Cigna-Humana deal fizzles after two weeks after term discussion fails, shareholders nix

December 13, 2023 | by

That was mercifully fast. After all the speculation and rumors [TTA 2 Dec], Cigna and Humana called off their talks on 10 December after not coming anywhere near terms on the financials. According to the Wall Street Journal, it was also evident that shareholders disliked it nearly immediately by driving down the share prices of both companies by 10%.

Their sources indicated that it would be a share and cash deal by Cigna for Humana, which added to shareholder displeasure. Cigna will be instead buying back up to $10 billion in stock to drive up their valuation. Reportedly, the repurchasing of least $5 billion of stock will take place between now and H1 2024. Cigna will also concentrate on smaller ‘bolt-on’ acquisitions and the sale of its Medicare Advantage business as previously announced. In the past five days, Cigna shares plumped by nearly $50 and Humana’s by about $10.

The WSJ‘s sources stated that Cigna continues to believe in a combination with Humana, something that the two companies have danced around for years, dating back even before the proposed payer megamergers of 2015 which saw Humana’s acquisition by Aetna (and Cigna’s by Anthem, now Elevance) disapproved both by states and at the Federal antitrust level. The two would, at least on paper, be a good fit, with Cigna’s strength in commercial plans plus Evernorth’s services added to Humana’s in Medicare Advantage, Medicaid, and home health services under CenterWell. It would have created a strong rival to UnitedHealth Group and CVS Health at $300 billion in revenue. What may have proved to be the antitrust stumbling block were their respective strengths in pharmacy benefit management (PBM) though with different focuses.

Even more than the increasingly hostile Federal antitrust environment between DOJ and FTC, it also points to the paucity of funding for mergers and acquisitions–M&A down 14% so far this year to about $1.2 trillion according to Dealogic.

In about three years, healthcare funding has gone from money thrown by VC and PE investors at what we recognize now as shaky propositions (Cerebral, Babylon Health, Olive AI, Pear) to no interest (or funds available) in what would be quality matchups. The pendulum swings–and swings back. We hope. Healthcare Dive

Thursday news roundup: Walmart hiring 50K workers including health, Anthem name-changing, GE Healthcare-AliveCor partner, IPO for Komodo Health amid slowdown?

March 17, 2022 | by

In the midst of war, inflation, and the contradiction of a tight labor market, it’s somehow reassuring that Walmart needs to hire 50,000 new workers–and fast, by end of April. According to reports, some of those new hires will be bolstering the health and wellness areas. In the past, Walmart has hired heavily in their in-store pharmacies. Many of these jobs are lower-end–delivery drivers for direct-to-fridge InHome groceries, in-store workers, and supply chain staff. One higher-level worker area that points to health is global tech, creating offices in Toronto and Atlanta, with Walmart planning jobs for 5,000 engineers, data scientists, analysts, and tech experts. Additional hires will go to increasing its advertising business which is based in the New York metro area. Especially for those high-skill positions, six weeks is not quite plausible in this market. But you have to admire them for trying. CNBC, Becker’s

Anthem changing its name–again. Health insurer giant Anthem, Inc. has announced a renaming to Elevance Health. According to the release, the name is a combination of elevate and advance, presumably for health but as they say in their release, vaulting beyond healthcare into the rarefied air of ‘whole health’. It also reflects vaulting beyond the health plan business, as they fully savor the rarified air of healthcare diversification like fellow giants UnitedHealth Group, Centene, and CVS Aetna.

The parent company of Anthem Blue Cross Blue Shield plans, Anthem owns non-Blues Amerigroup, Integra Managed Care in NY,  pharmacy benefits manager IngenioRx, plus a $25 million investment in digital health hub Sharecare. Plan and product names, along with organizations will not change at this time–these are major changes that usually require state department of insurance approvals.

To this Editor’s Gimlet Eye, the coined name Elevance feels pharmaceutical and not in a good way–it’s very close to an old anti-depressant, Elavil. A return to WellPoint, a name the company had up to 2014, would have accomplished the same ends. But there’s always the shock of the new, the opportunity to change the tired signage, and behind this, someone making a point for themselves. Undoubtedly the shareholders will agree at the 18 May annual meeting, since they always do, and it will start to be used–presumably with a logo and new graphics they don’t have now–at end of Q2. Another gimlety view–it takes a certain myopia to announce a name change given what’s happening in the world. Healthcare Dive

In time for HIMSS, GE Healthcare and AliveCor, developer of the KardiaMobile ECG, announced their partnership to transmit KardiaMobile 6L data directly into GE Healthcare’s MUSE Cardiac Management System for clinical evaluation. MUSE is used by 87 percent of the top cardiac hospitals in the US. The direct integration of KardiaMobile 6L data that is taken anywhere into the MUSE workflow and then into an EMR, targeting atrial fibrillation but also other cardiac monitoring, is a big validation and win for AliveCor. Release

