Mid-week roundup: Pear Therapeutics’ Chapter 11; Workit Health pinkslips 100; Outcome Health principals convicted of $1B fraud

April 13, 2023 | by

Pear Therapeutics ran out of runway and is in the drink. On Friday, CEO Corey McCann announced in a post on LinkedIn that the company filed for Chapter 11 bankruptcy and has laid off 170 employees, including him. Dr. McCann will continue on the board and as a compensated consultant, while chief operating and financial officer Christopher D.T. Guiffre will remain through the Chapter 11 process along with about 15 employees to manage the asset sale process, limited operations, and transition on behalf of the debtors.

According to their Securities & Exchange Commission (SEC) 8-K filing, terminated employees were paid through April 7, 2023, received two weeks’ salary as severance, and were asked to sign a separation agreement, which includes a general release of claims against the company resulting in a $1.2 million charge.

Only last month, Pear announced that it was exploring ‘strategic alternatives’ including a sale or being acquired. According to the release, the debtors are still seeking a sale of the whole business or to part out specific assets. Now such sales and the bidding process must be approved by the US Bankruptcy Court in Delaware. Release  The sale is anticipated for May.

Another behavioral health casualty in a model that proved unworkable. Pear developed and marketed Prescription Digital Therapeutics (PDTs) concentrated in behavioral health and substance use including opioid use disorder. While these seemed to be accepted by providers, patients, and some payers, payment didn’t materialize from the last, according to Dr. McCann’s LinkedIn post. According to Forbes, “There were more than 45,000 prescriptions written for Pear’s products in 2022, but only around half were filled and the company was able to collect payment for only 41% of those.” The other factors were price and reimbursement. Pear’s products averaged $1,195, which took them out of private payment. Only a limited number of commercial insurers and Medicaid plans would pay for them. Medicare did not. In 2022, Pear reported an operating loss of $123.4 million on $12.7 million in revenue, which doesn’t fly in 2023.

This is quite a change from the heady days of 2021, when Pear went public on Nasdaq via a SPAC in December, raising about $175 million in additional funding. A sign of trouble was that the raise was far less than the anticipated $400 million. At that time, Pear was valued at about $1.6 billion. Prior to the SPAC, they had raised about $284 million through Series D funding (Crunchbase)  Mobihealthnews, MedCityNews

Another virtual behavioral health company facing loss of business is Workit Health, This is due to the Drug Enforcement Administration’s (DEA) planned return to the in-person visit requirement for Schedule III-V non-narcotic controlled medications. Workit is a virtual therapy/treatment company for alcohol, stimulant, and opioid abuse, a crowded field. The company, rationally, is cutting 100 staff in anticipation of a drop in activity. To date, it has over $130 million in funding through a Series C, not a lot.  Behavioral Health Business  Also TTA 15 March on the DEA rule debate

Outcome Health–the other late 2010’s scandal after Theranos–had its denouement in a Federal court in Chicago yesterday (11 April). Convicted of $1 billion in fraud were:

  • Rishi Shah, 37, the co-founder and former CEO of Outcome Health: five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud, and two counts of money laundering
  • Shradha Agarwal, 37, the former president of Outcome: five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud
  • Brad Purdy, 33, former chief operating officer and chief financial officer: five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of false statements to a financial institution

Each count carries specific maximums of between 10 to 30 years which are usually served concurrently. Sentencing for the three executives and for three other employees who had pleaded guilty to lesser charges will be at a date to be determined. SEC charges are pending against the executives, along with Ashik Desai, former chief growth officer, who testified against his former bosses in the criminal trial and was one of the three who pleaded guilty.

Outcome delivered patient education on screens in doctor’s offices and circa 2016 was one of the hottest companies in Chicago. During the pandemic, it merged with PatientPoint. Their problem was inflating their ad delivery numbers to their sponsors such as Pfizer, Biogen, and Sanofi. This puffery included third-party analyses of the ads’ effectiveness, e.g. for prescriptions written. This was exposed by the Wall Street Journal in October 2017. Advertiser makegoods and clawbacks from lenders in the millions resulted. TTA 29 Jan 2018   But the executive crew above plus the other three employees concealed the under-delivery problem, faked revenue numbers, and presented them for debt financing plus equity funding in 2016-17 that rewarded them richly–thus the Federal fraud charges. Mobihealthnews, FierceHealthcare, DOJ release  TTA’s coverage from that time here

Let’s hope for more cheerful news out of HIMSS next week.

