able to use its rivals’ information to gain an unfair advantage and harm competition in health insurance markets.”

The plaintiffs–DOJ, New York, and Minnesota–conclude with a request of the court to 1) enjoin (stop) the acquisition and 2) award restitution by UHG and Change for costs incurred in bringing this action.

Consider this acquisition one for the books–the one embossed ‘Nice Try, But No Dice’. 

So what’s next? Here’s your Editor’s speculation.

Change is one of the ‘shaggiest’ independent companies in healthcare, in so many businesses (many acquired) that it’s hard to understand exactly what they stand for. It has extensive businesses not only in the areas above that will nix the UHG buy, but also in imaging, data analytics, clinical decision making, revenue cycle management, provider network optimization and related solutions, pharmacy benefits, patient experience in billing and call centers, funding healthcare….and that’s just the surface of a giant list. From the outside, it’s hard to see how all these parts coalesce.

In the industry, Change was long rumored to be for sale. Recently, it’s become unprofitable. It closed its FY 2021 (ending 31 Mar 2021) with a $13.1 million loss and through Q3 FY 2022 with a $24.5 million loss.

At the end of this, Change may be better advised to sell off some of its businesses, retrench, and refocus on its most cohesive and profitable areas. 

Thursday news roundup: Teladoc’s cheery 2021, uncertain 2022; DOJ deadline UnitedHealth-Change Sunday, Cerner’s earnings swan song, Humana feels the activist lash; funding/M&A for WellSky, Health Catalyst, Minded, Automata, MediBuddy

February 24, 2022 | by

Teladoc closed 2021 on Tuesday with record revenue of $2,032.7 billion, 86% over 2020. Visits were up 38% to 15.4 million with 53.4 million paid members. Q4 revenue was $554.2 million, 45% over Q4 2020, all of which exceeded investors’ expectations. Despite moving to a positive cash flow of $194 million, Teladoc is still not profitable, with full-year losses of almost $429 million and net loss per share of $2.73, somewhat lower than 2020.

The outlook for 2022 is less certain. For the full year, they anticipate a nice rise in revenues to $2.55 to $2.65 billion but a net loss of $1.40-1.60 per share, a little more than half 2021. Paid membership they project will grow to 54 to 56 million. The stock did take a bit of a bath due to market uncertainty with Ukraine-Russia and also a lowered forecast for first quarter. Teladoc earnings release, Healthcare Dive

DOJ has till Sunday 27 February to sue to stop the UnitedHealth acquisition of Change Healthcare. The acquirer and acquiree popped their 10-day notice on 17 February through their 8-K filing with the SEC. They had previously agreed to hold their closing until after 22 February. So if the DOJ is going to block the deal, as has been reported [TTA 17 Feb], they have from today to Sunday to do it–and courts aren’t open Saturday and Sunday. Healthcare Dive, Becker’s Health IT

Cerner’s 2021 swan song kind of… honked. Their net loss for the year was $8.8 million in 2021, compared with a net income of $76.9 million in 2020. Total net earnings topped $555 million in net earnings in 2021, down 29% from $780.1 million in 2020. Cerner release, Becker’s. Meanwhile, Oracle’s acquisition high hurdles continue [TTA 11 Feb] with the Feds, passing the first mark of the Hart-Scott-Rodino Act waiting period as of 11.59pm on 22 February. Still to go is the SEC review of Oracle’s tender offer for Cerner shares.  Becker’s Health IT

Humana joins Centene in insurers forced to change by activist shareholders. Starboard Value, a hedge fund, reached an agreement with Humana that Humana would add two independent board directors backed by Starboard. The first will be named on 21 April with the second to follow. They replace incumbents who will not stand for re-election. Starboard owns 1 million Humana or 0.79% of shares, but is well known for wielding them effectively to leverage change when the business hits a pothole–Humana’s $14 million Q4 loss and Medicare Advantage losses to both traditional rivals and insurtechs.

Humana is standing by its 2022 projection of 11-15%  growth but slowing performance in large areas such as Medicare Advantage. The company has stated that they will funnel funds back into Medicare Advantage through its “value creation plan”, which sounds very much like Centene’s “value creation office”. You’d think they’d come up with cleverer names and less anodyne ‘strategies’ for extracting savings from these lemons wherever possible, including selling off assets and “optimizing its workforce”. Reuters, Healthcare Dive

And quick takes from the US, UK, and India…

WellSky is acquiring TapCloud for an undisclosed amount. WellSky is a data analytics and care coordination automation company in the acute care and home care markets, with TapCloud a patient-facing engagement and communication platform. Release

Another data analytics company, Health Catalyst, is bolstering capabilities with its agreement to buy KPI Ninja, a provider of interoperability solutions and population health analytics. Purchase price and management transitions undisclosed, though from the release it appears that all KPI Ninjas will be onboarded.

