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

Need to knows: Omada’s $158M IPO at flat valuation, AZ lawsuit on Centene plan’s ‘ghost network’ fatality, UHG shareholders OK reduced package for CEO Hemsley, new ASTP/HIT-ONC leader, NJ’s Cooper Health patient data breach, Net Health buys Limber Health

June 4, 2025 | by

Omada Health nears a dip in the chilly IPO waters. Chronic care manager Omada Health started last week to road-show its long-anticipated public offering to interested investors. It’s been a long time in the making, with their first IPO S-1 filing back in October 2024.   Their 9 May SEC Form S-1 registration and preliminary prospectus, updated 29 May in their S-1/A, now reveals the extent of the offering–7.9 million shares. With an initial offering price of $18-$20/share, that is a raise of $142.2 to $158 million for OMDA (Nasdaq Global Market). The IPO may take place later this week, according to CNBC, with other sources saying Friday 6 June.

Morgan Stanley, Goldman Sachs & Co., and JP Morgan are acting as lead book-running managers for the proposed offering–a high-level crew for what was in the past a relatively small offering, but times have certainly changed with a dearth of IPOs continuing. 

Omada has raised $528.5 million through 11 rounds since the Ur-Health days of 2011, with a $192 million Series E in 2022 and the last round in 2023 an $80 million debt financing (Crunchbase). Investments came from major VCs such as Andreessen Horowitz, Fidelity, Norwest Venture Partners, Wellington Management, Intermountain, New Enterprise Associates, and Founder Collective. Their repositioning into ‘between-visit care model’ expanding from diabetes into obesity, hypertension, and MSK patients has met with success. With 2,000+ customers and over 679,000 total members enrolled in one or more programs, their 2024 revenue grew 38% from $122.8 million in 2023 to $169.8 million in 2025 , with Q1 2025 by 57% to $55.0 million from Q1 2024’s $35.1 million. Their prospectus revealed that they are closely tied to investor Cigna, with one health plan or PBM accounting for 31% of revenue, then a second health plan or PBM accounted for 29% of its revenue. according to FierceHealthcare. 

Unlike much-larger Hinge Health, Omada isn’t taking a valuation haircut, just a small trim when adjusted for inflation. The market capitalization versus valuation at its last letter raise is essentially flat: $1.1 billion versus $1.02 billion. Omada release, Mobihealthnews, Axios

Centene’s Health Net/Ambetter hit with ‘ghost network’ lawsuit on member fatality. Finding out that your provider isn’t in network is usually an annoyance, though it can be an expensive one. In this case, the consequences were fatal. 36-year-old Ravi Coutinho purchased an Affordable Care Act plan through Ambetter in 2023 and was being treated for mental health and addiction treatment in Phoenix. Both Coutinho and his mother, Barbara Webber, tried to find therapists who contracted with Arizona Ambetter who met Coutinho’s needs. Ambetter failed repeatedly, Coutinho’s condition deteriorated without care, and he was found dead in his apartment in 2023.

Ms. Webber filed a lawsuit last month in Maricopa County. Centene is accused of violating state and federal laws requiring network accuracy and adequacy, as well as negligence and fraud. Keeping provider networks current, especially in ACA plans, has been a known problem for years and under Congressional investigation. Studies from 2023 have indicated that 80% of provider listings contain inaccuracies, with only one-third of provider listings contacted by Senate subcommittee staffers were accurate. This is especially acute in mental health, with a shocking 3 in 4 insured adults who receive mental healthcare experience insurance problems, according to a 2023 survey (KFF). Health plans receive no incentives to keep their network listings current and accurate, though the ACA, state and other Federal laws such as the ‘No Surprises Act’ require plans to keep accurate lists of network providers. This also is not the first roundup on this issue for Centene’s plans. Healthcare Dive, FierceHealthPayer

UHG’s Stephen Hemsley will be seeing a pay cut, compared to his predecessor. UnitedHealth Group’s shareholders on Monday approved a compensation package for their new CEO. Mr. Hemsley will receive a base salary of $1 million per year. For stock options, he will receive only a one-time, $60 million equity award in nonqualified stock options with cliff vesting in three years. There will be no further awards for three years. It’s expected that Mr. Hemsley, 73, who was board chairman, will not remain CEO for the long term in this second round in the top spot. Another task he has is to find a leader who enjoys investor confidence–and who is capable of leading the company through what this Editor considers to be an inevitable change of model, likely a downsizing.

Shareholders are cutting the comp, not quite the 50% that the shares have fallen. This is considerably less than Sir Andrew Witty’s $26.3 million package for 2024, which was top of the pack from 2022 on. That year’s compensation started with a $1.5 million base salary, plus $17.25 million in stock options and $5.75 million in option awards. He also received $1.5 million in non-equity compensation plus ‘other’ of $339,000. Whether he will enjoy all of this based on 2024’s disappointing performance is not disclosed, as he resigned effective 13 May 2025 after Q1 results and a suspended forecast for 2025 were disclosed. Runner-up was Karen Lynch, who departed CVS Health last year but with a comp package of $23.4 million. FierceHealthcare 2 June, 12 May

Short takes:

The Trump Administration has named Thomas Keane, a software engineer and interventional radiologist, as Assistant Secretary for Technology Policy, formerly the Office of the National Coordinator for Health IT (ONC). According to his ASTP bio, Dr. Keane previously served in ASTP and also as a Senior Advisor to the Deputy Secretary of HHS. Among other duties, he was an administrator of the COVID-19 Provider Relief Fund and lead the development of the AHRQ National Nursing Home COVID Action Network. ASTP oversees Federal technology, data and artificial intelligence policy. More changes may be coming as Secretary Robert F. Kennedy Jr. will be reorganizing most areas of HHS. FedScoop, Healthcare Dive

Moving north to Camden, NJ, last March the Cooper Health system detected a data breach dating back to 2024. Personal health information (PHI) was apparently “accessed and acquired” without permission by an unknown actor around 14 May 2024. Abnormal network activity was noticed at the time and their systems were secured. However, the incident review which wrapped in March 2025 confirmed the PHI acquisition and Cooper has since notified the suspected individuals. Information accessed on individuals may include names, dates of birth, Social Security numbers, health insurance information, treatment information, medical record numbers. and medical history information. Mobihealthnews

Net Health acquires Limber Health. Net Health, a provider of specialized EHR software plus diagnostic and predictive analytics, including wound care and rehabilitation, is adding Limber Health’s MSK remote therapeutic monitoring and analytics to its platform. Acquisition cost was not disclosed but from the release at least some of the team will be transferring over to Net Health’s Pittsburgh team. Net Health is a 35-year-old portfolio company of The Carlyle Group, Level Equity, and Silversmith Capital Partners. Limber’s last raise was a $16 million Series A in October 2022 from Glenview Capital Management, Ironwood Ventures, and The Blue Venture Fund. (Crunchbase).  Release

Short takes: HHS forms NIH/CMS autism data project; Oscar Health beats Street w/Q1 $275M net; Centene’s $1.3B earnings; UHG has class action suit on earnings, 1K AI apps in production; Cedars-Sinai and Redesign Health partner on development; FDA, Lilly, Novo Nordisk win vs. compounders

May 8, 2025 | by

NIH, CMS to create autism data platform to enable research. The National Institutes of Health (NIH) and the Centers for Medicare & Medicaid Services (CMS), both under Health & Human Services (HHS), are partnering to enable NIH to build a real-world data platform. The purpose is to advance research around the root causes of autism spectrum disorder (ASD) that now affects 1 in 31 US children, according to HHS. The data gathered include claims data, electronic medical records, and consumer wearables focused on Medicare and Medicaid enrollees with a diagnosis of ASD. The first step establishes a data use agreement under CMS’ Research Data Disclosure Program.