Analytics software company Komodo Health is preparing an IPO as early as this summer. Goldman Sachs and SVB Securities are rumored to be the lead bookrunners. Timing will depend on markets and financing. Komodo completed last March a $220 million Series E for funding to date of $314 million [TTA 25 Mar 2021]. With a valuation now topping $3 billion, Komodo may be the ‘IT’ company of healthcare IPOs in a market much tamer than last year’s Wild West Rodeo. What they do isn’t easy to explain, but they feed their 325 million patient encounter database drawn from EHR, pharma, lab, and government data into proprietary software to map patient journeys, providing analytics on more than 325 de-identified, real-world patient insights. These are used to drive better health outcomes across therapeutic areas. The primary markets for their data are life sciences and pharma for R&D, clinical trials, and medical affairs, but are seeking to expand to providers and payers.

Other IPOs rumored to be on tap are Included Health (the former Grand Rounds/Doctor on Demand) [TTA 20 Oct 2021] and Tempus Labs in precision medicine.

News roundup: dogs sniffing out COVID, CVS rolling out OTC COVID tests, Hydrogen Health launches, Alcidion UK acquires ExtraMed

April 24, 2021 | by

Woof! A trained dog can sniff out COVID-19 with 96 percent accuracy. Based on a study by the University of Pennsylvania’s School of Veterinary Medicine, their trained dogs could recognize the unique odor signature of infection from saliva and urine samples. From the study: “Dogs successfully discriminated between infected and uninfected urine samples, regardless of the inactivation protocol, as well as heat-treated saliva samples.” The specially trained dogs were all Labrador retrievers ranging in age from 1.5 to 2.5 years, along with a six-year-old Malinois. The training took three weeks. However, the length and expense of the training, plus the dogs consistently treating as positive two samples where donors were negative in PCR testing but with one person recently recovered and the other exhibiting symptoms, may limit canine detection. FierceHealthcare, PLOS One.

But without a trained dog, you might be relieved to know that CVS is carrying in-store COVID rapid tests, rolling out in various states:  the Ellume COVID-19 Home Test, the Abbott BinaxNOW COVID-19 Antigen Self Test, and the Pixel by LabCorp PCR Test Home Collection Kit. All three tests have received FDA Emergency Use Authorization (EUA) which means they are not FDA cleared, but they don’t require a prescription and can be used by those with or without symptoms. CVS is placing them in-store initially in different and limited numbers of states, with the Abbott test set to be most widely available, plus online ordering. Healthcare Finance

Hydrogen Health launches a joint venture between Anthem, K Health, and Blackstone Growth. Its purpose is kind of the usual–improve care and care access at a lower cost. K Health combines a symptom checker with telemedicine–a $19 flat visit charge to see a clinician, including pediatricians. The release is a model of forward-thinking opacity as to what “innovative, digital-first healthcare solutions” might emerge, but they will target consumers, employers, and health plans. K Health’s CEO Allon Bloch will also serve as the CEO of Hydrogen Health. There is a put-and-call agreement between Anthem and Blackstone as part of the financials regarding the selling and buying of shares in the company. FierceHealthcare, Healthcare Dive

In the UK, Alcidion Group, a hospital software provider in interoperability, workflows, and clinical decision support with the Miya product suite and Patientrack, is acquiring ExtraMed. ExtraMed’s software provides real-time visibility of patient flow for NHS trusts. According to the release, ExtraMed will be purchased from current owner Hospedia, a bedside communication and entertainment unit provider. ExtraMed currently has nine customers in the NHS, including involvement as a partner in a 10-year Digital Control Centre project at Salford Royal NHS Foundation Trust. Alcidion works with 40 hospitals across the UK and is headquartered in South Yarra, near Melbourne, Australia. Alcidion news page

Short takes 9 April: Doro phones to elderly isolated; funding to Vesta Healthcare, Zedsen; Anthem partners with Canvas EMR, Health Metrics (AU) new owner

April 9, 2021 | by

Today’s News from all over roundup….

