News roundup: Oak Street’s Pykosz departs CVS, Musk’s Neuralink gains Canadian clinical trial, VA healthcare improvement bill omits EHR oversight measures, 23andMe’s Mirador precision medicine partnership

November 27, 2024 | by

Another CVS departure. As Glenview Capital taps its feet waiting for CVS financials to improve, Mike Pykosz, appointed less than a year ago to head up their Health Care Delivery unit, is departing. His replacement is Dr. Sreekanth Chaguturu. Unsurprisingly, Dr. Chaguturu will be working two jobs–president of Health Care Delivery as well as EVP and chief medical officer of CVS Health, saving an executive salary. This may be the capper of a two-month 52-card pickup that started with rumors of a breakup that would split off Aetna, replacement of CEO Karen Lynch, a new head of Aetna, and four new board seats given to Glenview. [TTA 19 Nov]

No date was given for Mr. Pykosz’s departure, but the wording in the release made it appear that it was effective immediately. His LinkedIn post from last Tuesday indicated that he was moving on by end of November, this week. According to new CEO David Joyner, Pykosz had informed management earlier in the year that he was planning to depart and had worked to ensure a smooth transition. Mike Pykosz had previously been CEO and co-founder of Oak Street Health, acquired by CVS for $10 billion in May 2023. In the following months, OSH integrated with elements of Signify Health, in-store Minute Clinics, and grew from 170 units to 250 locations. Whether any of them are profitable is not disclosed and likely not probable, though CVS made much of OSH’s and Signify’s 36% increase in quarterly revenue versus prior year. There is also no disclosure of Mr. Pykosz’s future plans though his LinkedIn post mentions that he was “excited to be able to dedicate time to investing in, advising, and supporting innovative healthcare companies, helping them meet their strategic goals and build better healthcare solutions as well as spend more time with family and friends.” including coaching grade 3 basketball. Bet on hearing from Mr. Pykosz after what is likely a prolonged non-compete agreement and a good rest. Healthcare Dive

Elon Musk’s brain-computer implant, Neuralink, to enter a clinical trial with Health Canada. This is the first outside-US trial for Neuralink. It comprises the N1 brain implant and R1 robot, which is used to place the 64-thread implant into the brain. The study will be performed by the University Health Network (UHN) hospital at its Toronto Western Hospital. The “Canadian Precise Robotically Implanted Brain-Computer Interface” (CAN-PRIME) subjects will be Canadian-resident patients with tetraparesis or tetraplegia resulting from cervical spinal cord injury or the neurological disease ALS who also have a life expectancy of at least 12 months. Earlier this year, an American implant patient moved a mouse by thought [TTA 21 Feb] and is now playing video games and online chess. Neuralink received approval last month for Blindsight, an implant for sight restoration. Mobihealthnews

VA service improvement bill manages to omit Oracle EHR oversight measures. The bipartisan omnibus bill titled ‘The Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act” (H.R. 8371) passed the House last week. It introduced many benefits to VA healthcare workers and to veterans, but managed to pass the House without the ‘guardrails’ that the House Veterans Affairs committee deemed necessary to continue the Oracle EHR rollout, replacing the obsolete VistA system. The committee spokesman, Mark Takano, D-Calif., attributed the omission of requirements included under the EHR Program RESET Act to “a lack of political viability in both the House and Senate”. The chair of the Technology subcommittee, Matt Rosendale (R-Montana), went considerably further and voted against the entire bill. Both blamed Oracle: Takano attributed it to “the army of lobbyists that Oracle unleashed to kill it” and Rosendale stated that “Oracle Cerner bought and bullied their way into getting this bill passed without their company being scrutinized.” The bill now goes to the Senate in the minimal time before the ending of the 118th Congress next month.   

The requirements in the omitted RESET Act included most of what has been discussed in both Senate and House to remedy Oracle Cerner Millenium’s stopped-dead implementation in the VA.

  • Increased Congressional oversight of EHR deployments, ensuring that each implementation of the new EHR “met or exceeded”  pre-deployment efficiencies before moving to the next one
  • Requiring VA to provide lawmakers with quarterly reports with additional data “on user adoption and employee satisfaction” with the Oracle Cerner system
  • Requiring VA to supply data on “employee retention and turnover at medical facilities where such electronic health record system is in use.”

