News roundup 23 Oct: views on a CVS breakup and CEO replacement, Amwell’s interesting new CFO, CopilotIQ/Biofourmis merge (updated), raises by HealthEx, Counsel Health, Oshi Health

October 23, 2024 | by

How CVS Health grew into a juggernaut…and why it may pull back to survive. October kicked off with the bombshell [TTA 1 Oct] that CVS Health was considering a breakup into at least two units. Based on Reuters’ insider information, CVS was considering separating their Aetna health plan side from their retail operations. Up in the air was where the now problematic pharmacy benefits management (PBM) units would reside. CVS’ revenue and profitability crunch is biting hard, with Glenview Capital Management and other investors tiring of declining share value (-25% YTD).

Last week’s bombshell was the immediate (17 October) replacement of CEO Karen Lynch with CVS Caremark’s (PBM) president, David Joyner. Lynch, one of the US’ most powerful top female CEOs, took the helm after Larry Merlo’s February 2021 retirement. She had been Aetna head and with the company a total of 12 years, including the pandemic. In August, trying to stave off a two-headed decline that has hit both health plans and retailers, she ousted Aetna’s president Brian Kane and took over direct control. It didn’t take long for this to be viewed as not working. Joyner is a CVS Health ‘lifer’, having started with Aetna as a rep close to 40 years ago, then with an independent Caremark and rising through the ranks. His tenure is starting at a low point with the medical loss ratio (MLR) topping 95%, medical costs soaring, MA ratings cratering, competition from other PBMs, Amazon, and Mark Cuban Cost Plus, plus Federal scrutiny of PBMs on insulin pricing. This is causing a reset on their FY financial guidance which won’t be revealed until early November. FierceHealthcare

MedCityNews did a smart analysis on this, going back in time to 2018 when CVS laid out $70 billion for Aetna. Last year, CVS, in pursuit of integration/expansion goals laid out by top management, acquired Signify Health (home health) and then Oak Street Health (OSH) primary care practices for a combined $18-19 billion. The experts they consulted largely look on a breakup/spinoff as a short term fix, though CVS is right now, to quote Dr. Robert Pearl of Stanford, FTA: “They’re sitting in the place where all the headwinds are.” Will they stick it out or will their investors like Glenview, facing their own headwinds, go for the short term solution?

Over at Oscar Health, their CEO Mark Bertolini, engineer of the Aetna/CVS deal and later ousted from the CVS board, must be smiling as Oscar is Back In Black.

Amwell, which is facing headwinds of hurricane force, named a new CFO. Mark Hirschhorn joins from his most recent spot as CEO of TapestryHealth, a post-acute care telemedicine provider. He is replacing Robert Shepardson, who stated last week he would resign effective Friday 11 October.

Hirschhorn was formerly with Teladoc, from which he resigned in 2018 under reports of insider trading and on top of it, an inappropriate relationship with a subordinate [TTA 20 Dec 2018]. He then was president/COO for two years at cracked SPAC Talkspace, from which he resigned after an internal review regarding his behavior at an offsite company event. Talkspace and Amwell discussed a merger back in the palmy days of 2022 [TTA 22 June 22] which never happened.

Hirschhorn’s last company, TapestryHealth, announced their new CEO effective a little over a month ago on 16 September, with Craig Anderson joining from UnitedHealth Group [TapestryHealth release]. In their release, Hirschhorn was described as pursuing other opportunities with Sopris Venture Capital. Fintel does not list Sopris as an investor or shareholder in Amwell, but this information could be outdated.

This Editor will restrain herself from further comment and wishes the best for Amwell. Healthcare Dive

Two home healthcare-focused companies, CopilotIQ and Biofourmis, announced their merger at HLTH this past Monday. CopilotIQ’s focus has been on in-home delivery of connected care including RPM and nursing for chronic conditions through an AI-assisted software platform, while Biofourmis’ system and market has concentrated more on health systems, payers, and pharmaceutical companies for in-home delivery of complex care. The combined company will be headed by CopilotIQ’s CEO David Koretz. Merger transitions and costs were not disclosed. Investors in both companies–General Atlantic, Openspace Ventures, and Bessemer Venture Partners–are listed as investing into the combined business. Release 

Update: What’s interesting is that CopilotIQ appears to be a relatively small company with only two funding rounds listed on Crunchbase. It was listed as one of Fast Company‘s most innovative companies of 2024 back in March and closed 2023 with 10,000 members, up from 200 at the start of 2022.  Biofourmis, founded in Singapore and moving to Boston in 2019, at one point was a unicorn with $464 million in 10 rounds of funding up to a Series D. Yet the company will be headed by the smaller company’s CEO. It could be a merger arranged, as nowadays many are, by the funders. It also may not be, because the release does not disclose the financials of these two private companies and positions it as a merger. But this is one merger that makes sense to provide wider availability of integrated in-home services. What is odd: Crunchbase is listing it as an acquisition by Biofourmis, which is not what the release states nor other sources.

Meanwhile, Biofourmis’ former CEO and one of their founders, Kuldeep Singh Rajput, has founded a health tech company based in Singapore that is focused on generative AI. OutcomesAI is using a LMM (large multi-modal model) called Glia to work with SingHealth for clinical companion AI. Mobihealthnews Update: Rajput transferred his 96.6 million shares in Biofourmis to 19 existing investors immediately prior to the merger, according to filings with ACRA, Singapore’s Accounting and Corporate Regulatory Authority. DealStreetAsia

A quick rundown on fundings touted at HLTH:

HealthEx, a company with a tech model for healthcare organizations to manage data around patient preferences and consent, announced a $14 million seed/Series A funding. It was “hatched”, according to the release, by General Catalyst. 

Counsel Health scored $11 million in Series A funding. Counsel provides on-demand, high-quality, personalized medical advice from expert physicians within minutes. It apparently is a blend of an advice, counseling, and telehealth model. Counsel currently claims to serve tens of thousands of patients through its health plan and provider partnerships in California, New York, Massachusetts, Florida, and Texas. Funding will be used for platform development and nationwide expansion..The round was led by Andreessen Horowitz (a16z) Bio + Health, with participation from Asymmetric Capital Partners, Floodgate Fund and Pear VC. Release

Oshi Health won this week’s Big Raise with a $60 million Series C. Oshi is a virtual-first gastrointestinal care clinic integrating evidence-based medical care and behavioral health support for patients with Crohn’s Disease, irritable bowel syndrome (IBS) and ulcerative colitis. Funding was led by Oak HC/FT with existing investors CVS Health Ventures, Flare Capital Partners, Takeda Digital Ventures, Bessemer Venture Partners, and First Cressey Ventures. Mobihealthnews, Release

Breaking: Teladoc’s Q2 sinks on $790M BetterHelp impairment; Wojcicki files to take 23andMe private

August 1, 2024 | by

Teladoc posts Q2 loss of $838 million, takes $790 million impairment on BetterHelp’s sinking performance. New CEO Chuck Divita had nothing but bad news to deliver to Mr. Market (right below). It was so bad that they withdrew their FY2024 outlook for both consolidated operations and BetterHelp stated in April and all three-year outlooks. TTA Q1 Teladoc results and outlook  

  • Q2 revenue declined 2% versus prior year to $642.4 million. Integrated Care (main business) segment revenue increased 5% to $377.4 million while BetterHelp declined 9% to $265 million. Readers will recall that previous CEO Jason Gorevic assured investors that BetterHelp would carry Teladoc to profitability. Au contraire, along with his job.
  • The bright spot was that adjusted EBITDA increased to $89.5 million, up 24% versus prior year, but adjustments reflect all sorts of financial legerdemain, including impairments.
  • First half results were essentially flat versus prior year, with revenue up 1% to $1,288 million with Integrated Care up 7% to $754.5 million–but BetterHelp again sinking results with a decrease of 7% to $534.0 million.

BetterHelp’s rolling failure is almost inexplicable, with telemental health being the ‘IT’ clinical category in digital health funding. Spring Health just scored a $100 million Series E [TTA 31 July]. Younger companies such as Talkiatry and Brightside Health seem to have no problem raising funds or gaining partners/customers. One would think that with established customers in the enterprise space, Teladoc would have no problem adding on telemental services. This Editor has previously analyzed the problems that have led to the decline of both Teladoc and Amwell, but Teladoc stands apart in one factor. It is still recovering in its huge failure in buying and failing to integrate Livongo. But in the telemental health space, the profitable companies are largely in the enterprise and payer space. Even DTC, they have slicker solutions and extensive networks. It’s a cost-sensitive market, both to benefit admins and to prospective members. 

Here’s the pivot. On the earnings call, CEO Divita and CFO (former acting CEO) Mala Murthy announced a pivot for BetterHelp to international, non-English-speaking markets, where customer acquisition costs are lower. (This Editor would add that competition is also less.) They also blamed advertising cost inflation and jacked-up acquisition costs during a US election year–something that is completely predictable and should be baked in the 2024 marketing expenses. Unbelievably, if advertising costs remain high, Murthy stated that they expect a low double-digit revenue decline, whatever that means.

The shocker here is that it finally dawned on them that the big problem with BetterHelp is that it does not accept insurance and has a high DTC cost. Their leavers in research cite both as reasons why. Hellooooo? What took so long?  So their fix is to negotiate insurance coverage–but that won’t take effect till 2025. 

From FierceHealthcare in an on-point close of their article: “Divita was adamant that Teladoc runs BetterHelp well and that it’s an important part of the company.”  Morningstar (Teladoc release)  How much more can Mr. Market stomach? This story is developing.

As we predicted, CEO/founder Anne Wojcicki has made an offer to take 23andMe private. She has filed with the Securities and Exchange Commission (SEC) amendments to their Schedule 13D form that confirm that on 29 July, she sent a non-binding proposal to the Special Committee that has been looking at alternatives since late March [TTA 20 April]. The Exploding Plastic Inevitable offer of $0.40 per share is to shareholders of Class A and B common stock. It became public yesterday (31 July). The current price is around $0.40, so there is no premium. 23andMe is also on a six-month delisting deadline with Nasdaq from November, which they have since passed but may have been extended due to the Special Committee formation.

Wojcicki holds supervoting privileges that have always given her effective control of the company. According to analyst TD Cowen, she currently holds 22.5% of the company’s outstanding Class A common stock and 59.2% of outstanding Class B common stock. In going private, she would be right in line to be paid out by outside funders (Other People’s Money). Other alternatives to her buyout, such as Chapter 11 or 7 bankruptcies, are even more bleak and would leave shareholders with effectively 0.

