Mid-week roundup: Babylon Rwanda update, CVS Health laying off 1,700+, Optum laying off too, Veradigm’s third non-compliance Nasdaq notice, AireHealth auctioning assets, Viome’s $86M raise + CVS retail kit deal

August 23, 2023 | by

It’s another jump into the unknown between bankruptcies, layoffs, and funding raises for the Lucky Few. Emblematic of this year as we prepare to wind up this Crazy Summer in the next few weeks.

Rwandan government scrambling to keep Babyl services going. According to a local website, The EastAfrican, on 7 August “Health Minister Sabin Nsanzimana convened a meeting with the head of Babyl’s operations in Rwanda, Shivon Byamukama, to formulate a contingency plan to mitigate the impact of the company’s bankruptcy.” The Rwanda Ministry of Health is trying to secure the Babyl Rwanda operation that serves 2.4 million Rwandans (not Babylon’s 2.8 million, but still close to 20% of population) and employs over 600 people–doctors, nurses, call center agents, and software developers, Babyl is maintaining normal daily operations for now while Babyl Rwanda’s managing director, Dr. Shivon Byamukama, told the publication that the Rwanda operation is in active discussions with potential investors and partners either as a standalone entity or in partnership with another body. One wonders where the $2.2 million in funding from the Bill & Melinda Gates Foundation went.

CVS Health is starting to wield the knife on its promised (to investors) 5,000-person layoff, starting with at least 1,200 in October. The bulk of the layoffs will be in Connecticut and Rhode Island, both home to much of the Aetna operations. State labor departments in Rhode Island and Connecticut have already received WARN notices from CVS that over 1,200 employees in those states will be terminated effective 21 October. In other states, WARN notices have been filed for another 580 also effective 21 October.

  • The Woonsocket, RI headquarters and a neighboring office in Cumberland will lose 770 workers. 198 live in RI, the others are remote workers reporting to RI-based supervisors.
  • 306 employees are based at the insurer’s headquarters in Hartford, Connecticut. An additional 215 work remotely but are supervised out of the Connecticut offices, for a total of 521.
  • Other employees will be terminated in New York (167), Plantation, Florida (288), and Arizona (134), according to notices filed in each state.
  • Updated 24 Aug: another 825 across four additional states. In NJ, 207 employees at multiple locations starting 15 November. In Texas, 167 employees in Richardson and Irving; in Pennsylvania, 157 employees at an Aetna office in Blue Bell; in Illinois, 294 employees in Chicago, Buffalo Grove, and Northbrook starting 21 October.  Becker’s
  • CVS refused to disclose other layoffs to Healthcare Dive in other states where the number fell below WARN notice requirements

These positions include assistants, data engineers, customer care pharmacists, actuary executives, corporate vice presidents, project managers, program managers, and managers/directors of network development. While these constitute only 2% of CVS’ overall workforce of 300,000, it is cold comfort to those affected, many of whom have worked years for Aetna or CVS.   Becker’s  

The timing is revealed in the Becker’s Payer Issues article: When CVS acquired Aetna, “its agreement with state insurance regulators included a promise to keep employment levels at Aetna and its subsidiaries at 5,300 for at least four years after the closure of the deal. The employment levels reflected staffing as of Oct. 1, 2018, and the agreement expired in 2022.” Notice the similarities in the numbers.

In the interim, CVS went on an acquisition binge of $18.6 billion, buying Signify Health and Oak Street Health only months apart in strategic moves to buy up practices and network extenders such as ACOs in value-based care and home health.

  • Oak Street Health and its 169 practices do not project profitability until 2025–maybe–and clocked an over $500 million loss last year [TTA 4 May]. In the views of many on the Street, Oak Street was a $10 billion waste.
  • No one knows if Signify Health is profitable or not with practices and home health, but that company took a bath on Remedy Partners in Episodes of Care models and wound down that business right before the auction. CVS Health got caught up in a four-way bidding war only a year ago (in a universe that feels quite far away) that topped out at over $8 billion in cash. Ill-considered in retrospect?

CVS Health is already dealing with 2023 and 2024 projections that are downtrend: increased Medicare Advantage costs, higher drug utilization, and lower consumer spending expectations affecting retail operations. Mr. Market does not ignore Where The Money Comes From, and the piper that is paid comes from where it usually does–the people working for the company.

Optum not immune from layoffs either. Optum Health’s MedExpress Urgent Care clinics are eliminating registered nursing positions at nearly 150 facilities as part of a larger group of layoffs at Optum. MedExpress’ RNs are circulating an online petition protesting the change as ‘negligent’. Social media has also posted about gradual current layoffs at UnitedHealth Group and Optum building to major layoffs affecting worldwide operations. There are no WARN filings so these are suspected to be below the 50-100 WARN threshold (number and time period e.g. 6 months may vary by state) but cumulatively across UHG substantial. Becker’s    Becker’s updated coverage today 23 August

Veradigm’s ‘problem’ with Nasdaq continues. The former Allscripts still has not filed an annual report for 2022, nor Q1 or Q2 financial reports, with the Securities and Exchange Commission (SEC) which are required for Nasdaq stock listing under Nasdaq Listing Rule 5250(c)(1). TTA previously reported in June that Veradigm is not reporting because they had a software flaw that affected its revenue reporting going back to 2021. This has been going on since March. Veradigm has requested multiple extensions from the exchange and are set to ask for another. Veradigm stock closed today at $12.89, which is well out of the usual trouble, but an accounting software problem this long unresolved from a software company specializing in practice EHRs and practice management software…does not compute. Healthcare Dive, Business Wire

AireHealth auctioning off assets. This respiratory health company based in Winter Park, FL founded in 2018 developed a FDA-cleared nebulizer with Bluetooth functionality plus AI and machine learning software to generate predictive data on patients’ clinical conditions. The online auction of patents, software, hardware, and intellectual property for the company’s remote patient respiratory care platform will be held by Florida-based Fisher Auction Company. Apparently, there was no bankruptcy filed but the early-stage company decided to shutter anyway and sell assets. Mobihealthnews

On the other hand, gut health is hot and Viome scored a Series C of $86.5 million for a total $175 million raise plus gut testing in 200 CVS locations. Lead investors are Khosla Ventures, Bold Capital, and WRG Ventures. With the raise, Viome announced the launch of its Gut Intelligence Test in 200 CVS locations. Online, the Gut Test retails for $149 on current sale. Viome also markets oral and throat tests plus a ‘full body’ test in the $200+ range. The gut test is not currently FDA-cleared, though its saliva-based oral and throat cancer test received FDA breakthrough device designation in 2021. They claim that its RNA sequencing technology that utilizes AI and advanced algorithms to analyze the world’s largest gene expression data from over 600,000 samples, was originally developed out of research from the Los Alamos National Laboratory, “is clinically validated, fully automated, exclusively licensed by Viome [to analyze] biological samples at least 1,000 times greater than other technologies.” Release, Mobihealthnews, TechCrunch

Cano Health appoints interim CEO as permanent; founder Hernandez steps down from board

August 22, 2023 | by

Cano Health made the obvious, and perhaps the only, choice. Interim chief executive officer Mark Kent was  appointed both as permanent CEO and joined the company’s board of directors. Founder Dr. Marlow Hernandez, the founding and former CEO up to 16 June when Mr. Kent was appointed, immediately stepped down from the board.

