Evolent Health talking major acquisition by payer Elevance, private equity

August 27, 2024 | by

Management services organization Evolent Health moving down the road in selling itself. Another deal perking below the Labor Day wire to brew into September or October coffee is a full or partial buyout of Evolent Health.  Potential buyers or partners include Elevance Health (the former Anthem), to position against Optum/UHG, and several private equity companies: TPG, KKR, and Clayton, Dubilier & Rice (CD&R). Evolent provides organizational and administrative services for primary plus specialty care physicians and payers for patients with complex conditions, within and outside of value-based care models such as ACOs, utilizing connected care and workflow automation technologies. In June, it agreed to acquire many of the AI utilization management assets of Machinify, not yet closed. 

Evolent’s (EVH, NYSE) current market capitalization is about $3.65 billion; stock price closing yesterday was $31.62 (Yahoo Finance). Industry analyst Jailendra Singh of Truist projected earlier this month, before this news dropped, that the stock was underpriced at the time in the ~$20 range and justified a target price at $33, citing their ability to manage utilization trends and rate adjustments for FY 2024. Seeking Alpha went so far as to state that at an acquisition price of $35, it would still generate a profitable internal rate of return (IRR).

A buyout won’t be cheap. With an estimated $114-116 billion shares outstanding, an outright purchase price at $35/share could approach or top $4 billion. Which means that the buyout lift could be shared. Projections with the information available range from PEs negotiating a leveraged buyout (LBO), a tuck-in by Elevance, or possibly a PE/Elevance partnership. Elevance already works with CD&R in the Mosaic Health care delivery platform partnership.  The shape of the buyout will develop over the next few weeks. FierceHealthcare

Another activist shareholder forcing a sale? Medical Buyer added to the above reports that long-time shareholder Engaged Capital pushed for this, to the degree that the board of directors needed to settle with them by forming a strategy committee focused on “value creation initiatives”.  As far back as 2021, Evolent was courting suitors or partners–at that time, Walgreens Boots Alliance, which may have been a far better but more complex buy than VillageMD. Hat tip to HIStalk 8/26

Evolent’s potential sale complicates the outlook for other MSOs such as Aledade, Optum, Privia Health, Health Catalyst, Accolade, Alignment Health, and Collaborative Health Systems (now part of Centene–disclaimer, CHS was this Editor’s former employer). In addition, a payer buying a large MSO with provider contractual relationships may pique the interest of FTC and DOJ, which already have Optum on their radar.

Sidebar: Revealed yesterday was Evolent’s CEO Blackley Seth cleaning up his stock option portfolio. According to Investing.com, he “sold shares totaling approximately $5.6 million at an average price of $30.00, with transactions ranging from $30.00 to $30.02. Additionally, the CEO acquired shares worth roughly $1.6 million through option exercises with prices between $6.87 and $10.27.” The sales were prearranged on 29 February under SEC Rule 10b5-1 to avoid insider trading charges. Both the sale and buy were over 100,000 shares.

Week-end roundup: Walmart Health adds 3 FL centers; wearables nudge close to 50%; Dandelion cardiac AI performance pilot; Aledade’s $260M Series F; $10M for DUOS’ older adult assistance platform; Friday Health Plans to close

June 23, 2023 | by

Walmart Health continues Florida expansion with three new centers opening this week–two in Orlando and one in Kissimmee. This adds to their present five in the central Florida area: Orlando, Kissimmee, Ocoee, Sanford, and Winter Garden. By fall, plans are to have 23 in Florida, tracking to the Q1 2024 plan for 75 total, including 28 new locations in the Dallas (10), Houston (8), Phoenix (6), and Kansas City MO (4) metros [TTA 3 Mar]. Becker’s

New study by AnalyticsIQ indicates nearly half the US population may be adopting wearables and using digital health. Usage doubled in the midst of the pandemic (2020-21) with 46% reporting using at least one type of consumer health technology over the past six months. 35% of the 8,000 respondents used smartwatches, with Fitbit (42%) edging out Apple Watch (38%) followed by Samsung Galaxy Watch and Garmin Vivoactive. By other wearable device type:

  • Blood pressure devices: 59% of survey respondents
  • Sleep monitors: 21%
  • ECG monitors are still a niche: 11%
  • Biosensors such as glucose monitors, hormone monitors, fall detectors, and respiratory monitors are still niche at 8%, but the business grew to $25 billion in 2021
  • Smart clothing: a surprising 6%.