Researchers will focus on autism diagnosis trends over time, health outcomes from specific medical and behavioral interventions, access to care and disparities by demographics and geography, plus the economic burden on families and healthcare systems.

The pilot program, intended to be a model for other conditions, will create a secure tech-enabled mechanism to enhance data sharing with timely, privacy and security compliant data exchange.  HHS release, FierceHealthcare

Payers, other than UnitedHealth, had an upbeat Q1.

  • Oscar Health, the feisty provider of ACA exchange individual and small group plans, notched a Q1 net income of $275 million with adjusted EBITDA of $329 million on revenue of $3 billion, up 42% from Q1 2024. Membership exceeded 2 million, up 41% from prior year. The ever-feisty CEO Mark Bertolini (center) railed on the earnings call against a shortened Federal enrollment period cutting off at 15 December versus January, as well as other enrollment changes. Oscar release, FierceHealthcare
  • Centene Corporation, one of the main rivals to UnitedHealth Group and a significant player in Medicaid state plans, had a decent Q1 turnaround with $1.3 billion in earnings and a  17% jump in premium and service revenues to $42.5 billion from $36.3 billion in Q1 2024. Their current membership versus Q1 prior year was down about 500,000 with the losses in Medicaid and traditional Medicare. They also increased their 2025 premium and service revenues guidance range by $6.0 billion to a range of $164.0 billion to $166.0 billion due to ACA exchange plans and Medicare Advantage (MA) revenue forecast performance. However, it’s projected by analysts that Centene will exit the Medicare Advantage market after this year in Alabama, Massachusetts, New Hampshire, New Mexico, Rhode Island and Vermont–about 3% of MA membership. CEO Sarah London criticized proposed cuts to Medicaid. Centene release, HealthcareFinance
  • UnitedHealth Group, after an anemic Q1 financial report driven by increased utilization and rising costs, cut its 2025 earnings per share (EPS) guidance by 12% to between $26 and $26.50 (Healthcare Dive). This just in: a shareholder group filed in Federal Court in the Southern District of New York on violations of securities laws affecting share price. It centers on the 2025 financial guidance provided prior to Brian Thompson’s assassination and how group CEO Andrew Witty did not account for: 1) the impact of that act but doubled down on the EPS forecast, 2) the increased scrutiny around the company for denials of claims even prior to the act, and 3) the general ill will generated as more information reached the general public. The affected group are those shareholders purchasing UHG stock between 3 December 2024 and 16 April 2025. Healthcare Dive, SDNY filing
  • Meanwhile, UHG has doubled down on AI development, totaling over 1,000 apps. According to a report in the Wall Street Journal, the company has these apps in production in their health delivery and pharmacy units, transcribing conversations from clinician visits, summarizing data, helping process claims, powering customer-facing chatbots, and in engineering to write software. According to chief digital and technology officer Sandeep Dadlani, half of the apps use generative AI and the remainder a more “traditional” form, without explanation of “traditional”. According to Dadlani in the article, “AI has a role to play in the claims evaluation process, but it will never be allowed to deny a claim”. Software, not necessarily AI powered but usually rules-based or using algorithms, ‘auto adjudicate’ 90% of UHG claims. UHG was sued in Federal Court as far back as 2023 in using an AI-powered application to evaluate and deny claims.

Redesign Health gets freshened up with a Cedars-Sinai partnership. Redesign Health is a combination funder and company builder which has launched over 60 healthcare-related companies, some clear successes such as Calibrate (weight loss) and Jasper Health (cancer care navigation), with others on the development curve such as Vault Health and Uptiv Health. They announced a partnership with the Cedars-Sinai health system in Los Angeles to add their clinical expertise and innovative research. Other strategic value additions through the new partnership are tapping into funding support, access to clinical environments within Cedars-Sinai’s network, and their dataset for validation of technologies and design. Redesign release

And in the pharma compounders versus Big Pharma war, the former have lost two battles. The compounder’s trade group, the Outsourcing Facilities Association (OFA), had separate lawsuits filed in Texas to force the FDA to reclassify both tirzepatide and semaglutide as still in shortage, which would permit compounding pharmacies to produce weight loss drugs with these active ingredients. The Texas judge found yesterday (7 May) for both FDA and Eli Lilly, the producer of Zepbound, that tirzepatide was no longer in shortage, which closed the door on the OFA. At the end of April, the same Federal judge ruled against the continued compounding of semaglutide, the active drug in Novo Nordisk’s Wegovy and Ozempic [TTA 27 Feb]. 22 May is the end date for the large compounding pharmacies for semaglutide, while smaller state-based compounders must cease immediately. Biospace 8 May, 25 April  Novo Nordisk’s new partnerships for Wegovy-based weight loss prescribing: TTA 1 May, 8 May

News roundup: Hinge Health may postpone IPO, Rite Aid may enter 2nd bankruptcy, Veterans Affairs committees want new EHR costs & timeline, fired Texas health plan head hired private eyes to spy on members, providers, lawmakers

April 8, 2025 | by

Isn’t April a bit early for roller coaster rides?

Hinge Health may postpone its IPO. This is absolutely to no one’s surprise. Virtual MSK provider Hinge Health had filed a SEC S-1 preliminary prospectus back in mid-March [TTA 14 Mar] with few specifics, and had not committed to any dates. With Mr. Market taking multiple rides on an old-school wooden roller coaster, Hinge is dangling a postponement. Business Insider spoke with the usual Insider who said rather minimally that the company intended to start speaking with investors towards the end of April and go public in May, but now may postpone. They might still go public on this schedule if Mr. Market sees Hinge as a good alternative buy. Supposedly, they have the cash on hand and don’t need the IPO to finance the business. By this stage, there’s a gaggle of investors hungry for a partial or full exit financed by Other People’s Money on their $826 million invested to date: 8% shareholders Coatue, Tiger Global Management, Whale Rock Capital Management, Bessemer Venture Partners, Insight Partners (19%), and Atomico (15%). Founders Daniel Perez (CEO) and Gabriel Mecklenburg (director), who own 18.9% and 8.2%, may also be eager to cash in. Hinge is keeping mum as they must. This Editor’s bet is that their IPO will be no later than June. Yahoo! Finance

