News roundup #2: why Walgreens is considering selling to a PE, December fundings, 2024’s surprises, M&A ’25 predictions, Transcarent buying Accolade for $621M

Why would Walgreens sell out to a private equity investor, reportedly Sycamore Partners? This news leaked early in December to the Wall Street Journal that this PE would either buy Walgreens Boots Alliance (WBA) in whole, in parts, or with partners [TTA 10 Dec 2024]. This MedCityNews article gathers the speculation from multiple financial executives, and the answer is a resounding Maybe.

  • Primary care was a losing bet–and their retail pharmacies are challenged by new models like Amazon Pharmacy and Cost Plus.
  • It will take about $9.2 to $10 billion, which is a lot for Sycamore to pony up. But it’s a bargain from what PE giant KKR offered in 2019– $70 billion.
  • Sycamore may have competition for buying WBA.
  • The 12,000 store network is now seen not as an asset, but a liability, not only for pharmacy but also for retail goods.
  • Sycamore may be more interested in the retail and e-commerce sides of Walgreens versus healthcare. For instance, WBA company Boots in the UK has leveraged its beauty business to nearly the prominence of health in their stores.
  • A private company may have more power to swiftly make the changes that Walgreens needs, versus a company having to report quarterly to shareholders. 

There was the usual rush to announce fundings by December’s end, a refreshing change from 2023’s end. MedCityNews helpfully rounded up five of the last-minute closings:

  • Already noted: Oura’s $200 million plus funding for a Series D from Dexcom ($75 million) and Fidelity Management. Our earlier reporting noted total financing at $223 million and the valuation at $5 billion.
  • Cleerly’s $106 million Series C led by Insight Partners. Cleerly developed AI-assisted detailed phenotyping of coronary artery disease.
  • Remodel Health gained $100 million in a funding led by Oak HC/FT and Hercules Capital. Remodel works with employers and employees to build and access Individual Coverage Health Reimbursement Arrangement (ICHRA) plans.
  • Cala Health raised $50 million from Vertex Growth Fund and Nexus NeuroTech Ventures. Cala is a bioelectronic medicine company which developed FDA-cleared, noninvasive devices for hand tremors.
  • Soda Health’s $50 million Series B, led by General Catalyst, is in the hot sector of ‘food as medicine’. Soda provides a ‘smart benefits’ card to use at approved retailers for food, health products, and pharmacy benefits.

2024 had its share of surprises in this two-part Mobihealthnews roundup. No surprise for our Readers in that GLP-1 drugs for weight loss went to radioactive-level hot (but this Editor predicts a collapse in 2025). The failure of retail clinics such as Walmart Health and VillageMD surprised many in the industry–as well as Optum shuttering its telehealth business. Developing: menopause and autoimmune health (and their relationship)–and food as medicine. On the insurance side, the troubles of the Medicare Advantage health plan model multiplied, not moderated. And AI? On top of everything, but you maybe shouldn’t develop your own LLM. Part One, Part Two

Predictions for 2025 mergers and acquisitions center on consolidations. There’s little foo-foo or froth in this Mobihealthnews article– instead, lots of New Reality. Many pandemic-born startups will die quiet deaths in sales, shotgun marriages, and shutdowns. Much caution in any M&A. The emphasis is on interoperability, which is widely defined as acquirer-acquiree and a clearly presented integrated value proposition to customers. Their industry leader panel cannot agree whether M&A will accelerate as a result of changes at FTC (Lina Khan’s departure and a new chair) or slow down. And at least one leader believes that Medicare Advantage will stabilize and recover.

But one buyer plays it high and wide in ’25–the deep-pocketed Transcarent, agreeing to buy Accolade for $621 million in 2025’s First Big Deal. Accolade is also in enterprise care navigation, as well as providing virtual primary care, specialist consultations, and patient advocates. It went public on Nasdaq in 2020. Transcarent’s offer is $7.03 per share in cash, an approximately 110% premium over the company’s closing stock price yesterday 7 January. The funding is coming from General Catalyst (!) and Glen Tullman’s 62 Ventures. Accolade will go private at the closing, expected to be Q2 following shareholder and regulatory approvals, and be integrated into Transcarent. The combined Transcarent will have 1,400 employer and payer clients. Release, Healthcare Dive

Wojcicki: I’m transforming 23andMe to be ‘viable’ and thriving–but had ‘no idea why her board resigned’

Transform it till it survives. That seems to be the meme of 23andMe’s CEO/founder Anne Wojcicki in a “CBS Mornings” ‘exclusive’ with co-host Gayle King. Dropping on 27 November (Wednesday morning before Thanksgiving), the 10-minute segment was primarily a pre-recorded eight-minute interview done in a ‘living room’ setting earlier with an introduction and closing commentary with two others. For a non-business interviewer, King directed it better than expected, though the context was soft, with an intro and early questioning that focused on the company’s problems and a Fortune article (more below), then moving towards the end to Wojcicki’s family and personal challenges this year. 

