Weekend Must Read: The 10 point pattern of failure of healthcare tech companies

April 24, 2026 | by | 1 Comment

This says it all for startups and early stage companies in the healthcare tech field. We feature today Haverin Consulting’s Stuart Miller, continuing his analysis of the signs that a health tech company, no matter how hot it may seem, is on its way to failure. All four, from startup to spinoff, were name companies that at one point were valued at over $3 to over $4 billion. All failed to deliver their main value propositions while having excellent ‘cover’ for a time. All were either parted out (assets sold) or were total hull losses.

Mr. Miller has drawn out 10 factors from the success, then failure of four companies: Olive AI, IBM Watson Health, Carbon Health, and Babylon Health–this last, one that TTA chronicled as far back as 2014, through the palmy Matt Hancock days, their questionable SPAC, and right to their near-complete dissolution. Back in February, we featured his article analyzing the Carbon Health failure. But all four have been profiled in impressive deep dives, available for subscribers on his Substack account. He does feature extensive free material and definitely is worth the follow.

This is not a long cuppa but very much worth your time and pondering. All This Has Happened Before

Two weekend ‘must reads’: the New Yorker’s Sam Altman/OpenAI exposé–and comments; a further deep dive into Carbon Health’s implosion

April 10, 2026 | by

Too long to summarize or opine on this week–but a must for your weekend reading. Grab the cuppa for the talk of AI World–a New Yorker dissection of Sam Altman, the CEO of OpenAI (link below). To say it is an exposé worthy, at first glance, of the Old School (ain’t no school like the Old School–Ed.) on probably the most important company of AD 2026 is to undersell it. It’s a long article and you’ll need at least one break.

OpenAI, founded as a non-profit with integrity at its core to “prioritize the safety of humanity over the company’s success, or even its survival”, recapitalized last year as a for-profit corporation with 26% of the shares owned by the OpenAI Foundation. It is now a trillion-dollar company that had no trouble raising a paltry $122 billion last week [TTA 2 April] though arguments are made that at least some of that money are IOUs or contingent. ChatGPT has become almost generic for AI, like Kleenex has become for tissues. The battles over control and direction of the company are now totally controlled by Sam Altman, whom former colleagues are not shy about pointing out his difficulty with the truth and a pattern of deceit, for instance to his board, to employees, and Microsoft. Yet everyone continues to do business with him. The FOMO Factor is very strong.

Mr. Altman makes extremely broad statements on the future of work (most traditional managerial, healthcare, and IT jobs will be taken over by AI, thus most of us will be unemployed), has easy access to President Donald Trump, as well as other world executives, and may, as the headline barks, control our future. Thus, he is a person of consequence.

My read so far of this is that within OpenAI, there is no one to counterbalance Mr. Altman’s immense ambition, his desire to dominate and win, not only with AI but also over all business and everyday life. These are character issues that also show up in aspects of his personal life, detailed in the article. If past results are predictive of the future, this flaw usually curdles into the desire to control countries and a complete disrespect for the rest of us leading our lives. 

Sam Altman May Control Our Future–Can He Be Trusted?, 

I will offer two LinkedIn comment posts on this article from an AI person I respect, the head of Curiouser.ai, Stephen Klein. Many of his posts on LinkedIn deal with what AI can and cannot do in business. He writes that he is “committed to designing technology that augments people, creates jobs, and elevates humanity. It’s time we all got back to thinking for ourselves.” 7 April, 8 April 

Our second Must Read is from Sergei Polevikov’s AI Health Uncut, a long analysis on the failure of Carbon Health and what it tells us in “this business we have chosen”. “What The Hell Went Wrong?” and its implications need answers–because it’s being repeated again and again. Today’s article (9 April) is Part 1 of 2, sets the stage about the mistakes made (insiders talk) and, with full credit, springboards off Stuart Miller’s (Haverin Consulting) original analysis made at the time of the Chapter 11 reorg. What we called the ‘Ominous Parallels’ was a Must Read here on 12 February.  TTA (as Telecare Aware, our original name) and this article are also mentioned twice (thanks!).

Those who have yet to subscribe for Mr. Polevikov’s analytic, erudite, and revealing (Emperor’s New Clothes!) POVs can read part of this article for free–but seriously, if you’re in this business, the subscription is worth your money. He also podcasts (links are on his Substack, link at lower right sidebar).

An early and scandalous publisher (before he utterly lost it), Matt Drudge, used to say that he ‘went where the stink is’. Mr. Polevikov does the same. The stink is of our broken primary care reimbursement system, the Covid steroids that pumped up the company, flailing management running through money like drugs, and good ideas for patient care buried under incompetence. 

