Mid-week news roundup: US offers $10M for BlackCat/ALPHV info; most Change systems still down; Risant closes Geisinger buy; SureScripts exploring sale; DarioHealth 2023 revenue -23%; Amazon Pharmacy same-day delivery NYC and LA

April 3, 2024 | by

US State Department pays well for Big Breach information. Interestingly, this US agency through the Diplomatic Security Service has a special program, Rewards for Justice (RFJ), for cyberattacks that are deemed “malicious cyber activities against U.S. critical infrastructure in violation of the Computer Fraud and Abuse Act (CFAA)”. The activities of the now-disappeared (ha ha!) BlackCat/ALPHV  ransomware-as-a-service (RaaS) group, identified on 29 February as the culprits in the massive Change Healthcare/Optum system takedown, are now listed as qualifying for a reward, presumably as disruptive to US healthcare and not just UnitedHealth Group. Contact Rewards for Justice via the Tor-based tips-reporting channel at: he5dybnt7sr6cm32xt77pazmtm65flqy6irivtflruqfc5ep7eiodiad.onion (Tor browser required). That is, if you dare! Rewards for Justice release, Becker’s

Six weeks later, most Change services are still X-d on the Optum Solution Status page. A quick rundown of the hundred or so programs that Change provides to enterprises has a long line of Xs with some triangles containing ! (partial outage) or yellow boxes (degraded performance). The green checkmarks are clustered in high-priority areas such as pharmacy solutions and clinical decision support. Otherwise, they are scattered across categories. The summary on the top of page (dropdown) lists workarounds for specific programs such as batch processing and transitioning over to Optum systems unaffected by the attack. This Editor bets that most of these Change legacy systems will come back only partially if at all–many will be abandoned and replaced by Optum systems. Hat tip to HIStalk 29 March

Risant Health, the non-profit community hospital system founded by but separate from Kaiser Permanente, has closed its acquisition of Pennsylvania-based Geisinger Health as of 2 April.  Jaewon Ryu, MD, JD, currently Geisinger’s president and CEO, will move to CEO of Risant Health, with Terry Gilliland, MD, replacing him at Geisinger. The Risant plan announced last April is that Kaiser will fund $5 billion to Risant, which will acquire now four or five health systems over the next four to five years. The health systems will retain their names and operational areas. The purpose of Risant is to bring community systems it acquires greater access to capital, technology, and resources for facility improvements, innovation, and investment in patient care. Keeping an eye on 109-year-old Geisinger. Risant release

Mega e-prescription system Surescripts is exploring a sale. Silicon Valley investment bank TripleTree is handling the search for buyers. Currently, Surescripts is owned 50% by CVS Caremark and Cigna-owned Express Scripts, with two trade groups, the National Association of Community Pharmacies and the National Association of Chain Drug Stores, owning the other 50%. It isn’t disclosed in the Business Insider ‘reveal’ what group(s) is interested in selling all or part of its ownership. Since Surescripts holds 95% of the e-prescribing market, any buyer or investor would need be mega flush to buy into it. 

DarioHealth didn’t have a great 2023. Net revenue was down 23% versus 2022: $20.4 million to the prior year’s $27.7 million. The chronic condition management company managed to narrow its 2023 net loss of $59.4 million from $62.2 million in 2022. A lot of the problems seemed to center on their Q4, with net revenue that declined to $3.6 million from $6.8 million in Q4 2022 and a net loss that increased to $14.3 million from $12.6 million in Q4 2022.  Dario’s gross profits for 2023 were down 38% to $6 million, a decrease of 38% versus 2022’s $9.7 million. The changing financial picture was attributed to a new private label platform with Aetna launching in 2024, changing from a B2C to a B2B2C model, and February’s “transformational acquisition” of Twill (Happify) in telemental health. As this Editor noted then, it was a feat of funding legerdemain that rivaled a Frank Lorenzo deregulation-era airline acquisition. Their information around 2023 earnings isn’t much different. Dario provides a combined app and in-person approach to musculoskeletal (MSK) therapy, diabetes (including GLP-1 drugs), hypertension, weight management, and behavioral health. Mobihealthnews, Dario release

And speaking of pharmacy, Amazon Pharmacy expanded same-day medication-delivery offerings to NYC residents and the greater Los Angeles area. This adds to same-day prescription delivery available in Phoenix, Austin, Seattle, Indianapolis, Miami, and Texas, including free drone delivery in College Station. How it works: Amazon has small facilities and pharmacists near the areas, ready to fill and deliver medications in minutes using genAI and machine learning tools. Delivery in NYC/Manhattan will be by bike and in LA, electric vans or other commercial vehicles. (Editor’s note: bike delivery in the outer boroughs is like LA–impractical.) Amazon Prime members have additional benefits. Competition here are online companies like Mark Cuban Cost Plus and GoodRx’s prescription service. But perhaps it’s a good time to sell Surescripts? Mobihealthnews

Can digital health RPM achieve meaningful change with type 2 diabetics? New metastudy expresses doubt.