Nextgov.com

Rep. Rosendale issued a press release blasting H.R. 8371. “…this bill ignored years of bipartisan work focused on requiring Oracle Cerner to fix its EHR System, that has resulted in veteran deaths, before it could be expanded to new VA Medical Centers and the company can continue to collect on its multibillion-dollar contract.” Omnibus bills like this are always shotgunned together as well. “The House Veterans’ Affairs Committee ignored regular order with this legislation which, by uniparty design, prohibited scrutiny and debate on the final product. That decision spearheaded a bad process for passing this bill which resulted in an unacceptable final product for our veterans. When a uniparty agreement comes together overnight, like it did with the Dole Act, it means a small group of individuals negotiated it and the American people – and in this case our nation’s heroes – get the short straw.”  

(Editor’s note: Senator Elizabeth Dole, who is still with us at 88, was a single-term Senator from North Carolina 2002-2006, but Cabinet member in two prior administrations as well as the widow of Senator Bob Dole from Kansas.)

Signs of life at 23andMe? The troubled genetic data company, which earlier this month shuttered what remained of its drug therapeutics unit and laid off 40% of its remaining employees, announced this week a research partnership with Mirador Therapeutics, a precision medicine company focused on immunology and inflammation. Mirador is using a targeted set of aggregated, de-identified genetic and phenotypic data from the 23andMe research database to combine with its Mirador 360 development “engine”. Most of the release is boilerplate with the requisite quote from the Mirador CEO, mixed with copy hyping previous 23andMe collaborations and their patient privacy policy which carefully omits the fact that you, personally, can withdraw from the research program, but your genetic data and limited identifiers cannot [TTA 8 Nov]. No financials or agreement duration are disclosed. 23andMe release, Endpoints News (paywalled)

News roundup: CVS Health cedes 4 new board seats to Glenview, Oscar’s strong Q3, telehealth controlled substance prescribing in 3rd extension, new Revere Medical to buy CareMax assets (updated), Oura picks up $75M Dexcom financing and partnership

November 19, 2024 | by

This pre-Thanksgiving week stuffs the turkey, not with giblets and savory fillings, but with Big Developments on the Big Stories of the past few weeks.

CVS feeds the crocodile, gives Glenview Capital four new seats on the board. CVS’ startling move with the hedge fund Glenview Capital Management that adds Leslie Norwalk, Glenview CEO Larry Robbins, Guy Sansone, and Doug Shulman, expands their board of directors to an unwieldy 16. According to the CVS release, Norwalk, from Epstein Becker Green, will join the Health Services Committee. Sansone, CEO of H2 Health, will join the Audit Committee.  Shulman, chairman/CEO of OneMain Holdings, will join the Management Planning and Development Committee. It’s unknown whether Robbins will need to join a committee given his prime position.

Despite CVS’ lack of confirmation after their reported breakup/spinoff discussions that kicked off October [TTA 1 Oct], it’s apparent to anyone with clean glasses that Glenview is driving multiple changes at the company including the ouster of CEO Karen Lynch even after she took direct control of Aetna. She was replaced by a CVS ‘lifer’, David Joyner, head of CVS Caremark. Glenview owns 1% of CVS stock as of last report in October, according to the Wall Street Journal, but that 1% accounts for over $700 million of its $2.5 billion war chest. That gives them cause for concern–and leverage.

The board appears to be looking towards maximizing performance now, not later. The new executive chair of CVS Health, Roger Farah, from the release: “In our discussions with the leadership at Glenview, we agreed that we can deliver greater value from our integrated businesses to all of our stakeholders, including our customers, consumers, colleagues, and shareholders.” New faces tasked with quick turnarounds include group president Prem Shah and at the head of shaky Aetna, Steve Nelson from ChenMed [TTA 8 Nov]. That means achieving profitability and cash flow at a very tough time for nearly all insurers. CNBC, Becker’s

How Centene did it after a similar move by Politan Capital Management. Since early 2022, Centene has been selling off in pieces what turned out to be an abundance of ancillary, only partly digested businesses, such as Ribera Health, Magellan, Apixio, and most recently their MSO/ACO organizer Collaborative Health Systems [TTA 13 Nov, 5 May 2023, 30 July 2022], along with a deep portfolio of real estate such as a projected Charlotte HQ, all bought by the late CEO Michael Neidorff. These ‘fat pads’ were easy cuts along with several thousand people. CVS Health, however, may not have the padding that Centene had to generate ready cash from willing buyers as it has the reputation of being fairly lean. Their big missteps may have been in 2022 (FOMO Time) pursuing a management-led Big Objective of entering brick-and-mortar and buying never-profitable Oak Street Health primary care for $10 billion, buying home health’s Signify Health for $8 billion, and investing $100 million in Carbon Health, all at inflated post-pandemic prices with the latter two having significant issues within their lines of business. 

