News and deals roundup: AHA opposes Optum buy of Change Healthcare; big raises by Komodo Health, Evidation Health, Ro’s $500M; Appriss acquires PatientPing

March 25, 2021 | by

Sometimes $13bn Mega Deals run into powerful opposition. The nearly 5,000 member American Hospital Association (AHA) is opposing UnitedHealth Group’s Optum‘s acquisition of software/analytics/revenue cycle management (RCM) company Change Healthcare. The AHA is urging that the Antitrust Division of the Department of Justice (DOJ) review it on anti-competitive grounds. Their position is that the OptumInsight integration of Change, planned for Q2, will drastically reduce competition for health care information technology (IT) services to hospitals and other health care providers, driving up costs to hospitals and patients. Optum is already one of the largest in this sector. It would also shift data from a third-party company to a subsidiary of the US’ largest payer. Change is the largest independent provider of health IT services for payments and RCM. Though substantial divestitures are part of the deal, the AHA opposition may kick off the same from other healthcare groups and successfully force DOJ to take action. FierceHealthcare, AHA letter to DOJ (PDF link).

Dizzy Digital Health Deals Continue This Week. Data analytics companies haven’t been as hot as other areas of digital health closer to telehealth and behavioral health, but Komodo Health just completed a big Series E of $220 million. This follows their snack-sized January Series D of $44 million (Crunchbase). Komodo feeds their 325 million patient encounter database drawn from EHR, pharma, lab, and government data into their proprietary software for analytics to drive better health outcomes across therapeutic areas. Their primary markets are life sciences and pharma for R&D, clinical trials, and medical affairs. The Series E was led by Tiger Global Management, which earlier this month invested in Tyto Care and Dispatch Health [TTA 4 March], with Casdin Capital plus existing investors ICONIQ Growth, Andreessen Horowitz, and SVB Capital. Release 

Evidation Health, another data aggregation and analytics company, raised $153 million in a Series E led by OMERS Growth Equity and Kaiser Permanente Group Trust for a total funding since 2012 of $259 million. This will be used for building out their virtual health analytics and research platform, Achievement. Release

In direct-to-consumer healthcare, integration gets tighter. For those who can stand their tacky commercials for Roman, you’ll be seeing many more of them because parent DTC/telehealth company Ro just raised $500 million in a Series D round, led by General Catalyst, FirstMark Capital, and TQ Ventures. The intent of co-founder Zachariah Reitano is to combine a nationwide telemedicine, pharmacy distribution, and in-home care network. Their total funding since 2017 is $876 million. According to the TechCrunch article, Ro is building out a patient-centric ‘vertical optimization’ model with 10 pharmacies scheduled for 2021 and the ability to provide 500 common drugs at $5 per month. Earlier this year, Ro acquired Workpath, a software platform that enables healthcare companies to offer on-demand, in-home care, and diagnostic services. Look for Ro to make another acquisition or two this year to bolster their telehealth capabilities. Release

PatientPing, a care coordination software that connects providers to create continuity of patient care to notify them of patient events, is in an agreement to be acquired by Appriss Health, a 25-year-old SaaS software company primarily known for behavioral health care coordination and data analytics solutions to identify and mitigate substance use disorders. The combined company will cover 1 million professionals, 2,500 hospitals, 7,500 post-acute facilities, 25,000 pharmacies including every national pharmacy chain, and 43 state governments. Terms of the transaction were not disclosed, nor valuation or management transition, but closing is expected in Q2. Release

CareCentrix files ‘corporate espionage’ on trade secrets lawsuit against Signify Health, former employee

March 18, 2021 | by

Usually, laundry like this is not aired or dried in public, but it’s on the line nevertheless in a lawsuit. CareCentrix, a post-acute care/transitions of care management company, has sued in US Federal Court for the District of Delaware both Signify Health, a diversified home care company overlapping the same line of business, and CareCentrix’s former general manager, VP post-acute care Marcus Lanznar.  Initial charges were filed on 23 December and motions are piling up fast based on what is listed (paywalled, unfortunately) on PacerMonitor.

The Federal charge is covered under the Defend Trade Secrets Act of 2016 (DTSA), Cause 18:1836(a) Injunction against Misappropriation of Trade Secrets. The basics are that Mr. Lanznar was a senior executive of CareCentrix, had access to proprietary information, and had a restrictive covenant that would not allow him to go to a competitor for nine months. Yet he was engaged in interviews starting in July 2020, by August-September was having regular meetings with his counterpart, chief product officer Peter Boumenot, and passed CareCentrix information not only to his personal email but also to Signify into October, when Mr. Lanznar resigned. He joined Signify Health in November 2020 and is listed on LinkedIn as SVP product, though not on their management page. 

The lawsuit claims that Signify “targeted, recruited, and hired former CareCentrix executive Marcus Lanznar in a covert scheme that succeeded in providing access to CareCentrix’s confidential information and trade secrets” and also was aware of the conflict presented by the restrictive covenant. It seeks to prevent Mr. Lanznar and Signify Health from using its trade secrets and to award it damages and attorneys’ fees. 

This is a David versus Goliath matchup. Signify Health in February had a highly successful IPO gaining over $560 million and is valued with a market cap of over $7 bn. CareCentrix to date is most definitely the David in this scenario in terms of size, having raised all private equity funding via Summit Partners starting in 2011. However, it has made two acquisitions of its own recently: Vesta Healthcare at $30 million and Turnkey Health for an undisclosed amount (Crunchbase). The stakes are piled high in this hot segment of healthcare. 

There are a number of high-powered law firms dueling in this lawsuit, which also includes CareCentrix’s parent, NDES Holdings. Note: this article is based on both reporting in Healthcare IT News, which initially filed the story, and FierceHealthcare’s close on follow-up.

