News roundup: CVS sells bswift; Babylon puts Meritage IPA up for sale, financially realigning to prevent delisting; Redesign Health sheds 20%, Noom 10%

October 13, 2022 | by

Companies shedding ancillary businesses, and more than a few of their people that make them go. 

CVS Health is selling bswift to Francisco Partners. Bswift, a benefits technology and HR services company, was acquired by Aetna in 2014 for $400 million. It became part of CVS Health in 2018 after CVS acquired Aetna. Based on the website, it was operated independently. Francisco Partners, an investment group specializing in tech, recently acquired IBM Watson (now Merative) [TTA 7 July] and added it to 400-odd portfolio companies. Acquisition cost and management transitions were not disclosed, but expected to close by Q4 this year. The company will continue to partner with CVS Health and Aetna. Francisco Partners/bswift release, Mobihealthnews, FierceHealthcare, HealthcareFinanceNews

Babylon Health exiting the provider business, transitioning to US financial reporting requirements, and reversing stock to boost price. Babylon has put on the block Meritage Medical Network, an independent physician association (IPA) based in Northern and Central California with 1,800 providers in six counties serving 90,000 patients. The sale was announced 12 October and is expected to complete in early 2023. Babylon’s rationale is “to focus on its core business model through further investment in its digital-first contracts”. It was a short-lived foray, as Meritage was bought only last year along with First Choice Medical Group [TTA 7 Oct 21], which is not mentioned, and completed prior to their SPAC.

Babylon is also financially realigning.

  • On 12 October they also announced conversion to US financial reporting and GAAP accounting from reporting as a foreign private issuer. This will be effective in January 2023.
  • In September, shareholders approved a reverse share split to take place in Q4 to consolidate shares within the approved range of 15:1 to 25:1. All shares will be converted to Class A ordinary shares from a previous A/B structure.

These address a major problem that threatened Babylon’s listing on the New York Stock Exchange (NYSE). In September, Babylon received notice that it violated NYSE rules in not maintaining an average closing share price of at least $1 over 30 consecutive days. Today’s close (12 October) was $0.42. A reverse split will boost the stock price and prevent Babylon from being delisted. Babylon release, Mobihealthnews

After a brief break, healthcare layoffs continue even at richly valued companies with recent raises.

  • Redesign Health is releasing 20% of its workforce, or 67 people from its NYC-based workforce. This is one month after a $65 million Series C raise in late September from General Catalyst, CVS Health Ventures, and other investors, and a valuation in the $1.7 billion range. According to a company spokesperson, these had nothing to do with the Series C or financially driven, but according to the CEO, part of a “ongoing evolution, and given the need to prioritize in a challenging market”. Departments affected in the ‘restructuring’ are engineering, product, marketing, and recruiting. Redesign is unusual in that it creates startups from its own research, assembles management teams, brands, and funds them. To date, it has created about 40, including a few that have had layoffs of their own (Calibrate). Redesign had planned to create more than 25 new companies by the end of 2022, which apparently will not happen. Fast Company, Mobihealthnews
  • The heavily advertised weight loss app Noom reportedly will be laying off 10% of their staff, or 500 people primarily in coaching. Noom currently has a valuation around $3.7 billion and a cumulative funding of $650 million. Apparently there is also a change in direction from the original (and successful) concept of nutrition, behavioral, and exercise coaching via live chat to scheduled video consults as part of a mind and body platform with a higher degree of personalization, including mental health. The company CFO is also departing for TripAdvisor, according to the Wall Street Journal. TechCrunch

Thursday news roundup: IBM Watson Health sale closed, now Merative; OneMedical inviting buyers–maybe; worst healthcare data breaches rounded up

July 7, 2022 | by

It’s a post-Independence Day and early summer holiday relatively quiet week….

It’s Merative, not IBM Watson Health anymore. Francisco Partners‘ buy from IBM of Watson Health closed last Thursday (30 June) but didn’t make the news until after the holiday. The announcement of the new brand, Merative, was splashed on HLTH’s website today (not HIMSS) with the usual language about how their data connects and transforms health through pioneering “cloud, real-world data and industry-leading AI” through health systems, hospitals, health plans, life sciences, and government. Speaking of data points:

  • HQ now in Ann Arbor, MI
  • New CEO Gerry McCarthy from CEO of eSolutions, a former Francisco Partners portfolio company that exited to Waystar in October 2020
  • The former general manager, Paul Roma, will be a Senior Advisor to Francisco Partners
  • Merative will have six product families: Health Insights; MarketScan; Clinical Development; Social Program Management and Phytel; Micromedex, and Merge Imaging 
  • Other investors include True Wind Capital and Sixth Street

Since 2015, IBM had built up Watson Health through four acquisitions and over $4 billion in investment. They sold it for perhaps $1 billion to get it off their books. Once upon a time they were the leader, now they’re up against Oracle and a dozen other competitors like IQVIA that sell connectedness and ‘actionable insights’ across and in chunks of their business (example, life sciences). Given the track record of the controlling private equity partner, Merative needs to become profitable quickly. Merative will not be a long term investment for them. FierceHealthcare. Our prior coverage: 7 Jan, 22 Jan, 25 Feb (Who needs Watson Health?)

Also apparently up for sale to the right buyer is One Medical. The clinic group flirted with but ultimately sent packing CVS Health. One Medical offers concierge in-person and telehealth primary care in seven metros and has over 700,000 members. They bought Medicare value-based primary care provider group Iora Health a year ago [TTA 11 June] but since then their stock (trading under 1Life Healthcare) and valuation has cracked by 75%. Not mentioned in the Bloomberg article is whether Iora is included in the possible deal.

And for those who like their Hackermania on the Wild Side, there’s a massive list over at Wired that racks up the Greatest Hits. It’s only halfway through 2022, but the data breaching and ransomware perps have multiplied. From Russia/Ukraine to extortion gangs like Conti and Lapsus$ to cryptocurrency theft and China, the Old Reliable Healthcare continues to star. Our recent list is here but topping out the Wired list are Shields Health Care Group, Baptist Health System, Resolute Health Hospital, Kaiser Permanente, and Yuma Regional Medical Center. Also Becker’s.

Sold! IBM Watson Health to Francisco Partners

January 22, 2022 | by

Another non-surprise, since we knew early in January [TTA 7 Jan] that Watson Health was on the exit side of the IBM ledger. Francisco Partners, a private equity company, is picking up the healthcare and data analytics assets of Watson Health. These include, according to the joint release, “extensive and diverse data sets and products, including Health Insights, MarketScan, Clinical Development, Social Program Management, Micromedex, and imaging software offerings.”

The company will be standalone and the current executive team will continue to serve their clients in the life sciences, provider, imaging, payer and employer, and government health and human services sectors.

Francisco Partners has $30 billion in assets under management and over time has invested in over 400 companies. Their current healthcare companies include GoodRx, ZocDoc, and  TrellisRx. 

Financial terms were not disclosed, but IBM was seeking bids in the $1 billion range. It’s also known that IBM spent well in excess of $4 billion to build the company, was earning about $1 billion in revenue sans profit, so it can be charitably called a fire sale to get it off the IBM books. In any case, barring regulatory glitches, the sale is expected to close in second quarter 2022. Also HealthcareITNews, Becker’s HealthIT, HISTalk