Must Read: an excellent analysis on Carbon Health’s bankruptcy–and the Ominous Parallels

February 12, 2026 | by

Carbon Health isn’t an outlier. It’s part of a trend that founders and senior managers must beware. This Editor didn’t know much about Carbon Health when news of its bankruptcy made the news [TTA 7 Feb]. It was of interest because of its telehealth roots and its growth into a current combination of bricks-and-mortar primary care with telehealth. The liabilities were king sized but the way out they chose was unusual, a combination of a sale and a reorganization.

In context and by comparison, Carbon Health follows a path of inevitable failure trod by two other companies, Olive AI and IBM Watson Health. 2022, an ‘in the money’ year for some, was the finis year for all these companies.

  • Olive AI started to fall apart in late 2022, was closed or parted out a year later, and was a classic case of a company that was overfunded, all over the healthcare map, and finally ran out of time and money. (It was also funded heavily by General Catalyst, another red flag.)
  • IBM Watson Health was originally a company that everyone wanted to like with playing chess on Jeopardy. As it grew, it became less lovable and, just like Olive AI, started to pursue multiple lines of business without a solid track record on their main lines as it gobbled up smaller companies. It started to go sideways as early as 2020, it repeatedly failed in high profile pilots with major healthcare organizations, parts were sold off, then the remainder sold by IBM by July 2022. Most of it still does business as Merative, maintaining a very low profile.
  • Carbon started to fail in 2022 as the pandemic tide receded, their overextension was revealed, and their growth plans collapsed; despite buckets of cash extended by CVS and other investors, it was well on the road to bankruptcy. Their creation of and practice dependence on a proprietary EHR in retrospect was mind-boggling.

Get the cuppa and settle in. Stuart Miller of Haverin Consulting, writing on Substack (free article), draws the Ominous Parallels among the three companies first on a seven-point comparison grid: peak valuation (always inflated), core promise (always 35,000 feet), growth strategy (always hyper), strategic overreach (always too complex), technology gap (always aggravated by overreach), demand dependency (always a fadeaway), and outcome (inevitably, failure). He then illustrates what your company should avoid. What are the lessons smart founders and funders should be minding? If you’re a potential partner, investor, or a board member, what are the yellow and red flags? The deal breakers? The simple questions the company should be able to answer?

The subscriber version goes into far greater detail and is recommended if you have earnest money or your future at stake in digital health companies.

Chutes & Ladders this week: Carbon Health’s Ch. 11; Centene’s 2-way beat, TrumpRx.com debuts; Doc.com files for $24M Nasdaq listing, $55M for Alaffia Health, big Series Ds for Midi Health and ElevenLabs

February 7, 2026 | by

One busy week in the game! Chutes first…

Primary care/telehealth provider Carbon Health filed for Chapter 11 dual-track bankruptcy reorganization. San Francisco-based Carbon filed on Tuesday 2 February a pre-packaged Chapter 11. The unusual dual track refers to a simultaneous sale of the company and a court-supervised restructuring backed by up to $19.5M in debtor-in-possession (DIP) financing. The DIP financing, via Future Solutions Investments, is currently approved up to $9 million. DIP financing ensures that operations continue and that employees and vendors are paid.

The bankruptcy was filed in the US Bankruptcy Court for the Southern District of Texas, with liabilities estimated between $100 million and $500 million. According to the company release, “the Chapter 11 plan is premised on a debt-for-equity exchange, and a post-petition marketing and sale process for all or a portion of the Company’s assets.” At this point, there is no projected date for emergence out of bankruptcy.

Carbon started as an app-based telehealth provider in 2015 in SF and now has 93 affiliated primary and urgent care clinics across eight states from California to New Jersey. It is structured as a management services organization (MSO) with a proprietary technology stack to support patient telehealth and the clinics. The company attributes the shortfalls and need for reorganization to post-Covid demand changes and a tight capital market for healthcare. (Editor’s note: operating primary care practices through a MSO model, where you make money selling services, is certainly interesting but presents many hurdles to consistent profit. I’ll cite my experience working for an MSO engaged with Medicare payment model ACOs and IPAs.)