As TTA noted in our April coverage, the company is yet another cracked SPAC (2021) hitting a $4.8 billion valuation, acquiring companies, and falling precipitously. It never found a recurring revenue model, being largely ‘one and done’ on ancestry and genetic reports. Recently, it lost a lucrative contract with GSK for research data. It stumbled badly after a major data breach in Fall 2023 that exposed 6.9 million records. Then, they blamed members for their poor cyberhygiene and lack of security. This once bright light has burnt out; is it even relevant anymore other than giving the CEO a job? Yahoo Finance, CNBC, MedCityNews  Developing. Our recent 23andMe coverage: 29 May (FY24 earnings and the committee’s poor choices), 2 Feb (data breach timeline, financials)

First half digital health investment — a true rebound or a ‘dead cat bounce’? A Gimlety look at Rock Health’s H1 report.

July 30, 2024 | by

Gimlet EyeFirst, your Editor assures our Readers that no felines were harmed or poorly thought of. It’s just words expressing concepts!

In ever-dapper Mr. Market’s picturesque and blunt language of finance, a ‘dead cat bounce’ is a temporary improvement, a short-term recovery that does not reverse the reality of the long-term downward trend, which resumes shortly thereafter the pick-me-up. It’s applied to assets, stock prices, market sectors, and even political polling. 

So…let’s debate the point. Is digital health investment in the US recovering, or taking a few lungfuls of air at the surface before sinking again?

Rock Health’s first half (H1) report. It is, like most of theirs, heavy on the optimistic ‘glass half full’ view. Its headline ‘Resilience Leads to Brilliance’ is certainly a catchy rhyme or meme, but in this Editor’s Gimlety View, an overstatement. It does look like the logjam in funding and M&A has broken, but where’s the brilliance?

Let’s take a cold look at the Rock Health findings for the first half (H1) of 2024. Rock Health only looks at US digital health fundings above $2 million and includes some companies those of us in the professional field do not consider ‘digital health’. FTR:

  • US digital health startups raised $5.7B across 266 deals. Average deal size: $21.4 million.
  • The action was in Series A and B raises, which were roughly comparable to prior years. Series C and D were anemic, with Series C especially lagging even anemic 2023.
  • 40% of H1 2024’s fundraises (107 deals) were unlabeled; by quarter, Q1 47% and Q2 33%. This is only slightly down from the 44% for full year (FY) 2023.
  • The top ‘value propositions’ for fundraising companies were disease treatment (including food as medicine), non-clinical workflow, R&D, clinical workflow, on demand healthcare and precision medicine. The first two are no change from FY 2023. The biggest shifts up from FY2023? Clinical workflow, on-demand healthcare, and precision medicine. These categories are not defined by Rock Health.
  • The top ‘clinical indications’ are mental health, cardiovascular, oncology, weight management, reproductive/maternal health, and neurology. Again, the first three are basically little changed from FY 2023. The big upward shift was funding for reproductive health.
  • “AI momentum underpinned deals in categories next on the list, including nonclinical workflow ($896M), R&D for pharma and medical devices ($737M), and clinical workflow ($639M).”
  • Until Q2 2024, there had not been any into the public markets for 21 months. Starting in May and June, there were three: fetal monitoring Nuvo (public exit via SPAC (!!) in May) and two in June: revenue cycle management company Waystar and precision diagnostics Tempus AI.
  • There were only 66 acquisition deals made in H1, about half between digital health companies. Private equity acquired 10 companies and 12 in “other”. 

In nearly every metric above, H1’s trends are comparable to 2023 extrapolated to a full year, as well as in line in numbers to pre-inflationary 2019–the investments in absolute terms are worth less. 

But overall, it is as if the boom of 2020-2022 never happened except in the wreckage of overfunded/foolish funded companies. And 2023 was marked by four tech bank lender bankruptcies and many high profile bankruptcies such as Babylon Health, Quil Health, and Pear Therapeutics. 2024 should look better than 2023, by that logic.

But let’s factor in the following for 2024 H2:

  • The raises are there and they’re fairly steady–but with only a few exceptions, usually AI related, they are far less than in the past, again using 2019-2020 as a baseline.
  • At the same time, layoffs are also prevalent and substantial at all levels, indicative of retrenching. And there is little real hiring versus resume collection.
  • This is an election year like no other in the US, UK, and France, as well as political and terror turmoil worldwide. 
  • Two active wars in Ukraine and Israel, possibly a third on the horizon with major impact (Taiwan)
  • Drying up of now unwanted Chinese capital that fed into Sand Road VCs
  • The very underdiscussed FTC/DOJ pre-merger notification and Merger Guidelines–and a hostile FTC

Socially and physically, there’s little respite, from the fool’s spectacle of the opening Olympic ceremony to increased volcanic activity worldwide seen from Yellowstone to Italy. Natural disasters add to nervousness. 

As usual, there are two metrics missing from Rock Health’s analysis: companies in deep trouble or bankrupt. Capital destruction matters. Granted, Rock’s report is about digital health investment, but considering what and why it fails is part of the investment picture. What comes after all those rounds and exits? 

  • Bankruptcies: Cue Health, Cano Health, Invitae, SmileDirectClub (late Dec 2023)
  • On the way: 23andme, NeueHealth (probably 2025), Amwell (which avoided delisting by a reverse stock split)

There is also the shutdown of Walmart Health’s telehealth / remote health unit, formerly MeMD, acquired by Fabric. There is also the Veradigm mystery–delisted and as of May, up for sale, despite having positive revenue. Added context: the failure of melding retail health with clinic operations–Walgreens’ VillageMD, CVS scaling back Oak Street, Amazon folding Clinic into One Medical.

AI is also proving to be ‘not all that’. Health systems are using them to automate procedures and some interfaces with patients. But the investment/payout equation is still tilted heavily to the former.

Conclusion: this Editor is leaning towards ‘dead cat bounce’ through this year unless something drastically changes, as in improves.

Agree? Disagree? Comment below!

Referenced: Rock Health FY 2023 report, Rock Health Q1 2024 ‘flat spin’ report, Mobihealthnews

Follow up roundup: Amwell to reverse stock split to avoid delisting (updated), Amazon Clinic folded into One Medical, Amedisys divesting to close UHG deal, latest on Steward Health’s antics and $7M spying, Masimo’s shareholder fight (latest)

July 2, 2024 | by

Amwell will reverse stock split to fix their pending delisting on the NYSE. The board of directors approved on 28 June a 1 for 20 reverse split. This will remedy their non-compliance with NYSE regulations requiring an average closing price of above $1.00 over a consecutive 30 trading-day period [TTA 5 Apr]. Shareholders approved the move at their meeting on 18 June. The NYSE notice was given on 2 April and the reverse split will happen at the market open on 11 July, well within the six-month window. Amwell Class A shares closed yesterday at $0.27 so that condensing 20 shares will bring the share price around $5.40. Amwell’s 2024 is forecast with revenue in the range of $259 to $269 million and adjusted EBITDA in the (less) red between ($160) million to ($155) million, with no breakeven in sight until 2026. Their Q1 posted a $73.4 million net loss. Amwell has also released 10% of staff since the palmier days of 2023. Amwell, like Teladoc, continues to struggle in a stand-alone urgent care model that is now obsolete. Release, Healthcare Dive

Update 11 July: Amwell shares opened today at $6.52, and as of midday were trading at $7.51. So short term, the reverse split is working to plump up the shares.

Amazon says goodbye to Amazon Clinic by folding it into One Medical. This should come as no surprise to Readers who noted the  May departure of Clinic’s general manager Nworah Ayogu, MD to VC Thrive Capital with no replacement or search. Amazon’s announcement on 27 June was typically upbeat in renaming the service as One Medical’s Pay-per-visit telehealth. The improvements they claim are:

  • Pay-per-visit telehealth for 30+ common but minor conditions, like pink eye, the flu, or a sinus infection
  • A One Medical monthly or annual membership plan that includes on-demand virtual care and same or next-day appointments at 150+ One Medical primary care offices
  • More affordable–messaging/asynchronous visits are now $29, formerly $35, and video visits at $49, formerly $75. 

The catch–existing Clinic members have to log into One Medical to access their records and the service. Amazon is also propping up One Medical through Prime membership, offering a better deal at $99/year and non-Prime individuals for $199 per year. Amazon does not disclose users, growth, or revenue for either Clinic or One Medical. Healthcare Dive

The long-delayed UnitedHealth-Amedisys home health deal moves closer to closing. Amedisys and UHG’s home health operation under Optum will be divesting some of their locations to VitalCaring Group to avoid Department of Justice anti-trust concerns. The divestiture is contingent on the acquisition closing, now projected in second half of this year. The number of locations was not disclosed though earlier speculation had estimated it at 100. UHG’s offer to acquire Amedisys was made in June 2023 for $3.3 billion in an all-cash deal. It would be additive to its earlier $5.4 billion buy of LHC Group, now part of Optum. With the divestiture, analysts do not see any impediments to a closing, though it had faced opposition in Oregon in March and DOJ opposition since it was announced. This Editor remains sanguine about a successful closing. After UHG won versus DOJ in the Change Healthcare acquisition, “DOJ has a long memory, a Paul Bunyan-sized ax to grind, and doesn’t like losing.” Expect a few more impediments tossed in their direction over the next months. FierceHealthcare , Zack’s Research

The latest episodes in the continuing soap opera of Steward Health involve both Optum and James Bond moves on their critics. Optum had offered back in March to buy their practice groups under Stewardship Health, which stalled with first the Massachusetts Health Policy Commission (HPC), then their bankruptcy. That offer is now off, leaving Steward in the lurch. It was critical to $75 million of Steward’s debtor-in-possession (DIP) financing as recently as 13 June [TTA 14 June]. The deal would have been problematic anyway for Optum as they are under DOJ scrutiny not only for Amedisys but also because Optum controls or has arrangements with 10% of US physicians, 90,000 to date. Healthcare Dive They also settled recently with DOJ for $20 million on Optum Rx’s filling orders from a mail-order pharmacy in Carlsbad, California between 2013 and 2015 for Schedule II drugs: opioids, benzodiazepines, and muscle relaxants. Healthcare Dive

Adding to Steward’s piles of misery are the latest revelations that Steward financed a $7 million spy operation on their critics. This loony aspect to the Steward endgame involved contracting with UK investigators on surveilling a critical former executive, a British financial analyst, and a Maltese politician to find compromising actions between 2018 and 2023. The investigations were allegedly authorized and prioritized by Steward’s top executives while Steward struggled to pay bills for its hospitals and practices. Payments to the investigators were routed through Steward’s Malta operation against their critics in Malta and elsewhere. Steward at the time was embroiled in a dispute around their management of hospitals in Malta, which was eventually investigated and terminated by a Maltese court last year.