Mr. Kent has a strong background as an RN, as well as a senior executive in hospitals and as a founder of three startup healthcare management services organizations (MSOs) for Florida primary care providers in value-based care, most recently as CEO of Care Management Resources, Total Health Medical Group, and Your Partners In Health. Before then, he was a regional president of Humana. From his LinkedIn profile, he sounds like an accomplished and interesting executive. Another interesting facet: he runs investments for his Florida-based family office Kent Capital Investments which maintains investments in the above MSOs and others. Turning around a company staring at the abyss,  laying off 17% of staff and exiting states right and left in a restructuring, and successfully selling what’s left is another matter. It is not disclosed whether Kent Capital has an investment in Cano Health or if there are ties between the practices and Cano. The Care Management Resources website displayed on LinkedIn or in a routine search is not to be found.

The company release does not refer to any other members of the board, the Cano 3, or Dr. Hernandez’ future, though he is a shareholder. The Cano 3, who hold 35% of near-worthless shares in their collective portfolios (resigned directors Barry Sternlicht, Elliot Cooperstone, and Lewis Gold), remain silent. Healthcare Dive   Previous coverage of Cano Health: 15 August includes restructuring; 21 June

Weekend reading: Forbes picks the next $1B startups, is TV streaming analogous to the future of healthcare?

August 18, 2023 | by

Will we have any more unicorn startups? Forbes seems to think we will and picked out 25 with TrueBridge Capital Partners. They’re a potpourri of cybersecurity, ID fraud, IT, fashion, financial, farming, and even an aircraft company. Only a few are healthcare-related and Becker’s picked them out:

Chapter, co-founded by Republican Party presidential hopeful Vivek Ramaswamy. uses its database to fit the best Medicare plan options (Medicare Advantage, supplements) to individuals. Unlike brokers, their consultants get paid the same no matter the plan. It’s raised $61 million and has revenue of $15 million.

Medallion does the dog work of verifying medical licenses and enrolling doctors in insurance networks. They have more than 300 customers, including Oak Street Health and VillageMD. It’s raised $85 million   and has revenue of $13 million.

Pendulum Therapeutics is in microbiomes–gut health–and what early usage can produce over a lifetime. Many babies given antibiotics have now been found to be more susceptible to chronic lifelong problems that include asthma, ADHD, diabetes, and celiac disease. Its flagship is a glucose-control pro­biotic for mana­ging Type 2 diabetes. It’s raised $116 million and has revenue of $11 million.

Verifiable verifies the credentials of medical professionals using machine tools. It’s raised $47 million and has revenue of $6 million.

Is there a usable analogy between the TV streaming wars and healthcare’s future? This essay in Becker’s Hospital Review is unusual for them. It draws a line between the fragmentation, redundancy, and overlap in entertainment that streaming services such as Hulu, Disney+, and Netflix have created, to the fragmentation, redundancy, and overlap between health systems and health companies such as Optum, Humana, CVS Health, Walgreens, and even Amazon in taking care away from the hospital setting into clinics and the home, breaking the centralized hold that health systems have had on patients. Too much á la carte, confusing, and fragmented for patients at usually a very bad time, unlike sitting on the couch and wondering which home improvement or celebrity reality show to watch.

Week-end short takes: Amazon Pharmacy automating couponing of insulin and supplies, Mendaera imaging/robotics wins $24M, Access Group acquires Oysta (UK)

August 18, 2023 | by

An automation innovation that will attract diabetics. Amazon Pharmacy, in an attention-grabbing move, is working with several manufacturers to automate coupons that discount diabetic drugs (insulin) and supplies. These will come from 15 diabetes care brands and include some of the most commonly prescribed products from Novo Nordisk, Eli Lilly, Sanofi, Dexcom, and Insulet, such as insulin vials, pens, continuous glucose monitors, and pumps. The coupons are sponsored by the manufacturers and can drive the cost for these supplies to start at $35 a month. The cost of insulin and diabetic supplies has been a major issue, and while manufacturers have offered coupons, actually obtaining them from manufacturer websites can be a complicated procedure. Amazon’s program was applauded by the head of the American Diabetes Association.  Amazon is also offering them for COPD, weight loss medications, and EpiPens. MedCityNews, HealthcareFinance

A notable Series A this week is San Mateo, California-based Mendaera, which developed a robotic system that merges real-time imaging, AI and robotics for minimally invasive care. Still in semi-stealth, their raise is $24 million led by Lux Capital with participation from Founders Fund, Operator Partners, and Allen & Company, LLC. Other investors include Intuitive Surgical and Auris Health founder Dr. Fred Moll and former U.S. Senator Bob Kerrey. They have moved into a new production facility in Silicon Valley. Release, Mobihealthnews

Access Group acquires Oysta Technologies. Oysta, a provider of care technology solutions for safe, independent living in the UK and Spain, will be part of Access Group’s Health, Support and Care (HSC) division that provides software for health, local government, and care organizations. In the UK, Oysta works with local authorities, social care providers, housing associations, care homes, and NHS Trusts. Acquisition cost was not disclosed. Oysta announcement, Access announcement   Hat tip to Adrian Scaife, Business Development Manager for Assure, via LinkedIn

Babylon Health files for US Chapter 7 bankruptcy, winding down Babyl Rwanda and ending care for 2.8 million users (updated)

August 17, 2023 | by

When added to the UK receivership, it looks like total hull loss* for Babylon. Their US bankruptcy was just made public through a Forbes article (hat tip to HIStalk) that Babylon Health filed for Chapter 7 bankruptcy with papers dated Wednesday 9 August. This is two days after shutting their Austin HQ and laying off 94 staffers. This confirms that the US company will be liquidated for the value of the assets, which will be sold through the court and the proceeds distributed to secured creditors. One wonders who will be lining up for the IP and other scraps.

Babylon Inc. and Babylon Healthcare Inc. are the two entities filing Chapter 7. There are hundreds of creditors, but as is typical in Chapter 7 bankruptcy, only the creditors secured by collateral will have some chance of being paid something on the dollar. AlbaCore Capital alone is owed $34.5 million from their recent bridge financing and an earlier $300 million in notes due 2026.

Katie Jennings, the writer, notes that Babylon has three other subsidiaries incorporated in Delaware, none of which filed for bankruptcy. In the filings, Babylon’s assets and liabilities are listed as between $100 and $500 million. She attempted to reach their chief operating officer Paul-Henri Ferrand, the signature on the Chapter 7 filing, but his email bounced. (The COO position was eliminated per the Texas Workforce Commission notice.)

Next steps according to the article in the filing: next Thursday 24 August to document its secured and unsecured debtors and summaries of assets and liabilities. Babylon’s creditors will meet on Tuesday 12 September. Bankruptcy documents are on Pacer and on Inforuptcy (fees required)

Update 18 August: The Healthcare Dive article published today has links to both Babylon Inc. and Babylon Healthcare bankruptcy filings. The precipitating act was that Centene first notified Babylon Healthcare on contract non-renewal on 4 August. On 8 August, after the AlbaCore deal collapsed the prior day, Centene terminated all contracts with Babylon effective immediately, save three contracts with Babylon’s IPA, Meritage Medical Network. The Centene contracts constituted over 48% of their US business in 2022. 8 August SEC Form 8-K

In Rwanda, Babylon Health through its Babyl unit is also winding down virtual care that covers 20% of the country. Babylon has a 10-year agreement with the government of Rwanda to provide virtual primary care services to people in that country, subsidized by $2.2 million in funding from the Bill & Melinda Gates Foundation in a partnership dating back to 2016. By the end of 2022, Babyl reported 2.8 million users, or 20% of that 13.2 million person country, claiming a daily 4,000 medical consults a day, which constitutes an outstanding success by the numbers. But that won’t be preserved in the parent company collapse.