Two major moves and what they mean: Doctor on Demand, Grand Rounds to merge; Amazon Care will go national by summer (updated)

March 18, 2021 | by

This week’s Digital Health Big Deal (as of Wednesday!) is the merger agreement between telehealth/virtual visit provider Doctor on Demand and employer health navigator Grand Rounds. Terms were not disclosed. It’s important because it extends Grand Rounds’ care coordination capabilities beyond provider network navigation and employee clinical/financial tools for six million employees into an extensive telehealth network with 98 million patients in commercial, Federal, and state health plans.

Both companies had big recent raises–$175 million for Grand Rounds in a September 2020 Series E (Crunchbase) and Doctor on Demand with a $75 million Series D last July (Crunchbase). The transaction is a stock swap with no cash involved (FierceHealthcare, CNBC), and the announcement states that the two companies will operate under their own brands for the time being. Owen Tripp, co-founder and CEO of Grand Rounds, will run the combined company, while Doctor on Demand CEO Hill Ferguson runs DOD and joins the board. The combined company is well into Double Unicorn status with over $2 bn in valuation. Also Mobihealthnews.

What it means. Smaller (than Teladoc and Amwell) telehealth companies have been running towards M&A, with the most recent MDLive joining Optum’s Evernorth [TTA 27 Feb] creating interstate juggernauts with major leverage. Doctor on Demand was looking at their options for expansion or acquisition and decided 1) the time and the $ were right and 2) with Grand Rounds, they could keep a modicum of independence as a separate line while enjoying integration with a larger company. The trend is profound enough to raise alarms in the august pages of Kaiser Health News, which decries interstate telehealth providers competing with small and often specialized in-state providers, and in general the loosening of telehealth requirements, including some providers still only taking virtual visits. Contra this, but not in the KHN article, this Editor has previously noted that white-labeled telehealth providers such as Zipnosis and Bluestream Health have found a niche in supplying large health systems and provider groups with customized telehealth and triage systems.

UPDATED. In the Shoe Dropping department, Amazon Care goes national with virtual primary care (VPC). To no one’s surprise after Haven’s demise, Amazon’s pilot among their employees providing telehealth plus in-person for those in the Seattle area [TTA 17 Dec 20] is rolling out nationally in stages. First, the website is now live and positions the company as a total care management service for both urgent and primary care. Starting Wednesday, Amazon opened the full service (Video and Mobile Care) to other Washington state companies. The in-person service will expand to Washington, DC, Baltimore, and other cities in the next few months. Video Care will be available nationally to companies and all Amazon employees by the summer.

Notably, and buried way down in the glowing articles, Amazon is not engaging with payers on filing reimbursements for patient care. Video Care and Care Medical services will be billed directly to the individual who must then send for reimbursement to their insurance provider. The convenience is compromised by additional work on the patient’s part, something that those of us on the rare PPO plans were accustomed to doing back in the Paper Age but not common now. It also tends to shut out over 65’s on Medicare and those on low-income plans through Medicaid. It is doubtful that Amazon really wants this group anyway. Not exactly inclusive healthcare.

TechCrunch, FierceHealthcare. Jailendra Singh’s Credit Suisse team has a POV here which opines that Amazon continues to have a weak case for disruption in VPC, along with their other healthcare efforts, and an uphill battle against the current telehealth players who have already allied themselves with employers and integrating with payers.

News roundup: Hacks, ransomware of medical records, security cameras spike; Withings launches new mobile-direct devices; Bluestream Health adds Leon Medical (FL) to telehealth

March 13, 2021 | by

In recent weeks, hackermania has been romping in healthcare. A compilation of incidents revealed just in the past few weeks have affected hundreds of thousands of patients, employees, and providers:

  • Security cameras produced by Verkada, Inc. were hacked across the US, including at Tesla. Healthcare organizations affected by the hack were Daytona Beach, Fla.-based Halifax Health, where the video showed “what appeared to be eight staffers tackling a man and pinning him to a bed.” Texarkana, Texas-based Wadley Regional Medical Center and Tempe (Ariz.) St. Luke’s Hospital were also hacked. The means in was described by one of the hackers (appropriately female for this month) as through a “super admin” account where the username and password appeared online. Becker’s Health IT 10 March, Bloomberg News
  • 210,000 MultiCare patients, providers, and employees of Tacoma, Wash.-based MultiCare had personal information exposed in a December ransomware attack on their medical practice management company’s IT services vendor. Becker’s Health IT 9 March
  • A clinic in North Carolina had a six-day ransomware attack starting 23 February. Hackers demanded a $1.75 million payment in exchange for giving back the clinic access to its data. The clinic came back online 1 March but did not disclose any payment. Becker’s Health IT 5 March
  • NBC News revealed that hackers stole employee files from Gallup, New Mexico-based Rehoboth McKinley Christian Health Care Services after a ransomware attack on its computer network in February. Those employee files were posted online; information included employee job applications and background check authorizations with Social Security numbers. Earlier attacks by the same hacker group included Leon Medical Centers of Miami-Dade Florida (see following) and Nocona (Texas) General Hospital resulted in the online publishing of tens of thousands of patient records. Becker’s Health IT 4 March
  • Hackers attacked biochemical machines used to prepare samples in Oxford University’s Division of Structural Biology. Forbes received the information from Hold Security chief technology officer Alex Holden, who provided screenshots of the hackers’ access to Oxford University systems, and notified the university.
  • The cutely-named DopplePaymer attacked a county government office in Chatham County, North Carolina, and stole residents’ PHI and PII between November 2020 and this past January. Becker’s 10 Feb 
  • And on the ‘Someone Got Fired For This One’ list is the response to hacking at Boise, Idaho’s Saint Alphonsus Health System. The health system had a data breach in January. Patients were routinely notified. However, the mail merge, not the hack, created an incorrect status for some patients, sending them letters as if they were deceased or a minor. Becker’s Health IT 10 March

It’s cold comfort when the US Department of Justice announces that they are indicting three North Korean hackers who inflicted the WannaCry malware and $1.3 bn in extortion damage on the world back in 2018. All three were members of North Korea’s intelligence agency, the Reconnaissance General Bureau (RGB). The likelihood of their extradition is one word: none.