Minded, a NYC-based mental health med management company, scored $25 million in seed funding from Streamlined Ventures, Link Ventures, The Tiger Fund, Unicorn Ventures, and private individuals. They provide direct-to-patient behavioral health medications through virtual evaluations with treatment plans without in-person visits, which are still unusual in psychiatry. At the present time, it is available only in New York, New Jersey, Pennsylvania, Florida, Texas, Illinois, and California.

The founders are an interesting mix: David Ronick, who previously co-founded fintech unicorn Stash, Gaspard de Dreuzy, the co-founder of telehealth company Pager, and Dr. Chris Dennis, a multi-state licensed psychiatrist. Their rationale for founding the company does resonate with this Editor, whose brother is a board-certified MD psychiatrist, and who knows well 1) the challenges of remote therapy and 2) the scarcity of psychiatrists in most of the US beyond urban and academic areas. Release, TechCrunch, Mobihealthnews

In the UK, London-based Automata, which automates lab technology to shorten turnaround time and scale up lab capacity, along with deploying automation with contract research organizations, research labs, and blue-chip healthcare institutions, announced a $50 million (£36.8M) Series B raise. The round was led by Octopus Ventures with participation from returning investors Hummingbird, Latitude Ventures, ABB Technology Ventures, Isomer Capital as well as strategic investors including In-Q-Tel. Mobihealthnews

From Bangalore, India, virtual health company MediBuddy $125 million Series C funding was led by Quadria Capital and Lightrock India, bringing their total funding to over $191.1 million, a hallmark of a largely bootstrapped company. MediBuddy uses a smartphone app for 24/7 real-time video doctor consults and at-home lab testing covering the family and in more than eight languages, important in India which has hundreds of languages and local dialects. Great smiles on the founders too! Mobihealthnews

Will ’22 digital health investment be historic? Or a question mark? The jury is out.

January 29, 2022 | by

Some say historic, or will it be a historic question mark? It’s only January…Earlier this month, a Silicon Valley healthcare VC funding analysis [TTA 14 Jan] looked at 2021 funding — up over 150%–that was skewed to biopharma and health tech. It noted the SPAC slowdown, anemic post-IPO performance, and a decline in M&A value, while consolidation and buying for expansion will be the trend.

Healthcare Dive spoke to some industry mavens, and came up with a split picture. Some see turbulence ahead due to rising interest rates, a fluctuating market, and political instability leading to tighter purse strings, others see blue skies and lots of money flooding in from new investors in love with health, following the Amazons and Microsofts, fearing that they’ll miss out. Certainly, 2021 was more than warm. Both Silicon Valley Bank in the previous analysis and Rock Health came up with just under $30 billion in 2021 investment.

The feather in the wind: Rock Health’s numbers indicated skyrocketing exits–with SPACs nearly double that of IPOs. Funding hit record mega rounds of $100 million+ that spread to early rounds–10 Series B and one Series A. Mega money means mega pressure to perform in young companies. The SPAC highway increasingly narrowed to a two-lane road by end of year based on regulatory scrutiny and even some timing out (SPACs have to consummate a deal in two years). Exits for investors are to take back money or write off losses, if they get shaky about a company or category, even if they find a more attractive squirrel. Yet the fact is that $13 billion raised by VCs this month has to go somewhere–but will it be in health tech? Time will reveal all.  Also Healthcare Dive on the Rock Health year-end report.

News, deals, rumors roundup: Cerner’s DOD and VA go-lives, Akili’s ADHD therapy SPACs, Talkiatry’s $37M raise, Alto sings a $200M supper–and the Cigna-Centene rumors don’t stop

January 28, 2022 | by

While Cerner’s acquisition by Oracle is winding its way through regulatory approvals, their EHR implementations are moving forward through both the Military Health System (Department of Defense) and the Department of Veterans Affairs (VA).