Wojcicki believes that the company is ‘viable’ and ‘transforming’ under her. King redirected Wojcicki from her initial corporate boilerplate-speak twice within the first few minutes back to the troubles of the company, including “How does a company survive when it’s lost 98% of its value though?” The answer was rather pat: “We absolutely are in a situation where we’re figuring out cash burn and we’re looking at all the ways that we’re gonna drive revenue growth.” which is about as much as a CEO and controlling shareholder would want to say about a public company potentially facing shareholder lawsuits.

King touched on the instances of last year’s massive data breach [TTA 19 Jan, 2 Feb], the layoff in November of 40% of its remaining workforce [TTA 14 Nov], and the entire resignation of the board [TTA 17 Sept]. This last elicited the surprising revelation that Wojcicki had “no idea why her board resigned” nor “great insights into what the strategic differences were” or that “there was not an overt disagreement.” King did not drill down into that brace of amazing statements about a hand-picked board of a public company during a financial crisis, trying to decide on a course of action whether to sell or go private. She also did not address the role that the data breach and 23andMe’s widely derided treatment of their customers had in precipitating the company’s decline.

Regarding content in the generally negative Fortune article from October, Wojcicki rebutted the former employees’ view that all decisions ran through her and that she was “outwardly charming, but stubborn and controlling behind the scenes.” saying that ‘”I love getting feedback” and that she encouraged everyone to voice their opinions and share suggestions, which is not quite the same as a collaborative management style or delegation. To her, her vision was centered on using genetic data for consumer empowerment, research, and discovery. Unfortunately, the company moved away from the consumer part which remained largely one-off testing, despite the late adoption of a subscription model and refocusing on consumer products such as GLP-1 drugs. The corporate focus became drug discovery and development (closed) and the GSK data (ended).

To Wojcicki, the closures and layoffs are justified in what she envisions as the ultimate transformation of the company, her new mantra. King closed by asking her about her one and five-year predictions for the company. At one year, Wojcicki without blinking and with a small smile said that 23andMe would be “thriving”. Five years? With a large, confident, and convincing smile, with clasped hands, Wojcicki said it would be “transforming healthcare”. This Editor has heard that song before.

News roundup: Cano Health board fight, board shakeup; Memora Health’s $30M raise; Teladoc enters weight management race

The continuing drama at Florida-based primary care provider Cano Health focuses on the board and CEO. The three board members who resigned in late March [TTA 7 April]–Barry Sternlicht, Elliot Cooperstone, and Lewis Gold (who we’ll dub the Cano 3)–are now demanding that the company board reopen the window for director nominations at the 2023 Annual Meeting of Stockholders. In a letter/press release targeted to fellow shareholders released on Monday, the group cited “drastically changed circumstances”, exclusion of the three from decision-making prior to their resignation, and “the emergence and disclosure of additional self-dealing and concerning related-party transactions that were not previously disclosed – have cast serious doubt on the credibility and fitness of the current Board and CEO Marlow Hernandez.” The letter/release also focuses on the company’s negative (-83%!) performance over the past year. The three own 36% of the common stock of Cano Health, which means they have a very loud voice.

Cano management responded on Monday with a very long letter/press release of its own rebutting the “destructive actions” of the Cano 3  with a lengthy but somewhat anodyne six-point action plan to move the company toward profitability, improve performance, and increase liquidity. Point 6 was quite the kicker: appointing a non-executive chairman of the board, Solomon (Sol) Trujillo. This separated the chairman and CEO roles, with the highly controversial founder Dr. Marlow Hernandez remaining as CEO. Not addressed were the issues around Dr. Hernandez. He has been accused of self-dealing in two instances: $23 million to the CEO’s father for general contracting work, and $8.5 million to a dental care company owned by Mrs. Hernandez. Earlier coverage included dubious transactions with Miami medical claims recovery company MSP Recovery (also known as LifeWallet).

What’s interesting about this is that it may turn into a battle royal between two major figures: chairman Sol Trujillo against Barry Sternlicht. Mr. Trujillo is highly experienced in board/CEO roles in high-stress turnaround situations, such as at Orange SA and most recently Australia’s Telstra Communications. Mr. Sternlicht is well known as the CEO of Starwood Hotels and is a major real estate and private investor.

Cano Health was founded in 2009 and went public via a SPAC in 2021. It lost $426 million in 2022. The shareholder meeting date hasn’t been released yet, but in 2022 it was in May. Stay tuned. Healthcare Dive, MarketWatch

Memora Health raises $30 million. This venture round was led by General Catalyst and joined by several health systems including Northwell plus existing investors Andreessen Horowitz, Transformation Capital, and Frist Cressey Ventures. Memora has AI-based technology for complex care management and digitizes clinical and administrative workflows. FierceHealthcare, Crunchbase

Teladoc to premier weight management program using GLP-1 agonist drugs. This will be part of their physician-based care product for employers, and will target patients needing additional assistance in weight loss and diabetes prevention. The program provides access to a Teladoc-employed doctor for a personalized care plan, along with daily coaching with digital tools. Debut is projected during Q3. GLP-1 drugs such as the widely advertised (in US) Ozempic injectable were originally designed for diabetes management but have found a different market in weight loss. Companies such as Calibrate, Ro, and Sequence (acquired recently by Weight Watchers) are competitors. Healthcare Dive