Optum Labs creates and funds digital health research hub at Cornell Tech NYC

December 6, 2022 | by

Optum Labs, the research and development arm of Optum/UnitedHealth Care, is allying with Cornell University to create a collaborative health research hub at the university’s NYC-Roosevelt Island campus, Cornell Tech. The initiative, funded by Optum Labs, is targeted to develop precision behavioral health and advance equity. According to the release, it will drive innovative research in precision behavioral health, extended reality for aging in place, and equitable human and algorithmic decision-making. A large part of this is incorporating new types of health data from wearables and IoT devices, Also this joint venture will seek to create new types of remote intervention and care delivery using augmented reality and virtual reality actuation technologies with computational techniques. (Whew!)

The digital health hub will be led by Deborah Estrin, an Associate Dean and a Robert V. Tishman ’37 Professor at Cornell University, and Tanzeem Choudhury, Ph.D., Senior Vice President at Optum Labs, and a Roger and Joelle Burnell Professor in Integrated Health and Technology at Cornell University. The funding amount is not disclosed. To this Editor, this seems like an effort to restore the New York area as a digital health hub and regain momentum lost since 2020. Cornell release, 

Optum has been reaching out on multiple fronts. The RVO Health joint venture brought over media and Healthgrades doctor ratings [TTA 14 July], UHG inking a 10-year deal with Walmart Health starting with Florida locations, and of course the Change Healthcare wrap into OptumInsight [TTA 20 Sept, 4 Oct] though still being contested by DOJ post-closing. All a part of Keeping Up With the CVS Health/Aetnas, Walgreens/VillageMDs, Amazons, and fellow payers like Cigna and Elevance. HealthcareFinanceNews

What’s next for telehealth in the (almost) aftermath–and rating the US states on policies

January 8, 2022 | by

crystal-ballWhat’s in that cloudy crystal ball?  Last year, especially the first half, saw telehealth acquisitions, stock prices and valuations hit the roof. The roof proved to be high but sturdy, as they bounced right back down, not unexpectedly. 

But gee whiz, Fast Company’s article seems to be shocked, shocked at all this, calling it a bubble. This Editor sincerely doubts that any investor that tracked telehealth over the last 10 years would have NOT expected this ride on the rollercoaster after the urgent care and practice offices reopened starting in mid-2020 and worked slowly through 2021. The rebound, as with health insurance payers, took a few months to work through into 2021. Telehealth usage in 2021 receded steadily to single digits, and at last report to just above 4% of claims as of October 2021 (FAIR Health US claims data).  What remains is the continued dominance of mental health–62% for mental health codes. It’s turned out that Babylon Health‘s SPAC was the last of the major action for 2021, getting in under the wire in October. 

It’s obvious that investors will be more realistic in assessing telehealth companies, looking at the areas that sustained telehealth usage, such as behavioral health. Another surprising niche is LGBTQ telehealth–Grand Rounds’ buy of Included Health in May, which then led to the entire company, including Doctor on Demand, adopting the name [TTA 20 Oct].

The other move that telehealth companies are making is to take more of the patient than a few virtual visits. They’ve moved into offering primary care teams to patients in employer plans (Babylon360 and Teladoc’s Primary360). Amazon Care moved into in-home health and clinics with Crossover Health. Amwell acquired SilverCloud for expanding behavioral health capabilities internationally, and stuck a toe into care management with their Converge platform and acquiring startup Conversa‘s health coaching app. The flip side is retail health migrating into in-person and virtual primary care–CVS Health and Walgreens, via VillageMD.