Rite Aid may go through the Pain of Bankruptcy yet again. Sadly, the distant third in the pharmacy/retail healthcare market is rumored to be considering another bankruptcy as not seeing a sustainable way forward as a private company. Alternatively, they are exploring selling parts of its business, though it’s hard to imagine who would buy. In the October 2023 bankruptcy, the company went from 2,000 locations and 47,000 employees to 1,300 locations, exiting entire states to concentrate where they could have some market impact. They sold Elixir, their pharmacy benefits manager, and settled with major creditors. In March 2018, they had downsized by selling 1,932 store locations for $4.38 billion to Walgreens. Like Walgreens and CVS, they are also dealing with legal liabilities from opioid-related lawsuits. Reportedly, they are being advised by Big Law firm Paul Weiss to advise on options, such as what can still be sold and what kind of bankruptcy. Wall Street Journal, Chain Drug Review, Daily Mail

The VA and Oracle have some ‘splainin’ to do to Congress. As VA has put stakes in the ground with migrating 13 VA Medical Centers from VistA to Oracle, a few Members of Congress on Veterans Affairs committees in the House and Senate have been awaiting More Information on the Electronic Health Record Modernization (EHRM) program. What they want to know are the fundamentals: costs and updated schedules. VA has not yet provided a cost update that is mandated by laws and Office of Management and Budget (OMB) directives governing major acquisition programs. The Congress members from both parties requesting the information are: Sen. Jerry Moran (R-Kansas), Richard Blumenthal (D-Conn.), Rep. Mike Bost (R-Ill.), Rep. Mark Takano (D-Calif.), Sen. John Boozman (R-Ark.), Sen. Jon Ossoff (D-Ga.), Rep. John Carter (R-Texas) and Rep. Debbie Wasserman Schultz (D-Fla.). Senator Moran press release

Private Eyes Are Watching You. They See Your Every Move. Mark Sanders, CEO of Superior Health Plans in Texas, a Centene health plan, admitted before the Texas House Delivery of Government Efficiency Committee that he had hired private investigators to get “background information” on lawmakers and plan members, specifically about claims, in a 26 March hearing on Medicaid procurement. The Dallas Morning News had previously uncovered examples of members who were being investigated from 2017 on, when Mr. Sanders became CEO. He testified that “investigators had done “routine” background checks into several state representatives, senators, health care providers, patients and their families and a journalist.” The state officials included Texas Land Commissioner Dawn Buckingham, then a state senator, and Southlake Republican state Rep. Giovanni Capriglione, according to documents obtained by The Dallas Morning News.  One claim denied was, according to the paper, Linda Badawo of Mesquite, Texas, and her 3-year-old son D’ashon Morris. “D’ashon, who was denied private duty nursing despite emphatic protests from Linda, his doctors and nurses, pulled his trach out and was found not breathing, as his caregivers warned he would.” Mr. Sanders called these ‘routine background checks’ and ‘general research’  no longer being done. Rep. Capriglione is now chair of the committee holding the hearings, which surely meets the Sicilian Standard of revenge as a dish best eaten cold.

Superior used a Missouri-based security company, Griffin Personnel Group, to perform these and other investigations. One investigation the committee uncovered said that Griffin attempted to obtain the divorce records of Sen. Charles Schwertner, R-Georgetown, just a few months after his wife filed in early 2019. Sen. Schwertner and Rep. Capriglione were members of budget committees at the time. Centene is HQ’d in St. Louis, Missouri.

Texas Attorney General Ken Paxton almost immediately announced an investigation into Centene’s practices. Centene fired Mr. Sanders within hours, stating “The conduct highlighted yesterday during the course of the Texas House Committee hearing is not reflective of our values nor is it a practice Centene’s current leadership condones. To this end, Mark Sanders is no longer with our organization.” Perceptive Readers will note the subtle ‘dig’ at the previous CEO; in 2017, Centene’s CEO for then over 20 years was Michael Neidorff, who is no longer here on this planet to defend himself. Centene is now controlled by activist investor Politan Capital.) At stake are hundreds of millions in state Medicaid contracts.

(Disclosure: this Editor worked for an ACO management services organization owned by WellCare, not Superior, acquired by Centene, and technically worked for Centene for less than one year ending in 2020.)

VillageMD’s co-founder/CEO resigns as Walgreens continues the brush-off after billions in losses

December 3, 2024 | by

Walgreens’ disposition of VillageMD clarifies with CEO/co-founder/board chair Tim Barry’s sudden and unceremonious departure. The news dropped on Wednesday 27 November, directly into the media black hole of the Thanksgiving holiday.

A tell-tale sign is that Walgreens’ board has appointed only an interim, VillageMD’s chief operating officer Jim Murray. It is not clear from company statements made to media if Mr. Murray will replace Mr. Barry on the board.

Mr. Murray was appointed only last April, having nearly all his experience on the insurance side. He retired from Centene in late March, having come aboard after being COO at Magellan Health when Centene acquired it (now mostly sold off) and with 28 years previously at Humana. [TTA 10 Apr and release] This may suit Mr. Murray, given his age at about 70 (from Centene regulatory filings). 

In a statement to the Chicago Tribune, a Walgreens spokesperson said that “We look forward to continuing to partner with Jim Murray as he assumes day-to-day leadership responsibilities.” (Editor Donna–as if a COO does not already have day-to-day leadership responsibilities?) Murray has been “integral in helping lead the company’s turnaround as VillageMD makes meaningful progress and positions itself for profitable growth.” Neither the Walgreens representative nor VillageMD spokesperson Molly Lynch answered media questions about why Mr. Barry left or the circumstances behind the sudden departure without even a fig leaf (or pumpkin pie) of a cover story or the usual ‘thanks for your service’–which leads to more questions and doubts about What Really Happened.

The larger picture of sinking Walgreens financials. They closed FY 2024 with an operating loss of over $14 billion, more than doubling FY 2023’s loss of $6.9 billion versus FY 2022’s profit of $1.4 billion during the pandemic. $12.7 billion of a total $13.4 billion impairment was due to VillageMD’s loss in value due to clinic closures, slow patient panel growth, and downward trends in Medicare reimbursement. The remainder of about $332 million was attributed to loss of value in the CareCentrix home care unit (Form 10-K 10 October 2024, document page 123; impairments page 97; also TTA 28 Mar)

The Big Idea of combining primary care with retail locations in the Roz Brewer/WBA’s Stefano Pessina vision (hallucination?) was a major misstep into a Big Hole.

  • Bad timing was one factor. VillageMD added to a mound of miseries in retail and pharmacy sales caving, competition from direct vendors such as Amazon and Mark Cuban Cost Plus, plus  traditional brick-and-mortar CVS and Walmart. There were also expensive settlements around opioid prescribing. VillageMD also tapped Walgreens for $3.5 billion to acquire Summit Medical and CityMD–and defaulted on a $2.25 billion loan in August.
  • Joining primary care clinics with retail footprints wasn’t based on testing consumer behavior and acceptance–or practice reality. The plan was to have 1,000 joint locations modeled on the picture above left by 2027. As a model, it depended on obtaining both sufficient providers and building loyal patient panels, a slow pull if there ever was one. Physically adding clinic locations to Walgreens’ stores proved to be both expensive and difficult. 
  • These factors and others sank Roz Brewer’s CEO-dom, the share price, and the vision of Mr. Barry’s and VillageMD’s founders and physicians. The last dated back to 2013 and built into a network of hundreds of freestanding primary care clinics in value-based care. Many of the 140+ closures starting early this year were not only of expansions, but also of long-standing VillageMD offices, including in its core market of Chicago metro. Earlier this year, Cigna wrote off most of its $2.5 billion investment, throwing its Q1 into the red [TTA 2 May].