A Monday 7 August email obtained by Forbes states that Babylon will be winding down operations there on a non-disclosed timetable and without a clear path for its 650 employees there. “It is with a heavy heart that we will begin the process of winding down Babyl Rwanda, while in parallel exploring opportunities to find Babyl Rwanda a new home. We have entered into discussions with potential investors and partners and will leave no stone unturned to secure the best possible outcome for our business and Babylonians.” (sic) Regarding layoffs, the email confirmed most of the US layoffs would be immediate, UK employees would largely be retained, and Rwanda and India workers would be told more at team meetings. Employees were warned not to talk to the press and the email was signed ‘Babylon Leadership’.  The Gates Foundation did not comment on whether the foundation had been informed of Babylon’s plans to wind down service.

Previous TTA coverage back to May:

Babylon Health shuts US operations, goes into UK receivership, Babylon merger with AlbaCore and MindMaze collapses, selling UK and transitioning US businesses, bankruptcy anticipated, Babylon Health to go private with AlbaCore in planned ‘Take Private Proposal’, combine with MindMaze, Babylon Health to go private (includes summary of Q1 financials)

This story is developing. *’Hull loss’ describes an aviation accident that results in catastrophic, unrecoverable damage to the aircraft.

Mid-week roundup: DocGo in NY migrant service trouble, more DOJ scrutiny of UHG-Amedisys buy, Exor now $2.8B lead investor in Philips

August 16, 2023 | by

DocGo catching flak over their services to migrants housed in New York State. Officials in Albany County and in the state capital of Albany have criticized DocGo’s health and food services to migrants being given temporary housing in that area. DocGo’s primary contracts for health services are with New York City including a $432 million no-bid contract with NYC. Since the migrants come through NYC and are being housed upstate, DocGo has been put in charge of about 700 migrants temporarily located in the Albany area with housing and services such as medical care, food, transportation, security, and case management. According to county officials, DocGo failed to provide these services. According to the Albany County officials, food was either not delivered or spoiled, and DocGo did not communicate with them since the program started in May. DocGo has denied these allegations and their CEO Anthony Capone has stated that DocGo is working to provide food via local food pantries and ‘culturally sensitive’ meal choices. In addition, they have provided to date over 25,500 meals to Albany area migrants, plus transportation shuttles for both medical treatment and to public transportation. DocGo said it has provided medical care and other services to more than 19,000 migrants in NY since beginning its work in September. Albany Times-Union, Mobihealthnews, WNYT.com  

As we noted only last week, DocGo upped its 2023 financials, buoyed by their large NYC contract. Their latest New York partnership is with EmblemHealth, a NYC and Tri-State area health plan that serves about 3 million members. DocGo will provide in-home services in New York, New Jersey, and Connecticut. Release

The UnitedHealth Group acquisition of Amedisys has run into extra scrutiny from the Department of Justice. Under the Hart-Scott-Rodino Act (HSR Act), a premerger notification has to be filed by both parties with the DOJ and the Federal Trade Commission (FTC). That was done on 5 July. DOJ and FTC responded with a second request for additional information on 4 August (page 16 of their SEC Schedule 14 A filing). What this will do is delay UHG and Amedisys moving forward with the deal until 30 days after they have complied with the second request. Amedisys is proceeding with a shareholder meeting on 8 September for approval of the acquisition.

The second request fits with recent changes to information disclosure requirements proposed by the US Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division in June. These are currently in 60-day public review open to 28 August. Both FTC and DOJ with premerger notification and Draft Merger Guidelines [TTA 20 July] are proposing significant additional information requirements and substantial tightening of what will be acceptable in mergers and acquisitions under new anti-competitive and antitrust guidelines. An educated guess is that DOJ and FTC will be looking at Amedisys’ fit and home health market share effect with UHG’s earlier acquisitions LHC Group and Contessa Health, now in Optum. A preview of coming attractions in M&A?

The buy was announced in June as an all-cash deal for $3.3 billion (over $100 per share). Healthcare Dive, FierceHealthcare

Exor taking a 15% share in Philips with a $2.8 billion stake. Exor is an Italian investment company controlled by the Agnelli (Fiat) family that also has shares in Ferrari, Stellantis, the Economist, and football club Juventus in an overall strategy of investments in healthcare and luxury companies. Exor bought the shares in the open market with the option to buy another 5%. Exor will take a seat on Philips’ board. The Respironics recall affected Philips’ overall business and cut share price by about 70% compared to pre-recall.  Reuters. Hat tip to HIStalk.

Cano Health at precipice of bankruptcy after disastrous Q2, lays off 700

August 15, 2023 | by

Primary care provider Cano Health may follow Babylon Health down the same drain. After announcing a horrible Q2 last week, Cano Health in its press release finally admitted that their “liquidity is not sufficient to cover the Company’s operating, investing, and financing uses for the next 12 months”. 700 people, or 17% of its current workforce, will be laid off during Q3 as part of restructuring.

Cano, or what will be left of it after the following, is officially up for sale either whole or partially, ASAP.

  • Cano will exit three states and one territory: California, New Mexico, and Illinois by the fall which presently have 5,000 members and 17 medical centers. Puerto Rico, with 8,000 members in an unenumerated number of affiliated practices, will wind up as of 1 January 2024. 40% of the layoffs they attribute to the exits, the rest to consolidation of and other downsizing of administrative operations.
  • Downsizing Texas and Nevada medical operations.
  • Massive restructuring in their core market of Florida.
  • Reducing their current 169 medical centers to 136 by the end of year
  • Their Q2 net loss was $270.7 million, adding on to Q1’s $60.6 million net loss [TTA 12 May]. This compares to prior year net loss of $14.6 million, an increase of over $256 million or over 1800 percent. This was attributed to lower Medicare Risk Adjustment (MRA) revenue and higher than expected medical expenses, along with adjustments and higher than forecast interest expenses.
  • Their adjusted EBITDA was equally dismal: $149.7 million, compared to $9.9 million profit in Q2 2022 and Q1’s $5 million,
  • Liquidity is $101 million as of 9 August–not enough to conduct business for 12 months (and an educated guess, to 31 December. Their line of credit (CS Revolving Line of Credit) is fully drawn while they engage in a rather complicated negotiation of something termed the “2023 Side-Car Amendment”. Supposedly this will be paid down ‘significantly’ by September. Despite this, here is the cautionary statement regarding the sale of the company or assets, which would not be in their release unless the company was truly in a deep hole indeed:

The Company has not set a timetable for the conclusion of this process and there is no assurance that the process will result in any transaction.  Cano Health does not intend to comment while it undergoes this process, unless required by law or the Company determines that it would be in its best interests.

Cano stock sank to the $0.40 to $0.45 range from a year ago in October of close to $10.

A stock commentator quoted in Becker’s (Seeking Alpha, paywalled) posits that any sale would be just about impossible without Chapter 11 bankruptcy. Logically, any investor would prefer to pick up assets at a fire sale without the encumbrances of a workforce, as brutal as that sounds. But the value of Cano is in its practices and workforce delivering primary care. Another wrinkle is that Cano is in current CMS agreements on Medicare Advantage and ACO REACH contracts that would have to be assumed. One would also assume that their search for a new CEO to replace interim Mark Kent is also on hold.