One example: the UK firm Audere “collected embarrassing personal information and photographs of a former Steward employee after Steward feared he would leak financial information to its auditor.” Another was the investigation and harassment of a British financial analyst, Fraser Perring, critical of Steward’s actions in its dealings with Medical Properties Trust (MPT). He was followed, his home CCTV was disabled, his home was broken into, family members and his partner were followed. Perring was also being smeared on Twitter through an account set up by Audere. There is much more on this in OCCRP’s report, published (paywalled) in the Boston Globe and Times of Malta. OCCRP’s full report and findings are here. FierceHealthcare

Electronics, audio, and medical device company Masimo continues to fight a hostile activist investor, Politan Capital Management. In December 2023, Masimo notched a significant win via the International Trade Commission versus Apple’s Series 6 and later Watches that forced Apple to disable its pulse oximetry (SpO2) sensors and software that violated Masimo’s smartwatch patents [TTA 28 Dec 2023]. Politan descended on Masimo in April accusing CEO and chairman Joe Kiani and others of mismanagement, including the 2022 acquisition of Sound United’s audio brands. It won two seats on the Masimo board of directors at the last shareholders’ meeting and is demanding two more seats at this year’s meeting on 25 July which would give it effective control.

The latest in the proxy fight is that the chief operating officer, Bilal Muhsin, will depart after 24 years at Masimo if Joe Kiani is forced out. The brief conditional resignation was sent to Masimo’s lead independent director, Craig Reynolds. Mentioned in the resignation was that he would refuse to work with Quentin Koffey, a Masimo director and chief investment officer of Politan Capital. More letters like this may be coming as reportedly Masimo management has urged employees to sign similar letters. Strata-gee, MedTech Dive  

Politan was the investment group that upended Centene Corporation and ousted most of Centene’s board plus 25-year CEO Michael Neidorff in 2022 shortly before his death on 7 April 2022 [TTA 18 Dec 2021]

Update: 300 engineers in Masimo’s healthcare division expressed specific support for Joe Kiani against Politan and Quentin Koffey in an open letter. “We wish to convey our deepest concern if Quentin Koffey and Politan Capital take control and Joe Kiani is removed. We are committed to Masimo because of the vision and innovation he pushes and drives us to deliver. The prospect of losing our founder and CEO threatens to derail the progress we have made and jeopardize the future of Masimo.” They also expressed that they may leave. “We, the undersigned from Masimo Healthcare Engineering, wanted you to be aware that we may not continue with the company if Joe Kiani is replaced by Quentin Koffey and Politan Capital.” This follows on other letters written by international regional managers and presidents in June also stating their support and warning that they may leave if Kiani leaves. The annual shareholder meeting is scheduled for 25 July.   MedTech Dive

However, Masimo is also embattled on other fronts: earlier in June, DOJ and FDA announced their investigation of problems with their Rad-G and Rad-97 SpO2 devices leading to a recall and the SEC is investigating potential accounting irregularities and internal control deficiencies. MedTechDive

News roundup: VA extends Oracle Cerner for 11 months; Amwell founders swap jobs; Alphabet’s Verily pivots to Lightpath with GLP-1, retiring Onduo; UnitedHealth hasn’t notified on Change breach

June 20, 2024 | by

To no one’s surprise, the Department of Veterans Affairs (VA) extended its contract with Oracle Cerner for another 11 months. This is per the new contract relationship that started last year, resetting from the original five-year contract that started in 2018 to five one-year terms, with mandatory annual reviews and renewals [TTA 18 May 2023]. Technically, the contract expired in May but VA extended it for one month as discussions continued over the next one-year term. This second option period expiring May 2025, according to the VA release, is focused on the following for the EHR modernization (EHRM):

  • Supporting the existing six facilities with the Oracle Cerner EHR
  • Achieving the goals of the reset and driving towards future deployments
  • Increased accountability across a variety of key areas, including minimizing outages and incidents, resolving clinician requests, improving interoperability with other health care systems, and increasing interoperability with other applications to ensure an integrated health care experience
  • Supporting value-added services, such as system improvements and optimizations
  • Achieving better predictability in hosting, deployment, and sustainment
  • Fiscal responsibility 

The plan is to resume site deployments in FY 2025, likely in year 2025, after reset goals are met. Seema Verma, Oracle Health’s new executive vice president and general manager, said that “VA’s intent to resume deployments in the next fiscal year is a significant milestone that reflects the hard work our collective teams have done to improve the system today, as well as confidence in our shared ability to continually evolve the EHR over time to meet the needs of both practitioners and patients.” NextGov/FCW, FierceHealthcare, Healthcare Dive, Oracle release

Is there much choice for the VA in the matter? Not really. VistA can be updated but remains non-interoperable with the Military Health System’s (MHS) Cerner-Leidos EHR. But can Oracle Cerner be fixed up and debugged to work for VA’s vastly different needs and smoothly deployed within the contract duration? That jury is still out in the view of the VA and Congress.

The Brothers Schoenberg swap positions at Amwell. Roy Schoenberg, MD, MPH, will transition immediately from his role as president and co-CEO to move to executive vice chairman of Amwell’s board of directors. Ido Schoenberg, MD, will become the sole CEO. The brothers co-founded the company in 2006. Ido’s quote closing the release is interesting in demonstrating the shift from investment without profits to getting on the path to profitability:  “This transition represents a natural evolution for our company as we shift from a period of intense R&D investment to an operational focus aimed at achieving greater efficiencies, optimizing cash flow and delivering profitable growth while maintaining our dedication to enabling our clients’ aspirations.” Roy is credited with developing Converge which is their next-generation integrated platform. If Teladoc is finding it difficult to transition from the stand-alone, transactional, urgent care service they and Amwell pioneered, into an evolved market that has incorporated virtual capabilities into multiple types of care models, whither Amwell’s future? More thoughts in TTA 2 May, 9 April

Alphabet (Google)’s once-visionary Verily now jumps on the GLP-1 bandwagon with Lightpath. Verily’s latest pivot to the highly trendy weight loss area is termed as a metabolic solution as part of a “personalized chronic care solution for health plans and members”.  Lightpath will start as Lightpath Metabolic, a four-part program that includes Metabolic Intensive (diabetes management), Weight Loss Intensive, Metabolic Improvement, and Metabolic Achievement. The Verily platform integrates data from health records, connected devices, and other care points to deliver “personalized pathways, suggestions, and nudges to health plan members” virtually along with health coaches and an advanced licensed clinical team. The current virtual chronic care management platform, Onduo, will be retired by 2025.

Once upon a time (2021, sigh), Verily was Google’s skunk works for advanced health tech with Google Health being the marketing and merchandising arm for clinical and consumer products. Google Health was broken up in August 2021 and Verily faded into the Alphabet background with the occasional joint venture and clinical pilots, with Onduo being their most marketable product. Google seems to have little direction for Verily other than to keep it alive. And given the competition plus a greater understanding of the long term effects of the GLP-1 drugs in the weight loss area, the GLP bandwagon is up for a shaky ride in the next year. Release, FierceHealthcare

And very strangely, UnitedHealth Group hasn’t notified Health and Human Services’ Office of Civil Rights (HHS-OCR) about the ransomware data breach at Change Healthcare, nor the individuals affected. The notification to OCR is required under HIPAA to be within 60 days of the date of the incident. UHG is over the deadline by two months, calculating from 21 February. CEO Andrew Witty wilted before double-barreled Senate and House hearings in May and UHG lost a fight to put the notifications for the breach onto providers [TTA 5 June]. Senators Margaret Wood Hassan (D-NH) and Marsha Blackburn (R-TN) sent a joint letter on 7 June to Andrew Witty, CEO of UnitedHealth Group, urging him to send a breach notification letter that notifies OCR, state regulators, Congress, the media, and health care providers that it intends to complete all breach notifications on behalf of all HIPAA-covered entities, individuals and businesses affected, by 21 June. That’s Friday. UHG continues to maintain that they still do not know the extent of the breach. The Medical Group Management Association (MGMA) also sent a letter to Mr. Witty on 12 June.  Don’t hold your breath for UHG sending millions of letters. Becker’s, HealthExec

News roundup: Transcarent raises $126M; 98point6 lays off; Oscar notches first profit; Steward Health’s Ch. 11; Amazon Clinic GM leaves; Amwell’s down but hopeful Q1; Hims founder gets political

May 8, 2024 | by

A study in contrasts

Already well-funded Transcarent gains another $126 million in a Series D round. Total outside funding is $424 million that boosts its valuation to $2.2 billion. This round will fund expansion and development efforts plus enhancing the platform’s AI capabilities. The Series D round was led by General Catalyst and Glen Tullman’s 7wireVentures, with participation from new investors Memorial Hermann Health System and Geodesic Capital, along with existing investors. As noted in our Rock Health analysis (but not in the company’s release), this raise had a ‘sweetener’ of a 2.5x return should the company IPO or M&A.  Transcarent is an enterprise health navigator that enables employees to use a single platform to navigate their needs for medical, surgery, pharmacy, and mental health care. Transcarent’s differentiator in this space for large self-insured employers is that Transcarent steers employees to higher quality, lower cost care settings. Their pricing is also based on actual users only in risk-based agreements, versus the more common per member per month (PMPM) care management model. Transcarent also pays health systems up front for surgical procedures.