Unsurprisingly, wearable health tech usage skewed heavily towards Generation X-ers and men. Among ethnic groups, black and Latino groups had the highest usage.  Healthcare Dive

Dandelion Health testing cardiac dataset for AI reliability and bias. Starting with their data on ECG waveform algorithms, this startup will be validating the performance and bias of artificial intelligence across key racial, ethnic and geographic subgroups. NYC-based Dandelion is a public-service focused precision analytics company that works with three healthcare systems–Sharp HealthCare (San Diego, California), Sanford Health (Sioux Falls, South Dakota) and Texas Health Resources (Arlington, Texas) to aggregate and de-identify clinical data for roughly 10 million US patients. The validation pilot will start on 15 July and last for an initial period of three months. It may be expanded to include additional clinical data modalities such as clinical notes and radiology imaging. According to their founder and CEO Elliott Green, the “pilot program answers the question, does your algorithm do what it’s supposed to do? And does it do it fairly, for everyone?”  Release, Healthcare IT News

Who said big, late raises are a thing of the past? Not if your company is Aledade, which has solidly succeeded in management services for independent primary care practices transitioning to value-based care models. They just gained a shiny new Series F of $260 million on top of last June’s $123 million Series E for a new valuation of $3.5 billion. The Series F round was led by Lightspeed Venture Partners along with Venrock, Avidity Partners, OMERS Growth Equity, and Fidelity Management. Aledade has grown to manage 1,500 practices and has acquired in recent months Curia (data analytics for advance care planning) and Iris Healthcare (care planning technology). The additional funds will be used to opportunistically add capabilities into its platforms. FierceHealthcare, Bloomberg (paywalled)

Somewhat more in the recent range is DUOS’ $10 million venture capital raise for a total of $33 million. Leading the round were Primetime Partners, SJF Ventures, and CEOc’s Aging Innovation Fund managed by Castellan Group. What’s unusual is that the platform addresses older adults’ needs as a personal assistant in areas such as care, support in social determinants of health (SDOH), housing, and transportation against Medicare Advantage plan benefits, local community resources, and government programs. The benefit for the older person is to close gaps in care and increase utilization of Medicare Annual Wellness Visits (AWVs). Originally targeted to older adults, the company is broadening its markets to health plans, providers and employers. Release, Mobihealthnews, Home Health Care News

Insolvent ‘insurtech’ Friday Health Plans loses last two health plans to state receivership, will close. Colorado and North Carolina were the last two states the company operated in. Both states’ insurance departments put Friday into receivership this week after the insurer notified them that they could not raise additional cash to continue operations. This affects 35,000 and 39,000 individual health policyholders respectively. Texas, Georgia, Oklahoma, and Nevada were previously placed in receivership. State insurance regulators have assured providers that they can expect to be paid for their services per their contracts. Members generally need to find new insurance companies quickly, however. 323 Friday employees in Alamosa, Colorado, their headquarters, will be laid off between 23 June (this Friday) and 6 July, without the previously promised 60 day notice nor any notice of severance or benefit continuation. Friday is the largest employer in this Denver/Colorado Springs suburb. In its brief lifespan, Friday raised over $300 million and lost over $700 million. FierceHealthcare 22 June, 21 June.  Alamosa Valley Courier  Additional commentary by industry analyst Ari Gottlieb on LinkedIn

Short takes: rounding up revenue and acquisition action during JPM

January 14, 2022 | by

The  JP Morgan conference (JPM), which wrapped on Thursday, is traditionally a major venue for healthcare announcements, from revenue to staff to investments. Having never attended but harboring a secret desire to observe (as a poor churchmouse on the wall–no fly am I) the 1% doing their thing, this Editor cannot imagine how boring it must be in virtual format. 

Here are a few highlights: the important, kind of interesting, and not too tedious.

  • Teladoc projects full-year 2021 revenue to hit $2.03 billion, nearly doubling its 2020 revenue. 2022’s projection is about $2.6 billion. It’s revenue without profitability, however. Teladoc lost $84.3 million Q3 2021, which more than doubled its PY $36 million loss. As we noted in our earlier article, Teladoc, like every other telehealth company, saw its shares plummet in 2021 as patients returned to offices and telehealth claims plunged to 4%, mostly for behavioral health. FierceHealthcare
  • Transcarent, Glen Tullman of Livongo’s ‘encore’ company, has landed a $200 million Series C and is now valued at $1.62 billion. Transcarent’s market is self-insured employers and provides a care management model focusing on personalized health and care support for employees. Kinnevik and Human Capital led investors and were joined by Ally Bridge Group, General Catalyst, 7wireVentures, and health systems Northwell Health, Intermountain Healthcare, and Rush University Medical Center. Release
  • Boston-based Medically Home, which supplies hospital-to-home support and integrates technology services, nabbed a $110 million venture round from investors Baxter International Inc., Global Medical Response, Cardinal Health, Mayo Clinic, and Kaiser Permanente. To date, they have worked with 7,000 patients. Release 
  • DexCare, a platform-as-a-service (PaaS) that ‘orchestrates’ digital demand and health system capacity, closed a $50 million Series B funding led by Transformation Capital, with participation from Kaiser Permanente, Providence Ventures, Mass General Brigham, Define Ventures, Frist Cressey Ventures, and SpringRock Ventures. Release
  • Mental health/meditation app provider Headspace Health acquired startup Sayana to build out AI capabilities in mental health and wellness. Its self-care app leverages chat-based sessions with an AI persona. Terms were not disclosed, but Sayana CEO/founder Sergey Fayfer will join Headspace in a product leader role. Headspace acquired rival Ginger back in August [TTA 27 Aug]. FierceHealthcare, release
  • Rival Talkspace is also facing a shareholder lawsuit on securities fraud after going public in a $1.4 billion SPAC deal. According to FierceHealthcare, the charges filed 7 January center on non-disclosure in their financials of critical growth headwinds, including increased advertising and customer acquisition costs and worsening growth and gross margin trends. They also overvalued its accounts receivable from certain health plan clients. Coupled with management turmoil–their president/COO resigned after a ‘conduct’ problem at an offsite event–their share price has plummeted over 80%. Their projection of full-year 2021 revenue was cut to $112 million from $125 million. Talkspace, of course, has said the suit is meritless.
  • Aledade, well known to this Editor as an organizer of accountable care organizations (ACOs) and a management services organization (MSO) for physician groups in value-based care, bought Iris Healthcare. Iris provides advance care and palliative care planning for health plans and providers for seriously ill and high-risk patients via its network of 1,000 independent primary care practices and health centers. It will be folded into their new Aledade Care Solutions unit. FierceHealthcare, release