Not a peep yet from the Cano 3 (resigned directors Barry Sternlicht, Elliot Cooperstone, and Lewis Gold), but observers expect they will have something to say with 35% of near-worthless shares in their collective portfolios. Medical Economics, Reuters, FierceHealthcare, Healthcare Dive   Our prior coverage on CEO Marlow Hernandez’s ‘step down’ on 21 June has links to earlier stories.

This story is developing and will be updated.

Healthcare M&A hit a 3 year low in Q2 2023, to the surprise of none: KPMG

August 11, 2023 | by

“Is deal making ready to rebound?”–KPMG tries to find the bright side in their new study of healthcare activity. If Q2 reflects the trend, it won’t be this year. See below for what this Editor sees that KPMG doesn’t.

  • There were 245 deals in Q2 2023, 7% below deal volume in Q2 2022 and 41% below the bull market of Q2 2021.
  • Buyers shifted from the financial buyer (e.g. a long-term investor), now at 29% of deals, to strategic buyers who look to expand or augment their businesses at 71%. This is a complete flip from the prior year, where strategic buyers were 37% (98) of a total of 264 transactions.
  • Sectors have also shifted:  42% of deals included physician groups, 27% were IT/digital health sector, 16% were in post-acute care, and 15% involved health systems. The shift away from digital health is pronounced from the palmy pandemic days of 2021 where 737 deals raised $29.1 billion.

There aren’t many big deals on the board in Q2, mostly announced and not closed: CVS Health-Oak Street (closed), Optum-Amedisys, TPG and AmerisourceBergen-OneOncology, Molina-BrightHealthcare’s CA plans, Froedert Health-ThedaCare, and Kaiser Healthcare-Geisinger (forming Risant Health). The last is still to be structured.

KPMG’s reason why for the paucity of deals were the Fed and the continuance of interest rate hikes to supposedly slow inflation (which hasn’t worked much and instead is depressing the economy), the US political situation (turmoil), and what they politely term “uncertainty about the valuations of potential acquisition targets.” Healthcare Dive, Becker’s

“Uncertainty about the valuations of potential acquisition targets” is an understatement. This Editor looks back at that time of  2020 to perhaps Q1 2022 as a binge of insane proportions and self-reinforcing FOMO. Rivers of free-flowing money for any company in digital health–who can blame founders and funders for grabbing their buckets and filling them? The hangover? Equally insane. Of SPACs alone, which were treated like the future of IPOs, nearly all cracked. Valuations of established telehealth companies plunged 70-90%. The money? The river bed is largely dry except for a few puddles and branches. The call for profitability is late.

Racking up reasons why from this Editor’s POV that aren’t in the KPMG analysis:

  • Investors such as VCs and providers no longer have the money because 1) they spent it and 2) can’t raise it. Those who have ‘dry powder’ are either reserving it for a brighter day, cutting back themselves, or deploying it to what they perceived as safer bets such as fintech and biopharma. The deals being made especially in digital health are small. Private equity, family offices, and high net worth investors are mostly staying out of healthcare, or being extraordinarily cautious about both where they invest and how much. More on this: TTA 5 April.
  • A four-bank collapse–Silicon Valley Bank’s failure most notably was a dagger in the heart of West Coast VCs. Add to it First Republic, Silvergate, and Signature in NYC (a favorite of Silicon Alley), plus Credit Suisse being taken over by UBS, all in fairly short order in late winter, ant that will tend to curb anyone’s enthusiasm. It also affected companies that located their cash, investments, and payables/receivables in these banks.
  • High valuations seem to have an inverse relationship to survival. This past year has seen the total ‘hull loss’ of the following former ‘industry darling’ companies: Pear Therapeutics, SimpleHealth, The Pill Club, Hurdle, Quil Health [TTA 11 July], and now Babylon Health.  Teetering on the edge are Bright Health Group and possibly 23andMe. Insurtechs Clover and Oscar are cleaning up frantically, trying to recover. Established companies such as Teladoc and Amwell have taken it in the shins and talk a lot about profitability after years almost proudly not being profitable. Onetime ‘too hot for their shirts’ telemental health is still trying to survive the scandals around Cerebral and Truepill. What remains isn’t favorable: too many companies chasing the same younger group of people who want virtual mental health, plus DEA confusion around Schedule II medication telehealth prescribing [TTA 14 June]. 
  • Big acquirers CVS Health (Oak Street Health, Signify Health) and Walgreens Boots Alliance (VillageMD) are posting down numbers, retrenching, selling units, closing stores, and laying off staff in a matter of months to a year post-acquisition.

And to wrap…there are six letters may sink any revival of M&A: DOJ (Department of Justice) and FTC (Federal Trade Commission), with a commission relishing their activist role. 

  • Draft Merger Guidelines that update corporate merger guidelines originally from 1968 but updated many times since. The 13 Guidelines drafted by DOJ Antitrust and the FTC have the intent to prevent mergers that threaten competition or create monopolies. But reading them, nearly every merger or acquisition other than in a horizontal or conglomerate model will be in violation of one of the 13. [TTA 20 July] 
  • Earlier, the Premerger Notification changes to the filing process covered under the Hart-Scott-Rodino (HSR) Act for transactions over $111.4 million. Again, it raises the height of the mountain and the time required for all transactions other than the smallest. [TTA 29 June]
  • FTC reviving the 2009 Health Breach Notification Rule to clamp down on ad trackers, fining Teladoc’s BetterHelp and GoodRx millions, and sending letters to 130 hospitals and health systems to put them on notice that they are on the radar [TTA 27 July].

This Editor is shocked that this concatenation of Federal actions have not gained the attention they deserve, especially the first–or maybe the legal departments are just working verrry verrry qwietly to register their objections.

Perhaps there will be a bounce in M&A–companies moving to acquire under the wire of both the merger guidelines and the premerger notification changes–akin to what Wall Street calls a ‘dead cat bounce’ (apologies to felines). After they’re in effect, watch for another dead stop in M&A and investor exits until everyone adjusts to the new rules and figures out new workarounds. No one wants to be the first out of the gate in this situation.

(Edited for clarifications)

Babylon Health shuts US operations, goes into UK receivership

August 10, 2023 | by

Babylon reached the end of the runway, smack into the lights and barriers. In the US, Babylon Health shut its Austin, TX headquarters on Monday 7 August, the same date as the announcement of the termination of their merger with AlbaCore Capital and their MindMaze business [TTA 8 Aug]. The required filing of a closure notice with the Texas Workforce Commission came to light late yesterday. The layoff of 94 employees left in the office was immediate and the closure permanent. 

As of this writing, there is no change to their US website, but LinkedIn has many posts from the now laid-off. There are no statements from founder and CEO Ali Parsa.

No transition in the US for users. With the US office closure, there is no service for current contracts such as with Ambetter’s (Centene) commercial exchange product nor with other payers or value-based providers and plans, mainly in Medicaid, which have been using Babylon apps. According to the Forbes article published yesterday, users have found that their Babylon 360 app no longer works and have been redirected to their health plan for assistance.

“When Linda, a patient in New York who requested her last name not be used for privacy reasons, went to login for a scheduled therapy appointment today, she received the following message on her Babylon app, according to a screenshot. “Babylon’s clinical services and appointments are no longer available. For details about your health plan benefits and to find a new provider, contact your health plan.”