It’s been a tough market for provider groups even when financing was easy, as VillageMD’s difficulties with Walgreens have demonstrated. Primary care provision to patients is too sporadic and competitive to allow for mistakes. Then when consistency and depth are needed, chronic care management becomes all about risk management. Not care. Beckers, FierceHealthcare, ElevenFlo

Between a Chute and a Ladder…

Centene’s horrible 2025 closed with a Q4 net loss of $1.1 billion, but a better forecast for 2026. The Q4 compared to a net profit of $283 million in FY 2024. A major factor was that the health benefits ratio (HBR) of 94.3% for Q4 2025 was sharply up from 89.6% in Q4 2024, as well as expenses relating to rising No Surprises Act billing disputes. The ladder was that the revenue topline of $49.7 billion, up 22% versus prior year, reportedly beat Wall Street expectations as did the full year.

For 2026, CEO Sarah London and CFO Drew Asher are promising a more stable ride. Medicaid profitability has improved plus year-over-year growth with breakeven in the Medicare Advantage market. This rosy outlook contrasts with UnitedHealth Group, Molina Healthcare, and Elevance, and has led to more questions by analysts about its validity.

A crotchety Mr. Market didn’t like the news today (Friday) and whipped the stock down 4% to $38. A year ago, CNC traded above $66. Centene’s primary markets are Medicaid, Medicare and the ACA. They continue to shrink non-core businesses, announcing that it is divesting the remainder of Magellan Health it still holds, resulting in an impairment of $513 million, or $389 million after-tax. (Disclosure: this Editor worked for a company Centene bought and holds CNC stock) Financial release, Healthcare Finance News, Healthcare Dive

On to the Ladders…

TrumpRx.com online site debuts. This provides some relief on pricing for 40 heavily prescribed and expensive drugs from five pharmaceutical manufacturers: AstraZeneca, Eli Lilly, EMD Serono, Novo Nordisk, and Pfizer. The pricing is ‘most favored nation’ (MFN) which means it is in line with the lowest paid by other developed nations. According to the White House release that outlines availability, “Depending on the manufacturer of a given drug, patients with valid prescriptions will be able to access savings through user-friendly coupons that can be printed or downloaded onto their phones or through channels set up by the manufacturer and integrated into TrumpRx.gov.” In return, the manufacturers are exempted for three years from pharmaceutical tariffs. Many of these drugs are already available at reduced prices through the drug companies’ DTC outlets, such as Zepbound and Wegovy. While for those in commercial plans or Medicare Part D there may not be much difference in pricing, the trend here is that manufacturers continue to unabashedly create outlets for drugs that bypass the beleaguered PBMs.  Healthcare Dive

It was also a Big Week for a future IPO and company financings.

Mexican telehealth Doc.com files for Nasdaq listing. Their filing is for 3 million shares of its Class A common stock priced at $8, for a total value of $24 million. (SEC Form 1-A) The stock will list under DOCC. Doc.com is a little different in claiming to use both blockchain to secure transactions and AI for workflows and operations to provide telehealth services that connect underserved markets with doctors, nurse-practitioners, psychologists, mental health specialists, and even veterinarians. It’s currently offered in Latin America and the US (as of last year), headquartered in NYC. Current financing is $300.7 million raised in January 2024 from Silver Rock Group private equity, and a $700,000 debt financing. (Crunchbase).  2025 annual report, Mobihealthnews

Alaffia Health scores a $55 million Series B. Lead investor was Transformation Capital with participation from previous investors including FirstMark Capital, Tau Ventures, and Twine Ventures. Their total raise is $73 million. Alaffia has developed agentic AI for health plan claims operations. The AI tools offered scale clinical review capacity for health plans and evaluate claims against the complete patient medical record, for a claimed 20%+ average savings on high-cost facility claims and 5x+ ROI for leading health plans. The fresh financing will be used for the usual R&D, developing additional agentic AI, and growth. Alaffia release, MedCityNews

Midi Health is a new unicorn, closing a $100 million Series D financing and a valuation over $1 billion. Even more unusual, it’s another strong raise for a women’s health company, this one in telehealth for women in perimenopause and menopause. Last week, Pomelo Care raised a $92 million Series C to move from the maternity segment into menopause and older women’s health. The Series D was led by Goodwater Capital with participation from new investors Foresite Capital and Serena Ventures, as well as continued support from Advance Venture Partners, GV (Google Ventures), Emerson Collective, SemperVirens, and McKesson Ventures.  MedCityNews

ElevenLabs closed its own Series D at $500 million, topping $781 million in funds for its generative AI in text-to-speech and an $11 billion valuation. Its scope is apparently near-universal for developers and companies in multiple industries. For healthcare systems, it has platforms for private practitioners and clinics that provide HIPAA-compliant, intelligent voice agents that triage, route urgent calls and respond to patients. The agents can sync with EHR and HIS systems as well as nurse-call and messaging systems. It can also update records, log triage outcomes and book appointments automatically integrated with EHRs. The fresh financing will assist in their international expansion and ElevenAgents, its enterprise platform for voice and conversational AI. Mobihealthnews, ElevenLabs release