Tullman, who is also Transcarent’s CEO, is well known for creating high profile companies that eventually are sold or IPO’d for high valuations. These deals make his followers money, but often not the buyers (ask Teladoc) or the employees left in the lurch. This Editor does wonder, given the state of US business right now, how this competitive enterprise care management niche earns this kind of investment and valuation. Release, Mobihealthnews 

One of Transcarent’s buys last year was 98point6’s virtual care and related assets that included 98point6’s physician group, self-insured employer business, and an irrevocable software license in a deal worth potentially $100 million according to publicity. 98point6 then had a well publicized and $32 million-financed pivot to being a software company and licensor, acquiring remaining assets from asynchronous telehealth provider Bright.md this past January for 55% in equity and 45% in cash. Despite all this, little noted was that at the end of April was that 98point6 laid off an undisclosed number of its estimated 100 US-based staff. One wonders if this affects service to Bright.md’s provider customers. GeekWire

On the health plan side, rebooted insurtech Oscar Health finally got into the black with $177.4 million in net income for Q1 and beat earnings per share estimates. It’s no surprise to those of us who’ve followed the modus operandi of Mark Bertolini, who took the reins a year ago March [TTA 30 Mar 2023] and stated at the time that his focus was moving Oscar to profitability. Total revenue was $2.1 billion, a 46% increase versus Q1 2023, driven primarily by higher membership, rate increases, and lower risk adjustment as a percentage of premiums. Release. Becker’s, FierceHealthcare Their full 2024 is projected at $8.3 to $8.4 billion in revenue, $125 to $175 million in adjusted EBIDTA. Oscar solely offers ACA exchange plans for individuals and small groups, having exited Medicare Advantage after 2022. Release

Steward Health Care filed Chapter 11 bankruptcy on 6 May. As forecast when the company moved to sell its provider group Stewardship Health to Optum [TTA 18 Apr], Steward’s debt load in its 31 hospitals and operations forced the restructuring on Monday. What’s owed: $1.2 billion in total loan debts, about $6.6 billion in long-term lease payments, north of $600 million to 30 of its largest lenders (Change Healthcare, Philips North America LLC, Medline Industries, AYA Healthcare and Cerner). There’s $289.8 million in unpaid compensation obligations: $68 million to its own workers in unpaid employee salaries, $105.6 million in payments for physician services and $47.7 million owed to staffing agencies. Topping it off–$979.4 million outstanding in trade obligations, of which approximately 70% are over 120 days past due.

Debtor-in-possession is now Medical Properties Trust (MPT) which will finance $75 million up front extending to $225 million more if Steward’s asset selloff milestones are completed on time. MPT will need to be far more forthcoming about Steward’s finances than Steward has been. The Stewardship Health sale to Optum now has to pass through the US Bankruptcy Court for the Southern District of Texas as well as Massachusetts regulators. Becker’s, Healthcare Dive 6 May, 7 May

Amazon Clinic loses its general manager, Nworah Ayogu, MD. He departed for Thrive Capital, a secretive VC (based on its website) that invests in technology, internet, and software companies. Dr. Ayogu, who doubled as chief medical officer of Amazon Pharmacy, stated the move will enable him to focus “exclusively on healthcare” after nearly four years with Amazon. He launched Clinic in November 2022 to a full 50-state rollout of the asynchronous and synchronous telehealth service last August, after a privacy challenge that escalated to the Senatorial level and forced a rollout delay [TTA 1 Aug 2023]. It sounds more like the doctor needs to go on a break. Amazon has not announced a replacement nor has Thrive issued any information. Becker’s, Modern Healthcare

Amwell’s soft Q1 reflective of telehealth as a whole. Its Q1 revenue of $59.5 million was 7% below Q1 2023’s $64 million, and missed Mr. Market’s forecasts. Where there was improvement was that net loss narrowed considerably to $73.4 million from prior year’s $398.5 million, when it took a hefty non-cash goodwill impairment charge. The bright spot Amwell is forecasting is that their Federal contract with Defense Health Agency, jointly with Leidos, will impact by Q4. Their part of the Digital First initiative for the Military Health System (MHS) will replace the current system, MHS Video Connect, with Amwell Converge [TTA 15 May]. Their pending NYSE stock delisting they plan to remedy with a reverse stock split to be announced.  Healthcare Dive, Amwell’s SEC Form 10-Q

Hims CEO and founder Andrew Dudum Does a Dumb. Mr. Dudum made a statement that on X that was interpreted by most to be encouraging the disruptive anti-Israel university and elsewhere protests which have roiled cities like New York and Los Angeles for weeks and are canceling graduations at Columbia University and University of Southern California. A statement like “If you’re currently protesting against the genocide of the Palestinian people & for your university’s divestment from Israel, keep going. It’s working.” and went on to say that companies would be eager to hire them is plain and clear. It immediately garnered criticism from investment group, industry, and software heads, as well as conservative and moderate media. This Editor will put on her marketing cap and remind Mr. Dudum of Marketing 101–be memorable, but do not offend the customer or investors who give you money. You have, after all, a company that depends upon appealing to a wide spectrum of people with easy and recurring telehealth prescriptions for hair loss, weight loss, skin problems, women’s health concerns, and erectile dysfunction. Your statement was not only completely unnecessary but also inflammatory at a bad time–it offended many customers no matter what religion or beliefs. Stock dropped. Customers canceled. Note to Mr. Dudum: if you want a thriving business, don’t live up to your name. FoxBusiness

Opinion: Further thoughts on Teladoc, Amwell, and the future of telehealth–what happens next?

April 9, 2024 | by

The end of last week marked an Apocalypse Light in telehealth, but it was coming in this Editor’s opinion. And Pepper the Robot has nothing to do with it, other than representing telehealth’s state, and perhaps this Editor’s.

Two events–the forced exit of 15-year CEO Jason Gorevic from Teladoc and both Teladoc’s and Amwell’s continued market weakness and long roads to breakeven, if ever–have caused many in the field to think hard about our direction and where telehealth is going.

Both Teladoc and Amwell are the pioneers in provider-to-patient telehealth, going back over 20 years. While Amwell is no longer the #2 to Teladoc’s #1, both were in the forefront of how remote consults have transformed healthcare. The ability to remotely diagnose and provide care at distance is now a ‘given’ that has shifted the baseline for providers, patients, and payers. Nearly every entrant has or has acquired a remote in-person or app feature, whether care management, diagnostics, health education, or telemental health.

Because Teladoc’s struggles are writ large in the industry, we might benefit from a closer look at What Happened–and what in this Editor’s opinion might happen next.

What Happened?

The pandemic. Yes, it provided a major boost to any telehealth provider’s business whether corporate or provider-based. It mainstreamed telehealth. Smaller players like MDLive and Included Health snatched market share. But it also introduced ‘silly money’ that led companies to think that all they had to do was hold out the buckets, fill them with cash, and buy business. By late 2020, practices had reopened–and telehealth usage nosedived quickly, stabilizing to around 5% of medical claims, over 60% of which is mental health according to the FAIR Health end of 2023 telehealth tracker. 

The integration of telehealth into multiple platforms is now commonplace. This Editor observed in her work with her then-employer in early 2020 that the population health platform they had introduced already had integrated HIPAA-compliant telehealth platforms as a module–all that was needed to get the practices up and running on it–and coding correctly. Health systems now integrate telehealth into their patient portals. EHRs even for the small practice market now have integrated telehealth. As mentioned, specialized telehealth such as telemental health took off during the pandemic and, after a cleanout period, have largely stayed with us. Asynchronous telehealth has also become acceptable to consumers. (Interestingly, the leading asynchronous diagnoses are for hypertension and respiratory diseases that benefit companies like Amazon Clinic and triage-type systems.)

People use it when needed, but the enterprise payment model is subscriber-based. Teladoc has long claimed its subscriber base is 90 million people–but user data from HHS (ASPE 3/2023) indicates that only one of four use it. For an enterprise, paying for subscribers, this is a big fat line item ready to cut. Payers have also integrated telehealth into their coverage. Teladoc has, to its credit, created payer partnerships such as with Aetna, but so have others.

Bottom line: there’s no more ‘blue water’ market left for a big player like Teladoc with a model dependent on growth and on enterprise sales that are inherently price-driven. It’s a hard and painful change to realize that your technology is no longer the future, and that you have to slug it out in the mud with everyone else. 

A closer look at Teladoc. 

After 20 years, why wasn’t it profitable? A look back on our Teladoc coverage prior to the pandemic indicated growth was created by buying up smaller competitors, domestic and international, at premium prices. InTouch Health was a notable one, acquired January 2020 for $600 million. But Teladoc was way overdue on turning a profit before 2020, at which point it should have firmly moved into the black. And then reality hit by early 2022.

Where was the board in all this? This Editor does not pretend to know the minds of those far more experienced in the financial aspect of business than she. But after 15 years of CEO Jason Gorevic and the 2022 $6.6 billion write-down of Livongo which precipitated the long 90%+ loss in market value slide, why was he given walking papers only last Friday? Boards are supposed to be wise heads, looking out for the business and the shareholders. Did they get caught in the hype or hope that BetterHelp would save the company? Did something else happen? (Fun fact: Mr. Gorevic remains on the board.)

A track record of flawed judgment and recovery. In December 2018, their COO/CFO was dismissed after charges of insider trading and sexual misconduct. There have been two COOs since then, the first, David Sides, moving to CEO of NextGen Healthcare in 2021. In May 2019, Teladoc’s NCQA accreditation, first won in 2013, was placed under an unusual “corrective action” by NCQA which was termed by the CEO ‘much ado about nothing’. Au contraire, it was a black eye at the time and the industry never quite knew what happened. And then there was Livongo….

The Livongo deal killed Teladoc; saying the quiet part out loud. As this Editor stated at the time, the $18.5 billion purchase price of Livongo was dangerous for Teladoc (see ‘Gimlet Eyes’ from August 2020 here and here). It was a too-fast too-much too-soon deal that closed in three months at the summer peak of the pandemic and lockdowns looking like forever. The very notion that Livongo would open doors in hospitals and cross-selling to enterprises was suspect even at the time. The deal that Gorevic and 7WireVentures’ Glen Tullman and Livongo CEO Zane Burke concocted was ‘Grand Theft Auto’–for Livongo and their leadership, especially if they sold their Teladoc shares. It was never a merger of equals nor was it additive in value. Teladoc then made multiple, continuing transitioning and management errors, including not retaining Livongo executives, which have been well documented. And again–where was the board on this?

Where are the analysts? They seem to accept a storyline that ‘all is OK’ for 2024 now that Gorevic is gone. But standing pat on the Q1 and 2024 guidance as nearly all have done is suspect. Unlike Amwell, Teladoc has not forecast when it will achieve breakeven, much less profitability.

What’s Next? Given all the above, when will the aftershocks hit? Sooner or later?