March 27, 2024 | by

A metastudy from the Peterson Health Technology Institute (PHTI) has reservations about the efficacy of digital diabetes management tools. Over $50 billion has been invested in the sector between development, investments, mergers, and acquisitions. Generally, the claim around digital management tools for diabetes to aid self-management and prevent poor outcomes, particularly for those at high risk, has been that they can 1) deliver meaningful and lasting clinical benefits in reduction of HbA1c (glycemic control) and 2) reduce long-term costs of poor control, benefiting patients. In the US, diabetes affects 11% of the population and is an expensive chronic condition. It also disproportionately affects people of color and those with lower income, especially as they age.

The systematic literature review of 1,100-plus studies was augmented by interviews with physicians, patients, digital health experts, along with companies. They included 120 clinical references from DarioHealth, Omada, and Virta. The PHTI grouped digital tools into three types of solutions for Type 2 diabetes in adults. All used standard glucometers, not continuous glucose monitors/CGM as well as apps to provide real time feedback to a virtual or actual coach or care team:

  1. Remote patient monitoring (glucometer plus feedback): Glooko
  2. Behavior/Lifestyle modification (glycemic feedback plus coaching features): DarioHealth, Omada Health, Perry Health, Teladoc (Livongo), Verily (Onduo), and Vida
  3. Nutritional ketosis (dietary guidance that restricts carbohydrates and monitors the patient’s glycemic and ketone levels): Virta Health

The findings did not meet their expectations in demonstrating “clear, substantial, and durable progress toward glycemic control in people with type 2 diabetes, resulting in a lower prevalence of uncontrolled type 2 diabetes across the population.”

  • They did not deliver clinically meaningful benefits compared to ‘usual care’. Only three out of 10 comparative HbA1C studies achieved a meaningful difference of 0.5 percentage points (Minimal Clinically Important Difference or MCID) in patients. Their range was 0.23 to 0.60 percentage points compared to usual care.  The nutritional ketosis program had greater benefits as long as patients maintained the rigorous requirements of the therapeutic regimen.
  • The average price impact of the solution exceeds the savings achieved from the clinical benefits. The PHTI analysis looked at commercial insurance, Medicare, and Medicaid over three years. Provider reimbursement and pricing exceed cost savings from avoided care.

So where is the worth? The PHTI study recommended that:

  • Payers use these solutions for the highest risk and diverse/underserved populations
  • Regularly analyzing outcomes and tie contracts to clinical performance
  • Focus on patients with higher starting HbA1c newly starting insulin
  • Payers could also recommend nutritional ketosis as the Virta program had greater benefits.
  • Solutions could also evolve to include GLP-1 drugs, CGMs, and nutritional ketosis.

PHTI study (free download of full report, four sections, and appendices). PHTI press release.

PHTI is also offering a free webinar on Thursday 28 March at 2pm US Eastern Time on assessing digital diabetes management tools–registration here.

Short takes on a springlike ‘defrosting’: Redi Health’s $14M Series B, Dario Health buys Twill for ~$30M

February 29, 2024 | by

Announced during ViVE, Redi Health gained a $14 million Series B. Funding came from not the VC or PE Usual Suspects so in evidence two short years ago, but from Blue Heron Capital with participation from inside investors Refinery Ventures, Mutual Capital Partners, Rev1 Ventures, and M25. This brings Redi’s total funding to about $19 million, after early-stage rounds totaling $5 million.

Based in Columbus, Ohio, Redi integrates program enrollment, a patient assistance program on a mobile app and website, and co-pay strategies into a single platform targeting patients with multiple chronic conditions. The app includes medication and symptom tracking, a pharma assistance program, and a navigator that connects providers, field teams, and patient support managers. Redi’s most convincing stats are that Traditional Patient Support Programs (PSPs) contribute to a non-adherence rate of approximately 70%, leading to estimated losses of over $600 billion annually for the pharmaceutical industry, but don’t get into the cost of non-adherence in patient outcomes: morbidity and mortality associated with poor medication adherence costs $528.4 billion annually (PAN Foundation). Yahoo!Finance, Mobihealthnews  Hat tip to Steven Wardell of Wardell Advisors

Another sign of the times? Complicated Deals. DarioHealth is buying Twill, formerly known as Happify (and with a behavioral health app still known as Happify). Dario is putting up $10 million in cash. The rest is in 10 million shares of common stock (Nasdaq,  DRIO) in the form of pre-funded warrants for the benefit of Twill’s debt holders and equity holders. These warrants will not vest all at once but in four phases after closing: 270 days, 360 days, 540 days, and 720 days. As Dario stock is at about $2.50, this is approximately $20 million for a total transaction cost of $30 million. 