And in other news….

Withings unveils new professional devices. The Body Pro smart scale and BPM Connect Pro, distributed to doctors, out of the box will transmit health data directly from patient to doctor. Neither require Wi-Fi nor a mobile phone, since they have embedded SIM cellular cards to directly connect to a mobile network. They are both sold through Withings’ professional division. FierceHealthcare

Telehealth provider Bluestream Health has added Leon Medical Centers, a seven-location Miami-Dade FL provider. Bluestream Health provides whitelabeled secure telehealth services that combine with medical workflows to approximately 50,000 providers in 500 facilities. Release.

Healthcare ad/patient ed network PatientPoint combining with once-hot Outcome Health

March 13, 2021 | by

Can’t retreat from advertising in a doctor’s office, at least in the US. Point of care ad/patient education ad network giant PatientPoint is combining with one-time unicorn Outcome Health. The combined company, called PatientPoint Health Technologies, will operate under the PatientPoint brand. The transaction is effective immediately and the company will be headquartered in Cincinnati. Financials are not disclosed, but claimed to reach 150,000 providers and 750 million patient visits a year.

Management of the combined company, and all the senior leadership, is from PatientPoint: CEO Mike Collette, Chief Client Officer Linda Ruschau, CFO Pat O’Brien, and Chief Provider Officer Chris Martini. The only two carry-overs from Outcome Health mentioned in the announcement are tech executives Glenn Keighley and Sean Barden. CEO Matt McNally and COO Nandini Ramani, who stabilized the company after Outcome’s 2017 advertiser fraud scandal, are thanked but not remaining with the company. The Outcome Health website has no leadership page and popups on every page announcing the new company. 

PatientPoint is now majority-owned by a group of investors, including funds managed by L Catterton and Littlejohn & Co., LLC. Both funds also backed Outcome Health, so one can assume their role in engineering the combination; the word ‘acquisition’ is nowhere to be found.

One-time $5.5bn unicorn Outcome Health lost its horn, rainbow sparkle, and its Chicago high-rise office building in autumn 2017 when Big Pharma/Biotech companies like Pfizer, Sanofi SA, and Biogen Inc. discovered that their advertising exposure was wildly inflated, affecting tens of millions in ad revenue, embarrassing investors like Goldman Sachs and Alphabet. By 2019, their principals were in Federal District Court in Chicago: former Chief Executive Rishi Shah, former President Shradha Agarwal, and former executives Brad Purdy (COO/CFO), and Executive VP Ashik Desai. Mr. Desai cooperated with the prosecution, leaving the rest to their tender mercies. The trial, now classified as a $1bn fraud, is still pending. PatientPoint release, MM&M, Chicago Tribune. TTA’s back file on Outcome Health here.

Marketing alert! Age-positive image library launched by Centre for Ageing Better–and free to use

March 5, 2021 | by

The UK non-profit Centre for Ageing Better has launched a much-needed resource for companies, healthcare organizations, and press–a photo library of hundreds of positive, realistic, and diverse images of older people in everyday life. It is free for use for non-commercial and commercial purposes, UK and internationally, with only a few restrictions on use such as crediting and non-alteration, which are clearly outlined in their short guide (downloadable PDF). They also provide information on how to search and guidelines for creating your own images. Link to the Centre’s information page on the photo library.

Categories on ResourceSpace are work, health, housing, communities, digital inclusion, finance, and planning. There are also icons free for use. At present, there are about 300 images which the Centre is adding to.

Sign up also for their newsletter, not only for updates on the library but also information on the Centre’s activities and policy updates.

Editor’s note: As a marketer (marketing director/head of marketing/consultant) in the past 15 years for several health care companies in the older adult market, including a payer, I can testify at length at the scarcity of images of older people in everyday activities including work and play. Searching stock libraries for photos that don’t depict infirmity, a medical setting, aloneness or sadness, or to represent diverse cultures and social groups, is wearying indeed. There aren’t many, which leads to overuse of the few royalty-free/single payment images that meet these needs. Is there lack of demand? (I don’t think so!) Larger organizations can and should set up photo shoots for their needs, but not all organizations or companies have that opportunity nor the resources. See these three images from the library at left/above for a sample (these are lower res suitable for PowerPoint). Easy to download and select. Another plus: there are relatively few that are identifiable as the UK or Europe, so this is a boon for marketers in many countries. 

Hat tip to Emily Wilson, Communications Assistant, at the Centre for Ageing Better.

News and deal roundup, 5 March: Oscar Health’s $1.4 billion IPO, telehealth expansion in Congress, what people *really* do during a telehealth visit

March 5, 2021 | by

What a difference a month makes in a blazing healthcare market. ‘Neoinsurer’ Oscar Health went public on Tuesday, selling over 37 million shares at $39 each, reaping an eyeblinking $1.44 bn. While shares took a tumble on Wednesday and Thursday, closing at just above $32, the valuation of the company could be anywhere between $7.92 and $9.5 bn (calculating in options and the like). Quite a difference from the estimate in early February, which was a modest–and as now we know, totally sandbagged–$100 million [TTA 9 Feb]. A lovely payday for their backers and all at Oscar who had stock grants, indeed.