  • Within the MHS, Brooke Army Medical Center and Wilford Hall Ambulatory Surgical Center, both in the San Antonio (Texas) Market, went live with MHS GENESIS on 22 January. The change most visible to patients is the transition from TRICARE Online to the MHS GENESIS Patient Portal which enables 24/7 access for visit notes, secure messaging, test results, appointment scheduling, and online prescription renewal. MHS covers military retirees, active military, and family beneficiaries. According to the MHS’s website, the goal this year is to get to halfway–to implement MHS GENESIS in more than half of all military hospitals and clinics. It’s been taking place since 2017 and, in true military fashion, it’s planned in waves. Coming up are Naval Medical Center Camp Lejeune in South Carolina on 19 March and William Beaumont Army Medical Center in El Paso in summer.
  • VA is moving far more slowly, just getting to its second hospital. The Columbus VA go-live has been pushed back from 5 March to 30 April, citing training slowdowns due to a spike in staff COVID cases. Walla Walla, Washington is set for after Columbus, but the date is to be confirmed. The first, failed implementation at Spokane’s Mann-Grandstaff VA Medical Center in late 2020 was the subject of Federal hearings and a complete redo in VA’s plans and procedures in cutting over from VistA to Cerner Millenium. TTA 28 July and previous. Federal News Network

Akili Interactive, which has developed tech-driven, game-based cognitive therapies for ADHD and other psychiatric and neurological conditions, has gone public through a SPAC via a merger with Social Capital Suvretta Holdings Corp. I, The transaction is expected to close in mid-2022. Akili will be listed on the Nasdaq stock market under the new ticker symbol AKLI.

The SPAC is expected to provide up to $412 million in gross cash proceeds and value the company at over $1 billion. Investors in the $162 million PIPE are Suvretta Capital Management’s Averill strategy, Apeiron Investment Group, Temasek, co-founder PureTech Health, Polaris Partners, Evidity Health Capital, JAZZ Venture Partners, and Omidyar Technology Ventures. The funds raised will support the commercial debut of EndeavorRx, a FDA-cleared and CE-marked prescription digital therapeutic for pediatric ADHD. The technology is termed the Selective Stimulus Management Engine (SSME) and will be rolled out for ADHD, ASD, MS, and MDD treatment.

TTA noted Akili last year in a trial of AKL-T01 at several hospitals for treatment of long-COVID-related cognition problems. Unfortunately, the writing in their SPAC release made this Editor feel like she needed a few treatments.

Mentalhealthtech (psychtech?) continues to attract funding. Psychiatric care startup Talkiatry topped off its July $20 million raise with an additional $17 million from Left Lane Capital for a $37 million Series A financing round. CityMD founder Dr. Richard Park, Sikwoo Capital Partners, and Relevance Ventures also participated. Talkiatry uses an online assessment for a preliminary diagnosis and then matches you with a participating psychiatrist.  It is in-network with payers such as Cigna, Aetna, UnitedHealthcare (Oxford Health Plan), Oscar, and Humana. Funding will be used to expand beyond NYC. Mobihealthnews

Digital pharmacy is also hot. Alto, which promises same-day filling and courier delivery, raised a $200 million Series E led by Softbank Vision Fund. Their total to date is over $550 million. Alto serves selected areas mainly in California, Nevada, Texas, and NYC (Manhattan, Queens, Brooklyn). Competitors Capsule had another raise of $300 million in April for a total of $570 million and Medly raised a $100 million Series B in 2020. Mobihealthnews

In the wake turbulence of Centene’s dramatic management shakeup last month [TTA 18 Dec], rumors continue to surface that insurer Cigna is interested in acquiring all, or possibly part, of Centene. Bloomberg News in publishing its article earlier this week cited ‘people familiar with the matter’ said that talks took place last year, but that they are not ongoing. Seeking Alpha picked this up, adding market activity boosting Centene. Perhaps the disclosure and the ‘denials’ align with what this Editor has heard–that it’s very much ongoing but under wraps.

A Centene buy makes sense, but only with Cigna. While Cigna is almost double the market value of Centene, it does not have the sprawling business model the latter has, nor do their businesses overlap much. However, some divestiture would be needed to do a deal, given the constrained regulatory environment in the US on the Federal and state levels. Any insurer merger is seen as anti-competitive, unless it is an acquisition of a smaller, struggling plan. 

It certainly would vault Cigna into the top rank of insurers with non-Centene branded exchange, Medicare Advantage and Medicaid plans, a provider network, an established MSO, and other lines of business including Magellan behavioral health management. Cigna might also value Centene’s international holdings, such as private hospitals Circle Health in the UK and Ribera in Spain. A sale would also create a quick and profitable ROI for Politan Capital Management, the activist investor company that initiated the retirement of 25 year CEO Michael Neidorff last month, rather than managing and reorganizing the sprawl of Centene’s businesses to make it more profitable.