If one looks to Walgreens as an example, where disaster hit quickly and hard last summer, a board member, Ginger Graham, took the acting CEO position. She took front and center on investor calls and executing reorganizations, which for an interim is unusual. Almost immediately, the cleanout began at the CIO and CFO levels and moved downward. Tim Wentworth joined as CEO in mid-October 2023 seven weeks after Roz Brewer was separated. VillageMD was identified quickly as a large part of the problem. He took the writedown even before locations were fully closed and made multiple moves to cut costs starting at the corporate level before moving into the field. This is not to make light of the human damage and the jury remains out on the wisdom of some of the moves. But Wentworth has moved quickly, decisively, and positioned it realistically in saying ‘this is not a 12-month turnaround’ and wisely caveating that board alignment around the strategic review was essential. Timid he is not.

Teladoc needs to move quickly, and intelligently–now, not later. While acting CEO Mala Murthy, backed by the board, makes decisive moves, Teladoc must find and appoint a Tim Wentworth-type at the helm for the turnaround. Quickly. It’s important not only for Teladoc but also for the telehealth industry.  But neither Mr. Market, judging on share price, nor this Editor, based on their track record, are hopeful.

News roundup: Amwell faces NYSE delisting; Walmart Health slows Health Centers, except Texas; Novosound’s ultrasound patent; Eko’s Low EF AI; Universal Brain; Elizabeth Holmes in ‘Dropout’ + update

April 5, 2024 | by

Amwell on a six-month NYSE notice to get stock price above $1.  Telehealth provider Amwell received an NYSE notice on 2 April that their Class A stock, in having an average closing price of below $1.00 over a consecutive 30 trading-day period, violated NYSE’s continued listing minimum price criteria. It dipped below $1.00 on 12 March and stayed there. The stock will not be delisted at this time and is now in a six-month ‘cure period’. Amwell has already confirmed its intent to cure the deficiency, including proposing at its upcoming 2024 annual meeting a reverse stock split, subject to stockholder and board of directors approval. Amwell (AMWL) closing price today was $0.72 which represents a 65% decline over the prior year. Amwell is largely owned by institutional shareholders–289–holding 149.2 million shares (Fintel). Amwell IPO’d in the palmy days for telehealth in September 2020, raising $742 million at the time with shares debuting over $25 [TTA 18 Sept 2020]. Amwell’s 2023 was as hard pressed as rival Teladoc’s with a $679 million net loss in 2023, up 150% from 2022’s $272 million loss. The 2024 is not much sunnier, with revenue in the range of $259 to $269 million and adjusted EBITDA in the (less) red between ($160) million to ($155) million, with no breakeven in sight until 2026. Amwell has also released 10% of staff since 2023. Eh, have times changed? Amwell release, Healthcare Dive

Walmart Health pressing the brakes on its Health Centers, concentrating on Texas. Walmart, generally superb at reading the weather, has decided to slow down openings of its primary and urgent care centers, located only in Walmart Supercenters. The previous plan was to open 30 or more centers in 2024, reduced now to 22. 18 of these will be in Texas: eight in the Houston metro starting this month and 10 in the Dallas/Fort Worth region. The remaining four will be in the Kansas City metro. The Health Centers target patients with no or poor insurance coverage in underserved areas and offer a range of services including labs, X-rays, and dental care. The goal of 75 centers has moved forward to early 2025. Healthcare Dive, Drug Store News

A potpourri of news around smaller companies and innovations:

Scotland’s Novosound has patented a wearable, WiFi-enabled ultrasound digital platform, its 21st. The Slanj (phonetic for sláinte, meaning health in Scottish Gaelic) uses thin film printed gel-free, disposable high-resolution sensors to be integrated into other wearables such as smartwatches and other monitors. Novosound’s patent covers both the US and UK. In 2022, they inked a commercial partnership with diagnostics and digital health company PAVmed Inc. for intravascular imaging. Novosound was the first spinoff from the University of the West of Scotland. Mobihealthnews

Also in cardiac, the FDA cleared Eko Health’s Low EF detection AI. This enables a provider to quickly diagnose Low EF (ejection fraction) in a physical exam to assess possible heart failure. The Eko stethoscope and module connects to a tablet and provides a reading within 15 seconds. Trained on a proprietary dataset of over 100,000 ECGs and echocardiogram pairs from unique patients, clinically validated in a multi-site, prospective clinical study of 3,456 patients, it requires only a minimum of specialized training as part of the SENSORA Cardiac Early Detection Platform that can be used just about anywhere. The Eko Low EF was developed in conjunction with the Mayo Clinic. Eko release, MedCityNews

Universal Brain, which has developed a range of wearables that measure brain activity, named three new executives:  Greg Hajcak, PhD, as tChief Scientific Advisor, Vangelis Lympouridis, PhD as Chief Product Officer, and K.T. Venkateswara-Rao, PhD, as Head of Operations. For psychiatric clinical drug trials and psychiatric diagnosis, there is an EEG wearable paired with a digital ERP interface, Neurotique. They also developed a patient neurofeedback treatment system (EEG wearable + digital therapeutic) to augment standard treatment by providing real-time feedback for depressive symptoms.  Release

And for UK Readers weekend viewing pleasure in the UK, the Elizabeth Holmes biopic, ‘The Dropout’ is now available on BBC iPlayer. Hulu produced and originally aired the eight-episode series in March of 2022 (our review here). Hat tip to Editor Emeritus Steve. For US Readers, it is still available on Hulu. Or if you have a VPN, you can set it to a UK-based server and sign up for BBC iPlayer. The only recent (January) news about Ms. Holmes is that the Department of Health and Human Services (HHS) Office of Inspector General (OIG) banned her and Sunny Balwani from all Federal health programs for 90 years, which does strike one as overkill as beyond their reasonable lifetimes. Ars Technica

Based on a Reddit posting on a pop culture chat, celeb Jen Shah, also at FPC Bryan, and Holmes were snapped ‘hanging out’ in the yard. Shah was convicted of heading a telemarketing financial scam that preyed on the elderly. She is serving 78 months in Federal prison and has to pay $6.6 million in restitution–numbers that could fit easily in Holmes’ 135-month sentence and $452 million restitution. And Sunny Balwani, about whom there are no pictures, no Reddit, is apparently still serving his time at Terminal Island near San Pedro, California, not in Atlanta.

Weekend roundup: NHS Dumfries (Scotland) cyberattacked; delisted Veradigm’s strong financials; One Medical NY patients’ coverage clash; Suki voice AI integrates with Amwell; Legrand and Possum extended; Zephyr AI’s $111M Series A

March 15, 2024 | by

NHS Scotland’s Dumfries and Galloway region reported on Friday 15 March a “focused and ongoing” cyberattack affecting their 148,500 patients. Information is light at this point, but the region has reported system incursions that may involve the acquisition of patient data. “We have reason to believe that this could include patient-identifiable and staff-identifiable data.” Police Scotland, the Scottish Government, the National Cyber Security Centre, and the NHS have all been notified along with law enforcement. This story is developing. NHS D&G cyberattack page, BBC News, The Record, Cybercrime Magazine Top News 15 Mar

Delisting from Nasdaq hasn’t hurt Veradigm’s results in the slightest. As TTA and others noted in late February, Veradigm management telegraphed their strong financial state while announcing the acquisition of ScienceIO, an AI data company. These are all unaudited revenue numbers:

  • For 2023, revenue between $608 million and $622 million, net income from continuing operations is estimated between $49 million and $58 million.
  • For 2024, their estimate is for revenue growth ranging from $620 million to $635 million, with adjusted EBITDA of between $104 million and $113 million, with net cash of $140 million subsequent to the ScienceIO acquisition.

Veradigm’s repositioning post-ScienceIO will be around healthcare intelligence with scaled and proprietary LLM products supporting physicians & providers, payers, and life science research enterprises. Release

Now about those 2022 and 2023 financial reports that went sideways due to their financial software. Lee Westerfield, their interim chief financial officer, stated at the Barclays 26th Annual Global Healthcare Conference that the audit process is not only “prolonged” but also not fully in the company’s hands but with auditors. While they won’t say it out loud, it seems that Veradigm hasn’t let the Nasdaq delisting cramp their style, nor making money, at all.  Crain’s Chicago Business

New York-area One Medical patients caught in the UnitedHealthcare-Mount Sinai clash. Mount Sinai, one of the leading hospital systems of the New York metro, is in a dispute with UnitedHealth on their upcoming insurance contract.  Mount Sinai requested higher payments for hospital stays and physician visits, not unexpected given the duration of most of these contracts span several years and inflation has bitten hard over the past two years, but UHG rejected this. The lack of a contract as of Thursday 14 March means that as of 22 March, patients of Amazon-owned One Medical practices in the New York area with UnitedHealthcare and Oxford insurances (Oxford is an insurance brand of UHG) will not be in-network if receiving services through Mount Sinai’s hospital network. One Medical is part of Mount Sinai’s clinically integrated network (CIN) but apparently this has no impact. This Editor is betting that Amazon did not figure on provider/payer disputes of this type–it may be the first of many affecting One Medical with hospital networks. Becker’s

Some good news from Amwell around their new partner, Suki AI. The Suki voice-enabled AI powered digital assistant will be integrated into Amwell’s platform Converge. The voice assistant will not require a separate app as fully integrated into Converge and into Amwell providers’ existing workflows. Suki Assistant leverages natural language processing to help clinicians complete notes 72% faster on average, according to Suki, and also supports coding and dictation. A date was not specified for implementation. Suki has partnered with with multiple EHR systems, including most recently Meditech. The Amwell platform is used by providers at more than 55 health plans covering 90 million lives, plus 2,000 hospitals and health systems. Suki release, Healthcare IT News

In more partner news in the UK, Legrand and Possum have extended their now 14-year reseller agreement. Possum continues as the exclusive reseller for the NOVO range of Legrand telecare products in the UK and Ireland. Read more about it on TSA Voice and UKTelehealthcare. While you’re there, our UK Readers can also seek our supporter UKTH’s continued training events and resources on the 2025 Digital Switchover. Legrand is a long-time advertising supporter of TTA.

Zephyr AI raises $111 million in Series A financing. Revolution Growth, Eli Lilly & Company, Jeff Skoll, and EPIQ Capital Group financed a bountiful Series A scarcely seen since 2022. As you’d expect, Zephyr has this year’s flavor, having integrated AI into precision medicine for oncology and cardiometabolic disease. Zephyr’s earlier seed round of $18.5 million was raised in March 2022 (Crunchbase). From the release: “The new funds will enable Zephyr AI to further enhance its analytical speed and fortify its extensive collection of training and validation data sets. Moreover, the funds will support the expansion of the company’s scientific and commercial teams to expedite the delivery of its rapidly growing pipeline of insights to the market.”