Doro in the UK is participating in the ‘Do Good’ initiative with the mobile network giffgaff. Doro is donating 500 Doro phones to isolated elderly people across the UK, as part of their efforts in other countries such as Germany, France, and the Nordics. The tie with giffgaff came about after their announcement of ‘goodybank’ to help those in UK communities facing hardship. Release

Vesta Healthcare raised $65 million in a venture round, bringing its financing since 2018 to $105 million (Crunchbase). Vesta connects a network of caregivers to at-home care and clinical care management. This round was led by Deerfield Management with participation from existing investors Oak HC/FT, Kaiser Permanente Ventures, Lux Capital, Generator Ventures, Nationwide, CareCentrix, and Epstein Partners plus K2 HealthVentures. Vesta is HQ’d in New York City and provides services in five states, which will be expanded with the new funding. Release. Hat tip to HISTalk

London-based Zedsen raised $12 million (£8.7 million) in a Series B which apparently is its first reported financing. Also joining them is Dr. Caroline Hargrove CBE, former CTO of Babylon Health, as Chief Technology Officer. Zedsen provides non-invasive skin biosensor-based monitoring of human body functions to create personalized insights about health, fitness, diet, and emotional wellbeing. The investors include: Joseph R. Grano, former Chairman and CEO of UBS Financial Services Inc; Nasser Kazeminy, Investor, Founder of NJK Holding and Chairman of the Ellis Island Honor Society (EIHS); Tony Rice, Former CEO of Cable and Wireless; Bonnie Mcalveen Hunter, Chairperson of the Red Cross; and Jim Harpel, Investor at Palm Beach Capital. Release, Mobihealthnews

Health payer Anthem is constructing an interesting partnership with a physician-targeted EMR, Canvas. Canvas will integrate Anthem member information into their EMR workflows as part of Canvas Payer SDK (software development kit). The company is leveraging this function as in primary care, usually health insurance claims data are a reliable source of patient data. They also gained a brand new Series A of $17 million funded by Inspired Capital and IA Ventures after seed and venture rounds. Becker’s Health IT, TechCrunch 

And Down Under, Tanarra Capital acquired a majority stake in Health Metrics, a software provider that supports Australia’s residential aged care, retirement living, community, and disability sectors.

Deals and news roundup: Ginger’s $100M, myNEXUS to Anthem, Everlywell snaps up PWN, Amwell’s banner year for revenue–and loss, VA reviews Cerner rollout, voice visits for MA, GE’s vScan goes wireless, uBiome founders indicted

March 27, 2021 | by

Deals–and news–are piling up like Easter eggs before the hunt. Mental health and cognitive digital therapy scored another raise with Ginger‘s $100 million Series E to fund expansion into health plan and government partnerships. Blackstone Growth led the round. Total funding to date is $220 million. It’s entered unicorn status with a valuation just north of $1 bn. Ginger to date has concentrated on corporate mental healthcare. From being an ugly duckling only a few years ago, digital mental therapies are this year’s ‘it’. But competition is fierce: the traditional telehealth companies such as Teladoc, Doctor on Demand, and Amwell are closing in on the early entrants such as AbleTo. Direct-to-consumer models like Talkspace; UK/Ireland’s SilverCloud Health; and Lyra, Spring Health, and Happify, which just closed a $73 million Series D, all step out with slightly different ‘differentiators’ but target the same companies, health plans, and health systems. FierceHealthcare, Ginger release. 

Home health is also another former ugly duckling transformed into a swan. Anthem is acquiring home health/nursing management company myNEXUS, which manages home-based nursing services for 1.7 million Medicare Advantage members across 20 states. Their digital authorization and visit management couples with a nationwide network of providers and nursing agencies for local care. Exiting myNEXUS are private equity investors led by New York’s WindRose Health Investors, after four rounds and a conservative $31 million in funding (Crunchbase). Neither terms nor management transitions were disclosed. myNEXUS will join Anthem’s Diversified Business Group. FierceHealthcare, release.

Home testing+telehealth company Everlywell (not connected with the Everly Brothers) has a different take on home health. They are now integrating their self-test kits with fully owned lab testing. New acquisitions PWNHealth and its subsidiary Home Access Health Corporation will join Everlywell in Everly Group. PWN was Everlywell’s main telehealth partner and diagnostic testing partner since 2016. It will become Everly Health Solutions with their testing data kept separate from Everlywell’s. Home Access was PWN’s self-collected lab test company. Everly Health now will support more than 20 million people annually in all 50 U.S. states, Canada, and Puerto Rico. Acquisition terms were not disclosed. PWN’s CEO will take a seat on the Everly Group board to assist integration. Valuation is now estimated at $2.9 bn.  Mobihealthnews, Everly release, Bloomberg News

And in other news…

Amwell reported a Very Good Year in their telehealth services, with visits growing to 5.9 million from 2019’s 1.1 million. Total revenue was up over 65 percent to $245.3 million. However, profitability continues to be elusive, with net loss almost equaling revenue. Release