Funding news roundup: Philips buys Capsule, Hims’ SPAC + Privia partnership, Signify Health’s $100M IPO; closed funding for K Health, Aledade, Conversa Health

January 27, 2021 | by

Royal Philips buys Capsule Technologies for $635 million, extending their integrated solutions platforms for patient care management. Capsule is a developer of medical device integration and data technologies, including vital signs monitoring and clinical surveillance services, for hospitals and healthcare organizations. These technologies connect medical devices and EMRs in hospitals through a vendor-neutral system. The deal will close in this quarter and Capsule’s approximately 300 employees will join Philips’ connected care segment. MassDevice, Philips release.

It’s all about the integration: Hims & Hers $1.6 bn SPAC completes, partners with Privia Health for telehealth and in-person visits. Now that Hims & Hers is now on the NYSE (courtesy of a ‘blank check’ with a division of Oaktree Capital Management) and valued at $1.6 billion, it continues its elevation out of e-commerce home delivery of erectile dysfunction and hair restoration meds to telehealth and in-person medicine. Starting about 18 months ago with virtual visits for minor maladies and mental health, Hims recently went beyond its homegrown capabilities with major providers such as New Orleans-based Ochsner Health System and New York City-based Mount Sinai Health System. Privia is a physician organization consisting of regional groups, ACOs, and specialty verticals in value-based care. Their addition to Hims will be for in-person and telehealth visits in the District of Columbia, Georgia, Maryland, Texas, and Virginia. In past months, it has been eagerly partnering with technology and analytics suppliers to build its management services portfolio. Another sign of more integration: Hims is also moving into pharmacy fulfillment after using outside suppliers. Hasn’t turned the profit corner yet, though. FierceHealthcare, Mobihealthnews

Signify Health signals an IPO. Going the more traditional route is Signify Health, which filed an S-1 registration statement with the SEC for a $100 million offering on the NYSE in the near future. Signify’s analytics and technology platform delivers through its mobile provider networks in-home health and care management services supporting major payers and value-based payment programs. Signify merged in 2019 with fellow, smaller New Mountain Capital company, the former Remedy Health, which specializes in managing providers through episodes of care/bundled payments under the CMS BPCI-A and commercial programs. It is not confirmed if New Mountain, a private equity company based in New York, will be exiting with the IPO. Signify Health release, FierceHealthcare.

Closing funding rounds:

Telehealth/AI platform K Health closed a $132M Series E round of funding led by GGV Capital and Valor Equity Partners, for a total since its 2016 start of $271 million. It also launched a pediatric version of the app, K for Parents. The app connects with doctors in 49 states but also uses health data, curated by AI, to provide patients with guidance for primary care, anxiety, and depression conditions. Release

Even non-telehealth or app-based healthcare companies are taking advantage of funding bounties. Aledade, a management services organization (MSO) for primary care practices, closed a $100 million Series D led by Meritech Capital Partners. Aledade partners with independent practices to organize ACOs in value-based care models. To date, Aledade has raised $249 million. Aledade release.

More modestly, Conversa Health closed its Series B at $20 million, up from $12 million. The round was led by Builders VC and Northwell Ventures. Conversa’s automated virtual care and triage platform remotely monitors, analyzes, and communicates with patients. During COVID, they developed COVID-19 Virtual Care Solutions, a mobile platform for hospitals to increase capacity by automating the outreach to and monitoring of vulnerable patient and employee populations. Release