It appears that Babylon is putting the responsibility of the “transition” on patients and their insurance companies. An email Linda received from Babylon at 11:02 am ET said: “We know you may have questions about this change. Your health plan’s dedicated Member Services team can assist you. You can find your health plan’s contact information on your ID card.”

In the UK, Babylon has entered UK administration (=US bankruptcy). Its main product is GP At Hand which is still active and up for sale in the dissolution of the company. Last year, it exited its three contracts with NHS Trust hospitals two years into ten-year contracts [TTA 24 Aug 22, Wired], leaving Reading and Birmingham controversially [TTA 24 Aug 2022] but may have had a fourth continue with Hammersmith and Fulham in London, one of its earliest users back to 2018-19. GP At Hand is still active in London with about 100,000 users reported by Pulse but is only enrolling patients in Fulham (West London). No further information on the administration filing but that would likely be with the High Court in London as previously disclosed by Babylon.

It is quite stunning that a company that the UK’s Health Secretary Matt Hancock lauded as the future of healthcare in 2018 and plumped for at every turn, survived a beatdown on BBC Two’s Newsnight in February 2020, successfully went public in a US SPAC two years ago (Oct 2021) at a value of $4.2 billion/$272 per share, that entered the US and bought two large US medical practices, had operations in 16 countries and as of last December had 1,895 employees with 35% (660 people), in the US, has collapsed so completely and thoroughly. As of 4pm EDT today, their market capitalization was just above $425,000.

As to the non-US/UK operations and multiple user services in places like Rwanda and India–their fate is unknown. Perhaps another reason why Babylon, like its Biblical namesake, eventually collapsed.

FierceHealthcare, Computing (UK–may require free signup), BMJ, The Telegraph (via Yahoo Finance)  Our Babylon Health file here.  This story is developing. If you were a Babylon employee, you may email Editor Donna in confidence or leave a public comment below.

Living to fight another day: insurtechs Bright Health, Clover Health, and Oscar Health report improved Q2s, H1s (updated)

August 10, 2023 | by

Have the upstart payers turned a corner–even if that means exiting the business? ‘Insurtech’ is the term given to the tech-enabled, health tech-friendly US payers which were supposed to deliver health insurance plans more efficiently (buy online!), more conveniently using apps and telehealth, lead in value-based care through strong networks, provider software, internal automation tools, and wrap it up with a ribbon of lower delivery cost to consumers, from those who needed individual exchange plans to Medicare Advantage. This utopian model cracked like the SPACs of Bright Health and Clover Health, and the IPO of Oscar Health, as this Editor noted last month, perhaps to the glee of traditional payers. But when survival is at stake, some surprising things can happen. All three are Not Dead Yet.

Bright Health Group succeeded last month in selling its remaining plans to ‘pure payer’ Molina Healthcare–their California Medicare Advantage plans Brand New Day and Central Health Plan. The deal: purchase 100% of the issued and outstanding capital stock of the two plans in a deal structured to be about $600 million. The Catch-22: stay solvent and absorb plan operational costs and losses (which are many) until Q1 2024 when the Molina deal will close. [TTA 6 July]

Last Friday (4 August), Bright secured a life preserver and line just as the waves started to crash–$60 million through a credit facility with an investment partnership of New Enterprise Associates (NEA). They also entered into a permanent waiver of default on its existing credit facility, which expires in February 2024. This has to refer to their prior $500 million credit facility with JP Morgan which was long overdue and now waived until the Molina close, apparently. Bright also is issuing penny warrants to NEA to purchase up to 1,656,789 shares of the Company’s common stock to the lenders under the new credit facility, approved by the board without the usual shareholder approval. This leaves an open question about who is really controlling the company. Release, Healthcare Finance, FierceHealthcare

There seems to be an even brighter (sic) picture in that their adjusted EBITDA for Q2 and H1 were actually in the black: $6.4 million for Q2 and $670,000 for H1. Even more bullishly, they project a full-year profitable adjusted EBITDA.

  • Reduced Q2 and H1 net losses: Q2 was $125 million versus $284 million in prior year. For H1 2023, the losses were $312 million and $488 million respectively.
  • Their other businesses in consumer care delivery, value-based care with providers in shared risk including ACO REACH (NeueHealth), and enterprise seemingly perform well. Their 2023 totals: consumer care $250-275 million, care solutions $900-925 million, and enterprise $1.15 -$1.2 billion.
  • Lives covered in value-based care are up to 371,000, an increase of 214% over last year’s 118,000–excluding any covered under their now exited commercial plans. Release,  Healthcare Finance

Looking at Clover Health, it was revealed this week that they survived a delisting off Nasdaq, which happens when the minimum closing share price requirement falls below $1 for at least 10 consecutive days. Now with closings for 10 days over $1, they are in Nasdaq’s good graces for now. They are exploring a reverse stock split or authorized share reduction, to be discussed at the 30 August shareholder meeting.

Clover then followed this up with a cheerful lead in their Q2 results that they had adjusted profitable EBITDA of $10 million versus last year’s $83.9 million loss. This is also remarkable as their revenue fell by over $333 million to $513.6 million due to a drop in non-insurance revenue of $384 million. Insurance plan revenue made up some of it by growing 17% to $314.4 million. In total, Clover recorded a net loss of $28.8 million. But for the year, adjusted EBITDA is projected to remain in the red between $70 and $120 million. Mobihealthnews, FierceHealthcare, release

Clover provides both Medicare Advantage (MA) plans in eight states plus a tool for practices, Clover Assistant, which assists in patient chronic care management through machine learning and aggregated data. They also entered value-based care in 2021 in the Medicare Direct Contracting (now ACO REACH) model which was a major loss generator in 2022 (Healthcare Dive) and has been cut back. Clover also survived an epically cracked SPAC out of the gate in January 2021 with the news that the Department of Justice (DOJ) had been investigating the company on investor relationships and business practices starting in fall 2020. A little over a month ago, the company finally settled seven shareholder lawsuits over its non-disclosure of the DOJ investigation at the time of the SPAC [TTA 28 June]. 

Now to NYC-based Oscar Health reporting its Q2, the first under its new CEO Mark Bertolini [TTA 30 March]. Their adjusted EBITDA went from red to in the black with a Q2 of $35.6 million, an improvement of $111.4 million versus prior year, and the second profitable quarter in a row with H1 adjusted EBITDA of $86.6 million, improving by $198 million from 2022. Revenue for Q2 was $1.5 billion with H1 at $3 billion. Net loss narrowed substantially to $15.4 million, an improvement of $96.7 million versus prior year, with H1 loss at $55.3 million, reduced by 70% from last year’s $187.3 million. The year will still be in the red with projected EBITDA loss of $75 to $175 million. The reasons for this gap–two profitable quarters, but an overall disappointing year–are not clear.

Bertolini touted factors such as improved medical loss ratios and rate increases. Oscar also pulled out of unprofitable Affordable Care Act marketplaces in Arkansas, Colorado, and California, as well as trimming MA plans in New York and Texas. On the earnings call, they announced that they were given state approval to resume MA enrollments in Florida and that they were relaunching +Oscar with help from ChatGPT to build automation tools in its Campaign Builder platform. In other news, their CFO is stepping down on 13 August, but remains on the board. He will be replaced internally by the chief transformation officer. Other staff are reportedly changing. Release, Healthcare Dive, FierceHealthcare

Update: you may also want to read Ari Gottlieb’s comments on these three companies on LinkedIn from the view of an expert financial analyst. Further comments on Bright’s perilous situation and Clover’s ‘legitimately good quarter’ here.