Now CVS Health may be reviewing ‘options’–including a possible breakup–report

October 1, 2024 | by

Perhaps CVS needs to take a medication for Corporate Indigestion. It turns out that CVS did not entirely avoid the agita that is sickening Walgreens. Instead, it has other reasons. Reuters reported that according to their sources (unnamed), their management, board, and financial advisers are exploring ‘options’ that may lead to a partial breakup of the company. Prominently mentioned: a spinoff of their insurance businesses from their retail business. CVS acquired Aetna for this back in 2018 for a pricey $69 billion. Being debated: where the Caremark pharmacy benefit manager (PBM) unit will reside, under retail or insurance. PBM feeds into both retail and the insurance plans.

Glenview Capital Management is reported to be one of the financial institutions in talks with management on an improvement plan. Glenview owns 1% of CVS stock according to the Wall Street Journal, but that 1% accounts for over $700 million of its $2.5 billion war chest. That gives them cause for concern–and leverage.

CVS has confirmed none of this, going to the Boilerplate Folder to pull copy about “driving performance and delivering high quality healthcare products and services enabled by our unmatched scale and integrated model.”

Industry observers aren’t expressing anything more than mild surprise about this, based on a concatenation of recent events and backwash from their 2022-2023 spending binge.

  • CVS cut its 2024 outlook again in August for the third quarter running…and has lost 25% in share value YTD.
  • The kneejerk of a $1 billion cost-cutting plan is being implemented; this week, about 2,900 corporate jobs will be cut. This is after a 5,000-employee layoff that was announced in October 2023, taking place into 2024.
  • Aetna’s Brian Kane was booted in August after less than one year on the job due to his numbers going the wrong way–and his job filled in and not replaced [TTA 8 August]. Who’s next?
  • The outlook for Medicare Advantage is glum into 2025 and later, with utilization costs soaring, new lower Federal reimbursement rates for diagnoses, and Federal clawbacks on overpayments from 2018 on. 2025 plan exits have multiplied with CVS’ affecting about 10% of their membership.
  • PBMs are under attack. The latest is a 20 September FTC administrative complaint (= suit) against the Big Three (CVS Caremark, Express Scripts/Cigna and Optum/UHG plus their respective group purchasing organizations for inflating insulin drug pricing. Insulin is the prime example of inflated drug costs in the FTC view. The latest action doubles down on FTC’s mid-year report. MedCityNews  Readers should note that drug costs have been consistently under attack in Washington not only with this administration, but the prior one, which makes the current election a continuation of the same negative atmosphere.
  • In May, CVS openly sought private equity partners to expand their Oak Street Health locations to a promised 300 by 2026. No partner nor expansion has been announced to date. OSH was bought for a stunning $10.6 billion only 17 months ago.at the very tail end of the ‘buy anything/FOMO’ boom.  This Editor noted that this summer, there were direct response TV commercials to rustle up members airing on various cable channels that target the mature demographic. OSH was regarded as the runt of the litter of primary care practice groups since the larger ones had already been bought by Walgreens and Amazon. Its drawbacks in addition to small size: its model was overly wedded to Medicare value-based (ACO REACH) and Medicare Advantage models, and it had never turned a profit nor was about to. Even at the time, CVS was heavily criticized as making “a deal that made no sense” and “CVS better have a plan they implement in 18 months or they’ll get slaughtered” by an industry figure. [TTA 2 Mar 2023,16 Mar 2023]  We’re at 18 months. Is OSH quietly on the block?
  • Signify Health was another expensive 2022 buy that sounded good on calls to support the “integration” objective ($8 billion, cash). It put CVS into burgeoning home health and practices–but cost not only the inflated purchase price but also part of the cost of unwinding Remedy Health’s failed Episodes of Care model. CVS also put $100 million into Carbon Health which had to unwind several lines of business including public health before their Series D [TTA 11 Jan 2023], and earlier this year had both their CEO and their president depart. Biotech Networks

Is it time to call healthcare the Sick Man of the American Economy? Or just these big pillars? Crain’s Chicago Business. FierceHealthcare, Healthcare Dive

This ‘n’ that: HHS settles *2017* ransomware breach, Carbon Health lays off 114 in restructuring, why oh why VC General Catalyst wants a $3B health system, when Larry Met Billy, a lexicon of workplace terms

