TTA’s Blooming Spring 2: Teladoc buys UpLift to buck up BetterHealth, Novo Nordisk partners with Hims, other teleprescibers on Wegovy, Masimo’s former CEO claiming un-granted shares, Commure-HealthTap partner, more!

May 2, 2025 | by | No Comments

2 May 2025

Cherry blossoms are starting to fall, much like Teladoc’s revenue for Q1 in our lead story. Can their acquisition of a small virtual mental health provider with insurance coverage help turn around BetterHelp? And what about their main business? Novo Nordisk would rather partner than fight with teleprescribers Hims & Hers, Ro, and LifeMD for GLP-1 Wegovy–will this be a trend? Commure adds to its ‘house that Jack built’ tech stack with a HealthTap partnership. And Masimo’s latest episode of its ongoing soap opera is that its former CEO (and major shareholder) is claiming ownership of shares as part of his severance–but they haven’t been granted and very much in dispute. (Irony alert: they’ve increased in value since his departure!)

This just in: Teladoc acquires UpLift for $30M, bolstering struggling BetterHelp telemental health; Q1 revenue down 3% (Can this telemental health be saved with one acquisition?)

News roundup: Hims, Ro, LifeMD and Novo Nordisk partner on Wegovy prescribing (updated); Commure partners with HealthTap for virtual care after hours; WebMD Ignite adds texting to member health ed; hellocare.ai raises $47M for virtual nursing  (When you can’t beat ’em in weight loss meds, join ’em. With a side of Commure’s interesting M.O. on acquisitions.)

Masimo updates: former CEO Kiani claims 13.2% ownership, and a review of the new management’s style (updated) (The soap opera continues)

From last week: Cherry blossoms are blooming (finally) and so is the news. The roundups include Walgreens’ continuing Aisle 9 cleanup of their Federal opioid prescribing allegations, a huge and mysterious breach of Google Analytics sending Blue Shield CA member info to Google Ads, and Veradigm’s interim CEO will be taking the summer off. Our big reads include two surveys: the first on the state of healthcare AI (more show than go) and the second on RPM utilization–and effectiveness. Two raises, a BCI/telehealth merge, and international initiatives.

Product & funding very short takes: South Australia 1st with Sunrise EMR; S. Korea pain research, new emergency services app; BCI + telehealth for stroke patients; VirtuSense monitoring launches at Emory; Series B raises for Nourish, Healthee

Short takes: Veradigm’s interim CEO departing, Blue Shield CA breached 4.8M members’ PHI to Google, advice on expanded M&A premarket notification rules (You can’t blame that CEO for ankling after all the trouble he’s seen! And Blue Shield has 2nd largest breach–involving Google Analytics. Bad timing for Google.)

News roundup: Walgreens’ $350M opioid settlement, only 30% of healthcare AI pilots reach production, Medicare RPM usage up 10-fold despite benefit limitations (Walgreens cleans up again, and two surveys on AI and RPM for weekend perusal)

Holding this over: The weekend read: why SPACs came, went, and failed in digital health–the Halle Tecco analysis/memorial service; why OpenAI is going to be a bad, bad business (Grab the cuppa and lunch for a good read and podcast. Updated–Also Tecco’s blog post on why she quit being an angel investor.) 

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This just in: Teladoc acquires UpLift for $30M, bolstering struggling BetterHelp telemental health; Q1 revenue down 3%

May 1, 2025 | by | No Comments

Teladoc closed out a down Q1 with buying UpLift. The $30 million acquisition is clearly strategic in bolstering BetterHelp, their floundering direct-to-consumer mental health provider. It closed on 30 April, the same day as Teladoc’s Q1 results call. UpLift was bought in an all-cash transaction, with up to $15 million in additional contingent earnout consideration. UpLift’s 2024 revenue was approximately $15 million. It is small compared to BetterHelp’s Q1 revenue of $239.9 million, which fell 11% versus Q1 2024 and continuing a decrease from Q4 2024, when its revenue was $250 million, after sinking through the entire fiscal year. 

What UpLift adds is insurance-reimbursable mental health coverage with all major commercial insurers, including Medicare and Medicaid, something that the cash-pay-only BetterHelp lacked. It also adds coverage of 100 million lives and a network of over 1,500 mental health providers. According to the release, BetterHelp will work with its customers to help them access insurance coverage. Their network providers will “have an opportunity to be considered for inclusion in the benefits coverage network, based on the respective requirements, needs and interests”, which is an interesting way to present it.

Teladoc said in the release  and on the earnings call that UpLift will be reported under BetterHelp’s results, although it will be run separately under its current CEO Kyle Talcott. There is no further indication as to management transitions. The impression given from the release at least in the short term is that it will be run separately for management of their provider network, quality and patient outcome oversight and the acceptance and administration of insurance coverage. 

What does this mean? How much of a lift UpLift will give this year to BetterHelp is anyone’s guess, but adding insurance coverage is a much needed move by Teladoc, given BetterHelp’s expensive DTC cash model.