As we’ve seen from recent IPOs, they have all been underestimated (e.g. Signify Health’s $100 million filing transubstantiated into $561 million). The downward glide slope in share price is typical. Whether it will rise will depend very much on strong results for this quarter, half year, and full year as Oscar presses harder into the competitive Medicare Advantage, exchange, and small group markets. How they, and all the other payers do, will be dependent on health policy permutations and emanations from the DC Swamp. CNBC, TechCrunch, FierceHealthcare

Speaking of the DC Swamp, telehealth expansion is enjoying real traction in Congress and with Health and Human Services (HHS). The chair of the House Health Subcommittee, Rep. Anna Eshoo (D-Calif.) has called for many of the flexibilities on payments and locations granted temporarily during the pandemic’s liberalization of coverage to be made permanent. These affect Medicare and other types of Federal payments. [Review of the 2021 Medicare Physician Fee Schedule re telehealth here]  They expire after the public health emergency (PHE), extended in January to end of April, so a clock is ticking, quickly.

The basics are that Congress must pass legislation that removes restrictions on geography (currently rural only) and permits the patient home to be used as a ‘distant site’. Advocates also want to add to Medicare telehealth coverage hospice and home dialysis care, more types of eligible care providers such as physical therapists and other allied health professionals, and audio-only (telephonic) consults. Others are pushing for reinstating HIPAA compliance for telehealth platforms.

The Telehealth Modernization Bill that covers most of the above was introduced on 23 February in both the Senate and House, in a rare show of both bipartisanship and bicamerality. (Excluded: telephonic consults, HIPAA compliance) Rep. Eshoo’s remarks were made during last Tuesday’s Committee on Energy and Commerce Health Subcommittee hearing.

HHS is also backing this, based on HHS’ Office of the Inspector General’s recent statement praising the expansion of telehealth. Recognizing that concerns have been raised about ‘telefraud’, IG Christi Grimm noted that they have been vigorously prosecuting fraudulent claims [TTA 2 Oct 20] with telehealth being used in a broad sense for billing other goods and services such as medications and durable medical equipment. FierceHealthcare, Healthcare Dive, ATA News 26 Feb

Speaking of telehealth visits, what do the patients do during them? This Editor had filed away, waiting for an opportune moment to share it, a surprising study by DrFirst, a mobile telehealth and communications platform. It was conducted online during the Pits of the Pandemic (June 2020). It may not surprise you that most patients weren’t fully engaged in the process. Bored, isolated, mostly male patients–73 percent men, 39 percent women–multitasked and distracted themselves during the virtual visit by: 

Surfing web, checking email, texting – 24.5%
Watching the news, TV, or movie – 24%
Scrolling through social media – 21%
Eating a snack or a meal – 21%
Playing a video game – 19%
Exercising – 18%
Smoking a cigarette – 11%
Driving a car – 10% (!!!!)

And the best….Having a “quarantini” cocktail or other alcoholic beverage – 9.4%

Reasons for consults were unsurprising: annual checkup – 38%, mental health therapy – 25%, and specialist visits (e.g., dermatologist, hematologist, or oncologist) – 21%.  N=1,002 US consumers. 44% of Americans Have Used Telehealth Services During Coronavirus Pandemic but Some Admit Not Paying Attention. Also Advisory Board blog.

Rock Health/Stanford U Digital Health Adoption Report: high gear for telemedicine, digital health, but little broadening of demographics

March 3, 2021 | by

It’s good news–and an antidote to the bubble at the same time. Rock Health and Stanford University Medicine-Center for Digital Health’s just-released report found that, unsurprisingly, that telemedicine/telehealth use rocketed during the pandemic and gained ground that would not have been true for years otherwise, as of September 2020. However, the growth was not largely from new demographics, but largely among the adopters of telehealth in 2019 and prior. It also rolled back to about 6 percent of visits. Wearable use also boosted, especially for better sleep, as did self-tracking. But overall healthcare utilization cratered from March onward, barely reviving in the late summer, and telemedicine use declined to a steady state of about 6 percent of all visits–far more than the near-zero it was pre-pandemic. Here’s our rundown of the highlights.

Telemedicine user demographics haven’t changed significantly. It accelerated among those in the 2019 and prior (through 2015) profile: higher-income earners ($150K+), middle-aged adults aged 35-54, highly educated (masters degree and higher), urban residents, slightly male skewed (74 percent men/66 percent women/67 percent non-binary)and those with one or more chronic conditions (78 percent) and high utilizers (87 percent with 6+ visits/year). This profile apparently sustains across racial and ethnicity lines. (page 15) The non-user profile tends to be female, over 55, lower-income, rural, not on a prescription, and Hispanic. (page 23)

More usage of live virtual video visits than before–11 points up from 32 to 43 percent. These reduced reliance on non-video communications: telephonic, text, asynchronous pictures/video, and email. (page 12) And respondents largely accessed live video and phone visits through their doctor, indicating a pivot on practices’ parts: 70 percent of live video telemedicine users and 60 percent of live phone telemedicine users. (page 17) But the reasons why were more acute than this Editor expected: 33 percent for medical emergency, then minor illness (25 percent), then chronic condition (19 percent). (page 16)

Barriers to use remain significant in telemedicine and have not changed year to year except for awareness of options. (page 22-23)

  • Prefer to discuss health in-person (52 percent)
  • Not aware of options (much less this year)
  • Provider didn’t recommend
  • Cost
  • Poor cellular or broadband connection is minimal (3 percent). There is also no barrier of ‘inability to use’, though this may be skewed by the survey group being online (see methodology).