The Department of Veterans Affairs (VA) finally announced a review of the Cerner-Leidos EHR integration. Back in February, VA was hanging tough on the rollout after the GAO report questioning its wisdom and recommending postponement until high severity issues were corrected. Secretary Denis McDonough, new VA head, has directed the undertaking of a 12 week strategic review without pausing the project. Taking bets on that 12 weeks! Healthcare Dive

Payers and their lobbyists are supporting a newly reintroduced House bill that would permit telephonic-only telehealth visits to be reimbursed for their Medicare Advantage plans after HHS closes the pandemic period. There is considerable information that video/audio virtual visits still have limitations with the 65+ group, clustered around high-speed internet or good data connections, smartphones, and computers with cameras, making video visits difficult or impossible. Which begs the question about continuing coverage for those on Original Medicare. Healthcare Dive

Those readers with long memories will recall GE Healthcare’s heralded introduction of the VScan handheld clinical-grade ultrasound device–back in 2010, complete with Eric Topol rave and demo. Not much has been heard from GEHC since till this month, and other competitors, such as the Butterfly IQ from 4Catalyzer, have made handheld ultrasound common and affordable. GEHC announced Vscan Air, a fully wireless version that connects to iOS or Android. It was FDA cleared in November 2020 and will be shipping its dual-headed probe and accessories starting 1 April for a US-listed target price of $4,495. GEHC page (with the cute domain vscan.rocks), Mobihealthnews

And in our Scandal Sheet section, a Federal grand jury in the Northern District of California has indicted the founders of now-bankrupt uBiome on 40-odd counts encompassing conspiracy to commit securities fraud, conspiracy to commit health care fraud, money laundering, and identity theft. Separately, the Securities and Exchange Commission (SEC) also filed charges. Between 2016 and 2018, uBiome had raised $100 million through a Series C, and was likened to Theranos, after its fall, in the Big Claim (‘inventing the microbiome industry’). Its business was analyzing the DNA of fecal and other biological matter to sequence the bacteria of the body’s microbiome. Starting with low-cost, limited data comparison for at-home tests, the founders progressed to claiming to doctors that their diagnostic tests were clinical-quality and would be reimbursed by payers. Payers did–for awhile–and the investors piled in. By 2019, the wheels fell off their scheme and the FBI came knocking at their Silicon Valley offices after the founders cashed in. Chapter 7 followed in late 2019. The Register reports that the two married founders are on the run, whereabouts unknown. US Attorney’s Office release, SEC filing (PDF)

 

Deal and news roundup, 17-18 Feb: Sharecare goes SPAC for hefty $3.9 bn valuation; Humana Care Support pilots; AliveCor, AstraZeneca partner on renal, cardiac; Current Health RPM in clinical trials

February 18, 2021 | by

Sharecare, a free/paid app platform that enables users to consolidate all their health and wellness data in one location and use proprietary health management tools, is going the SPAC route with Falcon Capital Acquisition Corp. It will trade on NASDAQ under SHCR. Initial enterprise value is expected to be $3.9 bn with approximately $400 million in growth capital. Closing is expected to be in Q2 of this year.

Founded in 2010 by celebrity doctor Mehmet Oz, MD (now on the board and not in active management) and WebMD founder Jeff Arnold, the current CEO, Sharecare will also have an undisclosed investment by strategic partners Anthem and Digital Alpha. Anthem is looking at the AI value plus consumer engagement and personalized care. Helping to fund both the public equity and cash position is a fully committed private investment in public equity (PIPE) of $425 million at $10.00 per share which is below market value. Falcon Capital will retain about 20 percent of the company. Mr. Arnold will join the board and be retained as CEO. After the closing, Sharecare and Falcon will donate about $4 million in stock to Sharecare’s charitable foundation.

Sharecare sells the platform to enterprises such as providers, employers, health plans, government organizations, and communities, as well as individuals on their free apps. Release, FierceHealthcare, Becker’s

Rival health plan Humana is also adding to its care management tools with a pilot of the Humana Care Support program. The platform creates an integrated, personalized experience for members, including a multi-disciplinary care team and SDOH integration. The pilot targets select groups of Medicare Advantage members in Kentucky, Pennsylvania, and West Virginia with multiple chronic conditions, complex congestive heart failure, and diabetes, with multi-disciplinary care teams. Humana Care Pilot is built on Salesforce’s Health Cloud platform for viewing the patient’s medical history and integrating clinician workflows. Its analytics are powered by Microsoft’s Azure and Power BI. The goal is lowering costs and improving outcomes for this high-cost group of patients. If successful, the program will roll out to other markets this year. Humana release, FierceHealthcare