  • Teladoc has known for some time that lack of insurance coverage was a key part of BetterHelp’s performance problems. UpLift will help in that regard.
  • In the past 18 months, it moved from Teladoc’s great hope, one which former CEO Jason Gorevic bet ‘large’ on only for him to depart in a haze of red ink [TTA 5 Apr 2024], to a slowly eroding asset or worse, a rolling failure. It is particularly inexplicable given the growth of virtual mental health.
  • In the past year, BetterHelp operations were responsible for a $790 million impairment that hit Teladoc’s Q2 and a nasty, embarrassing rap by short seller Blue Orca Capital on ChatGPT being used in therapeutic responses [TTA 25 Feb], vigorously denied by Teladoc [TTA 25 Feb]. 
  • BetterHelp’s revenue for the remainder of 2025 is expected to shrink by up to 9.75%.

The main Teladoc operation, segmented as Integrated Care, also performs virtual mental health care within its services. This is noted in the release: “Teladoc Health’s Integrated Care segment offers a range of digital tools, coaching, therapy, and psychiatry services for employers and health plans (Editor’s emphasis), and completed nearly a million mental health visits in 2024.” Since those virtual mental health services are within Integrated Care, its performance is not public. 

Is a real solution a rebranding of BetterHelp when it is integrated (as it eventually will be) with UpLift?

HIT Consultant, FierceHealthcare, Mobihealthnews

Teladoc Q1 financial highlights:

There wasn’t much encouragement across the board in Teladoc’s Q1 report.

  • Total Q1 revenue decreased 3% to $629.4 million from prior year’s $646.1 million in First Quarter 2024
  • The bright spot was that their main business under Integrated Care had a revenue increase of 3% to $389.5 million 
  • As mentioned, BetterHelp’s revenue decreased by 11% to $239.9 million
  • By domestic versus international, US revenue decreased 4% to $525.0 million. International revenue grew 6% to $104.4 million.
  • Net loss also increased to $93.0 million, or $0.53 per share, versus prior year’s Q1 $81.9 million, or $0.49 per share.
  • Adjusted EBITDA for Q1  decreased 8% to $58.1 million, versus $63.1 million in the prior year. \
    • Integrated Care’s adjusted EBITDA increased 6% to $50.4 million.
    • BetterHelp’s adjusted EBITDA decreased 50% to $7.7 million.

The release also confirms full year 2025 revenue projections of $2,468 – $2,576 million. BetterHelp’s revenue is projected to continue to shrink by 3.75 to 9.75%.

Teladoc responds to Blue Orca’s report on BetterHelp’s AI ‘therapy’ (updated)

February 25, 2025 | by | 2 Comments

Teladoc formally responds to the Blue Orca Capital research report [TTA 25 Feb]. Their letter (PDF) via its legal counsel (King & Spalding) yesterday refutes Blue Orca’s allegations in a report on their stock (TDOC) that a “meaningful” number of BetterHelp patients are receiving AI therapy from therapists in the form of text/asynchronous and live messages, calling them “vague and unsubstantiated”.

The policy stated by Teladoc, quoted directly from this letter (Editor’s notes):

  • BetterHelp expressly prohibits therapists from disclosing any member personal or health information to third-party AI. (Editor’s emphasis)
  • BetterHelp has a Trust and Safety team dedicated to the detection and prevention of non-compliant use of AI and, if anything, has structured its platform (and its incentives to therapists) to promote live video calls over asynchronous messaging. (Another point made by Blue Orca)
  • BetterHelp’s Privacy Policy provides further disclosures to members concerning its AI practices. (The Privacy Policy is at the end of Section 1 Data Collection and Processing, and is specific as to AI being used for ‘manual, repetitive tasks’ in processing and to “help therapists manage and document sessions more effectively”.)

Readers will note that this Editor called Blue Orca’s statements in its report about AI therapy “allegations”. I also noted that Blue Orca was a short seller. I later clarified what a ‘short seller’ is and that short sellers profit when the stock goes down. Short sellers are also prohibited by securities law from spreading false information about a stock for the purposes of profiting from its decline (Rule 10b-5 under the Securities Exchange Act of 1934.)

The Teladoc counsel letter to Blue Orca Capital addresses other allegations in the Blue Orca report about their changes in reporting practices in FY 2022 that supposedly inflated Teladoc’s profitability. These are outside the scope of both articles and will not be commented on here.

Disclosure: Teladoc reached out to this Editor, supplying information about their response including the King & Spalding letter.

This Editor hopes, and would like to see confirmation, that any BetterHelp therapist using third-party AI to respond to patients in providing direct therapy, versus Teladoc/BetterHelp supplied management tools, customer service information, or security tools, is disciplined and released. The integrity, privacy, and security of a telementalhealth platform is essential to its operation and the confidence of its patients–and should be publicly confirmed.

Update: In response to this article, a spokesperson from Teladoc Health further elaborated:

“To be clear, BetterHelp expressly prohibits therapists from disclosing any member personal or health information to third-party AI. BetterHelp has clear, rapid processes for members to report negative experiences, switch therapists, and cancel memberships, when requested. If a therapist is found to be practicing in an unethical manner, they are investigated and terminated from the platform. The overwhelming majority of members stay with their matched therapist, even though they are free to switch their therapist at any time.” 