Many of the practices participated successfully in CMS’ advanced ACO shared savings models starting in 2016 such as Next Generation, Direct Contracting, and the current ACO REACH. The practices integrated telehealth as part of their value-based care models to achieve quality metrics. In CY 2023, VillageMD-operated ACO entities in the REACH model achieved $140 million in gross savings for Medicare, with $36 million shared back with the government and the remainder reinvested in the care model. (CMS reports are released 10-12 months after the prior year’s end.) 12 November release

Walgreens went big–and was sent home with the metaphorical tail between the hind legs. Perhaps engraved on VillageMD’s headstone will be what Walgreens CEO Tim Wentworth said of VillageMD during the Q4 earnings call in October, “… We’ve declared it’s not a crucial part of our future.” Mr. Wentworth and the board declared months ago that they wished to sell all or part of the business, at least below their majority holding at 63% [TTA 8 Aug, 2 July]  Who even wants to or is able to buy, with Walmart Health defunct and Oak Street Health and One Medical retrenching for their respective owners? Will VillageMD be part of anyone’s future? Healthcare Finance News, Healthcare Dive

M&A action news: Astrana Health buys up Prospect Health for $745M after Centene MSO unit buy, Veradigm nears $1B+ sale, Sword Health lays off 17% of clinicians prepping for IPO using AI instead, Cigna is not buying Humana–really! truly!

November 13, 2024 | by

A company most have never heard of is snapping up provider networks, health plans, and management services. Astrana Health, a Southern California-based value-based care (VBC) company formerly known as Apollo Medical Holdings, has agreed to acquire most of the assets of Prospect Health for $745 million:

  • Prospect Health System: 3,000 primary care providers and 10,000 specialists across Southern California, Texas, Arizona, and Rhode Island. It currently has 610,000 members across Medicare Advantage, Medicaid, and commercial lines of business.
  • Prospect Health Plan, licensed in California 
  • One hospital, Alta Newport Hospital dba Foothill Regional Medical Center in Tustin, California (Santa Ana area), a fully accredited acute care hospital with 177 licensed beds
  • Prospect Medical Systems, a management service organization (MSO) that provides administrative support to Prospect-owned affiliates and managed medical groups/independent physician associations (IPAs).
  • RightRx pharmacy

FTR: “Astrana plans to leverage its proven Care Enablement platform, a set of care management tools and technology, including value-based contracting and credentialing, AI-driven population health analytics, its NCQA-certified Healthcare Effectiveness Data and Information Set gaps in care engine, care management and disease management platform, and other administrative services to further advance improvements in patient outcomes.”

According to William Blair analysts Ryan Daniels and Jack Senft, quoted in FierceHealthcare, “Prospect is expected to generate $1.2 billion in revenue and $81 million in adjusted EBITDA on an annual basis in 2024, implying a transaction value at about 9.2 times adjusted EBITDA.” The $745 million purchase was financed by cash on hand and a $1,095 million 364-day senior secured bridge commitment provided by Truist Bank and JP Morgan. It’s not expected to close until mid-2025 and is subject to the usual Federal and multi-state regulatory reviews and approvals. Sounds like a deal that evades the new premarket notifications as complementary and not competitive. But we’ll see. Release, Healthcare Finance News

One wonders about that cash on hand as Astrana previously bought Collaborative Health Systems, a 17-state MSO with 129,000 original Medicare beneficiaries managed in 10 primary care shared savings accountable care organizations (ACOs in the REACH and MSSP models), a Maryland Care Transformation Organization CMS/state primary care model, and three independent physician associations (IPAs). CHS came with Centene’s acquisition of WellCare Health Plans in 2020 and was originally organized by Universal American in 2012. That closed in October at an undisclosed price paid to Centene, continuing its divestment of what they consider ancillary businesses to maximize cash. It was also positioned as Astrana remaining a key partner in Centene’s Medicare business, now known as Wellcare (Releases 25 July, 7 Oct).

Prior to that acquisition, Astrana was a relatively concentrated California/Western States diversified health services organization with about 10,000 providers and claiming a million patients, with one ACO in the ACO REACH program and another in the MSSP model. In absorbing CHS, they also divested a substantial number of people, mostly senior managers and leadership, who managed a wide number of ACOs in demanding CMS models at scale. (Disclaimer: Editor Donna was marketing director for CHS 2018-2020). One wonders if CHS will be merged into Prospect’s MSO, though in reality they offer vastly different services.

Back in August and prior, MSO Evolent Health put itself up for sale for an estimated $4 billion, with the most interested parties being Elevance and assorted private equity organizations. Nothing has publicly moved since then. But it did confirm that major money is now interested in this decidedly unsexy corner of the healthcare business.

Veradigm’s long-drawn-out sale may be reaching a conclusion. Reports this week state that McKesson, Oracle, and private equity bidder Thoma Bravo are all bidders for the company. CVS considered it but passed. It may be finalized by Thanksgiving for an estimated price in excess of $1 billion, its current market cap.

Veradigm put itself up for sale last May. In August, reported bidders included private equity Thoma Bravo, which took NextGen EHR private in September 2023, Roche, and Vista Equity Partners, owner of the Greenway EHR. Thoma Bravo is the only carryover from this initial list. Apparently, Roche and Vista have dropped out. As reported then, the company is apparently in good shape but unwieldy, with healthcare data services and systems that make it an interesting buy for one or more companies. Though outwardly crippled by years of financial reporting problems due to a still unsorted software problem, which led to its Nasdaq delisting last February, it has been profitable (though unaudited) and is trading OTC above $11. Axios  Hat tip to HIStalk 13 Nov

Virtual MSK provider Sword Health lays off 13 physical therapists, about 17% of its clinicians, as it preps for a mid-2025 IPO. Therapists contacted by Business Insider stated that the layoffs also coincided with a doubling-plus of clinician caseload from an average 2-300 at the start of 2024 to 700 by year-end. In a statement to BI, Sword maintained the cuts were ‘performance based’ and that they had open positions.