Mid-week news roundup: Elevance-BCBSLA, SCAN-CareOregon mergers scuttled; Amwell’s $679M loss, layoffs; Invitae genetics files Ch. 11; innovations released from DeepScribe, Essence SmartCare (DE), fall detection at Atrium Health (SC)

February 15, 2024 | by

The unforgiving environment for mergers continues. Two payer mergers that seemed fairly reasonable have stalled or been scuttled due to regulatory and policyholder concerns. 

  • Elevance Health (the former Anthem) a multi-state Blue/non-Blue payer, was willing to buy a struggling Blue, BCBS Louisiana (BCBSLA), for $2.5 billion. BCBSLA has again ‘paused’ the process and offer that started last year, with a second withdrawal (the first in September 2023) of its amended filing in December with the Louisiana department of insurance. They also canceled a policyholder meeting and vote scheduled for next week. The reasons why in the BCBSLA statement hint at significant and well-timed opposition to their transition from a Blue non-profit to a for-profit insurer. They reaffirm that they need a partner, but “now is not the right time to make this bold step.” This sounds very final and The End.  FierceHealthcare, Healthcare Dive  
  • Across the country in Oregon, two smaller payers, SCAN Group and CareOregon, called off a long-planned merger (December 2022). HealthRight Group would have brought together two non-profits with SCAN in Medicare Advantage in five states and CareOregon heavily covering Medicaid members. It faced opposition from Oregon regulatory bodies scheduled to rule on it in the next few weeks, with the state’s Medicaid Advisory Committee nixing it based on SCAN’s California-based ownership. FierceHealthcare, Healthcare Dive

Amwell not having a good start to its year either. The other large integrated telehealth pioneer provider announced earlier this week a 2023 loss of $679 million, up from $272 million in 2022, and a 10% cut in staff as of the end of the year. What’s eyewatering is that $436 million of the losses were impairment charges caused by a sustained decline in its share price during the first three quarters. The staff cuts will create $15 million in compensation-related savings, which after the amount of the impairment charges seem like pocket change. Revenue declined 6% versus 2022. Some of this is related to Amwell’s transition from its original system to the new Converge platform.

But as typically in the bad news/good news paradigm, there is a ‘path to profitability’ charted by 2025 boosted by a major contract with the US Defense Health Agency in partnership with Leidos. This is part of the Digital First initiative for the Military Health System (MHS) and will replace the MHS Video Connect system with Amwell Converge, a contract that is worth up to $180 million [TTA 2 Nov 23]. In 2024, Amwell will concentrate on expanding its tech partnerships with current customers and winning new clients, according to management on the earnings call. Amwell’s shares are a cheap buy at just over $1.30, but this Editor’s experience is that Federal contracts especially with DOD or related are unpredictable in cash flow. Just ask Oracle. FierceHealthcare, Healthcare Dive

Invitae, a genetics testing data company, filed Chapter 11. It’s another sign that this former darling sector of health tech/biotech has fallen on hard times (see 23andMe, TTA 2 Feb). This week’s filing in the US District Court for the District of New Jersey, an unusual venue for this San Francisco-based company, requests the court to permit the use of cash on hand to fund continued operations as it seeks to sell. The company listed assets of $500 million to $1 billion, but liabilities of $1 billion to $10 billion. Invitae went public back in 2015 as a provider-patient driven genetics company previously spun off from Genomic Health. Their shares reached a high of over $56 in the crazy days of December 2020. Shares on OTC are now $0.019. Mobihealthnews, Reuters, Invitae release

Enough with the bad news–let’s look at some innovations.

DeepScribe, a generative AI platform for medical documentation, yesterday announced their new Trust and Safety Suite with three new features:

  1. Clinical Moments: This allows users to trace AI-generated medical notes back to their origins in the clinical conversation
  2. Note Insights: an audit dashboard that provides administrators with a snapshot of DeepScribe’s performance across an organization
  3. Expert Human Audits: DeepScribe’s expert human audits team will review notes and grade the outputs against DeepScribe’s clinical accuracy framework for users and administrators, and then provide customized suggestions to improve output accuracy.

Release, also HIT Consultant

Essence SmartCare was selected as the sole technology provider for Germany’s INES project. INES (intelligent emergency detection system) is an older adult support initiative led by Techniker Krankenkasse (TK), one of the largest health insurance funds in Germany, with the participation of nine other partners, and sponsored by the Innovation Fund. The INES project objective is to determine how intelligent alert and emergency systems can improve the care of seniors living independently. The test in three regions in Germany is with 2,000 seniors 75+ living alone. It started in June 2023 and will be in place for 21 months. It will use the MDsense radar-based home monitoring and alert system plus Voice Extender that calls emergency services and permits 2-way calls from any room in the home. Israel-based Essence technologies cover emergency response for the care of older adults at home, on the go, and vital signs monitoring at home and in hospital. This Editor last covered Essence back in September 2020 and am glad to see them still around. However, will the system continue to be used in support of these seniors after the 21 months are up?  Release

Hospital fall detection with the aim of fall prevention is being implemented at South Carolina’s Atrium Health. This was spearheaded by nursing staff to replace an inadequate system for fall detection and prevention. The new system, the Hester Davis Falls Program, permits additional analysis of patient dynamics of falls, identifies trends, and implements targeted interventions to improve outcomes. More in Healthcare IT News

Week-end short takes: payer earnings for Centene, Cigna, Humana; Centene and Walmart partner in FL; Dispatch Health and US Acute Care partner; Amwell widens loss; ProMedica $710M home health sale; AQuity’s $200M sale to IKS Health (updated)

November 2, 2023 | by

On the payer side, buyers of telehealth are trying maintain course:

Challenged Centene beat Wall Street estimates, but clouds loom. For Q3 they reported $38 billion in revenue, but year-over-year profit of $469 million was down 36%. 2014 forecast earnings were already downgraded. Centene is heavily dependent, as some other payers are, on state Medicaid. New Federal guidelines are ending the automatic eligibility redeterminations that took effect during the Covid pandemic. 2024 redeterminations may take millions more off the rolls, though many requalify. The payer contracts with 31 states to offer Medicaid coverage and has lost 1.1 million Medicaid members over redeterminations to date. Their Medicare Advantage (MA) plans were also hit in 2023 with low Star ratings, which reduce desirability and payment status with CMS, but recovered for 2024 with 87% over 3 stars (the minimum) compared to 53%. Layoffs also have bitten into Centene with a known layoff of 2,000 this summer, plus another unannounced layoff terminating staff in December, according to this Editor’s source. Healthcare Dive  Update: Centene is terminating 2,000, or about 3% of workforce, with an end date of 8 December. Becker’s Payer

Cigna also beat Wall Street estimates in a generally upbeat forecast. For Q3, they reported revenue of $49 billion, up 8% year over year. Net income was down 50% to $1.4 billion but understandably as Cigna sold businesses in six countries. Membership are up 9% year over year to $19.6 billion, mostly due to commercial membership. Cigna has little exposure to ACA business, but that grew as well and margins are improving. Healthcare Dive 

Humana saw increased Q3 utilization in its MA plans plus increased Covid hospitalization. This helped to drive its medical loss ratio (MLR) up for 2023. While beating the Street on revenue of $26.4 billion and profit of $1.1 billion and with projected MA growth MA of 19%, or about 860,000 members plus 2024 of 45,000, shares went a bit wobbly. In Star ratings, they did well and maintained a 4.5 Star (out of 5) in its largest contract with 40% of its MA members while the second largest contract improved from 4.5 to 5 stars. Healthcare Dive

A brighter spot for Centene is a partnership with Walmart in Florida on ACA plans. Ambetter from Sunshine Health in Florida is adding Walmart Health Centers to its preferred provider network. This will cover seven counties and focus on care coordination and referral management. Walmart is also working with Orlando Health, a private, not-for-profit network of community and specialty hospitals across Florida, to improve care coordination in the Orlando area initially. Walmart release, Becker’s

In partnerships, Dispatch Health announced today (2 Nov) that will be working with US Acute Care Solutions (USACS) to offer additional support for patients after a hospital stay or when they need hospital-to-home alternative care. Dispatch Health offers same-day, urgent medical care; hospital alternative care; and recovery care. USACS is owned by its physicians and hospital system partners for integrated acute care, including emergency medicine, hospitalist, and critical care services. Dispatch Health release

Back to Big Telehealth, Amwell didn’t have a good quarter. Their net loss of $137.1 million was up 94% year-over-year. This quarter included $78.9 million in impairment charges linked to sustained decreases in its share price and market capitalization. So far in 2023, these impairments have totaled $436.5 million. Another hit was that revenue declined 11% year over year to $61.9 million. Amwell is working to complete the transition of its customers to Converge. On the positive but very long term side, Amwell is partnering with the Leidos Partnership for Defense Health (LPDH) with the US Defense Health Agency as part of the Digital First initiative for the Military Health System (MHS). This will replace the MHS Video Connect system with Amwell Converge, a “comprehensive hybrid care enablement platform designed to power the full continuum of care using digital, virtual, and automated modalities”, and link to MHS GENESIS, the Oracle Cerner EHR. The contract may be worth up to $180 million over 22 months in a prolonged rollout. Healthcare Dive, Amwell release

In sale news, some big numbers are posting:

Ohio-based 12-hospital system ProMedica is selling its home health, palliative and hospice business to Atlanta-based Gentiva Health Services for a tidy $710 million. Gentiva is the largest hospice care company in the US. 4,000 employees will be transitioning. The hospice operations will go under the Heartland Hospice brand by the end of 2023, with home health also joining Heartland Home Health and the palliative care business under Empatia Palliative Care brand between the end of this year and 2024. Becker’s

AQuity selling to IKS Health for $200 million. The sale will add AQuity’s medical-coding, clinical-documentation and revenue-support capabilities to IKS’ technology-backed care enablement platform. This creates a $330 million company with a 14,000 person workforce that includes 1,500 clinicians, 350 medical coders, technology experts, clinical documentation specialists, and revenue integrity specialists. Another example of a larger trend in companies acquiring specific companies to build out their platforms and become more ‘one-stop shopping’, a more attractive proposition at least for now to VCs. Mobihealthnews. More discussion on why VCs are no longer hot on niche or point solutions in MedCityNews.