News roundup: DOJ investigating UHG on Medicare Advantage billing upcoding; Teladoc’s BetterHelp therapists using AI?–a short seller alleges; Hims whacked by FDA ending compounded GLP-1s (updated); some fired FDA staffers in CDRH reinstated

February 25, 2025 | by

UHG’s annus horribilis gets more horribilis. News broke on Friday 21 February via the Wall Street Journal (paywalled) that UnitedHealth Group is reportedly under investigation by the US Department of Justice–again.  The DOJ is looking at UHG’s billing practices for members covered by UnitedHealthcare Medicare Advantage (MA) plans on diagnoses that were made to generate extra payments, a practice known in the industry as upcoding. This also involves the many practices that UHG owns or has relationships through Optum, about 10% of primary care practices. These practices are receiving visits from DOJ investigators, certainly something that would strike some fear into any doctor’s or practice manager’s heart. 

The WSJ reported that two providers cited in their article provided documentation, while another person said that the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) is involved in the probe.

It’s a real Mound of Misery for UHG.

  • MA plans and their set rates for additional benefits not covered under original Medicare have been under HHS/CMS scrutiny in the past year, and health plans have been running higher costs than anticipated as covered patients have returned back to care.
  • UHG’s OptumRx unit last year was reported as under investigation on antitrust grounds.
  • Optum’s Change Healthcare (contested by DOJ but approved) is still recovering from an unprecedented hacking and ransomwaring, with the huge expense of restoring systems plus notification and providing a reported 100 million with free credit monitoring services.
  • The proposed $3.3 billion deal with Amedisys for home care continues to be delayed by the DOJ antitrust suit.
  • Their UnitedHealthcare president was assassinated in New York, and his (alleged) killer is starting his trial here, a spectacle which will go into the summer. But the issue that supposedly tipped off the murder–claim denials and denials of care due to policies and the use of AI, isn’t going away–jumping in the fray is megainvestor Bill Ackman.

While Federal involvement with health plans comes with the territory, the adversarial relationship with DOJ far exceeds the norm. The share price reflects it, having cracked 26% in the past six months. Those accepting the 30,000 buyouts on offer may be grateful if they take them. CNBC, FierceHealthcare

Another backwash from the use of AI? Teladoc is receiving some bad publicity it can ill afford. There are allegations of their therapists using AI-drafted responses with patients–and this apparently is becoming more frequent. It’s been percolating on social media boards such as Reddit (see example here) for some time. The latest is a report from a short seller* of Teladoc, Blue Orca Capital, that alleges that BetterHelp therapists not only use ChatGPT for text responses outside of live sessions (messaging), but also during live chat sessions. This goes against Teladoc’s own stated policy against AI therapy as ‘dehumanizing’  in a lengthy blog post ranging from social media to job loss as a result as AI. Blue Orca includes first hand information from two BetterHelp patients, an allegation from a competitor that BetterHelp doesn’t care, and that therapists are actually incentivized on the word length of responses they give to a patient, overloading their schedule, and being available 24/7 to patients paying a reported $400/month. Given BetterHelp’s prominence in Teladoc’s earnings–according to them “accounting for 40% of the Company’s revenues and adjusted EBITDA since FY21”, adding in their other financial factors, their dim view is jarring if you like or own TDOC.  Developing. Hat tip to HIStalk 2/24/25

*Editor’s note: Blue Orca Capital, as a short seller, profits when a stock goes down. Blue Orca has a short position in TDOC. So our Readers should take their position into account. Short sellers are also prohibited by securities law from spreading false information about a stock for the purposes of profiting from its decline (Rule 10b-5 under the Securities Exchange Act of 1934.)

The Feds giveth and taketh away Hims’ weight loss business. Updated information. Friday’s good news was that FDA has reclassified the shortage of semaglutide, the active ingredient in GLP-1 drugs, as ‘resolved’, meaning It’s Over and it’s easier to get your Wegovy, Ozempic, Zepbound, etc. prescription. The bad news is that online prescribers that were authorized by FDA to use less expensive compounding to approximate or customize the branded versions of these drugs for weight loss, are now prohibited from doing so. They have till April or May to transition to branded injectable versions. This affects the bottom line of all these telemedicine prescribers such as Ro, Weight Watchers, Future Health (a heavy local radio advertiser), 23andMe, and Hims & Hers. Hims, the showiest in class, took a breathtaking 25% hit on their stock between Friday and Monday.

It is not only cost of branded drugs but also that so many competitors have jumped into the field, creating another shortage of the branded drugs, that looms. Suppliers of compounded drugs, the high volume compounding pharmacies (not your corner pharmacy that does compounding based on Rx), may be reluctant to continue supplying telemedicine prescribers in reasonable fear of FDA action or pharma lawsuits that could put them out of business.

Hims also publicly took the hardest line against the pharma companies, implying in their now infamous Super Bowl commercial that their obesity drugs are priced “for profits, not patients”, unlike Hims’, of course. Novo Nordisk, the Ozempic and Wegovy manufacturer, in turn has taken a hard stance against the compounders pointing out that a compounded version isn’t standardized nor FDA-approved for safety and efficacy.