News, acquisitions, funding roundup: Cerner CEO, CTO’s ‘stay-with-conditions’ deal, Quest buying Pack Health coaching platform, Wheel’s $150M Series C, mental health’s bubbly Lyra Health’s $235M and Big Health’s $75M

January 21, 2022 | by

Cerner CEO, CTO sticking around after Oracle acquisition, but there’s a catch. Cerner’s recently started CEO (August), Dr. David Weinberg, and their chief technology officer, Jerome Labat, both received ‘stay deals’ to remain with Oracle for 12 months from the closing date. The language in the SEC filing discloses the conditions. It’s a typical waiver of the right to leave for ‘good reason’ or ‘constructive termination’ if Oracle adversely changes their authority, duties, position, or responsibilities, which would trigger their ‘change in control’ severance. In return for the waiver, even if assigned to the data center in the Yukon, they will receive their severance benefits ($4.5 million and $2.3 million in cash respectively plus stock vesting) a year and one day later, even if they remain with Cerner. One wonders how far down the top management this goes. Becker’s Hospital Review, HISTalk

Quest Diagnostics is buying Pack Health, a chronic conditions care management, coaching, and patient engagement platform. Term details other than an all-cash equity deal were not disclosed. Pack coaches across 30 chronic conditions to address patient mental health, lifestyle behaviors, access to care, and social determinants of health (SDOH) factors. They market to payers for care management and life science companies for medication adherence. Pack will be added to Quest Extended Care, which includes Quest HealthConnect, a provider of in-person home-based risk assessment and monitoring services to supplement clinical care. The sale is expected to close in Q1. Release

Wheel, an Austin, Texas-based clinical platform that combines turnkey virtual primary care, behavioral health, urgent care, and diagnostic telehealth, announced a $150 million Series C, bringing total funding since 2018 to $215.6 million. The round was co-led by Lightspeed Venture Partners and Tiger Global. New investors Coatue and Salesforce Ventures participated in the round along with existing investors. Funds will be used to scale their platform. In 2021, they claimed 1.3 million patient visits in 2021 and is expected to triple visit volume by the end of 2022. Release

And corporate-focused mental health tech stays frothy with Lyra Health completing a $235 million Series F, bringing their funding to over $900 million with a valuation now pegged at $5.85 billion. Lyra is planning international expansion with all that loot. The round was led by Dragoneer, plus (again) Salesforce Ventures and existing investor Coatue Management. Lyra claims that it presently serves 10 million global employees. FierceHealthcare, release

Not-quite-as Big Health, which also claims millions of corporate and health system users including the NHS (offered for free in Scotland and select postal codes), raised $75 million in a Series C, led by Softbank Vision Fund 2 with ArrowMark Partners and existing investors Octopus Ventures, Gilde Healthcare, Kaiser Permanente Ventures (KPV), and Morningside Ventures. Big Health started in the UK, and our Readers there may be more familiar with their apps–Sleepio (first mentioned here in 2013! for insomnia) and Daylight (for anxiety). Big Health departed the UK for San Francisco and its greener money pastures back in 2015, noted here. Release

Breaking–The Trial of Elizabeth Holmes, ch. 16: guilty on four charges of 11

January 4, 2022 | by

Breaking. Elizabeth Holmes, founder and CEO of Theranos, was found guilty on four charges of wire fraud of the 11 charges brought by the prosecution. The guilty charges are, according to the reports in the New York Times and the Mercury News (paywalled, but keep refreshing), all related to wire fraud against investors. Counts six through eight are fraud against specific investors. The TTA articles relating to each are linked.

  1. Count one of conspiring to commit wire fraud against investors in Theranos between 2010 and 2015
  2. Count six of wire fraud in connection with a wire transfer of $38,336,632 on or about Feb. 6, 2014. This was part of the $96 million PFM Health Sciences investment detailed in Chapter 9.
  3. Count seven of wire fraud in connection with a wire transfer of $99,999,984 on or about Oct. 31, 2014. This was the DeVos family trust investment (RDV Corp.) in Chapter 5.
  4. Count eight of wire fraud in connection with a wire transfer of $5,999,997 on or about Oct. 31, 2014, made by Daniel Mosley, a financial advisor to Henry Kissinger. Mr. Kissinger was an early investor and sat on the Theranos board (Chapter 6).

Each one of these charges carries time up to 20 years, but in Federal financial fraud cases, time is usually served concurrently. Judge Edward Davila of the US District Court, Northern District of California, will sentence at a later date to be announced.