Information obtained by BI in interviews with Sword executives clearly states that they mean for AI to be the ‘master expert’ of their virtual therapy model, vetted (of course) by humans. According to the therapists interviewed by BI, “Sword began using AI-generated messages for patient conversations in the spring. The technology allows physical therapists to accept an AI-generated message, edit it, or reject it.” The big push is to scale Sword for more employer contracts in an outcomes-based model, paralleling Transcarent’s USP. Sword in June received a jumbo round of $130 million and now is valued at around $3 billion. Profitability is projected to be at the end of 2024 to preface the mid-2025 IPO. A competitor also considering its own IPO is Hinge Health [TTA 3 Oct]. MSN  Hat tip to HIStalk 13 Nov

And finally, truly, really–Cigna is NOT buying Humana! This was evident on the investor call 31 October by their CEO David Cordani [TTA 31 Oct] but it seems that the rumors persisted until Cigna issued an official statement that yes, it’s using free cash to buy back shares, yes, it will make strategic acquisitions, and no, it’s not buying Humana as it doesn’t fall into the second category. (It also is under Federal and FTC scrutiny about their pharmacy benefit management business under Express Scripts, TTA 1 Oct.) From the Cigna release: “Additionally, in light of recent and persistent speculation, The Cigna Group expects to communicate that the company is not pursuing a combination with Humana Inc. The Cigna Group remains committed to its established M&A criteria and would only consider acquisitions that are strategically aligned, financially attractive, and have a high probability to close.” You wonder who’s been fluffing along this rumor to this extent, and why. The tale of the tape? Cigna shares are up 4.5% in the past five days, while Humana’s are down 4%. FierceHealthcare

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

July 2, 2024 | by

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Walmart Health shutters health centers, Walmart Virtual Care, in sudden move (updated–why?)

April 30, 2024 | by

In a shocker, Walmart throws in towel on onsite primary care, urgent care, and telehealth, effective today (30 April). Walmart’s release stated that “we determined there is not a sustainable business model for us to continue” either service since “the challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time.” Analysts also attributed the difficulties to the rising cost of labor, real estate, complex billing procedures, and reimbursement rates that haven’t increased in years.

The boom was lowered only three weeks after Walmart announced that they were slowing down 2024 openings of its primary and urgent care centers from 30 to 22 [TTA 5 April]. From aggressive promises back in 2018 of at least 1,000 locations, later revised to 4,000 locations by 2029, to serve the underserved with primary care, dental care, and basic lab and imaging services, only 51 centers were opened in superstores in six states–Arkansas, Florida, Georgia, Illinois, Missouri, and Texas. The top executive spot became a revolving door. 

The release did not disclose when the center closures would be effective. From the screenshot above from the Walmart Health website, it can be inferred that because appointments must be scheduled within the next 30 days and no new patients are being accepted, the closures will be start to be effective 30 or 31 May. The centers employ physicians, dentists, and nurse-practitioners. Walmart Health also had recently inked high profile partnerships with Centene’s Ambetter-Sunshine Health plan as an ACA preferred provider [TTA 8 Nov 23] and with Orlando Health in Florida for care coordination. It is not known what will happen to these latter partnerships. Update. UnitedHealthcare and Walmart have ended their co-branded Medicare Advantage “Walmart Flex” plan. This was part of a 10-year deal inked last year. The MA plan was available in Georgia only, with ambitions to expand. Other partner programs were available in Florida and Georgia. Becker’s

Walmart Health Virtual Care, in contrast, has no such notice on its website. Virtual Care services may be more problematic to shut down as they are provided to health plan members (e.g. UnitedHealthcare) and employers. Walmart Health acquired MeMD telehealth in May 2021 in very different times–at that time, they had five million members. Virtual Care also covers behavioral health. That winddown may differ in timing based on contracts and patient handoffs.

The release affirms that ~4,500 Walmart pharmacies and 3,000 +optical centers will continue and grow. Pharmacies already offer Testing and Treatment services, health screenings, access to specialty pharmacy medication and care, as well as other essential services such as medication therapy management. In vision care, Walmart recently acquired 200 Vision Centers.

Employees affected will receive either the opportunity to move to another location or separation benefits. The practices are “partners’ and will be paid for 90 days. Walmart’s wobbliness on the health provision front, along with rising costs, less reimbursement, and more competition than they thought, caught up to them in the end–as it did with VillageMD/Village Medical and Walgreens.  Healthcare Dive, Becker’s, Crain’s Chicago Business

Update. Perhaps there’s another trend here. A user of Walmart Health, ‘Wiggles’, posted on the always interesting HIStalk making some excellent points. Many of their appointments were canceled due to lack of available clinicians. He or she surmised that physicians (and this Editor would add, nurse-practitioners) don’t find putting in hours at a Walmart Health carries any prestige for the money earned nor that they enjoy ‘care-by-wire’. Your Editor would add that the areas where Walmart built the clinics may be areas of clinician scarcity–that they are booked solid. Add to that two cited reasons for shrinking Walgreens’ VillageMD operation–that they cannot fill the patient panels for each physician in many areas (saturation?), nor can they get the physicians in other areas to work in the space offered at a co-location (undesirable working conditions?). Could it be, as ‘Wiggles’ surmises, that here’s an opportunity for clinical professionals to take back control? (This is on top of the actions that pharmacists are taking across Walgreens and CVS on their working conditions.)

VillageMD names new president and COO as it shrinks to 620 locations

April 10, 2024 | by

Jim Murray retires from Centene to take the role of VillageMD’s president and chief operating officer. The appointment was effective on 1 April. He will be responsible for leading operations of Village Medical, Summit Medical, and CityMD.  Last October, VillageMD named new divisional heads: Rishi Sikka, MD as president of Village Medical, Dan Frogel, MD as president and chief clinical officer of CityMD, and Becky Levy, JD as president of Summit Health and Starling Physicians.  VillageMD release, Crain’s Chicago Business

As noted previously, VillageMD has been retreating quickly from its aggressive plans circa 2022 for expansion into Walgreens locations to closure of the co-locations and already established free-standing offices. The planned 140 closures are well above the originally estimated 50, then 85 locations, including all in Florida and six in its home state of Illinois. Majority owner Walgreens has already taken a $5.8 billion writedown of its estimated $9-10 billion investment. Industry analyst Brian Tanquilut, a health care services equity research analyst at Jefferies, estimated to Crain’s that VillageMD lost $800 million in 2023.

Jim Murray retired as Centene’s chief transformation officer on 29 March, just in time to move to VillageMD.  His planned retirement was announced by Centene last May. Previously, he had been president and chief operating officer at Magellan Health from January 2020 to its acquisition by Centene in January 2022. Subsequently, Centene sold parts of Magellan such as Specialty Health and Rx. His experience crosses both provider and payer, at Dallas-based PrimeWest Health, the Dallas-based hospital system LifeCare Health Partners, and prior to that, 28 years at Humana, departing as chief operating officer. It does show one how close the circles are at the C-level. St. Louis Today

News roundup: Cerner goes live at VA, DOD Lovell Center; WebMD expands education with Healthwise buy; Dexcom has FDA OK for OTC glucose sensor; Centene may have buyer for abandoned Charlotte HQ

March 12, 2024 | by

In news other than Walgreens and Optum/Change Healthcare–with more to come out of HIMSS in Orlando this week…

The DOD/VA Cerner EHR went live on Saturday 9 March in the Capt. James A. Lovell Federal Health Care Center (Lovell FHCC), right on scheduled time. This EHR which will serve both active duty service members in the Military Health System (MHS) and veterans through the VA is being watched closely. While MHS Genesis has been rolled out in most military health facilities in the US and overseas, the VA’s has stalled at five. As of now, Lovell is the only VA implementation planned for this year and its functionality and interoperability with MHS is under a microscope. Training has been intensive and VA reports having made many changes from the earlier implementations. The MHS Genesis team from DOD have also been a key part of the training.