A custom, compounded version of a drug can only be sold when there is a shortage or if the branded drug is in some way inappropriate for the patient requiring a customized version, e.g. with adjusted dosage, method of dosing, or added/deleted ingredients. Look for Hims and other telemedicine prescribers to start pushing this POV. FierceHealthcare, MedCity News

Some FDA reviewers reinstated after DOGE cuts. The ~230 probationary and other employees who were let go with severance then partially reinstated are reported to be reviewers in the CDRH (Center for Devices and Radiological Health). The 183 reinstated reviewers are actually funded by the industry through the Medical Device User Fee Amendment (MDUFA) agreements to help speed the review and approval process. There is considerable confusion about this because phone calls went out over the weekend but as of today (Monday) there is no written confirmation from HR or the Office of Personnel Management (OPM). It remains murky as do layoffs in the rest of HHS. FierceHealthcare, Endpoints

Teladoc’s Q1: increased revenue, increased net loss, dealing with slowing growth–as is CVS Health

May 2, 2024 | by

Teladoc had a passable Q1, given the sudden departure of their CEO, a lackluster 2023, and a downbeat (realistic?) 2024 forecast. The highlights were versus Q1 prior year:

  • Revenue increased 3% to $646.1 million. This exceeded their 2024 projection of $630 to $645 million but the percentage increase is below the 5.2% Teladoc is forecasting for the full year. Their US revenue grew 1% to $547.6 million while international revenue grew 13% to $98.5 million.
  • But net loss also increased far more on a percentage basis–18% to $81.9 million, or $0.49 per share. Some of the loss was due to stock-based compensation expense, severance expenses, and amortization of acquired intangibles. Due to these, the increased revenue did not offset or narrow losses.
  • Adjusted EBIDTA increased 20% to $63.1 million, which is positive.

Looking at their main market segments, their Integrated Care segment revenue grew 8% to $377.1 million, Once again, BetterHelp, their behavioral telehealth unit and one-time hope for growth, continued to disappoint with a 4% decrease in revenue to $269.0 million.

The forecast for Q2 is: 

  • Revenue $635 – $660 million
  • Net loss per share ($0.45) – ($0.35), slightly lower than Q1
  • Adjusted EBITDA $70 – $80 million

Integrated Care’s forecast is an increase of 2 to 5% in revenue, while BetterHelp’s remains weak with a decrease of 4 to 8% in revenue.

So far, cutting costs, higher margins, cutting jobs in data science and engineering, third-party (supplier?) costs, and getting on that ‘path to profitability’ has had limited results, at least to Mr. Market which continues to drop the stock–40% to date and deteriorating. On the earnings call, interim CEO and CFO Mala Murthy, in referring to this, said “We are not waiting. We have a plan to deliver, we have investments to execute, and that is absolutely our focus.” Will Mr. Market believe this in a shrinking market? The search for a permanent CEO is underway, and the replacement is expected to be named later this year. Teladoc release, Mobihealthnews, FierceHealthcare

The broader meaning? This Editor explored what happened at Teladoc and the aftermath after some of the dust settled [TTA 9 April]. The Teladoc foundational model as a stand-alone, mostly urgent care service is not growing but shrinking. It doesn’t coordinate care nor does it integrate well into providers. While the pandemic gave that model a lift, it also boosted integrated services as modules into patient portals, EHRs, population health, and other provider-based platforms. Among higher care need Medicare beneficiaries, usage was there but minimal detailed in two recent studies. Even asynchronous and telephonic telehealth gained since they were reimbursed or low cost. Before, during, and after the pandemic, there were too many telehealth companies for the limited demand. Add in the continuing proliferation of telementalhealth providers, still popping up like tulips in spring–another reason why BetterHelp, one of the earlier entrants, isn’t getting traction. FierceHealthcare adds more points such as over-supply cratering price (and the revenue model) and hybridization: white-labeling with providers, virtual specialty clinics such as those under Included Health’s, and partnerships with health plans and employers. 

CVS Health’s Q1 also wasn’t swell for reasons that are impacting their full year. High medical costs affected their Aetna plans, with high utilization in Medicare Advantage, inpatient admissions, and outpatient services were all high in Q1–$900 million higher than CVS expected. Lower MA STAR ratings will affect their forward Federal reimbursements, with one of their largest MA plans falling from 4.5 to 3.5 rating in 2024. According to CEO Karen Lynch, most of this utilization was from a patient usage reversion to pre-pandemic patterns. Their Q1 revenue of $88.4 billion was up 4% versus prior year with net income falling by almost half to $1.1 billion, both significantly below analysts’ expectations. CVS adjusted their full year downward, which led to their stock falling another 19%. Change Healthcare’s data breach is also affecting their forecasts with delayed claims, leading CVS to set a reserve of $500 million. HealthcareDive

Teladoc CEO Jason Gorevic steps down immediately in shock announcement

April 5, 2024 | by

Teladoc Health announced this morning the immediate departure of CEO Jason Gorevic. The release from Teladoc hit the wires at 6:30am Eastern Daylight Time. Chief financial officer Mala Murthy has taken the CEO position on an interim basis while the board of directors conducts an executive search for a permanent replacement. She will retain CFO responsibilities during the search.