It’s expected that Holmes will appeal. The issues of emotional and physical abuse, with Svengali-like control on her judgment, at the hands of Sunny Balwani were not enough for this jury to dismiss the key financial fraud charges. They clearly decided that Holmes was fully capable of engineering fraud, not just once but several times. But with the defense having seeded a backdrop of abuse, it may prove mitigating on appeal. (No, this Editor does not believe that Judge Davila will even refer to that during sentencing, having strictly advised the jury to not consider that during deliberations.)

Holmes was found not guilty on three fraud charges against patients and a fourth relating to advertising and marketing services to patients:

  • Count two of conspiring to commit wire fraud against patients who paid for Theranos’s blood testing services between 2013 and 2016
  • Count 10 of wire fraud in connection with a patient’s laboratory blood test results on or about May 11, 2015
  • Count 11 of wire fraud in connection with a patient’s laboratory blood test results on or about May 16, 2015. These two counts pertained to false results on HIV and prostate cancer.
  • Count 12 of wire fraud in connection with a wire transfer of $1,126,661 on or about Aug. 3, 2015 to Horizon Media for advertising and marketing services for the Walgreens launch.

Given the above, was The Verge (Chapter 15) correct in stating that patient fraud, with the concomitant distress and potential for injury, is less important than financial fraud? Or was the case less well made? 

No verdict was reached on an additional three charges relating to wire transfers in December 2013 by other investors. These apparently were the charges that the jury deadlocked on earlier today: 

  • Count three of wire fraud in connection with a wire transfer of $99,990 on or about Dec. 30, 2013. This was part of the investments made from 2006 to 2013 by private investor Alan Eisenman detailed in Chapter 8. Eisenman was a contentious and offputting witness, and will not have any satisfaction.
  • Count four of wire fraud in connection with a wire transfer of $5,349,900 on or about Dec. 31, 2013. This was an investment by Black Diamond Ventures headed by Chris Lucas, nephew of Don Lucas who was on the Theranos board (Chapter 6).
  • Count five of wire fraud in connection with a wire transfer of $4,875,000 on or about Dec. 31, 2013. This was an investment by the Hall Group.

One additional charge (nine according to the Times, 10 according to the Mercury News) was dropped. The Times article also provides a preview on the next trial–Sunny Balwani. Man of Mystery, or just a lucky sod who made a bundle of money from a dot.com?

The trial started on 8 September and concluded just before Christmas. Deliberations took about 50 hours. 

Also CNBC and ABC News. Let the opinion slinging begin!

Does the digital telecom switchover threaten the lives of the most remote old and disabled? (UK, updated)

December 21, 2021 | by

The UK’s recent preview of winter (which officially starts today), Storm Arwen followed by Storm Barra, was yet another exposure of the downside of the digital telecom switchover. As our UK Readers know, BT Openreach has been aggressively proceeding with the full conversion to VOIP by 2025 and closing the ‘broadband gap’ in rural and remote areas. Connecting them to the internet and more feature-filled VOIP service, including telecare services, has major advantages, especially where mobile service is sketchy or blank. 

Here’s the problem–power outages. According to the Energy Networks Association, 1 million homes and businesses in the northeast of England and Scotland lost power for days after Storms Arwen and Barra in late November, making it the worst storm in 15 years. Many of these homes were in rural villages and isolated areas. Power lines in these areas go down frequently in lesser storms that don’t have 100 mph winds and snow. When the power goes out, the VOIP goes out unless you have backup power. Phone lines no longer have their own power, as in the Public Switched Telephone Network (PSTN), equivalent to the US POTS (Plain Old Telephone Service or “copper”).

Add to this BT’s shortage of backup batteries. Digital phone systems in the US are usually installed with a backup battery, which isn’t cheap but sustains about 24 hours of basic voice service. Older models had special ‘brick’ batteries that you ordered from your phone provider that were around $50, newer models are powered by 12 D cell flashlight batteries that at least you can buy at the supermarket. Apparently, BT’s backup units are not only unavailable due to a global shortage, but also cost £85, a substantial charge to a pensioner–unless you live in a ‘not spot’ area without mobile service, in which case it’s free.

No power, no phone, no telecare, no PERS. But plenty of danger to thousands of older isolated adults, plus the frail, alone, and disabled. No connections to friends, carers, and emergency services for days, during a late fall snowstorm which made roads impassable. The storm may be early, but if this is a galloping start, there’s a whole winter to get through.