Mid-week short takes: Amwell lowers 2023 outlook, DocGo goes up, Imprivata + PFH win Ireland HSE contract, Oracle Health’s Nashville move, layoffs at 23andMe, Doximity

August 10, 2023 | by

Amwell missed Wall Street earnings analyst estimates and lowered its 2023 outlook. Q2 revenue of $62.4 million was a 3% drop versus prior year. Net loss was $93.5 million, added to a nearly $400 million net loss in Q1. Both quarters included goodwill impairment charges totaling nearly $400 million to reflect losses in stock value and market capitalization. Amwell is projecting downgraded revenue between $257 and $263 million compared with earlier guidance of $275 million to $285 million. Their adjusted EBITDA range for the year was also downgraded to lose $160-165 million from $150-160 million. Much of this is due to payer and provider migrations to their new platform, Converge, which will consolidate its offerings plus third-party tools, in a process that is losing providers and reducing visits. Release, Healthcare Dive

DocGo, a telehealth and medical transportation provider, upped its outlooks. First, they reported a tidy bump in Q2 revenue of $125.5 million, up from $109.5 million in prior year. Once known for mass Covid testing which has largely disappeared, which was $28 million in Q2 2022, non-testing revenue grew 53% versus prior year. Revenue is split between transportation ($45 million) and mobile health ($80 million). Adjusted EBITDA was $9.1 million for Q2, rising from $5.6 million in Q1. With $325 million in contracts not fully rolled out and wins with the NYC Department of Housing, their full-year 2023 revenue guidance is now projected to increase from $500-$510 million to $540-$550 million and monitoring over 50,000 patients. Release, Mobihealthnews

Ireland’s Health Service Executive (HSE) awarded a national framework contract to Imprivata and regional partner PFH Technology Group. Imprivata OneSign is a single sign-on (SSO) enterprise access solution for clinicians logging into various systems which eliminates repeated username/password entries. Logins will be via entering their password once per shift and reauthenticating with a tap of their ID badge, potentially saving 50 minutes per shift. Initial rollout will be to the following: Tallaght University, Beaumont, Rotunda, Galway University, Cork University Maternity, National Forensic Mental Health Service, and National Rehabilitation Hospitals. Imprivata release

Oracle Health on the move. Apparently Oracle Health, largely the former Cerner, will be moving to Nashville, Tennessee. This is a commitment that Oracle made in 2021 before purchasing Cerner. Oracle is building a $1.35 billion facility at a riverfront site, planning to locate 8,500 jobs in Nashville by 2031. Nashville has become a southeastern hub of healthcare companies and development. Oracle Health chair David Feinberg, MD and Seema Verma, a SVP there, were at a healthcare meet and greet there last week.  This adds to the de-Kansas City-ing of Oracle and perhaps more attrition among long-time employees. Becker’s

Two healthcare companies reported layoffs and revenue rethinks this week:

  • Genetic tester and data merchandiser 23andMe announced layoffs of 11%. This affects 71 employees primarily in their therapeutics segment, a cut of 47% in that segment and 11% of the company’s workforce. The staff downsizing reflected the end of a five-year partnership in therapeutics development with GSK and adds to April cuts of 75 jobs. The new cuts will be in Q2 of their 2024 fiscal year ending 31 March 2024 which will be by September this year. Revenues also fell in the quarter ending 30 June (their Q1) 6% to $60.9 million from $64.5 million in prior year, with a net loss of $104.6 million. Interestingly, 70% of their revenue is from direct-to-consumer services in genetic testing, subscriptions, and telehealth.  StreetInsider, GenomeWeb
  • Doximity also is laying off 10% of staff, or about 100 people. A digital platform for medical professionals with online networking tools, scheduling, CMEs, secure messaging and telehealth for consults, it is facing slowing growth and renewals among paying customers that include hospitals, health systems, pharmaceutical companies, and medical recruiting firms that purchase subscriptions for services on Doximity. The company adjusted its FY2024 (March end) financials downward to $452 to $468 million and $468 million from $500-$506 million, with adjusted EBITDA for the year to $193-$209 million from $216-$222 million. Release, FierceHealthcare

 

Week-end roundup: Is ChatGPT *really* more empathetic than real doctors? Amwell’s $400M loss, Avaya emerges from Ch. 11, Centene sells Apixio, more on Bright Health’s MA sale, layoffs at Brightline, Cue Health, Healthy.io

May 5, 2023 | by

Gimlet EyeA Gimlety Short Take (not generated by ChatGPT). This Editor has observed developments around AI tool ChatGPT with double vision–one view, as an amazing tool with huge potential for healthcare support, and the other as with huge potential for fakery and fraud. (If “The Woz” Steve Wozniak can say that AI can misuse data and trick humans, Tesla’s AI-powered Autopilot can kill you, plus quit Google over AI, it should give you pause.)

The latest healthcare ‘rave’ about ChatGPT is a study published 28 April in JAMA Network that pulled 195 questions and answers from Reddit’s r/AskDocs, a social media forum where members ask medical questions and real healthcare professionals answer them. The study authors then submitted the same questions to ChatGPT and evaluated the answers on subjective measures such as “better”, “quality”, and “empathy”. Of course, the ChatGPT 3.5 answers were rated more highly–78%–than the answers from human health care professionals who answer these mostly ‘should I see a doctor?’ questions. HIStalk noted that forum volunteers might be a little short in answering the questions. Another point was that “they did not assess ChatGPT’s responses for accuracy. The “which response is better” evaluation is subjective.” The prospective patients on the forum were also not asked how they felt about the AI-generated answers. Their analysis of the study’s shortcomings is short and to the point. Another view on compassion in communication as dependent on context and relationships was debated in Kellogg Insight, the publication of the Kellogg School of Management at Northwestern University, in Healthcare IT News.

Amwell posted a disappointing and sizable $398.5 million net loss in Q1. This was over five times larger than the Q1 2022 loss of $70.3 million and Q4 2022’s $61.6 million. The loss was due to a noncash goodwill impairment charge related to a lasting decline in the company’s share price. Current versus prior year Q1 revenue remained flat at $64 million, $15 million lower than Q4 2022 due to a decline in professional services revenue. Visits were 1.7 million visits in Q1, with 36% through the new platform Converge. Guidance for the year remains at $275-$285 million with an adjusted EBITDA loss between $150-$160 million. Mobihealthnews This contrasts with rival Teladoc’s optimistic forecast released last week, though remaining in the loss column [TTA 4 May]. 

Avaya emerged from Chapter 11 on Monday. According to the release, the company has financially restructured and now has $650 million in liquidity and a net leverage ratio of less than 1x. This was a lightning-fast bankruptcy and reorganization, usually referred to as ‘pre-packaged’, as it was announced in February with the company emerging from it in 60 to 90 days. Avaya provides virtual care and collaboration tools (and has contributed to our Perspectives series). 

Another restructuring continues at Centene. Their latest sale is Apixio, a healthcare analytics platform for value-based care. The buyer is private equity investor New Mountain Capital. New Mountain has $37 billion in assets under management. Centene acquired Apixio in December 2020 in the last full year of CEO Michael Neidorff’s leadership. Since 2022, Centene has been selling off many of their more recent acquisitions such as two specialty pharmacy divisions, its Spanish and Central European businesses, and Magellan Specialty Health. Transaction cost and management transitions were not disclosed. Based on the wording of the release, Centene will continue as an Apixio customer as well as other health plans. Given the profile of the 10 largest health plans, which includes Centene, and their diversification, Centene’s divestments coupled with the involvement of activist investor Politan Capital Management have led to speculation.

Another take on Bright Health’s projected divestiture of its California Medicare Advantage health plans is from analyst Ari Gottlieb on LinkedIn. If Bright sells the MA plans for what they paid for them–$500 million–according to Mr. Gottlieb they can pay off their outstanding JP Morgan credit facility as well as negative capital levels in many of the states where they had plans and are now defending lawsuits. It still leaves them $925 million in debt.

Unfortunately, we close with yet another round of layoffs.

  • Covid-19 test kit/home diagnostics Cue Health will be surplusing about 26% of its current workforce, or 325 employees. Most will be in the San Diego manufacturing plants. This is on top of 170 employees released last summer. The current value of the Nasdaq-traded company is estimated at $105 million, down from $3 billion at their 2021 IPO. Current share price is $0.68. HIStalk, San Diego Business Journal.
  • Another telemental health company is shrinking–Brightline–reducing their current workforce by another 20%. This affects corporate staff and is in addition to the 20% let go last November. Brightline’s focus is on mental health for children and teens, and has investment to date of $212 million. Becker’s 
  • Healthy.io, which offers in-home urinalysis and wound care, plus a new app for kidney care, laid off 70 staff while enjoying a fresh Series D raise of $50 million from Schusterman Family Investments.  Becker’s

“Big Story” update: where Elizabeth Holmes will spend 11 years, Cerebral sues former CEO Robertson, Amwell buying Talkspace?

November 30, 2022 | by | 1 Comment

Where will Elizabeth Holmes serve her sentence, whatever it is? A story that got lost in the Thanksgiving shuffle was Bloomberg News’ (paywalled) report that Judge Edward Davila recommended that she be remanded to a minimum security Federal women’s prison in Bryan, Texas, outside of Houston. What has previously been mentioned in the press and by legal commentators is that she would likely serve her time in a northern California minimum security prison about an hour from her present home, the Federal Correctional Institution in Dublin, California. According to commentators, the larger Bryan facility may be better than Dublin, which is a satellite camp. Bryan  “…compared to other places in the prison system, this place is heaven. If you have to go it’s a good place to go,” Alan Ellis, a criminal defense lawyer, told Bloomberg. The final say will be made by the Federal Bureau of Prisons. The selection is important because Federal inmates typically serve a minimum of 85% of their time, unlike time served in state prisons. Gizmodo reports on Bloomberg’s reveal

Holmes’ reporting to prison is scheduled for 27 April 2023. Her appeal to the Ninth Circuit Court of Appeals must be filed within two weeks of sentencing, which by this Editor’s calendar is 2 December but may be later due to the holiday. Holmes may be permitted to stay out of custody pending appeal if it extends beyond the surrender date if the judge permits. 