What also held telehealth back for over a decade of less than 1% was reimbursement by Medicare, Medicaid, and private insurers. The pandemic broke through that barrier. While it has narrowed considerably, CMS will still reimburse audio-only telehealth for behavioral health services, addiction treatment, and in-home health visits. State policies on telehealth practices can positively influence telehealth growth for patients and physicians. Free-market organizations Reason Foundation, Cicero Institute, and the Pioneer Institute have reported on all 50 on several policy metrics: 

  • In-person requirements
  • Modality neutral (asynchronous or synchronous, technology including audio, video, store and forward, and remote patient monitoring.)
  • No state barriers
  • All providers can use telehealth
  • Independent practice (including nurse-practitioners)
  • No coverage or payment mandates
  • Cross-state compacts

Rating the States on Telehealth Best Practices

News and deal roundup: another big mental health app funding, Happify Health’s prescription therapy app debuts, Alcuris approved by Scottish Digital Telecare for cybersecurity

July 30, 2021 | by

It does seem that behavioral health apps are falling from the trees and into pots of gold. Unicorns have become so…everyday. The latest is SonderMind, a Denver-based therapist matchmaking site for both video telehealth or in-person sessions. With a $150 million Series C round, it is claiming a valuation ‘well north’ of $1 billion. Main funders were Drive Capital and PremjiInvest. Previous funding was $32 million since 2017. The new funding will support expansion from the current 10 states to national. SonderMind first asks the prospective patient to complete a short questionnaire on care needs, insurance, and payment information, then connects them to a licensed mental health professional within a day or two. For their approved therapist group, they work with them to determine the types of patients they’d like to treat. FierceHealthcare

Another behavioral health company, Happify Health, announced Ensemble, its first prescription app. Formally called a PDTx (Prescription Digital Therapeutic), it will be for Major Depressive Disorder (MDD) and Generalized Anxiety Disorder (GAD). It’s a cognitive therapy with ‘Anna’, an intuitive support app with a patented dialogue flow. Ensemble is classified as an investigational medical device at this point. Happify plans to seek a 510(k) clearance in the future. It is designed to be used in support of other mental health treatments and can be integrated into a physician’s EHR.

The app’s development was facilitated by a recently renewed FDA guidance issued in April of 2020 that lets digital health companies go to market without clearance for digital health treatments for eight psychiatric disorders including those in Ensemble. Chris Wasden, head of DTx at Happify Health, was interviewed by Mobihealthnews. We note that Happify has been around since 2012 when mental health wouldn’t get you more than one free drink at a digital health conference. In March, they scored a $73 million Series D.

And in the UK, social alarm system Alcuris announced that their Memo Hub, Memo App and the Connec+ platform have been added to the list of Scottish Digital Telecare security-assessed suppliers. They were reviewed as part of cybersecurity for third parties which process personal data. Digital Telecare is part of the Scottish Local Government Digital Office and evaluates suppliers on their business processes as well as requiring independent Penetration testing (PEN testing). In their statement, “Alcuris welcomes the Digital Offices’ “Once for Scotland” approach and recognises the value it provides across Scotland. We would like to see a “Once for the UK” approach adopted and today we have written to the Telecare Services Association (TSA), to ask if they can collaborate with the Digital Office to enable the benefits of their security assessment programme to be available across the rest of the UK.”  Hat tip to Adrian Scaife of Alcuris for the release.

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

February 17, 2021 | by

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

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

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

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

Short takes: Livongo buys myStrength, Apple Watch cozies with insurers, Lively hears telehealth and $16 million

January 31, 2019 | by

Livongo gets behaviorally stronger with myStrength. Extending from their base in diabetes and chronic disease management into behavioral health, Livongo made a logical extension with early-stage behavioral health company myStrength. A large percentage of those with chronic conditions are also struggling with a behavioral health issue–Livongo cites 20 percent but in this Editor’s opinion, the estimate is low. Both Livongo and myStrength have been very successful in the payment game, with both companies achieving payment and reimbursement by employers, insurers, health systems, and state/Federal payers. The other factor is that employers and payers want single, integrated platforms for wellness and disease management. Livongo last year bought Retrofit for its weight management program. Competitor Omada Health recently acquired the behavioral health technology of defunct Lantern. MedCityNews, Fortune, Livongo release

