News roundup: Cano Health gets 2nd NYSE delisting warning; Veradigm acquires Koha Health RCM, faces class-action lawsuit; Bright Health-Molina sale closes; Devoted Health’s $175M Series E (updated)

Cano Health gets another billet-doux from the NYSE. Spoiling the confetti and champagne, tech-based primary care provider Cano Health was notified on 29 December that it faced delisting from the NYSE, this time not for the share price (which is above $1 at $5.23) but for its total market capitalization. The NYSE has a pesky rule (Section 802.01B) that a company’s total market capitalization must be above $50 million over a 30 trading-day period and its stockholders’ equity must be above $50 million. The timeline: Cano has 10 business days from the 29th to respond to the NYSE to state intent to cure the deficiencies, and 45 days from that time to submit a business plan to regain compliance within 18 months. If accepted, shares will continue to trade. In its release, Cano announced accelerating its ‘transformation plan’ to further cut costs, divesting operations and terminating underperforming affiliate operations to save approximately $290 million by the end of 2024, which includes the $65 million of previously planned cost reductions. They will also need to pay $30 million in pre-tax charges to resolve exiting leases and staff termination charges. Earlier in December, Cano appointed two independent directors, Patricia Ferrari and Carol Flaton, both with strengths in restructuring companies and their financials. It also established a three-person finance committee, to assist in trimming down the company and exploring a sale. Release

Veradigm buys Koha Health, which specializes in orthopedic/musculoskeletal (MSK) revenue cycle management (RCM). Acquisition cost and management transitions were not disclosed. The purchase of Koha adds to Veradigm’s RCM portfolio in ambulatory health. Koha, based in Merrimack, New Hampshire, was still owned and run by younger members of the founding family.  Veradigm is still working out over a year of trouble with its Nasdaq listing and has changed out its CEO and CFO recently [TTA 14 Dec]. Release. Also HIStalk 1/3/24   

Updated  Veradigm faces a shareholder class-action lawsuit on its share price. As is typical in these cases, there is a lead plaintiff (John M, Erwin) represented by a law firm (in this case Robbins Geller Rudman & Dowd LLP of San Diego) which is filed on behalf of a class, in this case individuals who bought shares between 26 February 2021 and 13 June 2023 and suffered losses. It charges Veradigm as well as certain of its current and former top executive officers with violations of the Securities Exchange Act of 1934.  This centers around Veradigm’s ongoing problems in stating its financials from Q3 2021 and overstating its earnings from there through 2023, negatively affecting the share price. The lawsuit was filed 22 November 2023 in the US District Court for the Northern District of Illinois. Robbins Geller is now seeking other plaintiffs to join in the suit. Release, Justia Dockets & Filings, Mobihealthnews

Wrapping up another continuing story, Bright Health closed the sale of its California plans to Molina Healthcare on New Year’s Day. With the proceeds, reduced to $425 million [TTA 20 Dec 23], Bright as predicted cleared what was owed on its credit facility with JP Morgan, reduced on Friday by $30 million to approximately $298 million. The remaining funds will go to their cash position ($90 million in unregulated cash plus approximately $155 million in excess cash surplus after reserving for expenses) and $110 million from escrow, and now on its sole continuing value-based primary care business, NeueHealth. Cash reserves do not include CMS Repayment Agreements which come due on or before 14 March 2025, sufficiently far in the future (?). No mention of repayments to their lender New Enterprise Associates (NEA) or the Texas Department of Insurance clawing back money owed out of its insolvent Texas plan. You have to hand it to Bright Health. They’ve managed to play multiple ends against the middle and tie masterful Gordian knots (pick your analogy) to stay alive until, they hope, 2025.  [TTA 5 Dec].  Release 29 Dec. Release 2 Jan   FierceHealthcare

Updated  And one more bright spot: $175 million raised by Devoted Health. Devoted is a combination of Medicare Advantage (MA) plans with in-house telehealth and in-home care delivered by Devoted Medical. The Series E was funded by a lead syndicate composed of The Space Between (TSB), Highbury Holdings, GIC, Stardust Equity, Maverick Ventures, and Fearless Ventures with an arms-length list of other participants. Devoted was started by two brothers, former athenahealth and government IT leaders Ed and Todd Park, CEO and executive chairman respectively. Devoted release, Becker’s. Fierce Healthcare, Mobihealthnews

What a difference a little over two years makes. At the time of their hefty $1.15 billion Series D, raised in the heady days of October 2021, they were considered one of the smaller, more specialized ‘insurtechs’ along with Alignment Health. Now they are walking tall in a field of damaged or expired payers: Bright Health, Oscar, and Clover among the survivors, and Friday Health Plans deceased. Devoted now states that its MA plans serve 140,000 members in 299 counties across 13 states, as of December 2023. Most impressively, 94% of their members in Star-eligible plans are in 4 to 5 Star plans. Their HMO plans in Florida and Ohio were all 5 Star plans. 

Some thoughts on the insurtechs, why the hype didn’t quite pan out, and the damage they may have done [TTA 7 July 2023].

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