November 2, 2023 | by

It only took five years to levy a $100,000 fine. Doctors’ Management Services, a Massachusetts-based medical management company, had a ransomware attack back in 2017 that exposed 206,695 individuals to personal health information violations. The Health and Human Services (HHS) Office for Civil Rights (OCR), which is charged with actually enforcing penalties and remedies for data breaches, decided that Doctors’ management hadn’t done quite enough to protect their patients. The cyberattack was identified in December 2018, but Doctors’ didn’t report the breach to OCR until April 2019. Their network had been infected with GandCrab ransomware. After determining various protection failures, HHS put them on a three-year corrective plan to protect their data and collected the $100,000 fine, their very first. But still, nearly four years later? And with breaches, ransomware, and hacking going on every day?  Healthcare Dive

Another Covid unicorn comes down with a bang. Carbon Health, a 13-state network of primary care clinics along with virtual care in areas such as mental health, says ‘bye’ to 114 or 5% of its staff. It grew and got funded big during Covid as it set up testing and vaccine initiatives, achieving a valuation of $3 billion. In 2021, Covid accounted for 60% of their revenue, but as it waned in 2022, so did their revenue by 23%. To date, their funding has been over $622 million, with $100 million in January in a Series D funded by CVS Health Ventures. This isn’t their first big layoff–200 staffers said goodbye in January as well as 250 in mid-2022 which was about 8%. Becker’s

General Catalyst’s newest venture into Health Transformation Land, HATco, The Health Assurance Transformation Corporation, is in the market for a health system in the “$1 billion to $3 billion” range. Not too small to not have an impact in their communities, and large enough to have capabilities around value-based care plus a track record of excellence. This is to create their ‘blueprint’ for healthcare transformation. Interested parties should contact CEO Marc Harrison, MD. Their other plans to get there were announced at HLTH. As to why…General Catalyst has had a lot of experience with companies, and perhaps they feel they have a Better Way to Get There. Becker’s, TTA 10 Oct.

Of Note…The second wealthiest executive in healthcare, Oracle’s Larry Ellison, wasn’t too busy to hang out with the third wealthiest on Forbes’ list, former senator and HCA honcho Bill Frist, in Nashville at the inaugural Frist Cressey Ventures Forum. Ellison is also investing in a 70-acre, $1.35 billion campus on Nashville’s riverfront. It’s always nice to make nice with the neighbors, especially when they have major holdings in a large health corporation. Becker’s

To wrap up This ‘N’ That, Becker’s has a useful article that will keep you au courant on those workplace terms you see on places like LinkedIn. ‘Quiet quitting’, so popular in 2021-2, has had its day with layoffs leading to real ‘quitting’, leaving behind ‘grumpy stayers’ who try to get away with ‘Bare Minimum Mondays’. ‘Coffee badging’ was a new one on your Editor. The rest are catchy phrases for things as old as time in the workplace.

Is CVS’ Oak Street Health deal genius? Or a waste of time and $10B?

February 16, 2023 | by

A sample of the split opinion. In the buccaneering between CVS and Walgreens, plus Walmart and Amazon, to add primary care, CVS definitely buckled the swash with three deals: Signify Health (being questioned by DOJ and FTC) [TTA 21 Oct 22 latest], a $100 million investment in Carbon Health [TTA 11 Jan], and Oak Street Health [TTA 9 Feb]. These are in line with their strategy of acquiring companies to expand their capabilities in primary care, provider enablement, and home health. The wisdom of the first–primary care–is being questioned by a few in healthcare. 

The basic argument is that primary care is money-losing, ‘unless you have significant ancillary revenue and downstream referral income’ according to Randy Davis, vice president and CIO of CGH Medical Center, based in Sterling, Illinois. Oak Street’s Medicare Advantage business is also money-losing because of its dependence on increasing severity scores (risk adjustment) and is generally an ‘uphill battle’. This Editor will add that as previously noted–and lauded in CVS’ release–Oak Street is notable for serving underserved patient populations–50 percent of Oak Street Health’s patients have a housing, food, or isolation risk factor. That equates to greater expenses that may or may not be reimbursable. Oak Street certainly has proven the money-losing part, forecasting a loss of $200 million for 2023 and not projecting a profit until 2025. Mr. Davis was blunt, calling it a deal that made no sense and “CVS better have a plan they implement in 18 months or they’ll get slaughtered.”

Another rap on the deal is that it is not big enough. Given the size of Oak Street at about 169 offices and the national figure is quoted as 600,000 ambulatory sites, it’s tiny. However, what isn’t considered is Aetna’s existing relationships with primary care physicians through ACOs formed as joint arrangements, and if Signify Health goes through, the Signify/Caravan ACOs. In fact, this may be a factor in the DOJ/FTC consideration of antitrust.