AliveCor, the developer of the KardiaMobile mobile ECG/EKG, and AstraZeneca are partnering on research for new disease management solutions in cardiovascular, renal, and metabolism (CVRM) therapeutic areas. This will use AliveCor’s monitoring system for blood potassium. The Kardia-K AI platform uses ECG/EKG neural network analysis to measure a patient’s potassium levels without a patient blood draw. Hyperkalemia (elevated blood potassium) is linked to renal issues and kidney disease as well as cardiac issues. Kardia-K received Breakthrough Device Designation status from the FDA to screen for elevated levels of blood potassium in September 2018, and was validated in a study with Mayo Clinic published in 2019. Release, Mobihealthnews

Current Health, a monitoring and care management RPM system for enterprise-level health organizations, announced its “Community” initiative to build diverse longitudinal datasets for decentralized clinical trials. Their platform is FDA-cleared and used at scale in phase III and phase IV drug trials by major pharmaceutical organizations for remote endpoint collection and for virtual trial delivery. Monitoring is performed through wearables and sent to the electronic data capture (EDC) vendor for the clinical research organization (CRO). Current Health is using Community for its own COVID-19 study to predict hospitalizations and inform clinical treatment. The study is recruiting US participants diagnosed with the virus in the last 48 hours. Current has locations in Edinburgh, London, Boston, and San Francisco according to their website. Mobihealthnews

Anthem-Cigna merger lawsuit finally wraps with ‘No damages for you! Or you!’

September 2, 2020 | by

Not with a bang, but a whimper and a large bill. The long, drawn-out (May 2017!) lawsuit and countersuit in Delaware Chancery Court between payers Anthem and Cigna ended with the decision by Vice Chancellor J. Travis Laster to refuse to award damages to either party in the litigation.

Cigna, which was seeking nearly $15 bn from Anthem, seemed to receive the worst of his judgment. In his decision (PDF), VC Laster stated that Cigna was unable to prove that Anthem breached the Efforts Covenants and in fact, Cigna sought to derail the deal by pulling back on integration efforts, thus itself breaching the covenants. Thus, Cigna was not entitled to the $1.85 bn breakup fee or additional damages. Anthem proved that they sought to complete the merger and Cigna did not, thus seeking $20 bn in damages. In counterpoint, Cigna was able to prove that the deal would have been blocked regardless of their actions to demo the deal.

VC Laster’s conclusion, “In this corporate soap opera, the members of executive teams at Anthem and Cigna played themselves. Their battle for power spanned multiple acts….Each party must bear the losses it suffered as a result of their star-crossed venture.” The testimony revealed the deep divisions and battle lines between both companies during the merger preliminaries, until the Federal courts and DOJ put paid to it.

Yet the denouement of this Merger Made In Hell may not be fini. Anthem said in a statement to Fierce Healthcare that it feels “this decision is in the best interests of Anthem and our stakeholders.” But a Cigna spokesperson said they are not finished and considering a potential appeal. “We are pleased that the Court agreed with us that Cigna did not cause the merger to fail. We continue to strongly believe in the merits of our case, and we are evaluating our options with respect to appeal.” Certainly not the peaceful-in-public parting after the Federal denial of their merger by Aetna (acquired by CVS) and Humana (still in play).

The chief beneficiaries of this three-year drama? The law firms listed on page 1 of the opinion. Also Wall Street Journal (paywalled in part).

The TeleDentists now in 14 states with Anthem

June 30, 2020 | by

Updating our May article about The TeleDentists expanding their coverage via Anthem Blue Cross and Blue Shield (BCBS), our initial information was that Anthem was offering teledentistry in only nine states. The current total since May is actually 14 states and covers by state and plan:

  • CA – Anthem Blue Cross
  • CO, CT, GA, IN, KY, ME, MO, NH, NV, OH, VA, WI – Anthem Blue Cross and Blue Shield
  • NY – Empire BlueCross BlueShield

Part of this Editor’s puzzlement is that each health plan issues releases for its plan by state, and when our original article was written, only nine states had issued releases. This is in addition to their agreement with Cigna in employer-sponsored plans announced in April [TTA 15 April]. Hat tip to FischTank PR’s Kate Caruso-Sharpe for the update on behalf of Anthem.

Another COVID casualty: a final decision on the Cigna-Anthem damages settlement

June 12, 2020 | by

Remember Cigna and Anthem, a Merger Made In Hell? This Editor loves to follow up a good public slugfest which has been going on in Delaware Chancery Court since May of 2017. As our Readers may recall, the Doomed To Fail merger, finally pounded into the ground by the Federal courts, soon degenerated into what a former VP of your Editor’s would call a ‘Who Shot John’ scenario. Anthem would not pay Cigna the breakup fee of $1.85 bn. Cigna then demanded an additional $13 bn in a ‘Funny Valentine’ of damages, accusing Anthem of harming Cigna’s business. Anthem then in turn claimed $20 bn in damages. Three years later, other than a blip of news in March 2019, the imminent decision was to be at the end of February or even March this year (Axios, Reuters). We all know what happened in March–a pandemic that shut the courts. The timing could not be worse, as COVID has bitten hard into payer profits, and a settlement could bite even harder, putting either company into the red–going back years.