Wearables and digital information tracking accelerated, but ‘churn’ continued. 54 percent of respondents adopted wearables, up 10 points, while information tracking increased by 12 points.  (page 11) Unpacking this:

  • The populations with the highest rate of digital tracking were those with heart disease, diabetes, and obesity as chronic conditions
  • The leading reasons for wearables remained fitness training and weight loss. However, right behind these were major year-to-year spikes in better sleep (27 to 52 percent), managing a diagnosed condition (28 to 51 percent), and managing stress (24 to 44 percent).
  • The surprise uses of wearables? Managing fertility tracking and menstrual cycle.
  • Yet wearables churn continues. From the study: 55 percent of respondents who owned a wearable in 2020 stopped using it for one or more purposes (though they may continue using it for another purpose). The demographics tend to mirror telemedicine users for adoption and stopping use. (pages 24-28)

Healthcare utilization overall, telemedicine or not, has barely revived versus the March baseline, using the Commonwealth Fund data TTA profiled here. The report usefully digs into the groups that delayed care: 50 percent of 35-54-year-olds, women, Northeast residents, chronic conditions, and mental health. (page 34)

Yet trust in health information remains with the person’s physician, family, hospital, payer, and pharmacy. Overall, there is a reluctance to share data with entities beyond these. Health tech and tech companies aren’t trusted sources, along with social media, and lag to less than 25 percent, along with less willingness to share data with them. COVID-19 data is broken out in sharing, generally following these trends except for more willingness to share this data with governmental entities and research. (pages 29-31) 

The report recommends that for telemedicine to go deeper into adoption, refocusing is in order: (page 21)

  • Shift from a transactional model to a continuous virtual care or ‘full-stack’ model
  • Seek a different kind of customer. One-third of telemedicine visits were for emergencies. A more sustainable model would concentrate on chronic condition management and lower-acuity care.
  • Accept that new care models are disintermediating the patient-provider relationship especially in the younger age groups

The methodology of the survey: N=7,980 US adults, matched to US demographics; dates conducted 4 September-2 October 2020; online survey in English only. Rock Health summary, link to free survey report download, Mobihealthnews article.

The Theranos Story, ch. 70: the lab director turns Federal evidence

February 18, 2021 | by

A Tasty Appetizer of what awaits in July in Federal District Court, San Jose, showed up in the Wall Street Journal today (paywalled, link to full article below). Theranos‘ lab director Kingshuk Das, MD will testify in Elizabeth Holmes’ trial that the Theranos lab and technology did not work accurately enough to use–and that the company’s leaders ‘pushed back’ against his assessment.

Dr. Das’ comments, revealed in new court filings, represent his most extensive (and only revealed, in this Editor’s estimation) remarks on Theranos. His one-hour interview with Federal agents took place on 1 February. They indicate that Federal prosecutors continue to dig for damning evidence prior to the July trial.

Dr. Das held the lab director, later medical director, position at the Newark, California lab facility in Theranos’ final years (December 2015 in the article, the LinkedIn profile states March 2016, to June 2018). The Centers for Medicare and Medicaid Services (CMS) had already put Theranos on notice for“deficient practices” in November 2015. The WSJ, around that time, revealed Theranos’ dodgy practices.

Dr. Das’ fully credible and extensive pathology training is listed in his LinkedIn profile. It includes his MD at Case Western Reserve, internship at UCLA, residencies in clinical pathology at Washington University (St. Louis) and USC, and return to UCLA for a fellowship in molecular genetics, then rising to Associate Medical Director, UCLA Clinical Laboratories. As for many others, Theranos was challenging,  could not have been good for his career, but perhaps gave him a taste of how to do entrepreneurship right. He has worked in several positions and is currently listed with consumer genetics tester Invitae as a molecular pathologist and founder of AnimanDX from 2018.

This Editor would bet that Dr. Das had far more to say than what was cited in the WSJ article. At least this is more like Joe Friday’s ‘just the facts’ (Dragnet) and not mired in the swamp of ‘motivations’ represented by the filings around Silicon Valley’s Lifestyles of the Rich, Famous, and Busted.

Full article at StockXpo. Hat tip to reader William T. Oravecz. For those interested in the full sturm und drang by chapter, it is here.

Funding roundup, 16 Feb: virtual mental health gains two (more) unicorns, Zocdoc’s fresh $150M, Owlet’s $325M SPAC

February 17, 2021 | by

Virtual behavioral health continues its hot run with two companies’ funding launching them into Unicorn Stratosphere valuations. The latest is San Francisco-based Modern Health which closed a $74 million Series D investment round, led by Founders Fund with participation from Lachy Groom. Total funding now exceeds $167 million over the past two years. The company claims a valuation of $1.17 bn plus status as the fastest entirely women-founded company in the US to hit the magic unicorn mark. Modern Health provides for about 220 mid-sized companies an app platform combining therapy, coaching, and self-guided courses in 35 languages. On 1 February, Modern Health acquired Kip, another mental health platform that was also woman-founded, for an undisclosed amount.

In January, corporate mental health provider, Lyra Health, gained a Series E of $187 million, bringing its valuation to $2 bn. Lyra claims 2 million members in large companies like Pillsbury, Uber, and Morgan Stanley. Talkspace, a direct-to-consumer digital therapy provider, went public earlier in January via a $1.4 bn SPAC. [TTA 29 Jan] According to Crunchbase News, among mental health startups, 141 were venture-backed within five years to the tune of $1.3 bn in investment. The pandemic and ‘lockdown loneliness’, as we’ve noted, kicked digital health and mental health funding into overdrive. FierceHealthcare, Crunchbase 

Patient appointment setter Zocdoc also gathered $150 million in fresh funding–what’s termed growth financing from Francisco Partners, bringing their total financing to $376 million in 10 rounds. Zocdoc has changed its model in the past two years from a subscription basis–priced per provider–to a per-booking charge. They also added virtual visits. Zocdoc now claims to be profitable and has grown its network by 50 percent in some states. It was one of the early healthcare unicorns, controversial in its business practices as far back as 2016, with customer churn, low margins, and high customer acquisition costs leading to unprofitability [TTA 11 May 2016, 21 Jan 2019], plus a former CEO suing about his ouster after eight years. HISTalk, Zocdoc release