Editor’s commentary: One wonders whether Holmes’ appeal will be successful. One factor is what Judge Davila acknowledged: “What is the pathology of fraud? Is it the inability to accept responsibility?” Even in her personal statement during the sentencing, there is evasion. Holmes did admit some sorrow about patients and investors relating to her own failings (back to her again), but sorrow is not responsibility. Moreover, Holmes did not refer to making amends for that sorrow created by the Fraud That Was Theranos. Her defense continues to blame others, like Sunny Balwani, former president and live-in. Even the 130 character letters, many from others who knew her only briefly, blamed others including Balwani, almost tracking to the defense’s talking points. The case proved conspiracy with Balwani, who will likely be sentenced on 7 December for what is expected to be something close to the full 20 years as convicted on all 12 counts.

The tables are turned by Cerebral on co-founder/former CEO Kyle Robertson. Only a week or so ago, Robertson (through his attorneys) reportedly sent a letter to Cerebral management demanding access to documents detailing “possible breaches of fiduciary duty, mismanagement and other violations of law.” [TTA 18 Nov] Now Cerebral is suing Robertson for his default on a $49.8 million loan taken this past January to buy 1.06 million shares of common stock in the company. According to the filing in New York Supreme Court, he is personally liable for $25.4 million, plus interest and attorney’s fees. After his dismissal 18 May, he had six months to repay the loan or direct Cerebral to repurchase or cancel the shares. According to the lawsuit, “Robertson repeatedly asserted that he would not repay the loan.” The troubled company laid off 400 or more in October and is now valued at a fraction of last year’s $4.8 billion valuation.  Stay tuned. HealthcareDive, Mobihealthnews

A cracked SPAC may get itself sold. Talkspace, which has had a year of challenges since its SPAC, apparently is in talks to be acquired by Amwell. According to Calcalist, an Israeli business publication, Amwell is in advanced talks to acquire it for $1.50 per share, or about $200 million. This is quite a comedown from when Talkspace was valued in January 2021 at $1.4 billion. It executed its SPAC in June [TTA 25 June 2021] and hit Nasdaq at $8.90 per share. Today it closed at $0.88, so Amwell’s offer would be close to double. It would also remove another problem. Nasdaq notified Talkspace on 18 November that they were on the verge of delisting their stock, as it was trading for over 30 consecutive business days at under $1.00 per share.

The ‘advanced’ term is interesting because this past June, reports indicated that Talkspace rejected overtures by Amwell and Mindpath. The amount bandied about at that time was $500 million and a sale was expected during the summer. (What a difference six months of economic uncertainty makes.) 

In November 2021, founders Roni and Oren Frank stepped down and their COO resigned shortly thereafter on a conduct-related allegation. Shareholders started to sue starting then. YTD results have also been dismal, with losses of $61 million on revenues of $89 million.

Talkspace would bolster Amwell’s mental health capabilities in telepsychiatry with a DTC and enterprise product. If the company hung on to most of their $184 million in cash reported in June (of the SPAC’s $250 million), for Amwell it also would be a deal that almost pays for itself. HealthcareDive, FierceHealthcare

Week-end news roundup: Allscripts on the acquisition hunt, Amwell’s CVS telehealth deal, Cerner’s $1.8M racial discrimination settlement, predicting Parkinson’s progression via smartwatch data

August 12, 2022 | by

Another company on the hunt for strategic buys. Health IT and EHR company Allscripts is seeking to add to its Veradigm analytics, research, and provider/payer platforms with some strategic acquisitions. Announced on its Q2 earnings call by new CEO Rick Poulton is the intent to expand the company from its current provider base into a more diverse one serving payers and life sciences. Allscripts does have some free cash–about $700 million–having recently sold its hospital and large physician practice EHRs to Constellation Software/N. Harris Group, though there were some settlements around their Practice Fusion EHR now incorporated into Veradigm [TTA 2 Apr]. With a free cash flow from continuing operations around $120 million and about 7% growth, they feel the time is here for some accretive, strategic, and proven acquisitions–at the right price. FierceHealthcare

Amwell’s Q2 earnings call also had good news for shareholders, who of late haven’t had much to cheer. CEO Ido Schoenberg, MD announced that Amwell will provide CVS Health’s Virtual Primary Care, formally launched in late May  Amwell will be providing primary, behavioral health, and chronic care management through the platform. CVS will be providing these services to Aetna fully-insured, self-insured plan sponsors, and CVS Caremark clients effective first half 2023. As this Editor wrote earlier this week, CVS Health is making no secret of its intent to expand into delivering primary care and home health. One way Virtual Primary Care will be leveraged is converting in-store health services to virtual, such as non-emergency treatment and nutrition/wellness programs. CVS is even dabbling into blockchain with downloadable non-fungible tokens (NFTs) for virtual services. HealthcareFinance 

Cerner, on the other hand, is paying out $1.8 million to settle a racial discrimination lawsuit brought by the US Department of Labor. As a Federal contractor, Cerner went under review by the Office of Federal Contract Compliance Programs. That office alleged that Cerner systematically discriminated against qualified Black and Asian applicants who applied for positions at five facilities in Missouri and Kansas between 2015 and 2019. Cerner agreed to pay $1,860,000 in back pay and interest to 1,870 applicants in areas such as medical billing, system engineers and technical solution analysts. Certainly Oracle wanted to get this off the plate before the cutover on 1 October. HealthcareFinance, Department of Labor release

Can enough data collected build a predictive model for the progression of  Parkinson’s? Koneksa, a digital biomarker builder, is working with the Michael J. Fox Foundation for Parkinson’s Research to build a predictive model on how Parkinson’s will progress over time in an individual. The Fox Foundation already has a database to analyze — the Parkinson’s Progression Markers Initiative, launched in 2010, with health information and biosamples from Parkinson’s patients. Added to this will be data from Verily’s smartwatch:  activity tracking, gait analysis, and sleep cycles, which will be analyzed using Koneksa’s algorithms and additional machine learning. The award by the Fox Foundation was not disclosed, but it is the second for Koneksa after another grant awarded in mid-June to analyze vocal abnormalities relating to early progression of the disease, in conjunction with Northwestern University. FierceHealthcare

Amazon moves to acquire One Medical provider network for $3.9B (updated)

July 27, 2022 | by | 1 Comment

Amazon joining the in-person provider network space for real. Amazon Health Services last week moved beyond experimenting with in-person care via provider agreements (Crossover Health, TTA 17 May) to being in the provider business with an agreement to acquire One Medical. Earlier this month, news leaked that One Medical as 1Life Healthcare was up for sale to the right buyer, having spurned CVS, and after watching their stock on Nasdaq plummet 75%.

  • The cash deal for $3.9 billion including assumption of debt is certainly a good one, representing $18 per share, a premium to their $14 share IPO in January 2020. (The stock closed last Wednesday before the announcement at just above $10 per share then plumped to ~$17 where it remains.)
  • The announcement is oddly not on One Medical’s website but is on Amazon’s here.
  • The buy is subject to shareholder and the usual regulatory approvals. The IPO was managed by JP Morgan Securities and Morgan Stanley. It is primarily backed by Alphabet (Google).
  • One Medical’s CEO Amir Dan Rubin will stay on, but there is no other executive transition mention.
  • Also not mentioned: the Iora Health operation that serves primarily Medicare patients in full-risk value-based care models such as Medicare Advantage (MA) and Medicare shared savings, quite opposite to One Medical’s membership-based concierge model. However, Iora’s website is largely cut over to One Medical’s identity and their coverage is limited to seven states.

There is a huge amount of opinion on the buy, but for this Editor it is clear that Amazon with One Medical is buying itself into in-person and virtual primary care for the employer market, where it had limited success with its present largely virtual offering, and entree with commercial plans and MA. One Medical has over 700,000 patients, 8,000 company clients and has 125 physical offices in 12 major US markets including NYC, Los Angeles, Boston, and Atlanta. It has never turned a profit. Looking at their website, they welcome primarily commercial plans and MA (but not Medicare supplement plans).

Amazon, with both a virtual plus provider network, now has a huge advantage over Teladoc and Amwell, both of which have previously brushed off Amazon as a threat to their business. There is the potential to run two models: the current Amazon Care pay-as-you-go model and the One Medical corporate/concierge model. This puts Amazon squarely in UHC’s Optum Health territory, which owns or has agreements with over 5% of US primary care practices, is fully in value-based care models such as Medicare shared savings through its ACOs, and is aggressively virtual plus integrating services such as data analytics, pharmacy, and financial. Becker’s

What doesn’t quite fit is Iora Health and the higher cost/higher care needs Medicare market that is less profitable and requires advanced risk management, a skill set that Amazon doesn’t have. This Editor will make a small prediction that Iora will be sold or spun off after the sale.

This Editor continues to believe that the real game for Amazon is monetizing patient data. That has gained traction since we opined that was the real Amazon Game in June and October last year, To restate it: Amazon Care’s structure, offerings, cheap pricing, feeds our opinion that Amazon’s real aim is to accumulate and own national healthcare data on the service’s users. Then they will monetize it by selling it to pharmaceutical companies, payers, developers, and other commercial third parties in and ex-US. Patients may want to think twice. This opinion is now shared by those with bigger voices, such as the American Economic Liberties Project. In their statement, they urged that the government block the buy due to Amazon’s cavalier attitudes towards customer data and far too much internal access, unsecured, to customer information (Revealnews.org from Wired). Adding PHI to this is like putting gasoline on a raging fire, and One Medical customers are apparently concerned. For what it’s worth, Senator Bernie Sanders has already tweeted against it.   MarketWatch

Whether this current administration and the DOJ will actually care about PHI and patient privacy is anyone’s guess, but TTA has noted that Amazon months ago beefed up its DC lobbying presence last year. According to Opensecrets.org, they spent $19.3 million last year. In fairness, Amazon is a leading Federal service provider, via Amazon Web Services. (Did you know that AWS stores the CIA’s information?)  One Medical is also relatively small–not a Village MD/Village Medical, now majority owned by Walgreens Boots. This is why this Editor believes that HHS, DOJ, and FTC will give it a pass, unlike UHG’s acquisition of Change Healthcare, especially if Amazon agrees to divest itself of the Iora Health business.

Treat yourself to the speculation, including that it will be added as an Amazon Prime benefit to the 44% of Americans who actually spend for an Amazon Prime membership. It may very well change part of the delivery model for primary care, and force other traditional providers to provide more integrated care, which is as old as Kaiser and Geisinger. It may demolish telehealth providers like Teladoc and Amwell. But as we’ve also noted, Amazon, like founder Jeff Bezos, deflects and veils its intents very well. FierceHealthcare 7/25, FierceHealthcare 7/21, Motley Fool, Healthcare Dive