From LinkedIn: Ms. Murthy has been with Teladoc since June of 2019, joining as CFO from seven years at American Express as CFO of their Global Commercial Services segment. Previously she was with Pepsico. 

The industry for some time anticipated Mr. Gorevic’s departure after 15 years due to Teladoc’s lackluster 2023 and a dismal forecast for 2024. Teladoc never really recovered from a disastrous 2020 $18.5 billion acquisition of Livongo engineered by Mr. Gorevic with Glen Tullman, followed by its 2022 $6.6 billion writedown. The share price never really recovered, reaching a high over $293 in February 2021 but eroding quickly after that. It currently languishes at below $15, losing 34% YTD and 95% since 2021. The crash in Teladoc’s value as the pandemic closures of practices resolved was replicated by other telehealth companies such as Amwell, MDLIVE, Included, and most others. But the picture didn’t seem to be clearing. Telemental health provider BetterHelp, which last year was touted as the company’s salvation, wasn’t, falling flat in 2023 revenue. Teladoc’s 2024 forecast was downbeat as well [TTA 22 Feb], but management in the announcement reinforced that they are standing pat on their Q1 and full year 2024 financial guidance.

The usual anodyne statements followed. “We thank Jason for his many achievements and contributions during the 15 years he led Teladoc Health. We wish him success in his future endeavors,” said David B. Snow, Jr., Chairman of the Teladoc Health Board of Directors. To CNBC, Mr. Gorevic said, “I am proud of the impact we’ve made on the healthcare system, and our many accomplishments in advancing innovation and transforming virtual health care from an unrealized promise into a valued reality for our 90 million members.” 

The impression left by Teladoc from press and related news articles, as well as by analysts, was this move was sudden. The precipitating action to remove Mr. Gorevic is yet to be revealed. The release was timed for the usual pro forma Friday, but the morning timing was designed for the markets to lift the stock in week-end trading. Teladoc’s financials have been hammered for the past two years, but no differently than its now extensive competition, with health systems and practices now incorporating telehealth and virtual health software. Another confirmation that this was a sudden move: a quick view of the Teladoc website at 12.30 ET was that Mr. Gorevic was still listed as the CEO; this changed with a second view at 1pm. To be continued…  FierceHealthcare, Axios, HealthcareDive

Mid-week news roundup: $105M senior debt to Headspace; Nextech bought for $1.4B; Teladoc’s Better(Help) Q2 boosts 10%; Peppermint’s online ‘clubhouse’ for seniors, PathAI lays off 87

July 27, 2023 | by

Mostly good news this midweek…

Headspace gained some needed cash–a $105M senior debt facility–from Oxford Finance. The company can use it. Their more recent headlines were for layoffs (15% earlier this month) and the telemental health space, which boomed during the pandemic, now can best be described as challenged. Headspace expanded to the UK in January. As noted with the layoffs, Headspace never SPAC’d but after acquiring Ginger for a $3 billion valuation back in the crazy days of 2021, hasn’t had an easy time of it. Their financing will be used for expansion and for opportunities. The problem is that telemental health has too many lookalike/soundalike competitors including the 9,000 lb. elephants (see Teladoc) all going after the same targets–direct to consumer, enterprise, and health plan markets. It’s a rocky road to that cliché, a path to profitability. Business Wire, FierceHealthcare

Nextech was bought by TPG for a tidy $1.4 billion. Nextech is a healthcare IT company with cloud-based specialty EHRs, analytics, and practice management systems. Specialties they cover are dermatology, ophthalmology, orthopedics, plastic surgery, and med spa. TPG is investing in Nextech through TPG Capital, its US and European late-stage private equity platform. The exit was made by Thomas H. Lee Partners. TPG has previously invested in Lyric (formerly known as ClaimsXten), WellSky, and IQVIA. TPG release, FierceHealthcare

Teladoc had good Q2 news for investors, with a 10% boost aided by BetterHelp’s performance.  TDOC beat The Street ever so slightly with a 10% quarterly revenue boost to $652 million. They also narrowed net loss to $65 million, or a loss of 40 cents per share. BetterHelp’s performance was up 18% in revenue, with $292 million in Q2, hardly dented by their $7.8 million FTC settlement in March. Integrated care was up 5% for $360 million in revenue. In Q2 2022, Teladoc took a $3 billion impairment charge as the second part of writing off its Livongo buy [TTA 30 July 2022]  and their Q1 wasn’t much better with a $6.6 billion writeoff [TTA 4 May 2022]. It showed in TDOC’s share price which has been up about $5 since the announcement on 25 July.  On the investor call, CEO Jason Gorevic is betting on BetterHelp and weight management [TTA 21 April] being introduced this quarter, though for the latter recent health concerns on Ozempic as a weight loss drug, insurers increasingly refusing to pay for it (Medicare does not, and it costs upwards of $1,000/month), and substantial competition from other weight loss players may cloud the outlook. FierceHealthcare, Q2 earnings