VA has shown improvement with no full outages in 300+ days and with the nagging smaller incidents greatly reduced. But the VA’s deputy inspector general reported significant and dangerous faults in the Oracle Cerner Millenium medication record system only last month to the House Subcommittee on VA Technology Modernization [TTA 22 Feb]. While the fixes are in effect in the five VA locations with Millenium, Genesis at Lovell will not have them yet.

Lovell FHCC is located in north Chicago, has a combined DOD/VA staff of 3,200, and serves 75,000 patients per year: 25,000 veterans, over 10,000 TRICARE enrollees, and 30,000 Navy recruits from Great Lakes with a 300-bed main facility and clinics in the Chicago area. Federal News Network

WebMD buys health education developer Healthwise. The company’s patient education assets including content and technology that integrate into care management platforms for both health systems and payers will become part of WebMD Ignite, which was formed last April to unite Krames, also in health education, Mercury Health data analytics, Wellness Network videos, Vitals provider scheduling, in addition to Medscape and WebMD. According to the release, the combination of Krames and Healthwise will reach 650 healthcare organizations, comprising more than 50% of hospitals in the U.S. and 85% of the top 20 payers, which is a dominant market share with limited other competition such as Wellframe, owned by HealthEdge. Transaction cost, surviving name, and management/staff transitions were not disclosed.

Healthwise is unusual in that it was formed as a non-profit in Boise, Idaho in 1975. In the 2024 Best in KLAS Report, Healthwise was ranked first in health education for value-based care. While the education assets are being sold to WebMD, the non-profit will go on, according to Healthwise. Healthcare IT News (Editor’s disclaimer: Donna was a consultant for Krames on marketing projects during 2021-22, prior to Ignite.)

WebMD is also integrating into Ignite personalized medication instructions from First Databank (FDB)’s Meducation through WebMD Ignite’s Krames On FHIR platform. It will then go into prescribers’ EHRs and patient portals. FDB release

Dexcom receives FDA clearance for Stelo, the first over-the-counter (OTC) continuous glucose monitor cleared in the US. Like the prescription version, the biosensor attaches to the arm to monitor blood glucose without skin penetration and connects to a Dexcom phone app. The sensor is the same as the prescription Dexcom G7, with a battery life of about 15 days. Stelo was cleared for use by adults 18+ who have Type 2 diabetes but not on insulin therapy–over 25 million people in the US. Release is scheduled for online-only release this summer as a cash-pay purchase (cost not disclosed), with insurance reimbursement TBD over the next few years. Mobihealthnews, Healthcare Dive

Centene may be close to selling its ‘dream’ Charlotte, North Carolina headquarters building. The now near-complete 800,000-square-foot building in Charlotte’s University City would have been Centene’s East Coast HQ. It was planned by the previous CEO in 2020 to be the center of a campus with over 6,000 employees, 3,200 to be hired locally. The plan was abandoned in August 2022 due to a shrinking office-based workforce primarily in St. Louis with some in plan locations throughout the country. Cushman & Wakefield is marketing the building with word being that a single company is interested in purchase. New Class A space is reportedly relatively rare in Charlotte, though the vacancy rate in the immediate area is at 25%. There is also undeveloped land on the site that has attracted interest from a locally active multifamily developer, although that would require a rezoning. Centene purchased the land in 2020 for $19 million, not including a separate 51-acre parcel purchased later in 2020. In addition to reducing its real estate pattern, Centene has also been reducing its staff with two 2,000-person layoffs in 2023, one in the summer and the second in December.  Charlotte Business Journal, Becker’s

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

November 2, 2023 | by

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

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

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

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

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

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

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

In sale news, some big numbers are posting:

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

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

Babylon Health shuts US operations, goes into UK receivership

August 10, 2023 | by

Babylon reached the end of the runway, smack into the lights and barriers. In the US, Babylon Health shut its Austin, TX headquarters on Monday 7 August, the same date as the announcement of the termination of their merger with AlbaCore Capital and their MindMaze business [TTA 8 Aug]. The required filing of a closure notice with the Texas Workforce Commission came to light late yesterday. The layoff of 94 employees left in the office was immediate and the closure permanent. 

As of this writing, there is no change to their US website, but LinkedIn has many posts from the now laid-off. There are no statements from founder and CEO Ali Parsa.

No transition in the US for users. With the US office closure, there is no service for current contracts such as with Ambetter’s (Centene) commercial exchange product nor with other payers or value-based providers and plans, mainly in Medicaid, which have been using Babylon apps. According to the Forbes article published yesterday, users have found that their Babylon 360 app no longer works and have been redirected to their health plan for assistance.

“When Linda, a patient in New York who requested her last name not be used for privacy reasons, went to login for a scheduled therapy appointment today, she received the following message on her Babylon app, according to a screenshot. “Babylon’s clinical services and appointments are no longer available. For details about your health plan benefits and to find a new provider, contact your health plan.”

It appears that Babylon is putting the responsibility of the “transition” on patients and their insurance companies. An email Linda received from Babylon at 11:02 am ET said: “We know you may have questions about this change. Your health plan’s dedicated Member Services team can assist you. You can find your health plan’s contact information on your ID card.”

In the UK, Babylon has entered UK administration (=US bankruptcy). Its main product is GP At Hand which is still active and up for sale in the dissolution of the company. Last year, it exited its three contracts with NHS Trust hospitals two years into ten-year contracts [TTA 24 Aug 22, Wired], leaving Reading and Birmingham controversially [TTA 24 Aug 2022] but may have had a fourth continue with Hammersmith and Fulham in London, one of its earliest users back to 2018-19. GP At Hand is still active in London with about 100,000 users reported by Pulse but is only enrolling patients in Fulham (West London). No further information on the administration filing but that would likely be with the High Court in London as previously disclosed by Babylon.

It is quite stunning that a company that the UK’s Health Secretary Matt Hancock lauded as the future of healthcare in 2018 and plumped for at every turn, survived a beatdown on BBC Two’s Newsnight in February 2020, successfully went public in a US SPAC two years ago (Oct 2021) at a value of $4.2 billion/$272 per share, that entered the US and bought two large US medical practices, had operations in 16 countries and as of last December had 1,895 employees with 35% (660 people), in the US, has collapsed so completely and thoroughly. As of 4pm EDT today, their market capitalization was just above $425,000.

As to the non-US/UK operations and multiple user services in places like Rwanda and India–their fate is unknown. Perhaps another reason why Babylon, like its Biblical namesake, eventually collapsed.

FierceHealthcare, Computing (UK–may require free signup), BMJ, The Telegraph (via Yahoo Finance)  Our Babylon Health file here.  This story is developing. If you were a Babylon employee, you may email Editor Donna in confidence or leave a public comment below.

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

May 5, 2023 | by

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

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

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

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

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

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

Unfortunately, we close with yet another round of layoffs.