Others see opportunity in integrating primary care into CVS’ retail locations (Carbon Health) and serving historically underserved communities–much the same tack that Walgreens is taking with VillageMD (acquiring Summit Health) and Walmart with Walmart Health clinics. Becker’s Hospital Review

And as to Amazon, this Editor’s prediction is that Amazon will strike its Jolly Roger and sail away from the One Medical buy.

CVS opens the checkbook, does the Oak Street Health deal for a generous $10.6B

February 9, 2023 | by

Staying on strategy, CVS buys provider group Oak Street Health. First rumored in mid-January, CVS Health and Oak Street finalized their deal today. The $10.6 billion purchase price of the NYSE traded company rewards shareholders with a $39 per share purchase price. 45% of the shareholders are composed of Newlight Partners LP and General Atlantic LLC plus certain members of the Oak Street Health Board of Directors. They have agreed to vote the shares they own in favor of the transaction (with a whew! at exiting). It is expected to close this year subject to the usual Department of Justice antitrust, Federal Trade Commission (FTC), and state-level review.

The $39 per share price was a tick lower than the January speculation that the price would be over $40 per share. $39 is not bad; at close of last week OSH was trading at $26.80, a far cry from its 2021 share prices in the $50-60 range. Today’s price closed at just above $35.  It has 169 offices and 600 providers across 21 states, making it a manageable size for CVS. OSH is headquartered in Chicago. Their CEO Mike Pykosz will continue to lead OSH, which will become part of CVS’ new Health Care Delivery organization and will be payer agnostic.  Oak Street is notable for serving underserved patient populations–50 percent of Oak Street Health’s patients have a housing, food or isolation risk factor.  

CVS Health’s long term plan, announced at recent earnings calls, is to add services in three categories: primary care, provider enablement, and home health. They are not hurting for profit or financing, closing out 2022 with $4.2 billion profit which certainly is a shining star in the depressed healthcare sky. CVS projects more than $500 million in synergy potential at the 2026 goal which is over 300 centers by 2026. But there will be losses first: 2023 loss about $200 million and not turning the profit corner till 2025 at earliest. An attractive point for CVS is  Canopy, their proprietary technology that determines the appropriate type and level of care for each OSH patient–and care integrates nicely into CVS Health’s community, home and digital offerings, as they say.

Will DOJ allow it without divestment? This administration has already taken a fairly hard tack on antitrust, trying (and failing, though appealing) to block UHG-Change Healthcare. Already the CVS-OSH tie-up has been opposed by an antitrust think tank, the American Economic Liberties Project. Oak Street adds primary care practices to those already under Aetna, many of which are in Federal ACO programs. Signify Health also has Medicare ACO practice groups, including the Caravan ACOs bought late last year. The Signify buy is already under a rolling DOJ and FTC review that has been moving slowly since last October. Signify’s other strength is diversification into home health, CVS’ third target area.

CVS’ investment in Carbon Health ($100 million Series D investment into primary and urgent care clinics in Western states) may be considered as Carbon will be piloting clinics in CVS retail locations. Release, Mobihealthnews, Healthcare Dive, Becker’s (including a breakdown of CVS’ 2022 financials), FierceHealthcare

Interesting pickups from JPM on CVS, Talkspace, Veradigm backs Holmusk, ‘misunderstood’ Babylon Health; six takeaways

January 19, 2023 | by

Out of a decidedly soggy JPMorgan healthcare conference that concentrated mainly on pharma and biotech, there was some news in the downtrodden health tech and related areas. Selected from FierceHealthcare’s Heather Landi’s take:

CVS Health’s open checkbook for the right companies in primary care, provider enablement, and home health was a throwback to the palmy days of 2020-21. A big announcement at JPM was their investment in in-home kidney care and end-stage renal disease management provider Monogram Health. Their Series C raise of $375 million was lead-funded by CVS Health, Cigna Ventures, Humana, Memorial Hermann Health System, and SCAN.  Release, Mobihealthnews This added up to a busy January for CVS with leading Carbon Health‘s $100 million series D [TTA 11 Jan] and $25 million for Array Behavioral Care [TTA 12 Jan].