Dario has a combined app and in-person approach to musculoskeletal (MSK) therapy, diabetes, hypertension, weight management, and behavioral health. Twill concentrates on telementalhealth, initially on reducing stress and increasing wellness, but now has expanded to the mental issues around chronic conditions, pregnancy and maternal health, with tailored and culturally adapted tracks and activities. It is not stated if the Twill products will continue under their present names.

The combination of both companies is expected to double Dario’s pro forma 2023 revenues to $30.5 million, based on extrapolating Q1-3 2023 revenues: $16.7 million in Dario revenues and $13.8 million in Twill revenues.

The rest of the Dario release is a dizzying chronicle of funding legerdemain that this Editor hasn’t seen since her airline days when she sat in on finance meetings that would ultimately decide 1) how many cities the airline could open and 2) how much she could spend on advertising media to support them. There’s a $22.4 million private placement of convertible preferred stock, inducement grants of stock options to employees of Twill to purchase up to 2,963,459 shares of Dario’s common stock at a strike price of $2.55, and 1,766,508 shares, 733,562 in the form of restricted stock units and 1,032,946 in the form of warrants mainly to keep key employees of Twill on board, such as co-founder/CEO Tomer Ben-Kiki, as well as to other employees, board members, and consultants. Investment firm Stifel is listed, but again none of the VC or PE Usual Suspects. 

Twill reported only a single non-equity assistance funding through the PharmStars accelerator in Spring 2023, so Dario likely did not have a lot of investors to buy out.

Funding, acquisition news roundup, round 2: Lyra Health’s $187M Series E, DarioHealth-Upright, GetWellNetwork-Docent Health, Hillrom-BardyDx (updated)

January 29, 2021 | by

Our cowgirl has been keeping busy rounding up more news on funding and acquisitions. Significance? Nearly all are major rounds only dreamed of a year ago for these relatively small companies boosting valuations into the stratosphere. The acquisitions also extend these companies into multiple lines of business.

Lyra Health, a mental health therapy benefit company for employers, closed an additional $187 million in a Series E round led by Addition Capital. This adds to a torrid 2020 $185 million Series C and D bringing their total funding to $475 million. The company claims a valuation of $2.3 billion and doubling its customer base in 2020 to 2 million members, with marquee clients such as Genentech, Morgan Stanley, and Zoom. Lyra Health uses cognitive-based therapy (CBT) models using virtual self-care, coaching, and therapists. Also announced was a partnership with ICAS World, an employee-assistance provider. Lyra is one of many companies in an increasingly crowded category using the CBT model to save employers and payers money on employee and member mental health with and without chronic conditions such as diabetes. Earlier this month, the Talkspace app, which focuses on direct to consumer therapy, announced they were going public through a ‘blank check’ SPAC with Hudson Executive Investment Corp, in a deal valued at $1.4 billion, including debt. Release, Mobihealthnews

DarioHealth, an Israeli-US company concentrating on digital diabetes and hypertension management, extended into musculoskeletal (MSK) therapeutics with the $31 million acquisition of Upright Technologies Ltd., another Israeli-US company. Upright uses a $100 sensor that provides biofeedback and vibration reminders to correct posture plus digital coaching. Last year, Upright was heavily advertised on US television. The buy will transfer to Upright $1.5 million in cash and $29.5 million in stock, and is expected to close in about 10 days. Dario also completed a $70 million private placement for 3,278,688 shares of its common stock at a purchase price of $21.35 per share. Dario has about 150,000 users and Upright 90,000 users. Dario is projecting a 2020 revenue of $7.6 million. Release, Mobihealthnews

GetWellNetwork, a relatively small player in patient engagement and communications in the inpatient care journey, announced it has acquired patient-messaging company Docent Health for an undisclosed sum, beefing up capabilities in data analytics and directing patients to additional services. According to Crunchbase, GetWellNetwork has funding to date of $19 million.  Release, Mobihealthnews

Wrapping it up is cardiac monitoring giant Hillrom’s acquisition of Bardy Diagnostics for $375 million plus future potential payments based on the achievement of certain commercial milestones. Hillrom is also acquiring net operating losses valued at more than $20 million and 230 employees. The BardyDx Carnation Ambulatory Monitor (CAM) is a lightweight cardiac patch monitor for heart rhythm diagnostics using P-wave-centric ECG detection. The irony here is that BardyDx positioned itself squarely against Hillrom’s Holter monitors. Nothing like buying out the competition! Release, MedCityNews