Owlet socks it to a Q2 SPAC. Baby monitoring system Owlet Baby Care becomes a unicorn of just over $1 bn through a SPAC (special purpose acquisition company) merger with Sandbridge Acquisition Corporation, backed by Sandbridge Capital and PIMCO private funds. It will trade on the NYSE (OWLT) and close in Q2. Anticipated value is as much as $325 million through cash ($230 million) and concurrent private placement (PIPE) of common stock ($130 million). Owlet started in 2013 with a ‘Smart Sock’ (left) using pulse oximetry to monitor baby heart rate, oxygen levels, and sleep patterns with readouts via their app, but has expanded to include an Owlet Cam. Owlet stated 50 percent revenue growth in 2020 after approximately $50 million in net revenue for 2019. Amazingly, Owlet in seven years raised a modest $48 million through 27 investors concluding with a two-year Series B. Awwww-worthy indeed. Release, Mobihealthnews

Lasting effects of the pandemic lockdown on health and wealth

February 13, 2021 | by

A PR hook for healthcare-related companies is a survey that tells us More Bad News about the effects of the pandemic and the US lockdown. Some of it is marketing content scrum, but the quantification of lasting effects has value.

  • Early surveys came from non-profits working with (largely) non-vendors, such as the Epic Health Research Network and Commonwealth Fund/Harvard/Phreesia studies.
  • Then later tracking studies such as those published in PLOS One, by FAIR Health and the Harvard study published in Health Affairs.
  • Focused studies such as those by GoodRx, the prescription discounter, with a surprisingly deep survey concentrating on the CoronaDepressed–mental health and the worsening of anxiety and depression, inferring from prescription usage. SECOM CareTech in the UK concentrated on the effects of ‘lockdown loneliness’ on older adults.

The latest survey comes from another free prescription coupon platform, RxSaver, concentrating on financial and medication adherence:

  • 51 percent of adults reported a negative financial impact resulting from the pandemic. 65 percent of them were Hispanic.
  • Over 60 percent of millennials reported continuing financial impact one year after the pandemic’s start.
  • Where are they economizing? Unsurprisingly, medication.
    • 15 percent of adults surveyed stopped taking medication in the past year. Of this group, the under 30 cohort comprised the largest demographic segment at 23 percent.
    • Trying to manage, 21 percent have used a prescription savings coupon, but 31 percent either didn’t fill prescriptions, skipped doses, or split their pills/capsules–all of which are risky.

Phoenix Research performed a Public Insights Survey for RxSaver, N=1,000 nationally representative adults ages 18 and older, and performed 20-22 January. There was no disclosure on survey methodology. This Editor hopes that other entities use this directional information in conducting larger and less product promotional research to be used by health organizations and policy groups. RxSaver web page, release.

‘Neoinsurer’ Oscar Health goes for $100 million IPO; Clover Health’s big SPAC under SEC microscope

February 9, 2021 | by

Oscar Health, one of a number of US ‘insurtech’ or ‘neoinsurance’ private health insurance companies that have nipped at the heels of the Big 9, announced late Friday an IPO on the NYSE. The number of shares and their value is not on the SEC S-1 filing but the estimate of the raise is $100 million. Timing is not disclosed but rumored to be by March or early Q2. The offering is underwritten by Goldman Sachs, Morgan Stanley, and Allen and Company.

Oscar was one of the first to offer members apps, telehealth, and fitness trackers–revolutionary back in 2012 but routine now. Expanding beyond its original base of individual health insurance coverage, it now offers Medicare Advantage and small group coverage in 18 states to over 500,000 members. Oscar remains a virtual-first platform with the majority of its members in Florida, Texas, and California. Oscar makes much of member engagement and its partnerships; 47 percent of its overall subscribing membership and 44 percent of its 55-and-up subscribers are monthly active users. Oscar has also partnered with Cleveland Clinic and other larger insurers like Cigna. 

Financing for Oscar to date is over $1.5 bn. It has tidily grown in geographic coverage, members, and revenue–$1.67 billion in 2020 and $1.04 billion in 2019–no simple feat against the Big 9. Oscar’s problem is profitability–operating losses grew proportionately, $402.3 million (+56% from $259.4 million). Operating expenses also grew by 16 percent. TechCrunch gives additional crunch in the financial analysis (article in part, full paid access). Mobihealthnews

Oscar is one of a few health-tech heavy survivors of insurance companies that bloomed like flowers–and wilted–during and post-Obamacare. Clover Health, which thrived in a slice of the Medicare Advantage market, went the SPAC (blank check) route 8 January with Social Capital Hedosophia Holdings. Now with an enterprise value of approximately $3.7 billion, the SPAC indeed put Clover in the clover [TTA 14 Jan].

But perhaps short-lived. Clover’s SPAC is now being scrutinized by the SEC based on last week’s explosive charges by short-seller maven Hindenburg Research (!). Hindenburg’s research report alleges that Clover “lured retail investors into a broken business” by not disclosing a Department of Justice (DOJ) investigation that started (at least) last fall. Clover countered that the investigation is “routine” since Clover is in the Medicare business. Thus, it was not disclosed by Clover to investors as ‘non-material’. DOJ investigations are far more serious than CMS fines for compliance violations, which are not uncommon. Back in 2016, Clover was fined just over $106,000 by CMS on misleading marketing practices.

In short, DOJ investigations are never routine. They usually are the start point for enhanced claims scrutiny and a concatenation of charges, as WellCare, then a scrappy upstart insurer, found out over six agonizing years, 2006-2012, that were serious enough to send much of top management to Club Fed.  The Hindenburg paper (linked above) details other business practices that if true, are dodgy at best and fuel for further investigations.

The SEC notice of investigation was disclosed by Clover last Friday evening, usually a good time to disclose Bad News. This SPAC may have feet of clay.  PYMNTS.com, CNBC

23andMe will go the SPAC route with Virgin Group in a $3.5 bn valuation

February 5, 2021 | by

Have we reached a peak? 23andMe, the genomic testing and genome research company, has struck gold, oil, and platinum in a merger with ‘blank check’ SPAC (special purpose acquisition company) VG Acquisition Corp. VG was formed by Richard Branson’s Virgin Group for the purposes of the acquisition. By end of Q2, the company will be trading on the NYSE under the ticker symbol ME. The company’s valuation is estimated as $3.5 bn.