Talkspace, the cracked telemental health SPAC most recently rumored to be in buy talks with Amwell, touted their “defined, very significant path to profitability within a short period of time.” New CEO Jon Cohen, MD, a surgeon and veteran healthcare exec, touted the strength of the telemental health model, the effectiveness of their asynchronous messaging therapy for depression and anxiety,  and their market change from consumer to employers and health plans. Talkspace has some distance to go, quickly, with a loss through Q3 2022 of $61 million on revenues of $89 million and a share price today of $0.74, which means eventual delisting from Nasdaq. Is a quick buy in their future?

Veradigm, still settling in on their new corporate name, has its own bet on behavioral health data on the analytics side, with a lead investment in Holmusk‘s $45 million Series B. Holmusk will pull in de-identified patient data from Veradigm to their NeuroBlu Database.  Release

And on to Babylon Health, where Ali Parsa must feel like Eric Burdon of the 1960s blues group The Animals in the depth of being ‘misunderstood’. Dr. Parsa promises a path to breakeven by end of 2024.  Babylon’s revenue is on target to hit over $1 billion. They operate in over 15 countries with well over 5 million transactions. But their SPAC cracked too from a high of $272 per share after listing in October 2021 to today’s price just above $11, leaving a lot of investors in the lurch. Even though Q3 revenue increased by $288.9 million versus $74.5 million in 2021, an increase of $214.4 million or 3.9x, and the Q3 loss correspondingly widened to $89.9 million, the loss was significantly lower as a percentage of revenue. They are also converting from a foreign private issuer to a domestic, planning a reverse share split, and selling non-core businesses like the Meritage IPA [TTA 22 Nov 22] It’ll either be more correctly understood by Mr. Market or…be bought?

Arundhati Parmar in MedCityNews had a tart take on the proceedings, leading with the convergence of therapeutics with devices and data, Primary Care-Primary Care-Primary Care, billion-dollar bolt-on acquisitions that may be good for biopharma (but not necessarily so in health tech where integration is leading), and innovative therapies that don’t save but actually cost mo’ money. All of which is no surprise to our Readers. And why is there a JPM every year? Healthcare insanity may be catching.

CVS works their plan in Oak Street Health buy talks, Carbon Health $100M investment + clinic pilot; VillageMD-Summit finalizes (updated)

January 11, 2023 | by

CVS, Walgreens, Amazon, Walmart all chasing the same type of companies to expand their service continuum. During their Q2 2022 earnings call, CVS Health announced that they were determined to enhance their services in three categories: primary care, provider enablement, and home health. And CVS’ CEO Karen Lynch was pretty blunt about it: “We can’t be in the primary care without M&A” (sic). So CVS’ latest moves should come as no surprise.

Oak Street Health: CVS is in talks with this value-based care primary care provider for primarily older adults in Medicare and Medicare Advantage plans. With 100 offices nationally, it’s not too small, not too large to combine with other operations. As a public company traded on the NYSE but puttering along in the $13-$22 per share range since the fall from a high of $30 in August, the news of CVS’ interest has boosted them above $28 and a market cap of just under $7 billion. Although Oak Street has previously maintained that they have no interest in a sale, it has never been profitable and is on track to lose $200 million this year. That is not a good look for CVS but they are working a strategy. Previously, CVS walked away from primary care group Cano Health [TTA 21 Oct 22]. Bloomberg News (paywalled) reported that CVS could pay $10 billion which would be over $40 a share. Healthcare Dive, Reuters

Carbon Health: CVS leads their Series D with a $100 million investment plus piloting Carbon Health operations in primary and urgent care clinics in their retail stores. However, the deal came at a price. Last week, prior to the investment announcement, Carbon announced that it would wind down lines of business in public health, remote patient monitoring, hardware, and chronic care programs, cutting 200 jobs in addition to a June cut of 250, at the time about 8% of their workforce. Carbon will now concentrate on their clinic core business. 100 are presently located across Arizona, Nevada, Colorado, Kansas, Florida, Massachusetts, and California (San Francisco, Bay Area, and San Jose).

In the last two years, Carbon raised $350 million and grew by acquiring four clinic chains. It diversified by buying Steady Health (chronic care management in diabetes) and Alertive Health (remote patient management)–both businesses they are departing. Reportedly last month they bought Inofab Health, an Istanbul-based digital health platform for patients with asthma, chronic obstructive pulmonary disorder, and cystic fibrosis. Crunchbase, FierceHealthcare, Mobihealthnews, SF BizJournal,

CVS is still working its Signify Health acquisition past the Department of Justice (DOJ) and the Federal Trade Commission (FTC). It went into a Second Request for information in late October under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which adds 30 days to the review timetable after the Second Request has been complied with. There is some competitive overlap between CVS and Signify in home health management and accountable care organization (ACO) operations, and some divestitures may be necessary. A closing in Q1 as planned seems optimistic. Acquiring Oak Street may complicate matters since their clinics operate as a Direct Contracting Entity (DCE, now ACO REACH). This present administration is not friendly towards healthcare consolidation of any type, especially with entities participating in Federal programs. (See UHG’s acquisition of Change Healthcare, with court approval being appealed by DOJ.) Reaching (so to speak) deep into CMS programs could be a red flag.