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

Mid-week roundup: Kaiser Permanente to buy Geisinger, setup separate system; GoodRx co-CEOs step down; strong earnings for Centene, Humana; Clover Health stock woes, settles $22M lawsuit

April 27, 2023 | by

Today’s big news was that Kaiser Permanente will be acquiring Geisinger Health. Technically, the acquisition is being made by Risant Health, a separate non-profit organization founded by the Kaiser Foundation Hospitals that will acquire other non-profit community health systems. Acquisition costs and a timetable for the transaction were not disclosed and will be subject to the usual state and Federal regulatory review and requirements.

Geisinger will be the founding system of Risant Health, a non-profit that will be headquartered in the Washington, D.C. area. Its current president, Jaewon Ryu, MD, JD, will become CEO when the acquisition closes. Risant’s purpose will be to advance value-based care by acquiring and connecting other multi-payer, multi-provider, community-based health systems in areas such as care model design, pharmacy, consumer digital engagement, health plan product development, and purchasing. 

Kaiser Permanente is a giant integrated care system with 12.6 million members based in California. It operates in eight states (California, Colorado, Georgia, Hawaii, Maryland, Oregon, Virginia, and Washington) and the District of Columbia. Geisinger Health is Pennsylvania-based, has 10 hospital campuses, its own health plan that covers more than 500,000 members, and the Geisinger College of Health Sciences with schools of medicine, nursing, and graduate education. Geisinger was also a pioneer in incorporating telehealth and remote patient monitoring into its healthcare system. The benefit to Geisinger joining Risant is that as the lead system, it will help to shape their operational model. Reportedly, Kaiser will spend $5 billion and acquire five to six health systems over the next five years. The health systems will retain their names and operational areas.

On the face of it, this seems to be a novel solution to both health systems’ challenges. Both have had operating losses and net losses in recent years and difficulty expanding out of their geographic areas. Kaiser has a tightly integrated health plan and service model that is location-dependent. Geisinger has been squeezed in Pennsylvania by UPMC and Penn Medicine along with other community systems. In 2020, it ended its effort to expand into southern New Jersey via a merger with AtlantiCare. However, this current administration and state regulators have not favored health system mergers, which has seemingly been anticipated by Kaiser in forming the Risant Health organization. Healthcare Dive, FierceHealthcare, Kaiser/Geisinger/Risant release

GoodRx names Scott Wagner as interim chief executive officer. Current co-CEOs and founders Doug Hirsch and Trevor Bezdek will be stepping down but staying with the company as chief mission officer and chairman respectively. Wagner was formerly CEO of GoDaddy and is a board member of other digital and advertising businesses. In February, GoodRx was the first ‘victim’ of the newly aggressive Federal Trade Commission policies on Meta Pixel and other ad trackers collecting user health-related data and sharing for revenue with Facebook, Google, Criteo, and other advertising sites. The FTC used the Health Breach Notification Rule, created in 2009, to GoodRx in a Federal court with misuse of consumer health information. Even though GoodRx is not a HIPAA-covered entity and they ended the practice in 2019, they settled with the FTC for $1.5 million. But the likely reason for the CEO change is that the company is still unprofitable. It ended 2022 with a net loss of $32.81 million and laid off 16% of staff last September. Mobihealthnews, FierceHealthcare

It’s earnings report season for payers. The news has been good for some, not for others. 

  • Centene reported year-over-year gains, with Q1 revenue of $38.9 billion versus prior year $37.2 billion. Q1 profitability also gained at $1.1 billion versus prior year $849 million, which missed Wall Street projections. Their outlook was scaled back due to Medicaid redeterminations, 2024 Medicare bids and investments. They also attributed the increased profitability through the strategic sale of Magellan Rx and internal reorganizations. Fierce Healthcare
  • Humana’s Q1 was also profitable and met Wall Street analyst expectations with earnings of $1.24 billion, or $9.87 a share (adjusted to $9.38/share), up from prior year $930 million, or $7.29 a share. This reflects investments in their Medicare Advantage business. Humana is projecting an aggressive target of a 17% membership increase, reversing from last year’s losses.  Fierce Healthcare
  • Clover Health’s Nasdaq notice, settles $22 million in SPAC class action lawsuit. Nasdaq notified Clover on 20 April that since their stock traded below $1.00 for 30 days, they have 180 days to 17 October to regain compliance with the Minimum Bid Price Requirement. This was disclosed in Clover’s SEC 8-K filing last week. There are other ways to maintain a listing (e.g. transferring to Nasdaq Capital Markets) but the anemic share price (closing today at $0.73, a drop of over 90% from the SPAC high) shows no signs of reviving. On Monday, Clover announced a $22 million settlement in a class action lawsuit filed in Tennessee around the company’s January 2021 SPAC. The following month, Hindenburg Research published that Clover did not disclose a Department of Justice (DOJ) investigation in 2020, claiming it was ‘non-material’ [TTA 9 Feb 2021]. The share price fell off the roof and kicked off multiple similar class action suits which are proceeding in New York and Delaware. Release

More gimlety views on CVS-Oak Street Health, Amazon-One Medical acquisitions

March 2, 2023 | by

Perhaps this Editor is not that much of an Outlier in thinking that these deals don’t beat, say, sliced bread. Oak Street Health (OSH) disclosed its financials in an SEC 10-K filed on Tuesday. One must wonder what CVS is seeing in the company other than bulking up its primary care profile. Their loss grew to $510 million from 2021’s $415 million. While OSH grew impressively in 2022 with a 51% increase in revenue to $2.2 billion, driven by 40 new centers ending with a total of 169 facilities in 21 states, expenses grew exponentially for the new patients: medical claims expenses grew 48%, cost of care went up 49%, and sales and marketing up 38%. Scalable, so they claim; profitable, not till 2025 at earliest.

Other problems were revealed in the 10-K. OSH has substantial business from other payers, which may not be pleased that CVS owns a small payer called Aetna, though has pledged to keep OSH payer-neutral. OSH leases or licenses most of its care centers from Humana. That payer also accounted for 32% of its 2022 capitated revenue. Centene’s plans and HealthSpring made up an additional 23%. Other, more routine concerns are regulatory review, attrition of physicians and clinician staff, and last but not least, breakup fees ($500 million if CVS walks away, $300 million if it’s OSH). When you add these to other factors as outlined in our earlier article, such as the Medicare Advantage and high-need populations, CVS is cutting off a hefty slice of loaf, especially considering that the more complex Signify Health buy is due to close this quarter. Earlier opinions on the buy [TTA 16 Feb], Healthcare Dive

Now to Amazon and One Medical. This Editor received her invitation to buy a One Medical membership earlier this week (left). Countering this Editor’s analysis from last week, which maintains that Amazon is already under a broad antitrust microscope viewed by the Federal Trade Commission (FTC) and the Department of Justice (DOJ), Healthcare Dive counters, quite logically and in the view of their experts, that if either agency was going to object, they would have done so before the closing, and the grounds were likely too novel. The article concedes that the FTC could take action further down the road, for instance if Amazon violates HIPAA or consumer privacy with ad trackers. Instead, the focus is on objections by consumer groups, Amazon leveraging health data, privacy violations, and a general consumer unease around Amazon dealing with their health issues.