23andMe’s SPAC follows on December’s $85 million Series F round, bringing their total funding pre-SPAC to about $900 million. The transaction will result in 23andMe having around $984 million in cash to invest. The deal also includes the private investment in public equity (PIPE) transaction in which Richard Branson and 23andMe founder/CEO Anne Wojcicki will invest $25 million each. There is no disclosure of the status of GSK’s ongoing investment in 23andMe, reportedly 50 percent, and Sequoia Capital’s. 

For 23andMe, this is a massive turnaround–and exit from stagnant private ownership–from their precarious state one year ago, which required layoffs of 14 percent of their staff, about 100 people. While the direct-to-consumer testing for diseases and ancestry model fell apart after holiday 2019 (TTA examined why here), the gold in genomics is monetizing that data with large drug and clinical trial companies for drug discovery and therapies. With GSK, they began clinical trials of a cancer drug last year, as well as licensing its first drug candidate to Spanish dermatology drugmaker Almirall. 

Going public via a SPAC and with a PIPE is definitely a one-up on rival Ancestry.com. Last August, they sold 75 percent of the company to Blackstone Group for $4.7 bn. TechCrunch, Becker’s Health IT, Financial Times

Telehealth parity, coverage, access debated in New Hampshire, South Dakota; CMS issues corrections to RPM in 2021 Medicare PFS rules

January 30, 2021 | by

Two US states are taking opposite tacks on the permanence of payment parity, telehealth coverage, and access recently broadened during the COVID pandemic: 

  • New Hampshire’s legislature is debating a bill (HB 602) that would eliminate the payment parity requirement for all telehealth consults, as well as eliminate coverage for telephonic (audio) consults and faxes. Parity was first permitted on an emergency basis at the start of the COVID pandemic in 2020, then passed through the legislature and signed into law by Governor Sununu in July. Parity requires provider reimbursement at the same rate as in-person visits for state Medicaid and private plans.  mHealthIntelligence
  • South Dakota’s Governor Noem, however, is proposing to make permanent the emergency telehealth expansions directed in two 2020 executive orders in two bills she’s submitted to the legislature:
    • Eliminate the in-person exam requirement before a care provider begins telehealth treatment with a new patient
    • Enable providers to prescribe certain medications via telehealth
    • Eliminated the requirement for telehealth on an audio-visual platform, thus enabling providers to conduct telephonic consults for some services
    • In the second bill, South Dakota could recognize medical licenses from states included in the Uniform Emergency Management Assistance Compact (EMAC), a mutual aid agreement that allows states to share resources during natural and man-made emergencies. mHealthIntelligence

Both payment parity and coverage access are hot topics in physician reimbursement and patient services. The argument in favor of parity is to incentivize usage among physicians. Opposing this is the notion that telehealth has a lower value than in-person visits and that payers should be able to negotiate coverage and rate with care providers. In New Hampshire, a rural state but adjacent to Massachusetts, there is sparse availability of many healthcare services, especially for mental health and substance abuse services. The same is true in South Dakota, a state 8.5 times geographically larger than New Hampshire and truly ‘big sky’ country. Here parity is not an issue but ‘existing patient’ requirements, prescribing, telephonic, and licensing are. Telephonic consults in rural areas with spotty broadband are also considered to be a vital inclusion.

CMS also did some revising on the 2021 Medicare Physician Fee Schedule (PFS) to clarify and correct coding plus other information around remote patient monitoring (RPM) effective 1 January:

  • 20 minutes of time includes, but is not limited to, “Interactive Communication” with patient
  • RPM billing by one practitioner, per patient per period
  • Many codes can be used for billing RPM, including codes for collecting and monitoring the data, and treatment/management services of the conditions monitored with the data. (In the US, certified billing and coding professionals are the most frequent ‘brain benders’ on these issues. It is that complex.)

The Foley & Lardner blog has a concise summary, but you can enjoy the CMS-corrected document in the Federal Register here. 

Funding, acquisition news roundup, round 2: Lyra Health’s $187M Series E, DarioHealth-Upright, GetWellNetwork-Docent Health, Hillrom-BardyDx (updated)

January 29, 2021 | by

Our cowgirl has been keeping busy rounding up more news on funding and acquisitions. Significance? Nearly all are major rounds only dreamed of a year ago for these relatively small companies boosting valuations into the stratosphere. The acquisitions also extend these companies into multiple lines of business.

Lyra Health, a mental health therapy benefit company for employers, closed an additional $187 million in a Series E round led by Addition Capital. This adds to a torrid 2020 $185 million Series C and D bringing their total funding to $475 million. The company claims a valuation of $2.3 billion and doubling its customer base in 2020 to 2 million members, with marquee clients such as Genentech, Morgan Stanley, and Zoom. Lyra Health uses cognitive-based therapy (CBT) models using virtual self-care, coaching, and therapists. Also announced was a partnership with ICAS World, an employee-assistance provider. Lyra is one of many companies in an increasingly crowded category using the CBT model to save employers and payers money on employee and member mental health with and without chronic conditions such as diabetes. Earlier this month, the Talkspace app, which focuses on direct to consumer therapy, announced they were going public through a ‘blank check’ SPAC with Hudson Executive Investment Corp, in a deal valued at $1.4 billion, including debt. Release, Mobihealthnews