What about mobile service as a backup? Rural areas are, in bright sunny weather, plagued by spotty service. Supposedly nearly all areas in England have a minimum of 2G service sufficient to call 999. But when the cell phone masts go down, as they did in the storm, and the power to charge the phone is out, the backup is out of commission. One unnamed resident of Grizedale in the Lake District put a molto fino point on it. “It’s embarrassing that a supposedly world-leading country has such a shonky infrastructure. I had full 4G in the mountains of Transylvania a few years ago.”

Ofcom, the regulator, positioned the storms as exceptional. “Even in those circumstances, our rules are clear that there should be protections in place for people to call the emergency services” (999). Rules are one thing, reality another. Judge for yourself as we head into winter. BBC News Hat tip to Editor Emeritus Steve Hards.

Editor’s note for our US Readers: The situation is not that different for us. Nationally, POTS service is deteriorating and not being replaced by providers, forcing changes to VOIP. (I can personally speak to this–20 miles from NYC.) And if you believe that we’re well covered everywhere by cell phone service, you haven’t been to Lancaster County, Pennsylvania, much less further west in the area the locals call ‘Pennsyltucky’. That area also skews older–18.2% of state residents are age 65+. The US also has a wide variety of extreme weather–ice storms, blizzards, ‘snow bombs’, hurricanes, tornadoes, and tropical storms.

(Breaking) Sold! Cerner to Oracle for $28.3 billion. And is Epic next?

December 20, 2021 | by

That bombshell came in fast! From the rumor mill to reality, from last Thursday to today (Monday), Oracle and Cerner announced their deal today at 9.37am ET. It is a bracing all-cash deal at $95/share plus debt assumption totaling $28.3 billion, expected to be immediately accretive to Oracle’s earnings. Closing is anticipated sometime in 2022. It is subject to considerable regulatory (SEC and likely DOJ) and shareholder approvals. It’s Oracle’s largest deal ever, but so far their share price is not appreciative of the big move.

According to the Oracle release, Cerner and its EHR plus related systems will be organized as a dedicated Industry Business Unit within Oracle. No transition information was included, although towards the end it’s stated that “Oracle intends to maintain and grow Cerner’s community presence, including in the Kansas City area, while utilizing Oracle’s global footprint to reach new geographies faster.”

Both the Oracle and Cerner releases (headlining their home page in gigantic type) are written totally from Oracle’s POV–no shilly-shallying about how Cerner will guide them into the healthcare arena or a meeting of like companies, et al. It’s all about how Oracle will transform healthcare.

Changes will be coming to Cerner. Between the lines, they are not painted in the best light. From the Mike Cecelia (EVP, Vertical Industries) quote, “Oracle’s Autonomous Database, low-code development tools, and Voice Digital Assistant user interface enables us to rapidly modernize Cerner’s systems and move them to our Gen2 Cloud. This can be done very quickly because Cerner’s largest business and most important clinical system already runs on the Oracle Database. No change required there. What will change is the user interface. (Ed. emphasis) We will make Cerner’s systems much easier to learn and use by making Oracle’s hands-free Voice Digital Assistant the primary interface to Cerner’s clinical systems. This will allow medical professionals to spend less time typing on computer keyboards and more time caring for patients.”

There is also no mention of Cerner’s challenges with the VA. What are the implications with the Cerner implementations there and with DOD?

Do anticipate much industry speculation on David Feinberg, MD, who only this fall joined Cerner as CEO, and his role in this. The most logical is that he’ll shepherd the sale till the close and exit stage left, well-rewarded, with his future (only 59) still ahead, unless Oracle sees a role for him. In its way, it broke Cerner out of a corner that they were painted into with EHRs. At the end of the day, will there be a Cerner?

And what about Epic? A more complex picture, as Epic Systems is wholly private, on a roll, and dominated by Judy Feinberg, the founder and CEO. However, she is 78, and both personal and corporate considerations on future planning must loom large. What would Epic be worth to an acquirer? And who would it be? Amazon? IBM? (a terrible fit after the Watson Health debacle), Salesforce? Microsoft? Hmmmmm…. CNBC,  TechCrunch, HealthcareITNews   Our earlier coverage here.

Theranos, The Trial of Elizabeth Holmes closes, ch. 15: she believed! in the technology!

December 18, 2021 | by

The defense returned to their closing arguments on Friday. According to lead defense attorney Kevin Downey, not only did Holmes appoint a stellar board, but also the evidence showed that she believed intensely in the Theranos technology changing the world.