Babylon merger with AlbaCore and MindMaze collapses, selling UK and transitioning US businesses, bankruptcy anticipated

August 8, 2023 | by | 2 Comments

Babylon running out of runway, likely to hit the barriers and lights at the end unless there’s a miracle. On 7 August, Babylon, in a tersely written announcement, stated that their 23 June agreement to execute the ‘Take Private Proposal’ with AlbaCore Capital to merge with another of their holdings, MindMaze Group SA, has fallen through and will not proceed. No reasons were given for this surprising development six weeks later.

The release is headlined in the usual guarded terms of being “in discussions of new strategic alternatives” for their US and UK businesses but the reality is in the release copy.

  • Babylon is selling its UK businesses. The company is pursuing the divestiture of its UK business to third parties to provide financing to assure the continuity of Babylon’s operations. There is non-surprising coverage language in the release that “it cannot provide assurance that any of these initiatives will result in Babylon entering into a definitive agreement for or completing a divestiture” which means that the UK businesses may close without a transition. 
  • Babylon will be transitioning its US business to other providers. It is exiting its core US business. As to the transition, no providers are disclosed as of this time.
  • The sale of the Meritage Medical Network IPA is still pending.
  • After the bridge financing by AlbaCore Capital that was provided in May along with AlbaCore’s interim funding proposal of $34.5 million, Babylon is out of money. It is actively seeking additional financing but cannot assure that it will fund continued operations or that a third party sale will be executed in time.
  • This anticipates a complete shutdown of operations, not a reorganization. “The applicable entities of the Group will file for bankruptcy protection or implement other alternatives for an orderly wind down and liquidation or dissolution, which may include commencing Chapter 7 proceedings under the U.S. Bankruptcy Code and/or a UK administration for the applicable entities of the Group in the near term.” For American readers, UK administration for insolvent companies is similar to US bankruptcy procedures in equivalents of US Chapter 11 reorganization and Chapter 7 asset sale and closing. Administrators for Babylon would be appointed by the High Court in London.

Any sales to third parties for any of the above are subject to AlbaCore approval. The proceeds will go to AlbaCore to settle Babylon’s indebtedness to them. As before, common shareholders of Babylon will be shut out as their shares are near worthless today at $0.28. 

Babylon is headquartered in Jersey (Channel Islands) along with Austin, Texas. The company was once a leader in the UK telehealth scene with remote consults and cooperative deals with GPs that received considerable criticism, then expansion to the US after their SPAC with Alkuri Global Acquisition in October 2021. Shares reflected the telehealth bull market of the time with a share price of $272 per share. The SPAC cracked like so many others, deflating shares to double then single digits to around $6 in May. Despite some success in the US market with payers, developing chronic care management programs for high-risk patients, reorganizing as a foreign private issuer to a domestic one, and the reverse share split on 15 December 2022, this last ‘rabbit out of hat’ didn’t work and apparently AlbaCore’s deal with a forced merger with a very different company, MindMaze in neurotherapeutics, didn’t work either. ‘Wicked Tuna’ indeed.

At present, there are no further announcements or changes on the website, nor any confirmed layoffs, a situation which undoubtedly will change.

Also Mobihealthnews, Healthcare Dive, Sifted (UK/EU), and UKTN

Short takes: CVS’ $1.12M Q2 net income loss, forecast spurs 5,000 layoffs; Signify’s in-home kidney exams; Indonesia’s Halodoc $100M D; FeelBetter raises $5.9M; Medicare breach hits 612,000 beneficiaries

August 3, 2023 | by

A mixed picture for CVS Health. Their Q2 reporting was almost schizophrenic, depending on whose reporting you read. Healthcare Finance highlighted their $1.12M net income loss–tiny when compared to the size of the company– but apparently one of the factors driving a layoff of 5,000 corporate, non-customer facing staff. From FierceHealthcare, CVS is still quite profitable at $1.9 billion, but that is down 36%. Revenue of $88.9 billion was up 10% from prior year. The results beat Wall Street analyst estimates of $2.12/share with adjusted earnings of $2.21/share. 

Despite the overall good picture of Q2, financial projections trended down for the full year. CVS in Q2 started a restructuring plan which cost $496 million in pre-tax income, expected to be completed by year’s end. 2023 is projected to have increased Medicare Advantage costs, higher drug utilization, and lower consumer spending expectations affecting retail operations. Added to their acquisition binge of Signify Health and Oak Street Health, which together totaled $18.6 billion, their 2024 earnings per share projections for 2024 fell from $9 to a range of $8.50 to $8.70. Timing was not disclosed for the 5,000-person reduction among corporate staff. It is not known whether this will affect Aetna and CVS Caremark (pharmacy benefit). CVS has 300,000 employees (75% full time) including part and full-time retail workers. They are also reducing corporate travel, plus the use of consultants and vendors. (CVS is known to have extremely low contractor rates already.) The restructuring is projected to save $700 to $800 million next year, but cold comfort to the 5,000 who won’t be there.  FierceHealthcare. We’ll see.

One of those CVS purchases, Signify Health, is moving forward with an in-home option for evaluating kidney function as part of in-home exams of Medicare Advantage members. This evaluation will include urinalysis and estimated glomerular filtration rate testing which are relatively simple and cost-effective to administer in-home. It fits within their in-home exam protocols and will support early detection and diagnosis of kidney disease plus management of those with chronic kidney disease for earlier and better treatment. End-stage renal disease (ESRD) costs $37.3 billion to Medicare. FierceHealthcare

Going far, far East to Indonesia, virtual health provider Halodoc scored $100 million in a Series D funding round. Lead investor was Astra International with Openspace and Novo Holdings. This brings their total funding to $245 million. Halodoc provides online and app-based health services for 20 million active platform users claimed. Services include telehealth, medicine ordering, lab test, and doctor appointment booking. They also manage third-party health insurance purchase and at-home health testing. Their network includes more than 20,000 medical practitioners, 3,300 hospitals, and 4,900 pharmacies. On the website, there are a wide variety of services, including wellness. Unfortunately, to read it, you’ll have to know Indonesian (Malay)–and there are some pictures of intriguing recipes there! Mobihealthnews

Contrasting this to an exceedingly modest raise by a new Boston/Tel Aviv medication management company, FeelBetter. Their $5.9 million unlettered raise was led by Firstime Ventures and Shoni Health Ventures, with participation from Random Forest VC, The Group Ventures, and previous investor Triventures for a total of $8 million. FeelBetter uses AI tools to create what they call Pharmaco-Clinical Intelligence to identify patients at risk and deliver insights on gaps in care to personalize medication management to change the risks of polypharmacy. Release, Mobihealthnews  They also issued a study on how FeelBetter could be used to effectively risk stratify emergency department use and hospitalizations among patients 65+ with multiple chronic conditions and complex medication regimens to avoid the 10-30% of hospitalizations that include medication issues. Release

No week seems to pass by without a data breach of some sort, but it’s unusual when Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) are attached to it. A contractor to the Medicare program, Maximus Federal Services, Inc. (Maximus), used a vendor, Progress Software, and their MOVEit Transfer software, which is a popular file transfer software for transmitting sensitive data. There was a vulnerability in this software that has previously been exploited by Russian ransomwareistes CLOP with Johns Hopkins currently being sued for their breach [TTA 19 July]. Maximus detected the unusual activity, an outside entity copying files, from 27 to 31 May. CMS is reporting that about 612,000 Medicare beneficiaries may have been affected by the breach which may have exposed personally identifiable information (PII) and/or protected health information (PHI). CMS and Maximus are notifying the beneficiaries this week and offering 24 months of free credit monitoring service. CMS release, Federal News Network, Progress page,  Deep Instinct backgrounder on MOVEit’s zero-day vulnerability

Done (and split) deal! Informa to “manage” HIMSS Global Health Conference & Exhibition (updated)

August 2, 2023 | by

Gimlet EyeIt’s now a “landmark partnership”. From a non-announcement announcement by Informa in its H1 financials to today (seven days), we have gone from Informa’s “exclusivity to acquire the HIMSS Global Health Exhibition/Conference” to a “partnership” as follows:  Informa will manage the HIMSS Exhibition, while HIMSS will oversee the content and programming. This will expand the combined conference and exhibition. (Informa taking over conference logistics aren’t specified, but assumed from later on in the release.)