The proposal of splitting up the company sounds drastic to achieve profitability. It may be a ‘worst case scenario’ thrown out to keep the crocodile sated. Much depends on how both Glenview Capital and Mr. Market behave next year with the opportunities presented, while facing a new administration and HHS and CMS heads without ties to or fondness for payers. 

Meanwhile, Oscar Health, helmed by Aetna’s former and ousted head Mark Bertolini, posted a strong Q3 closing September 30. Versus prior year, their revenue went up 68% to $2.4 billion, medical loss ratio remained fairly stable at 84.6%, up 80 basis points (bps=.01%), and expenses improved by 3.6%, but importantly they narrowed their net loss to $54.6 million, or $(0.22)  of earnings per share, a $10.8 million improvement. Revenue for the year was adjusted upward to the $9.2 billion to $9.3 billion range, $200 million above the prior range of $9.0 billion to $9.1 billion. It’s quite a turnaround from the dancing-with-disaster Oscar of only 18 months ago. Look hard, there’s a schadenfreude-ish smile on the middle guy’s face….  Oscar release

DEA extended telehealth prescribing of controlled substances for a third round. The kicking the can down the road was easily predicted last month. The “Third Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications” exited the registry of the White House Office of Management and Budget (OMB) 14 November. On the 15th, the rule was posted to the Federal Register and officially published today (19 Nov). It gives the Drug Enforcement Administration (DEA) a clean extension of the pandemic time flexibilities on Schedule II-V remote prescribing. The industry will wait and see if the incoming Trump 47 administration will bring this up to Congress to repeal, as by a whisker the extension fell outside the 60-day vacate window. But it’s not a hot button issue and is very likely to continue into 2025. FierceHealthcare, ATA release

CareMax goes into Chapter 11, agrees to sell to the new Revere Medical. The senior healthcare provider based in Miami filed Chapter 11 on 17 November but already has entered an agreement to sell assets to Revere Medical, formerly Stewardship Health, sold out of Steward Health’s bankruptcy to Brady Health Buyer, an entity of Rural Healthcare Group-Kinderhook Industries [TTA 8 Nov]. The sale that had to be planned for some time is part of a restructuring plan approved by the company’s secured lenders, commonly called a pre-packaged bankruptcy. Revere is acquiring CareMax’s management services organization (MSO) and ACO assets, including the Medicare shared savings program (MSSP) part of its MSO business that supports about 80,000 Medicare beneficiaries. CareMax will wind down and exit their Medicare Advantage and ACO REACH businesses which will take some time, likely 2026. The operating clinic business assets will go to a third-party buyer. Further restructuring is part of a restructuring support agreement (the “RSA”) with lenders holding 100 percent of the Company’s secured debt obligations, according to the 17 November release. Becker’s  Update: CareMax was related to Steward Health as the exclusive value-based managed service organization (MSO) for Steward Health Care’s Medicare network. Steward’s failure was the final crack that broke CareMax’s back, as it had been losing money for several years, according to Paul Rundell, CareMax’s chief restructuring officer. Not helpful was their leasing many of their properties from real estate investment trust Medical Properties Trust, same as Steward.  HealthcareDive   And where in the world is Dr. de la Torre, Steward’s CEO?

Finland’s Oura health tracker ring now discloses where the money’s coming from. Oura picked up $75 million from Dexcom in a Series D funding round, their first since a $100 million Series C in May 2021 and an undisclosed venture round the following year. Their total financing is $223 million and the valuation at $5 billion. Dexcom and Oura are also in partnership to integrate Dexcom glucose data with vital signs, sleep, stress, heart health, and activity data from Oura Ring. The two-way integration will flow data between Dexcom and Oura products, including Dexcom glucose biosensors, Dexcom apps, Oura Ring and the Oura App. Oura release, FierceHealthcare Oura purchased Sparta Science earlier this month and metabolic tracker Veri in September. Veri, however, works with the Abbott FreeStyle Libre to guide users to the right foods, habits, and timing versus common health metrics such as sleep for their bodies.