Peppermint appealing to older adults with online ‘clubhouses’. Out of NYC-based VC/developer Redesign Health , Peppermint’s purpose is to address senior loneliness through virtual clubs. Older adults can practice hobbies or contribute their knowledge as ‘experts’. Peppermint is kicking off with $8 million in seed funding partly out of Primetime Partners and partnering with senior centers affiliated with the Massachusetts Council on Aging (MCOA). This Editor wonders if $9.99 per month (nearly $120/year) with a 30-day free trial is a sustainable model for those minding their dollars in this inflationary time. Release, MedCityNews

AI pathology company PathAI is releasing 87 employees, according to a Massachusetts-filed WARN notice. Of the 87, 51 live in the Bay State with 36 mainly remote workers outside it. It’s considered to be one of Massachusetts’ largest health tech companies with an estimated 600 employees. The layoffs are effective 31 July. The company has had over $255 million in funding through a 2021 Series C including General Atlantic and Labcorp. (Crunchbase) One month ago, they added a new president of biopharma and chief business officer, Matt Grow (release).  BostInno (paywalled), Becker’s

FTC, DOJ float enhanced information requirements for HSR premerger notification filing process–what will be M&A effects?

June 29, 2023 | by

FTC, DOJ are now coming after M&A–and you thought they were tough before? New information disclosure requirements proposed by the US Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division for mergers and acquisitions that fall under the Hart-Scott-Rodino Act (HSR) may put a damper on an already stagnant business area. On Tuesday 27 June, FTC, notably taking the lead with the concurrence of DOJ, released multiple proposed changes to the premerger notification filing process, the most extensive since they were first published in 1978 after HSR was passed in 1976. HSR premerger notification is required for transactions that exceed the threshold currently set at $111.4 million.

These changes will be formally submitted for the standard 60-day public review and comment later this week in the Federal Register. Changes are typically made after that time before final rules are published, a process that may take months.

From FTC’s release, the proposed changes fall under these areas.

  • Provision of details about transaction rationale and details surrounding investment vehicles or corporate relationships.
  • Provision of information related to products or services in both horizontal products and services, and non-horizontal business relationships such as supply agreements.
  • Provision of projected revenue streams, transactional analyses and internal documents describing market conditions, and structure of entities involved such as private equity investments.
  • Provision of details regarding previous acquisitions.
  • Disclosure of information that screens for labor market issues by classifying employees based on current Standard Occupational Classification system categories.
  • These proposed changes also address Congressional concerns that subsidies from foreign entities of concern [North Korea, China, Russia, and Iran–Ed.] can distort the competitive process or otherwise change the business strategies of a subsidized firm in ways that undermine competition following an acquisition.

The National Law Review goes into far more detail on exactly what additional information will be required. This includes disclosure of what foreign jurisdictions are reviewing the deal. The rationale for the changes is that transactions have become far more complex since the original requirements were set and that the additional information will “more effectively and efficiently screen transactions for potential competition issues within the initial waiting period, which is typically 30 days.” According to FierceHealthcare, the FTC said it expects the proposed changes will take merging entities 144 hours per filing, up from the current 37-hour average. It’s clear that the mountain of information already needed to file a pre-merger notification and the time needed to gather such information will be much higher, perhaps to months and reveal far more than perhaps some companies want to disclose.

For those surprised that FTC is taking the lead on this, this once-sleepy agency woke up late last year in a heckuva bad humor and is now (more…)

Mid-week roundup: CVS-Oak Street closes, DEA extends controlled substance telehealth waiver, Bright Health selling CA MA plans, Talkspace, Teladoc turnarounds? (updated)

May 4, 2023 | by

CVS closed its $10.6 billion deal for Oak Street Health, well before the anticipated end of 2023. It picks up 169 primary care offices in 21 states–and an unprofitable operation that clocked a loss last year of $510 million without much of a change till 2025. The quick closing was likely spurred by both the Department of Justice (DOJ) and the Federal Trade Commission (FTC) letting their antitrust challenge period expire at the end of March with nary a whimper. DOJ and FTC, the latter which has been remarkably ‘pixelated’ of late on privacy issues with GoodRx and Teladoc’s BetterHelp, evidently passed on ‘egg on the face’ and let the ovoid land squarely on Elizabeth Warren’s Senate desk. She had asked FTC to ‘carefully scrutinize’ the deal. Shareholders received a tidy $39 per share. OSH will remain a multi-payer practice and now-former CEO Mike Pykosz will lead the company under CVS’ new healthcare delivery arm. This follows on CVS’ closing of Signify Health [TTA 30 March].  CVS release, FierceHealthcare Our prior gimlety coverage of CVS/OSH: 16 Feb, 2 March, Unlike OSH, CVS had a strong Q1 with $2.1 billion in profit, slightly down from 2022’s $2.4 billion, and an 11% boost in revenue. FierceHealthcare

DEA in-person prescribing requirements on Schedule II and higher controlled substances postponed indefinitely. The proposed rule would have added back in-person requirements for telehealth prescribing of controlled substances after the official end of the Public Health Emergency and its in-person waivers on 11 May. On 25 April, the DEA filed a draft temporary rule with the Office of Management and Budget for the extension. The Ryan Haight Online Pharmacy Consumer Protection Act of 2008 requires that Schedule II medications and narcotics (including Adderall and Ritalin) require an in-person prescription, while Schedule III or higher medications, including buprenorphine, Ambien, Valium, Xanax and ketamine can be prescribed for 30 days via telehealth but would require an in-person visit before a refill. The DEA was deluged with 38,000 comments and advocacy pressure from ATA. The change has also thrown a wrench in the works of online mental health companies which prescribe many of these drugs. FierceHealthcare  Updated–The ATA has weighed in favorably about the DEA postponement. Kyle Zebley, executive director of ATA Action, stated in their release that “Our hope is that the DEA will use the time of an extension to be responsive to the concerns of telehealth advocates, patients, and the American people to create rules that ensure access to clinical care that is not inappropriately restricted.”