Walgreens’ VillageMD finalized their Summit Health acquisition for $8.9 billion yesterday (9 Jan) (updated). Now with 680 provider locations in 26 markets and 20,000 employees, the group adds to VillageMD’s primary care practices specialty practices in neurology, chiropractic, cardiology, orthopedics, and dermatology plus 150 City MD urgent care locations. 200 VillageMD locations are already adjacent to Walgreens locations. Walgreens Boots Alliance (WBA) and Evernorth, the health services business of Cigna, were the two investors. WBA raised full-year sales guidance from $133.5 billion to $137.5 billion. The current chair and former chief executive officer of Summit Health, Jeffrey Le Benger, MD, will be the interim president until VillageMD finds a permanent president reporting to VillageMD CEO Tim Barry. Release, RevCycleIntelligence, Forbes  At this point, Walgreens hasn’t moved forward with the rumored acquisition of ACO management services organization Evolent Health [TTA 1 Oct 22], which would be far more complex. 

Amazon is still awaiting Federal approval for One Medical as well as in multiple states (Oregon only the first; expect scrutiny). It is also closing Amazon Care and opening asynchronous non-face-to-face telehealth service Amazon Clinic.  Walmart continues on an internal strategy of opening Walmart Health clinics in underserved areas. Earlier in 2022, they announced the opening of more health ‘superstores’ in Florida, having established 20 in Arkansas, Illinois, and Georgia starting in 2019. Walmart’s approach to retailing health services and products, since getting serious about it in 2018, has wavered with multiple changes of strategy and executive departures [TTA 22 Nov 22]

News and deals roundup: Owlet’s $1B SPAC, Carbon Health’s $350M Series D, Series Bs by Woebot Health and b.Well, digital health rakes in $15bn

July 23, 2021 | by

Baby monitoring system Owlet closed its SPAC late last week with Sandbridge Acquisition Corporation. It is now trading on the NYSE (OWLT) for around $8 per share. With Sandbridge’s investment and the concurrent private placement (PIPE), Owlet now has $135 million and a valuation of over $1 billion, far exceeding the $325 million estimated [TTA 17 Feb]. Owlet started in 2013 with a ‘Smart Sock’ (right) at $299 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 and a Dream Lab to encourage good baby sleep, which parents will be the first to appreciate. Mobihealthnews

Carbon Health, which is certainly an odd name for a primary care provider plus virtual health with a streamlined patient record/EMR system and makes insurers happy because they charge only Medicare rates, received a hefty $350 million Series D raise. Led by Blackstone Horizon Partners with Atreides, Homebrew, Hudson Bay Capital, Fifth Wall, Lux Capital, Silver Lake Waterman, and BlackRock participating, along with returning investors Dragoneer Investment Group and Brookfield Technology Partners along with a slew of private investors, it follows on last November’s Series C of $100 million for a total raise since 2016 of $522 million. Valuation is what used to be an eye-blinking $3.3 billion. Carbon’s locations are a bit strange–concentrated in California and SF area with outposts, many of which are limited service or ‘pop-ups’, in Florida, Arizona, Kansas, and NYC. Unlike the recently covered One Medical, it does not require any kind of annual concierge fee. The model is an interesting one in positing high service and low cost. The founders are also staking out becoming the largest US primary care provider, which Village Medical or UnitedHealth Group would not be delighted about. One wonders if all this staking out will work, or is to attract payer investment when the VCs decide to exit. FierceHealthcare, Mobihealthnews (referring to them as multimodal, which sounds like ocean/rail transport or articulated lorries), Forbes

Also in the Mobihealthnews article: a Series B $90 million raise by Woebot Health, developer of a mental health chatbot (ok, relational agent), and the $32 million Series B raise of b.well Connected Health, a patient-facing health management platform that will get a big boost from interoperability around patient records required under the Cures Act. Woebot’s twee infographic about their therapeutic bond study in the JMIR is woeful, though, as large parts are unreadable.

No surprise that digital health funding hit a $15 billion high in the first half of 2021, up 138%, driven in large part by telehealth investment. This is based on a report from Mercom Capital Group. FierceHealthcare