DarioHealth, an Israeli-US company concentrating on digital diabetes and hypertension management, extended into musculoskeletal (MSK) therapeutics with the $31 million acquisition of Upright Technologies Ltd., another Israeli-US company. Upright uses a $100 sensor that provides biofeedback and vibration reminders to correct posture plus digital coaching. Last year, Upright was heavily advertised on US television. The buy will transfer to Upright $1.5 million in cash and $29.5 million in stock, and is expected to close in about 10 days. Dario also completed a $70 million private placement for 3,278,688 shares of its common stock at a purchase price of $21.35 per share. Dario has about 150,000 users and Upright 90,000 users. Dario is projecting a 2020 revenue of $7.6 million. Release, Mobihealthnews

GetWellNetwork, a relatively small player in patient engagement and communications in the inpatient care journey, announced it has acquired patient-messaging company Docent Health for an undisclosed sum, beefing up capabilities in data analytics and directing patients to additional services. According to Crunchbase, GetWellNetwork has funding to date of $19 million.  Release, Mobihealthnews

Wrapping it up is cardiac monitoring giant Hillrom’s acquisition of Bardy Diagnostics for $375 million plus future potential payments based on the achievement of certain commercial milestones. Hillrom is also acquiring net operating losses valued at more than $20 million and 230 employees. The BardyDx Carnation Ambulatory Monitor (CAM) is a lightweight cardiac patch monitor for heart rhythm diagnostics using P-wave-centric ECG detection. The irony here is that BardyDx positioned itself squarely against Hillrom’s Holter monitors. Nothing like buying out the competition! Release, MedCityNews

Comings, goings, and more: YouTube goes healthy, COVID vax distribution and EMA hack, IPO/M&A roundup, Japan’s health tech startups highlighted at CES

January 14, 2021 | by

Short takes on news snippets from just about everywhere. It’s been that kind of a week. (Picture: the famous Raymond Loewy-designed ’49 Studebaker Commander, of which it was joked ‘you can’t tell whether it’s coming or going)

Google-owned YouTube has decided to take a more organized approach to healthcare content with the hiring from CVS Health of Garth Graham, MD, who will serve as its director and global head of healthcare. At CVS, he was chief community health officer and president of the Aetna Foundation. His portfolio will include the development of content from providers including the Cleveland Clinic, the Mayo Clinic, the National Academy of Health, and Harvard’s School of Public Health. It’s seen as a platform for video-formatted health education both US and globally. The importance to Google is evident in the reporting line: Dr. Graham will report to Karen DeSalvo, MD, the chief health officer at Google. One wonders if the next step is the curating (a/k/a demonetizing or removal) of health content not Google-generated. FierceHealthcare, YouTube press release

Some states have done well on COVID-19 distribution. Others haven’t. It apparently doesn’t matter if you’re large or small. In the US, states were given vaccines based on CDC information and consultation with them. The states then designed their own distribution and priorities. Here’s a running tally on Becker’s Hospital Review Meanwhile, back in Hackerville, the European Medicines Agency (EMA) confirmed on 12 January that data relating to regulatory submissions by Moderna, Pfizer, and BioNTech that were on a hacked server was leaked to the internet. Becker’s

In IPO/M&A news:

Centene Corporation is acquiring Magellan Health, a behavioral health, specialty healthcare, and pharmacy management company, for $2.2 billion. Centene continues its transformation into a UnitedHealthcare structured company, with payer programs on one side and health services including population health management, data analytics and other areas of health tech on the other side. Magellan will be operated independently. The deal requires Federal and state review, and is expected to close in second half 2021. Release  Magellan this week announced its lead investment in a $20 million Series B raise by Philadelphia-based NeuroFlow, a clinical behavioral health monitoring system. Philadelphia Business Journal

Amwell announced a public offering of over 11 million shares. The date and pricing for the offering were not mentioned in the release, but at the current share price of $28, this would raise in excess of $308 million. This is on top of their socko IPO last September which raised in excess of $700 million. 

Behavioral therapy continues to be hot, with online behavioral therapy company Talkspace going the SPAC ‘blank check’ route in merging with investor company Hudson Executive Investment. It provides them with $250 million cash. Estimated net revenue is $125 million in 2021, up 69 percent from 2020, creating an enterprise value of $1.4 bn, which is quite a reach. Healthcare Dive, release.

Medicare Advantage payer Clover Health of Jersey City, NJ also went the SPAC route this week with Social Capital Hedosophia Holdings Corp. III, giving it an enterprise value of approximately $3.7 billion. Clover Health styles itself as a health tech company as it analyzes member health and behavioral data to improve medical outcomes and lower costs for patients, many of whom have multiple chronic conditions or are classified as underserved.  Release

Israel’s Itamar Health, which focuses on integrating sleep apnea management into the cardiac patient care pathway, is buying SF-based Spry Health for an undisclosed amount. Founded in 2014, Spry has an FDA-cleared wrist-worn device, the Loop System, that monitors SpO2, respiration rate, and heart rate. Itamar plans to develop a wrist-worn device based on their Peripheral Arterial Tonometry (PAT) immediately, with initial market launch anticipated in 2022. Release

Hinge Health’s Series D raised $300 million and a new valuation of the company at $3 bn. (Remember when $1 bn was a unicorn amount?) Hinge’s specialty is musculoskeletal–a virtual MSK Clinic for back and joint pain care and rehab including access to physical therapists, physicians, health coaches, and wearable sensors to guide exercise therapy. Release

In startup news…Under the radar, Japan has been developing a crop of health tech startups. They were highlighted at this year’s virtual CES by Jetro–the Japan External Trade Organization. Their CES web page has a teaser video and sortable profiles on companies, many of which look very interesting. According to their materials, there are perhaps 10,000 Japan startups but few of them make it out of Japan. This Editor looked forward to their presentation on ‘Turning the Super Aging Society into a Super Smart Society’ yesterday evening, but virtual doesn’t mean that links work or events actually happen, so our reporting will attach some statistics on their super-aging society, as well as a comparison with other countries (PDF).