  • Consumer protection group Public Citizen urged regulators to block the deal in a letter to regulatory groups after it was announced last summer. For instance, it could bundle One Medical and Prime membership (a no-brainer). By tying the two together, Amazon could gain consent for using patient data from health records. Amazon could also serve ads for products related to medical conditions without that access (that old Pixel/ad tracker business again). These concerns are publicly shared by two FTC commissioners.
  • “Analysts said that data acquisition was likely a big driving factor for the deal. After linking One Medical’s data with that from its other products and services, Amazon can analyze petabytes of healthcare data in the cloud and use the findings to better manage the health of One Medical’s Medicare population, build new products and pinpoint people with rare diseases to solicit participation in clinical trials, according to (market research firm) Forrester’s (Natalie) Schibell.” [Editor] That would, of course, require patient consent. 
  • Forrester noted that the consumer unease around Amazon in healthcare is substantial. 34% of surveyed adults weren’t at all comfortable with Amazon for healthcare needs with an additional 17% only somewhat more comfortable (tier 2). Trust levels are low, and it would take only one or two incidents, such as a security breach or HIPAA violations, to destroy it. This Editor would add that if One Medical practices were not managed impeccably, that would go viral among individual and corporate members, in a way that Amazon Care did not.

Week-end roundup of not-good news: Teladoc’s Q2 $3B net loss, shares down 24%; Humana, Centene, Molina reorg and downscale; layoffs at Included Health, Capsule, Noom, Kry/Livi, Babylon Health, more (updated)

July 30, 2022 | by

Teladoc continues to be buffeted by wake turbulence from the Livongo acquisition. The company took a $3 billion goodwill impairment charge in Q2, adding to the $6.3 billion impairment charge in Q1. The total impairment of $9.3 billion was the bulk of the first half loss of nearly $10 billion. While their revenue of $592.4 million exceeded analyst projections of $588 million, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $46.7 million were barely up from projections and were down from $66.8 million year prior. Losses per share mounted to $19.22, versus $0.86 in Q2 2021.

Another weak spot is their online therapy service, BetterHelp, which in the US is pursuing a substantial TV campaign. CEO Jason Gorevic in the earnings release pointed out competitors buying the business at low margins and consumer spending pullbacks. Teladoc’s forward projections are bolstered by Primary360 and Chronic Care Complete. Projected revenue for Q3 is $600 million to $620 million. Shares on Thursday took a 24% hit, adding to the over 50% YTD drop misery. At best, Teladoc will muddle through the remainder of the year, if they are lucky. MarketWatch, Mobihealthnews, FierceHealthcare

Health plans are also presenting a mixed picture. 

  • Humana announced a healthy earnings picture for the quarter and YTD. It earned $696 million in profit for Q2, up nearly 20% year over year. For first half, Humana earned $1.6 billion, an increase of 14.8% from 2021’s $1.4 billion. Cited were growth in their primary care clinics, Medicaid membership, and investment in Medicare Advantage. Earnings surpassed Wall Street projections and Humana increased its guidance to $24.75 in earnings per share. At the same time, they announced a reorganization of its operating units that separates their insurance services (retail health plans and related) and CenterWell for healthcare services including home health. Some key executives will be departing, including the current head of retail health plans who will stay until early 2023, ending a 30 year Humana career. FierceHealthcare, Healthcare Dive
  • Under new leadership, Centene posted a Q2 loss of $172 million which in reality was a significant improvement over Q2 2021’s $535 million and looked on favorably by analysts.
    • Their ‘value creation plan’ has sold off its two specialty pharmacy operations to multiple investors, using third-party vendors in future, and agreed this week to sell its international holdings in Spain and Central Europe — Ribera Salud, Torrejón Salud, and Pro Diagnostics Group — to Vivalto Santé, France’s third-largest private hospital company.
    • Medicaid, their largest business line, has been growing by 7%.
    • Centene is continuing to divest much of its considerable owned and leased real estate holdings, which marks a radical change from the former and now late CEO’s* ‘edifice complex’ to house his ‘cubie culture’. As a result, it is taking a $1.45 billion impairment charge.  Healthcare Dive. [* Michael Neidorff passed away on 7 April, after 25 years as CEO, a record which undoubtedly will never be matched at a health plan.)
    • A cloud in this picture: Centene’s important Medicare Advantage CMS Star quality ratings for 2023 will be “disappointing” which was attributed to the WellCare acquisition (accounting for most of the MA plans), two different operating models between the companies, and the sudden transition to a remote workforce. For plans, WellCare operated on a centralized model, Centene on a decentralized one, and the new management now seems to prefer the former. (Disclosure: your Editor worked over two years for WellCare in marketing, but not in MA.) Healthcare Dive
  • One of the few ‘pure’ health plans without a services division, Molina Healthcare, is also going the real estate divestment route and going full virtual for its workforce. Their real estate holdings will be scaled down by about two-thirds for both owned and leased buildings. Molina does business in 19 states and owns or leases space across the US. Net income for the second quarter increased 34% to $248 million on higher revenue of $8 billion. Healthcare Dive

Many of last year’s fast-growing health tech companies are scaling back in the past two months as fast as they grew in last year’s hothouse–and sharing the trajectory of other tech companies as well as telehealth as VCs, PEs, and shareholders are saying ‘where’s the money?’. 

  • Included Health, the virtual health company created from the merger of Grand Rounds and Doctor on Demand plus the later acquisition of care concierge Included Health, rebranding under that name, has cut staff by 6%. The two main companies continued to operate separately as their markets and accounts were very different: Grand Rounds for second opinion services for employees, and Doctor on Demand for about 3 million telehealth consults in first half 2020. As Readers know, the entire telehealth area is now settling down to a steady but not inflated level–and competition is incredibly fierce. FierceHealthcare
  • Unicorns backed by big sports figures aren’t immune either. Whoop, a Boston-based wearable fitness tech startup with a valuation of $3.6 billion, is laying off 15% of its staff. (Link above)
  • Digital pharmacy/telemedicine Capsule is releasing 13% of its over 900 member staff, putting a distinct damper on the already depressed NYC Silicon Alley.  FierceHealthcare also notes layoffs at weight loss program Calibrate (24%), the $7 billion valued Ro for telehealth for everything from hair loss to fertility (18%), Cedar in healthcare payments (24%), and constantly advertising Noom weight loss (495 people). Updated: Calibrate’s 150-person layoff was reported as particularly brutally handled with employees. Many were newly hired the previous week, given 30 minutes notice of a two-minute webinar notice, then their laptops were wiped. Given that the company makes much of its empathy in weight loss, facilitating prescription of GLP-1 along with virtual coaching, for a hefty price of course. HISTalk 8/3/22
  • Buried in their list are layoffs at Stockholm-based Kry, better known as Livi in the UK, US, and France, with 100 employees (10%).
  • Layoffs.fyi, a tracker, also lists Babylon Health as this month planning redundancies of 100 people of its current 2,500 in their bid to save $100 million in Q3. Bloomberg