  • Holmes stayed till the end trying to save the company–because she believed in improving healthcare
  • She continued to improve the company and the technology, but after all that she didn’t realize…
  • …that the labs had problems until March 2016, when her very last lab director, Kingshuk Das, MD, invalidated 60,000 lab tests made on Theranos labs in 2014-2015.
    • This happened only after CMS sent a deficiency report notice to Dr. Das’ predecessor with the subject line  “CONDITION LEVEL DEFICIENCIES – IMMEDIATE JEOPARDY.” And that lab directors and techs had already told Holmes about problems with the Edison labs.
  • The proof of her sincerity? If she committed fraud, she would have sold her stock while it still had value, and jumped ship like a scared rat!

Interestingly, Downey made no mention of Sunny Balwani, except that Holmes fired him in 2016. No mention of all the time spent in her testimony depicting Balwani as a mentally and physically abusive Svengali, which led Holmes-as-Trilby to not be in control of herself as CEO, even after he departed.

The prosecution returned for rebuttals. John Bostic countered the defense claim of Holmes’ belief with “the disease that plagued Theranos wasn’t a lack of effort, it was a lack of honesty.” “We see a CEO of a company who was so desperate for the company to succeed, so afraid of failure, that she was willing to do anything.” Bostic also reminded the jury that they needed to put Holmes’ claims of emotional abuse by Balwani aside since there was “no evidence connecting the allegations of abuse with the actual charged conduct.” 

Judge Edward Davila, in winding up 14 weeks of trial, then charged the jury to avoid consideration of or speculation on the abuse, and to disregard both public opinion and Holmes’ place in society. They could consider whether Holmes had a “good faith belief” in the truth of her statements. The jury will return Monday morning to start deliberations. The fraud charges include conspiracy between Holmes and Balwani against patients and investors. Two more charges are related to patients receiving erroneous test results on HIV infection and prostate cancer. One is on fraudulent marketing and advertising. Six more charges are about investor fraud. 

AP, Mercury News (paywall–refresh to read)

Because it’s the weekend, your Editor will include two extra articles. The Verge article reads something like a screed against our legal system valuing money fraud over patient medical fraud. The NY Times article is on the latest Holmes makeover. During the trial, she changed from hard-edged, black turtleneck, red-lipsticked Lady Steve Jobs to suburban-junior-manager-working mom in off the rack wrinkled skirts, peachy pink lip color with curled but messy hair, carrying an inexpensive baby bag. All calculated by her defense to create an illusion of innocence and, this Editor would add, incapability of any dastardly acts, such as financial and medical fraud.

To be continued…

TTA’s earlier coverage: Chapter 14, Chapter 13, Chapter 12, Chapter 11, Chapter 10, (10-13 recap the Holmes testimony); Chapter 9, Chapter 8, Chapter 7, Chapter 6, Chapter 5, Chapter 4 (w/comment from Malcolm Fisk), Chapter 3, Chapter 2, Chapter 1

Theranos, The Trial of Elizabeth Holmes closes, ch. 14: was it fraud over business failure–or building a company, not a criminal enterprise?

December 17, 2021 | by

The flat spin starts as the trial winds up. On Thursday, the prosecution presented its closing argument to the jury, and the defense began its summary which will finish on Friday.

The key prosecution points made by Assistant US Attorney Jeffrey Schenk were:

  • Elizabeth Holmes’ decisions were all hers. She first defrauded investors, then deceived patients.
  • “She chose fraud over business failure. She chose to be dishonest with investors and with patients.”
  • Elizabeth Holmes was not a young, naive CEO. She had headed Theranos for nearly a decade. But it was ‘a house of cards.’
  • A decision about Sunny Balwani’s abuse is not pertinent to the case and does not have to be made to reach a verdict. 
  • That has to be made on whether this was deliberate investor and patient fraud.“Ms. Holmes knew these honest statements would not have led to any revenue,” Schenk said. “She chose a different path.”

Mr. Schenk reviewed the testimony of all 29 witnesses and statements made by Holmes herself, with the specific aim of refuting every defense point made about her not being aware that the technology didn’t work, or that she was not in charge of the marketing, advertising, business development, partnerships, and finances. He put a very fine and obvious point on it with a chart for the jury entitled “Knowledge of falsity,” which listed her false statements alongside exhibits.

Enter the defense, represented by Kevin Downey. He started by telling the jurors that they had a high burden of proof in finding Holmes guilty “beyond a reasonable doubt”and that crucial information was left out of the government’s case. It was ‘incomplete’ and that their opinion would change with his review of the evidence. Holmes acted ‘in good faith’. In that review, Downey provided illustrations of 11 successful partnerships Theranos had with drug companies. As to the board, he pointed out that they were not cronies who one would expect in a fraudulent enterprise; “She appointed these people, an incredibly illustrious group of people.”