Whatever company wins may, after legal fees, may have enough money to buy one of these–before the concours restoration.

 

Drawn-out decision on the CVS-Aetna merger held up again in Federal court

April 6, 2019 | by

“The Perils of Pauline” saga that is the CVS-Aetna merger continues. Judge Richard Leon of the US District Court for the District of Columbia twirled his mustache and announced that his court will hold a hearing in May on the merger. Practically nobody dislikes this particular $69 billion merger that’s already closed–not the companies, shareholders, Congress, the states, and not the Department of Justice, once Aetna sold off its Medicare Part D drug business to WellCare. But Judge Leon is an exception.

The Tunney Act requires the government to file proposed merger settlements as an approval of the consent decree with a Federal district court to assure they are in the public interest. Most are filed, reviewed by a judge, and approved with no hearings. Since October, Judge Leon has been examining the merger up, down, and sideways in, of course, the public interest and great attention by the press. Now a week (or more) of May hearings will commence with those who don’t like this merger, including the American Medical Association, the AIDS Healthcare Foundation, pharmacy and consumer groups.

Certainly this is long and drawn out, even for the DC district court. Even the high drama of the Aetna-Humana and Cigna-Anthem mergers took a little less time. Judge Leon continues to get coverage and the merger continues to be held up. Reuters, Fox News, Seeking Alpha

Comings and goings: CVS-Aetna finalizing, Anthem sued over merger, top changes at IBM Watson Health

November 8, 2018 | by

imageWhat better way to introduce this new feature than with a picture of a Raymond Loewy-designed 1947 Studebaker Starlight Coupe, where wags of the time joked that you couldn’t tell whether it was coming or going?

Is it the turkey or the stuffing? In any case, it will be the place you’ll be going for the Pepto. The CVS-Aetna merger, CVS says, will close by Thanksgiving. This is despite various objections floated by California’s insurance commissioner, New York’s financial services superintendent, and the advocacy group Consumers Union. CEO Larry Merlo is confident that all three can be dealt with rapidly, with thumbs up from 23 of the 28 states needed and is close to getting the remaining five including resolving California and NY. The Q3 earnings call was buoyant, with CVS exceeding their projected overall revenue with $47.3 billion. up 2.4% or $1.1 billion from the same quarter in 2017. The divestiture of Aetna’s Medicare Part D prescription drug plans to WellCare, helpful in speeding the approvals, will not take effect until 2020. Healthcare Dive speculates, as we did, that a merged CVS-Aetna will be expanding MinuteClinics to create urgent care facilities where it makes sense–it is not a big lift. And they will get into this far sooner than Amazon. which will split its ‘second headquarters’ among the warehouses and apartment buildings of Long Island City and the office towers of Crystal City VA.

Whatever happened to the Delaware Chancery Court battle between Anthem and Cigna? Surprisingly, no news from Wilmington, but that didn’t stop Anthem shareholder Henry Bittmann from suing both companies this week in Marion (Indiana) Superior Court. The basis of the suit is Anthem’s willfully going ahead with the attempted merger despite having member plans under the Blue Cross Blue Shield Association meant the merger was doomed to fail, and they intended all along for “Anthem to swallow, and then sideline, Cigna to eliminate a competitor, in violation of the antitrust laws.” On top of this, both companies hated each other. A match made in hell. Cigna has moved on with its money and bought Express Scripts.

IBM Watson Health division head Deborah DiSanzo departs, to no one’s surprise. Healthcare IT News received a confirmation from IBM that Ms. DiSanzo will be joining IBM Cognitive Solutions’ strategy team, though no capacity or title was stated. She was hired from Philips to lead the division through some high profile years, starting her tenure along with the splashy new Cambridge HQ in 2015, but setbacks mounted later as their massive data crunching and compilation was outflanked by machine learning, other AI methodologies, and blockchain. According to an article in STAT+ (subscription needed), they didn’t get the glitches in their patient record language processing software fixed in ‘Project Josephine’, and that was it for her. High profile partner departures in the past year such as MD Anderson Cancer Centers, troubles and lack of growth at acquired companies, topped by the damning IEEE Spectrum and Der Spiegel articles, made it not if, but when. No announcement yet of a successor.