Bright Health put its California Medicare Advantage plans up for sale. The company, staring down at bankruptcy [TTA 7 Apr, 20 Apr] does not yet have a buyer for the MA plans. When they are sold, it will be Bright’s exit as a health insurer, as it has exited MA plans in Florida and exchange plans everywhere else–in a flurry of state investigations ranging from Tennessee to Texas. Bright plans to focus on its provider arm, NeueHealth. Healthcare Dive

Talkspace narrowed its loss, increased revenue. The telemental health provider narrowed its Q1 net loss to $8.8 million compared to 2022’s $18.3 million in Q4 2022 and $20.4 million in Q1. Revenue increased to $33.3 million versus last year’s Q1 of $30.2 million. Their source of business has shifted to B2B with a 71% increase, a sharp departure from their formerly dominant consumer segment which has declined 40%.  Their 2023 forecast revenue is $130-135 million. It is still facing a Nasdaq delisting as trading below $1.00 per share and a class action lawsuit on subscription renewals. Mobihealthnews

Teladoc also waxed positive, ‘beating the Street’ with Q1 revenue growth of 11% to $629 million. This was powered as expected by BetterHelp, Teladoc’s direct-to-consumer mental health business. Their revenue grew to $279 million, a 21% increase. Teladoc’s enterprise business also had a 5% boost to almost $350 million. Their weight loss business is expected to be another net positive income generator, but not affecting results until 2024 as it won’t be introduced until Q3 [TTA 21 April]. The road to profitability will be a long one, as losses this quarter were $69.2 million, but compared to last year’s $6.7 billion writedown of Livongo, it’s positively smooth. Healthcare Dive

FTC takes off the gloves, v2: a walk on the technical side of ad pixel tracking

March 22, 2023 | by

FTC explains its actions versus GoodRx and Teladoc’s BetterHelp. If ad trackers leave you a little “pixelated”, this FTC blog (who would have thunk?) is a decent explanation of what ad trackers, a/k/a third-party tracking pixels, do. They’re not evil, as some of the FTC statements would have you think, and have legitimate uses in tracking how your website pages are being used (and by whom). But GoodRx and BetterHelp in particular went too far in information gathering, sloppy handling, and monetizing customer information with third parties. 

  • Pixels, once tiny images, are now extensive bits of JavaScript or HTML code that send information back to the owner of the page they’re on. Consumers are of course totally unaware of their use.
  •  These codes can send back basic, non-identifiable, and useful information to marketers, such as pageviews, clicks, and interactions with ads or with their pages.
  • Unfortunately, code can be written to send back far more detailed information back to marketers, such as names, answers to questionnaires, email addresses, financial information, and more. Some of this can be hashed (a form of masking) but can be decoded. This is potentially sensitive information that needs to be handled carefully and with the assumption of confidentiality. 
  • As mentioned in our TTA articles, this information can be monetized by companies and provide an additional revenue stream. This type of information has value to ad networks (Apple, Microsoft, Google, Meta etc.), data brokers, social networks (Facebook, TikTok), advertisers, and others. 
  • Neither site asked permission from users to retain information nor to use it for third-party ad targeting.

The FTC blog then goes on to discuss their concerns and where FTC will go even more extensively into areas such as consumer harm and how companies manage the data. You don’t have to be a HIPAA-covered entity to fall under FTC’s purview–just capture consumer health data then share it with third parties or make deceptive representations.

Digital health companies are on notice to be concerned about yet another Federal three-letter agency. Expect more actions by FTC beyond GoodRx (getting off lightly at $1.5 million) and BetterHelp (dinged for $7.8 million which will somehow be returned to consumers). 

FTC takes off the gloves: $7.8M fine for Teladoc’s BetterHelp, warns Amazon (and everyone else) on One Medical patient privacy

March 3, 2023 | by

The Federal Trade Commission (FTC) goes to ‘bare knucks’. BetterHelp, Teladoc’s promising telemental business, settled a complaint brought by the FTC in a 4-0 vote over ad trackers and sharing consumer health data with third parties. The ad trackers shared data with  Facebook, Criteo, Pinterest, and Snapchat for ad retargeting to these customers, knowing their situation. While the $7.8 million fine has to be approved by a Federal judge (as does GoodRx’s), the $7.8 million will be returned to consumers whose data was shared. How this will be done is a question mark to this Editor, but the tracking was done from 2013 (prior to Teladoc’s buy in 2015) to 2021, so quite a few will be eligible. According to the complaint, BetterHelp made false and deceptive statements to users about the disclosure of their information and formally “disseminated, or caused to be disseminated, misleading and deceptive representations regarding its compliance with federal health privacy laws.”