The defense continues on Friday. The jury will be given instructions after the defense concludes, and it’s expected they will have over the holidays to deliberate. MercuryNews (paywalled but refresh repeatedly to view), CNBC, The Guardian

To be continued….

TTA’s earlier coverage: Chapter 13, Chapter 12, Chapter 11, Chapter 10, (10-13 recap the Holmes testimony); Chapter 9, Chapter 8, Chapter 7, Chapter 6, Chapter 5, Chapter 4 (w/comment from Malcolm Fisk), Chapter 3, Chapter 2, Chapter 1

Theranos, The Trial of Elizabeth Holmes, ch. 13: a crescendo of ‘I don’t knows’ and ‘I don’t remembers’…and the defense rests! (updated)

December 8, 2021 | by

Elizabeth Holmes returned to the stand in her own defense today, continuing with cross-examination by the prosecution’s Robert Leach. From the coverage published so far of six hours of questioning, Holmes has done everything to deny key statements she made multiple times to writers and investors, just short of ‘taking the Fifth’ (Amendment, which is a Constitutional guard against self-incrimination). 

Starting with the now-infamous 2014 Fortune cover story authored by Roger Parloff, Holmes admitted to Leach that the claim of 200 tests using the equally infamous nanotainers was incorrect, but used what marketers call ‘weasel words’: “I believe that now.” Did she not believe that then? She then proceeded not to remember that she forwarded the article via email to investors on 12 June 2014. “I think I could have handled those communications differently.” 

More not knowing or remembering. Were Theranos labs being used on military medevacs, as witnesses from Walgreens and Safeway, among others, have testified? Was Walgreens told of difficulties with the Theranos labs? Did or didn’t she dismiss concerns raised by Erika Cheung and Tyler Shultz to John Carreyrou of the WSJ as coming from disgruntled employees? Did she present a 2015 revenue projection of nearly $1 billion to investors, especially as the internal estimate was much lower and there were no contracts with pharma companies? Did she listen to her lab directors about problems with the tests?

But regrets, she had a few. The WSJ investigation, for instance. And slapping pharma company logos on Theranos reports.

It all comes down to who the jury believes. The prosecution either will close today or tomorrow (Wednesday). The defense will return to wrap up, either with Holmes or with expert witnesses such as Mindy Mechanic and, possibly, others. The defense will return to the 3 Ds–diffusion, deflection, and diminished capacity. The luridly resonant theme of Sunny Balwani as an abusive Svengali, which led her to be not in control of herself even after he departed, will be the coda. The Guardian, CNBC

Wednesday Update. Boy, was your Editor wrong. The defense rested today (Wednesday).

  • Dr. Mindy Mechanic, the defense’ expert on relationship violence, will not be testifying about the nature of the Balwani-Holmes relationship. By not calling Dr. Mechanic, the prosecution cannot call their psychiatrists who also spoke with the defendants. For his part, Balwani has consistently defended himself from these charges of relationship abuse. The prosecution is also seeking to strike Holmes’ testimony of being sexually assaulted while a freshman at Stanford as now being irrelevant to the case, but it is hard for a jury to unhear it.
  • Holmes was, of course, the star witness in her own defense, joined in minor roles by paralegal Trent Middleton from Williams & Connolly, Holmes’ law firm, who summarized evidence in the case, then former Theranos board member Fabrizio Bonanni, who testified that Holmes attempted to remedy Theranos’ problems–but only after it came under regulatory scrutiny, which was late in the game. He had been offered the COO position but declined as ‘too old for that’.
  • Holmes returned in her final testimony to Balwani. Sunny, she said, was her most important advisor though she was, admittedly, the decision-maker. He was volatile. She “tried not to ignite” Balwani in emails and frequent texts. “Sunny would often blow off steam or vent through text,” Holmes said. “I was trying to be supportive.”
  • Returning to tugging on the heartstrings of the four women on the jury, she stated that breaking up with him was a ‘process’. He’d just show up at places she would go, like church and The Dish near Stanford. 
  • Holmes explicitly denied ever trying to mislead investors, Her own summary was restating her original ‘healthcare vision’ and the impact the company would make on healthcare.

Summaries by the prosecution and defense will be next up. Mercury News (partial paywall), CNBC

To be continued…

TTA’s earlier coverage: Chapter 12, Chapter 11, Chapter 10, Chapter 9, Chapter 8, Chapter 7, Chapter 6, Chapter 5, Chapter 4 (w/comment from Malcolm Fisk), Chapter 3, Chapter 2, Chapter 1