Cigna’s $69 million acquisition of Express Scripts clears US Department of Justice hurdle

September 18, 2018 | by

As reported on 8 Sept, the DOJ announced on Monday that they have formally cleared the Cigna acquisition of pharmacy benefits manager Express Scripts. This puts together a major payer with a PBM manager, the latter area considered to be challenged for profitability as the PBM drug rebate model may be substantially less profitable in the future. Federal policy pressure is ramping up from Health & Human Services (HHS), with Secretary Alex Azar only last week promising disruptive change and more transparency in drug pricing.

CVS (PBM-Caremark) with Aetna is in the works and Anthem is creating its own PBM called IngenioRx. UnitedHealthcare has its own OptumRx for some years. 

Another point of pressure on the entire PBM category is the Amazon-Berkshire Hathaway-JP Morgan combine, sometime in the future when the hype and speculation on What Amazon Will Do turns into actual plans beyond their acquisition of tiny, specialized player PillPack for an exorbitant $1bn [TTA 4 July]. 

The DOJ investigation took six months, reviewed more than 2 million documents, and more than 100 industry people were interviewed.

Cigna and Express Scripts now must negotiate over 50 state departments of banking and insurance–over 50 because some states have two. Both companies already have shareholder approval, and the lack of overlap in their businesses limits the possibility of divestitures. Their advocacy website is here. But state DOBIs can be unpredictable, as Cigna found out with Anthem. (Their contentious breakup is still being contested in court–and Cigna could use the contractual breakup money to ease the Express Scripts debt estimated at $15 bn. Forbes.  Bloomberg, Healthcare Dive

Department of Justice won’t challenge CVS-Aetna merger: report

July 13, 2018 | by

DOJ, stay away from our doors! The $69 bn CVS Health and Aetna mega-merger looks like it will go sailing down that river, if Mr. Market is right. Shares in both companies enjoyed a nice bump on today’s report that the DOJ won’t challenge this merger. The local Hartford Courant is relieved that Aetna plans to stay in their longtime HQ city (since 1853), conveniently omitting their long-standing plan to set up a big shop in NYC. CNBC

What a difference from a year ago when two mega-mega-mergers, Aetna-Humana and Anthem-Cigna, were shot d0wn–nay, riddled with bullets–in the Senate and in two courts [TTA 9 Feb 17]. Cigna is still living with the hangover of their bad breakup with Anthem, with a fight over a nearly $1.9 bn breakup fee [TTA 17 May 17] continuing in the Delaware Chancery Court in 2019.  Cigna nixed any other insurers in a horizontal merger and sought out Express Scripts, a pharmacy benefits manager (PBM) which was reeling a bit after its largest client (coincidentally) Anthem departed. Anthem sued its PBM, Express Scripts, for $15 billion, alleging the PBM overcharged it by $3 billion annually The merger will cost them over $550 million in transaction cost and that is just the beginning. That $1.9 bn would sure come in handy. Modern Healthcare 

Breached healthcare records down 72% but incident numbers steady. Then there’s MyFitnessPal’s 150 million…

April 5, 2018 | by

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2015/02/Hackermania.jpg” thumb_width=”150″ /]Hackermania in healthcare may be running less wild…but what about consumer health devices? Year-end and top-of-year analyses indicate that the flood of breached records may be starting to drain. A Bitglass analysis of 2017 US Department of Health and Human Services (HHS) data from its infamous ‘Wall of Shame’ is encouraging. They found that the number of breached records decreased over the 2015-2017 period by 72 percent between 2015 and 2017 and by 95 percent from 2016. The calculation excludes the huge spike in breaches due to two 2015 incidents at Anthem and Premera Blue Cross [TTA 9 Sep 15]. Numerically, the breach incident numbers decreased but are relatively steady: 2017 at 294, 2016 at 328. Data security company Protenus in its tracking found more incidents in 2017 versus 2016 (477 in 2017 v. 450 in 2016) but the same reduction in records affected, with five times fewer records in 2017 versus 2016’s 27.3 million records.

What’s been successful has been reducing mega-breaches and containment of healthcare device loss and theft through education and enforcement of employee practices. What continues is the major cause of breaches continue to be insider-related via error and wrongdoing; this includes the major annual Verizon report. Healthcare Informatics

Protenus’ February report, while continuing the reduction trend, had its share of hacking and insider incidents. Of the 39 incidents in their report affecting over 348,000 records, insider actions such as the misuse of system credentials accounted for 51 percent of breached records while hacks were 46 percent, with the majority involving ransomware or malware. Hacking as a cause hasn’t disappeared but perhaps has shifted to easier targets.