No transaction costs are disclosed. The word ‘acquire’ is not used once.

It may be the best possible deal for both. The press release (on Yahoo Finance) and identically in the news section on HIMSS.org content is masterful in saying very little in a lot of words. Here’s this Editor’s view of the deal:

  • It avoids the biggest problem–without HIMSS content, the conference would lack a strong reason why to go and spend money on participation and exhibiting. (This Editor guessed right on that.) Minus HIMSS, it would be easy for exhibitors and participants to walk away from it or say ‘maybe next year’. A lot of what has driven HIMSS is FOMO.
  • It would lose 50+ years of Society legitimacy, continuity, and goodwill as an unaffiliated conference
  • This gives HIMSS, as a society, an annual conference as part of member value (Guessed right on this too)
  • Informa would be hard-pressed to organize the conference content by year’s end, as there’s basically less than eight months to March
  • It absolves the HIMSS organization of being responsible for venue negotiations, expo design, logistics, travel arrangements, and all the messy expenses such as Freeman. Their vulnerability showed in the last-minute cancellation in 2020. It’s now in professional hands. 
  • It may generate some needed cash for HIMSS in this FY (not disclosed) 

HIMSS24 will be taking place in March in Orlando as originally planned, managed by Informa’s South Florida Ventures unit. Informa promises “improved digital features, enhanced registration processes, marketing tools, and cutting-edge product discover applications”. One would also hope improved travel arrangements.

There is no information in the release about Informa involvement in the 18-21 September APAC conference (too soon?) nor mention of any future international conferences, though Informa is certainly capable of staging and managing them.

Open issue–HIMSS Media is not mentioned in the release. Media tie-ins and merchandising are a substantial source of revenue for that division. But the lack of mention is not a ‘no’ and if HIMSS is generating the conference content, it’s likely that HIMSS Media will do the merchandising.

Surprisingly, the press ‘break’ is not yet up on HIMSS Media (Healthcare IT News, Mobihealthnews, Healthcare Finance News). Update–an 18 minute video hosted by editor Mike Miliard is up on Healthcare IT News 3 August.

  • The name will not be changed.
  • HIMSS has been considering bringing in an outside organization to manage the conference for some time and had been speaking with Informa over the past year.
  • Mr. Wolf of HIMSS stated that their conference organizing people will be moving over to Informa.
  • Mr. McAvoy of Informa touted the tools that HIMSS will now be able to access–enhanced tools that Informa has developed and amortized over multiple conferences.
  • More to come

A new day for HIMSS in a competitive conference market. Except the link to the conference page at the end of the release, https://www.himss.org/global-conference.–does not open the conference page but goes to a ‘page not found’. Oops! Hint: it’s misconfigured to include the period in the URL.

Previous coverage: More thoughts 2 August, Informa to acquire 27 June    Follow up 8 Aug, answers to questions:

 

More thoughts on the pending sale of the HIMSS Global Conference

August 2, 2023 | by

In the absence of a real announcement, speculation has been everywhere on the not-yet-done deal between HIMSS and Informa. As reported last week [TTA 27 July], HIMSS will be selling the annual Global Conference to Informa PLC, the largest B2B trade show operator on the Planet Earth. There has been no communication as of this writing from HIMSS to members or chapters, nor any announcements in HIMSS Media. The only corporate confirmation came through Informa PLC’s H1 financial report.

From LinkedIn, Tom Foley, who is the head of GenieMD telehealth and also hosts a podcast called The Virtual Shift via HealthcareNOWRadio and Answers Media Network (headed by Roberta Mullin and Carol Flagg, with whom this Editor worked some years back) had two posts on the pending ‘exclusivity to acquire’. In the later post, he addresses the fact that HIMSS has already been booked by most exhibitors as HIMSS, not as a ‘third-party conference’, and asks for market responses. The earlier post is about the ‘announcement’ and is largely the same as his comment on TTA’s original article. Other than these and spinoff posts from other commenters, Other than we Happy Few, LinkedIn posts have been on the QT and very hush-hush on the subject. Interesting as so many on LinkedIn are HIMSS, HLTH, ViVE and other health conference exhibitors and attendees.

Which leads this Editor to turn to the pointed, yeasty HIStalk where their Editors have dug around HIMSS and turned up some interesting things. This Editor encourages Readers to go to the source articles linked below for their analysis. I will add some points and commentary to each, especially on the Form 990s:

  • Monday Morning Update 7/31/23 speculates on HIMSS’ financials reported in their Form 990 as a 501 (c)(6) non-profit. Their last FY filing is for fiscal 2020. Since HIStalk does not, here is the link to that Form 990 2020 in Candid, a public database on non-profits (the former Guidestar and Foundation Center). On the organization page, click on the Form 990 tab for the first 2020 dropdown, which is for their FY starting 1 July 2019 to 30 June 2020. In 2020, HIMSS had total revenue of $28.7 million, a severe drop from 2019 where revenue was over $111.9 million (line 12). Their expenses were over $82.6 million for an operating loss of over $53.9 million. This represents the effects of the cancellation of the 2020 conference, which in 2019 ‘conferences and meetings’ reported $42.8 million in revenue and in 2020 only $1.9 million. Using this information and from Informa’s track record, HIStalk does some calculations on projected sales prices.
  • This Editor also examined the second 2020 dropdown, which is a six-month first-half report from 1 July to 31 December 2020. Revenues rose to $65.1 million with expenses of $42.6 million for an operating profit of $17.9 million. Conference revenue was a tiny $8.7 million but higher than the full year. HIMSS under a joint Health 2.0 banner had a Middle East-based virtual conference in November and HIMSS Media promoted some ‘HIMSS20’ content as digital sessions.
  • News 8/2/23 has reader comments on a HIMSS initiative for vendors called Accelerate, which has apparently been inactive for some time, executive salaries, and speculation on why the delay on the Form 990s.

What remains problematic is HIMSS’ future involvement, if any, in a conference that has been branded as HIMSS for over 50 years and has already been sold into as HIMSS’. How will Informa handle that? Invite HIMSS to sponsor it? Then again, what will be HIMSS’ future as a member-based society without a conference and with a subsidiary, HIMSS Media, that makes money off sponsorships both pre and post and content during the conference? It seems that both buyer and seller would benefit from a shared relationship.

This is a developing story and will be updated.

Amazon Clinic announces 50-state rollout 1 August. Were the privacy issues fixed?