BetterHelp did not disclose to users that it was sharing personal information with third parties and never obtained consent. In fact, they assured users on intake that their information would be private, between them and their therapist. BetterHelp did not offer disclosure of information sharing and an opt-out form until October 2021. The information shared was extensive:

  • Intake questionnaire answers, such as whether the user was experiencing suicidal thoughts, and if they belonged to a group such as LGBTQ, teens, or Christians
  • Prescriptions
  • Prior therapy history if any
  • Email addresses and IP addresses
  • Financial status

The decisions on sharing information were delegated to a junior marketing analyst without training in PHI and protecting privacy from 2017. There was no formal compliance review or employee training in HIPAA practices. BetterHelp also displayed various logos, including HIPAA, to assure users that their information adhered to governmental standards and practices for health, when it clearly did not. (Editor’s note: as a marketer, both are shocking with Teladoc as a parent company well aware of these issues.)

Why this is important: Ad tracking is a form of revenue for companies, which now will be effectively shut off. This presents a decline in revenue hopes for Teladoc, which in January positioned BetterHelp as a bright spot of ‘balanced growth’. Expect that BetterHelp will be only the first of these companies in telemental health counseling to receive a working over from a newly-aggressive FTC–and with a return to in-person visits required for Schedule 2 meds, further depressing the entire category.  Complaint, Healthcare Dive, Mobihealthnews

FTC’s shot across the bow to Amazon and everyone in DTC digital health. With Amazon closing the buy of One Medical, the FTC issued a 1 1/2 page public statement warning both companies that because of privacy representations they have made prior to and after the acquisition, any failure to maintain consumer privacy will be in violation of Section 5 of the FTC Act. FTC will be looking at ‘false net impressions’ and “make clear not only how they will use protected health information as defined by HIPAA but also how the integrated entity will use any One Medical patient data for purposes beyond the provision of health care. ” And in closing, a broader warning:

The Commission has long taken the position that personal health information is sensitive data and has reaffirmed this position through recent enforcement actions. Further, companies that fail to have adequate safeguards or controls in place to protect sensitive data or fail to obtain consumers’ express affirmative consent for marketing based on sensitive data such as health data may be in violation of the law.

The law requires companies to treat sensitive data with great care. Accordingly, the parties and the market more broadly should be on notice that the Commission will continue to monitor this space and bring enforcement actions whenever the facts warrant.

Hat tip to HISTalk 3 March   TTA on FTC issues with Amazon post-closing 23 Feb

Teladoc laying off 6%, reducing real estate, in move to “balanced growth” and profitability

January 19, 2023 | by

Following on Teladoc’s mildly upbeat announcement of improved Q4 2022 revenue, now the layoffs. Today, employees were informed that 300 positions, about 6% of Teladoc’s workforce, will be departing. Timing was not disclosed. Based on the employee memo and disclosure in their Securities and Exchange Commission (SEC) 8-K filing, the cuts will affect only non-clinical staff and eliminate ‘redundant’ positions acquired in their 2020 merger with Livongo. CEO Jason Gorevic’s statement to employees cited the “challenged economic environment”, transitioning to “balanced growth of revenue and profitability,” and bottom-line growth. Gorevic cited a path to profitability via refocusing on commercial business under the ‘whole person care’ concept covering Primary 360, chronic care management, and mental health, as well as the BetterHelp consumer behavioral health business. 

Released employees will receive severance including payouts based on years of service and grade level, 2022 bonuses, subsidized healthcare benefits under COBRA, BetterHelp therapy access, and job search assistance. Their office space footprint is also being reduced in select markets.  These and other Q4 actions will not have a material impact on 2022 financial operating results.

This Editor, who as a marketer been made redundant a few times due to company acquisitions and once in a business closure, is puzzled that Teladoc carried overlapping Livongo staff for two years after the August 2020 acquisition. The typical non-senior executive in the acquired company usually gets anywhere from ‘depart close of business’ to six months depending on their function or project assignment. Rarely, one finds a berth and even that can be temporary until the next reorg. Perhaps Livongo staff were needed for enterprise customers or Teladoc staff didn’t have the app expertise. The Livongo integration was reportedly an exceptionally bumpy one as well. This Editor also recalls Mr. Gorevic’s statements last May at the time of their Q1 2022 $6.6 billion writeoff of the Livongo acquisition: the competition in telemental health, the rising cost of paid search advertising, expensive keywords driving towards direct-to-consumer telehealth driving up the cost of acquisition, and the long cycle of closing B2B deals [TTA 4 May 22]. Amazing how these costly factors were not cited. In fact, Teladoc has launched TV advertising for Livongo, and for enterprise customers has created a new app that debuted at CES earlier this month that integrates primary care, mental health, and chronic condition management.

In any case, talking about profitability is now fashionable, based on the memes at JPM around partnerships and robust ecosystems. Even if profitability remains way off there on the distant horizon. Also Healthcare Dive, Mobihealthnews