Apple Watch wastes no time in partnering with insurers. Or vice versa! Confirming that Apple Watch’s growth strategy hinges heavily on health via its new features are fresh agreements with Aetna/CVS Health and a rumored reach into three Medicare Advantage plans. The Aetna partnership is with an app called Attain, which blends Apple Watch activity tracking data with users’ health history to create personalized programs. The program is limited to about 250,000 slots plus additional slots for employer plans, and will debut this spring. Late last year, United HealthCare announced Apple Watches would be added to existing wellness program called Motion and their Rally platform. Both Aetna and United have tiered payment programs for the watches, with United adding a HSA reward. For Medicare Advantage plans, Apple is rumored that they will subsidize the watch for use as a health tracker and coach. FierceMobileHealthcare 30 Jan (Aetna), 14 Nov 18 (UHC), and 29 Jan (Medicare Advantage).

Lively adds telehealth to hearing assistance. Lively’s mobile-connected, direct to consumer hearing aids are adding more telehealth features such as remote tuning, virtual video consults with an audiologist, and an online hearing assessment/uploading audiogram for assessment. The NYC-based company also announced closing on a $16 million seed/Series A fundraising round led by Declaration Capital with participation from Tiger Management. There are an estimated 35 million Americans with hearing loss in a $10bn annual market. Hearing aids are rapidly adding digital and DTC features–others in the field are Eargo and ReSound. Lively release, AlleyWatch, Mobihealthnews. (Lively is not to be confused with Lively!, acquired by GreatCall two years ago)

Our wrapup of news and tart takes on HIMSS 16 (updated redux)

March 9, 2016 | by

Lions Lie Down With Lambs, and Other Miracles!

HIMSS 16’s main ‘breaking news’ centered on HIT interoperability. The lead was US Department of Health and Human Services (HHS) Secretary Sylvia Burwell’s announcement on how Lions Will Lie Down With Lambs, Or Else. 17 EHRs that cover 90 percent of electronic health records used by U.S. hospitals–including the bitterest of rivals, Epic (the EHR everyone likes to hate) and Cerner, 16 providers including the nation’s five largest private healthcare systems, and more than a dozen leading professional associations and stakeholder groups (including HIMSS) pledged to implement three core commitments that allegedly will improve the flow of health information to consumers and healthcare providers. They are consumer access, no information blocking and standards. When? Where? How? Strictly TBD. HHS release, MedCityNews, Modern Healthcare, which dubbed it ‘another year, another promise’.

Innovate or Die. For companies and providers, it’s not about compliance anymore but about improving patient outcomes due to value-based care and incentives. Providers will increasingly be responsible for patient care throughout the community to make their numbers. Having made this sound point, Dr John Halamka then proposes they will need a ‘care traffic control’ system through data aggregation, with a laundry list of ‘enablers’, directories and connectors surrounding the EHR. How this all will work together, and who will buy in already challenged practices and ACOs, plus how those 17 notoriously territorial EHRs will work with said ‘enablers’ — or complicators — is a mystery to this Editor. Pass the Advil, please. MedCityNews

Read on for more Top 10s, roundups, DOD and VA EHR news, the Super Bowl-winning quarterback tackles the closing keynote, and 10 ways you can become a HIMSS speaker! (more…)

Advanced haptics advancing behavioral mHealth

January 23, 2014 | by

Haptics is the feedback you receive through a sense of touch–think of the slight vibration you receive on a mobile touchscreen when you touch a ‘button’. Marry haptics to behavioral health and remote monitoring, and you have some interesting devices from MIT’s Touch Lab (formally the Laboratory for Human and Machine Haptics) which have reached clinical testing stage. The four are Touch Me, Squeeze Me, Hurt Me, and Cool Me Down. Touch Me is an array of sensors that vibrate at the caregiver’s remote command to simulate touch. The related Squeeze Me is a vest that inflates, also remotely controlled, to simulate holding, similar to the T.Ware T-Jacket vest [TTA 22 Mar]. Both are for autistic children or those with sensory processing disorders. The touch is to calm and reassure them. Hurt Me is not for the local “dungeon” or Client #9–it’s to assist in the therapy of those who deliberately harm themselves such as ‘cutters’ by simulating the feeling of being bitten on the arm. The pins against the skin deliver controlled pain without breaking the skin. (more…)