August 1, 2023 | by | 2 Comments

At least the disclaimers are new and improved. Amazon today, on its news page, announced that Amazon Clinic was being rolled out to all 50 US states from the previous 33. You will be paying in cash (no insurance accepted) for services, which now include live 24/7 telehealth (via two ‘white-labels’, Wheel and SteadyMD) in addition to asynchronous (messaging) telehealth, for treatment of about 30 common mild and chronic conditions such as rosacea, gout, eczema, UTIs, and the ever-popular erectile dysfunction and hair loss. Access is provided through the Clinic website or the Amazon app. Providers set fees on a one-time and ongoing basis. Prescriptions can be filled individually or through Amazon Pharmacy. The service is not available to those below 18 or above 64, which is a mystery as those 65+ are perfectly capable of paying in cash and suffer from the same maladies. (Age discrimination, anyone?)

As to the reported delay from 27 June on the service expansion [TTA 27 June], an Amazon spokesperson denied that privacy concerns expressed by two US senators (Warren and Welch) and in the Washington Post had any effect and in fact, denied that there was any delay.  FierceHealthcare.

It is unknown whether Amazon replied to the senators’ letter that cited where consumer information went, that it may be redisclosed, and denial of service (inability to complete registration) if a user during registration did not agree to waive HIPAA and give Amazon access to the patient’s personal information file.

Looking at the news, website and privacy disclosures, there are multiple disclaimers wherever one looks that seem to address these concerns.  On the news release, there is a link labeled Read more about how privacy is built into Amazon Clinic’s core. Excerpts below (main points in red):

We do not sell customer information.

Amazon doesn’t sell customers’ personal information. Amazon Clinic also doesn’t use a customer’s personal health information to market or advertise other products in the Amazon.com store.

We ask for HIPAA authorization to make things easier for customers.
One of the complaints we hear a lot about traditional health care is how many times customers are asked to fill out forms over and over again. To solve this problem, Amazon Clinic asks customers for permission (through the HIPAA authorization) to allow us to save their information and patient records if their health care provider leaves Amazon Clinic. This supports continuity of care and makes it easier for customers to work with different provider groups, because they won’t have to fill out the same form multiple times or lose access to their visit history. Customers have the option to accept or decline the HIPAA authorization before getting treatment—customers who decline can still receive care from Amazon Clinic.

Privacy disclosure on the Amazon Clinic site is the same in consumer-oriented language and with a revocation notice:

What we do (and don’t do) with your information
We use your information to make your healthcare experience easier. We send it to your healthcare providers and pharmacies when you’re being treated, and we save it so you won’t have to fill out the same forms over and over again—even if your healthcare provider were to leave Amazon Clinic. We’ll never sell your information to anyone and we don’t use your personal health information to market or advertise other products available on Amazon.com.
We respect your preferences
If you don’t want us to save your health information, you can still get care through Amazon Clinic. However, you should know that if the healthcare provider(s) you’ve used leave Amazon, we’ll be required by law to delete your health information and you’ll have to re-enter it if you visit us again.
You can change your mind
If you give us permission to save your health information, then change your mind, that’s OK. To revoke your HIPAA Authorization, just email your request to clinic.privacy@amazon.clinic. Make sure to include your name, date of birth, address, and phone number, or download the HIPAA revocation form, fill it out, and send it as an attachment to your email.

Unless this is not operating reality, Amazon may have come to its senses and installed proper guardrails on this service. Amazon is making a massive bet on healthcare by building Clinic, Amazon Pharmacy, and paying $3.9 billion for One Medical which is currently unprofitable. They are betting that to their captive audience, basic healthcare can be delivered like merchandise and that more complex primary care can be folded into the Amazon continuum. In Amazon Clinic, it’s betting that it can one-up established players like Ro and Hims as well as Teladoc and Amwell.

A hard look at Amazon reveals that the strategy compensates for losses in other areas, such as their basic businesses with layoffs of 27,000, including Amazon Pharmacy and the Washington Post, and shuttering Amazon Care last year. Technology hasn’t been much of a winner, with Halo terminated yesterday and with privacy concerns (again) around Alexa, Kindle, and Ring security cameras. AWS is no longer the cash cow mooing in the meadow that subsidizes various ventures, with growth down by half and plenty of competition [TTA 16 June]. Amazon has few friends in DC, not even at the Washington Post. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) have held up their $1.7 billion buy of iRobot for one year as of this month, and are still scrutinizing One Medical.

If the guardrails are made of Silly Putty and there are consumer complaints, Senator Warren, who has a long history of sparring with Amazon, will be issuing more letters. She will huddle with FTC and DOJ, where there’s a dartboard with Amazon’s name on it. Note to Amazon: Senator Warren is up for reelection in 2024, and she needs a high-profile issue.

Legal roundup: Dorsata sues athenahealth, provider group on trade secret theft, Nevada terms Friday Health Plans

July 28, 2023 | by

Dorsata, a women’s health-focused EHR, filed a lawsuit on 19 July against athenahealth and provider group Unified Women’s Healthcare. The suit has nine counts that allege unfair and deceptive acts and practices, breach of oral contract, breach of fiduciary duty, common law fraud, unjust enrichment, theft of trade secrets, tortious interference with current customers, breach of nondisclosure agreement, and commercial disparagement. 

A joint venture that went very sideways. After Unified purchased Women’s Health USA in 2021, an existing customer of Dorsata, athenahealth approached Dorsata to create a joint solution to pitch to Unified. According to Dorsata, which signed a non-disclosure agreement, Dorsata provided trade secrets to athenahealth and the two made oral agreements to approach Unified as a joint venture. Dorsata developed a software product for this, vU, but to finance it had to borrow $6 million from athenahealth. Unbeknownst to Dorsata, athenahealth created its own version of vU using Dorsata’s information to sell into Unified, cutting out Dorsata. Provisions in the promissory note prevented Dorsata from competing with athenahealth. Unified is also named as a defendant as it aided athenahealth’s actions and failed to act while athenahealth cut Dorsata out of their business. 

The suit has been filed in the civil court of Suffolk County, Massachusetts and is searchable here. Dorsata is seeking damages incurred from a loss of expected profits, the value of injury to reputation, a loss of company valuation, the value of future lost business as well as damages for unlawfully gained commercial marketplace advantage. “We’ve been severely damaged, and we hope the court will rectify the situation,” David Fairbrothers, cofounder and CEO of Dorsata, told Mobihealthnews in an email. athenahealth has stated that the suit is ‘without merit’. Becker’s

Friday Health Plan’s last state, Nevada, shuts down their plans. The Nevada Division of Insurance is terminating all Friday plans effective 31 August. After the liquidation on 1 September, Nevada Life and Health Insurance Guaranty will pay provider claims through 31 August. Approximately 2,000 members of Friday’s plans will have to scramble to find coverage on Nevada’s Silver State Health Insurance Exchange (NevadaHealthLink.com) during the special enrollment period (SEP) ending 31 October. The Nevada exchange offers six different health plan carriers with 100 different options. Nevada, like Colorado, had hoped that the plan might survive until the end of the year. Earlier this month, Colorado terminated Friday Health Plans [TTA 20 July]. Friday leaves behind a lot of members in the lurch, providers who are wondering if their states will pay them, over 300 former employees, state insurance departments having to guarantee hundreds of millions in payments in seven states, and embarrassment by the state regulators and by CMS. FierceHealthcare, Nevada DOI release