UnderArmour’s MyFitnessPal delivers another breach blow. Late last month, the company revealed that 150 million user records were hacked in February. The MyFitnessPal mobile app (more…)

CVS’ bid for Aetna–will it happen, and kick off a trend? (updated)

October 28, 2017 | by

We have scant facts about the reported bid of US drugstore giant CVS to purchase insurance giant Aetna for a tidy sum of $200 per share, or $66 billion plus. This may have been in development for weeks or months, but wisely the sides are keeping mum. According to FOX Business, “an Aetna spokesperson declined to chime in on the reports, saying the company doesn’t “comment on rumors or speculation” and to Drug Store News, a CVS Health spokesperson did the same. Aetna’s current market cap is $53 billion, so it’s a great deal for shareholders if it does happen.

Both parties have sound reasons to consider a merger:

  • CVS, like all retailers, is suffering from the Amazon Effect at its retail stores
  • Retail mergers are done with the Walgreens Boots Alliance–Rite Aid merger going through considerable difficulties until approved last month
  • The US DOJ and Congress has signaled its disapproval of any major payer merger (see the dragged-out drama of Aetna-Humana)
  • It has reportedly had problems with its pharmacy benefit management (PBM) arm from insurers like Optum (United HealthCare), and only last week announced that it was forming a PBM with another giant, Anthem, called IngenioRx (which to Forbes is a reason why this merger won’t happen–this Editor calls it ‘hedging one’s bets’ or ‘leverage’)
  • Aetna was hard hit by the (un)Affordable Care Act (ACA), and in May announced its complete exit from individual care plans by next year. Losses were $700 million between 2014 and 2016, with over $200 million in 2017 estimated (and this is prior to the Trump Administration’s ending of subsidies).
  • It’s a neat redesign of the payer/provider system. This would create an end-to-end system: insurance coverage from Aetna, CVS’ Minute Clinics delivering care onsite, integrated PBM, retail delivery of care, pharmaceuticals, and medical supplies–plus relationships with many hospital providers (see list here)–this Editor is the first to note this CVS relationship with providers.

We will be in for more regulatory drama, of course–and plenty of competitor reaction. Can we look forward to others such as:

  • Walgreens Boots with Anthem or Cigna (currently at each others’ throats in Delaware court) 
  • Other specialized, Medicare Advantage/Medicare/Medicaid networks such as Humana or WellCare?
  • Will supermarkets, also big retail pharmacy providers, get into the act? Publix, Wegmans, Shop Rite or Ahold (Stop & Shop, Giant) buying regionals or specialty insurers like the above, a Blue or two, Oscar, Clover, Bright Health….or seeking alliances?
  • And then, there’s Amazon and Whole Foods….no pharmacy in-house at Whole Foods, but talk about a delivery system?

Also Chicago Tribune, MedCityNews.

UPDATED. In seeking an update for the Anthem-Cigna ‘Who Shot John’ court action about breakup fees (there isn’t yet), this Editor came across a must-read analysis in Health Affairs 

(more…)

It’s all hackable by Black Hats: pacemakers, Amazon Echo, trains, heart monitors, prison cells!

August 2, 2017 | by

It’s the servers, stupid! Unlike the economy, where people comprehended the problem, it seems we are automating more and securing less. The annual Black Hat Conference, where participants see this as a challenge, and the news are serving up some prime examples.

In Las Vegas, Lucas Lundgren, a senior security consultant at IOActive, scanned away–and was able to open prison doors, gain access to alarm systems, an oil pipeline, a German train controller, pacemakers, heart monitors, and insulin pumps. These communicate with servers through an open-source messaging protocol known as MQTT used in home and industrial systems. The problem is that access to the servers is not protected through a user name and password, much less two-factor authentication. “Not only can we read the data — that’s bad enough — but we can also write to the data.” Scary when you contemplate a hospital with insulin pumps, BP monitors, and multiple surgical devices all going haywire.  ZDNet 

Similarly, easy hacking pickings have turned up in IoT cameras–over 175,000 inexpensive cams made by Chinese manufacturer Shenzhen Neo Electronics’ as NeoCoolCam and distributed worldwide, discovered by BitDefender. Older Amazon Echo devices can be physically tampered with and malware uploaded to be turned into listening devices, according to MWR InfoSecurity.

And Anthem gets no respect. After suffering its 2015 data breach of 80 million members–and spending $115 million to settle the lawsuit–there’s a third-party contractor, LaunchPoint Ventures, who decided that no one would notice if 18,500 patient records were sent to a home email a year ago. Actually, it was noticed after the contractor was nabbed for unrelated “identity theft-related activities” this past April. More ‘splainin’ to do to HHS, surely, after filing their July 24 report. At least it’s not an IoT breach! Healthcare Dive