News and deals roundup: CoverMyMeds ‘big bang’, Noom’s $540M Series F, insurtech Bright Health’s IPO, Grand Rounds-Included Health, GoodRx, Cedar-OODA, Huma, Bluestream Health’s outreach

McKesson shmushes four units into CoverMyMeds. McKesson’s Big Bang combines four McKesson business units–RelayHealth (pharmacy networking), McKesson Prescription Automation (software), CoverMyMeds (medication access for patients), and RxCrossroads by McKesson (therapeutic and drug commercialization). They are being reassembled into one massive unit under the CoverMyMeds name. The unit will have about 5,000 people and will be headed by Nathan Mott. More here in a blog post/announcement posting that’s short on information and long on cheerleading.

And the funding rounds keep marching down the alphabet. Noom, the weight loss app, gained a generous Series F of $540 million led by Silver Lake with participation from Oak HC/FT, Temasek (Singapore), Novo Holdings, Sequoia Capital, RRE and Samsung Ventures. Valuation is now at $4 billion. Adam Karol, a managing director at Silver Lake, and former TaskRabbit chief executive Stacy Brown-Philpot will join Noom’s board. The fresh funding will be used to expand into areas such as stress and anxiety, diabetes, hypertension, and sleep.

Noom had a banner year in 2020, with $400 million in revenues as people tried to shed Pandemic Pounds (aided by a near-ubiquitous ad push). The app has had 45 million downloads to date in 100 countries, largely in the US, UK, Canada, Australia, Ireland, and New Zealand. According to a (paywalled) Bloomberg News report, feelers are out for an IPO which may be valued at $10 billion. TechCrunch, Reuters, FierceHealthcare

Bright Health Group filed its S-1 registration statement with the Securities and Exchange Commission (SEC). Their rumored $1 billion IPO will be on the NYSE and trade under the symbol BHG. Timing, share value, and number of shares are to be determined. It’s speculated that the valuation at that point is expected to be between $10 and $20 billion. Bright Health is an insurtech operating exchange and Medicare Advantage (MA) health plans under Bright HealthCare  in 14 states and 50 markets, covering over 620,000 lives. They also have a separate care delivery channel called NeueHealth, 61 advanced risk-bearing primary care clinics delivering in-person and virtual care to 75,000 unique patients. Last month, they purchased Zipnosis, adding their white-labeled telemedicine for large health systems business. Bright Health Group release, Mobihealthnews

Short takes:

Doctor on Demand and Grand Rounds, which finalized their merger earlier this month, have agreed to acquire Included Health. Terms and timing were not disclosed. Included Health specializes in care concierge and healthcare navigation services for the LGBTQ+ community. FierceHealthcare, Release

GoodRx acquired rival RxSaver for $50 million in cash in late April to bulk up against Amazon. FierceHealthcare

Medical billing and pre-visit tech company Cedar is acquiring payer workflow tech company OODA Health for $425 million deal in a mix of cash and equity. It’s expected to close at end of May. OODA’s co-founder, chairman, and co-CEO is Giovanni Colella, MD, also co-founded Castlight Health and founded RelayHealth (see above), so another successful exit for him. FierceHealthcare, HISTalk

London-based Huma, raised $130 million in a Series C. Leaps by Bayer and Hitachi Ventures led the round. The former, mysterious Medopad now seems to have settled on a platform that supports ‘hospital at home’ plus pharma and research companies in large, decentralized clinical trials. There’s an add-on of $70 million to the Series C that can be exercised at a later date. Release, HISTalk

White-label telehealth provider Bluestream Health is partnering with The Azadi Project to provide virtual care services to refugee women and girls fleeing from countries like AfghanistanIranIraq, and Syria for safety in Greece. “Bluestream Health has teamed with The Azadi Project to provide a virtual care platform that stretches around the world. The women fleeing war-torn and conflict-affected countries have suffered unspeakable abuse, and while seeking safety in Greece, they are further exposed to terrible living conditions and hostility.”  said Matthew Davidge, co-founder and CEO of Bluestream Health.  Release

Weekend reading: the strange reasons why Amwell doesn’t consider Amazon a competitor; ground rules for the uneasy marriage of healthcare and technology

Yahoo Finance interviewed co-CEO/founder of Amwell Ido Schoenburg, MD on the company’s 2020 results and forecast for 2021. It makes for interesting but convoluted reading on their growth last year in what is a consolidating field where Amwell was once one of the undisputed two leaders. They now compete against payers acquiring telehealth companies (MDLive going to Optum) and mergers like Doctor on Demand-Grand Rounds that are taking increasing market shares. Then there are specialty providers like SOC Telemed and white-labels like Bluestream Health. However, there are a couple of whoppers in the happy talk of growth for all. Dr. S pegs the current run rate of telehealth visits at 15-20 percent. The best research from Commonwealth Fund (October) and FAIR Health (August) tracked telehealth at 6 percent of in-office visits. Epic Health Research Network measured 21 percent at end of August. [TTA summary here

Then there’s the tap dance around Amazon Care. His view is that telehealth companies all need a connective platform but that each competitor brings ‘modular components’ of what they do best. What Amazon excels at is the consumer experience; in his view, that is their contribution to this ‘coalition’ because healthcare doesn’t do that well. There’s a statement at the end which this Editor will leave Readers to puzzle through:  

“And Amazon and others could bring a lot of value to those coalitions, they should not be seen as necessarily competing unless you’re trying to do exactly what they do. And there are some companies, including some telehealth companies, that that’s what they do. They focus on services. They try to sell you a very affordable visit with a short wait time and a good experience. They should be incredibly concerned when someone so sophisticated as Amazon is trying to compete in that turf.”

The last time this Editor looked, none of these companies were non-profit, though nearly all are not profitable.

Gimlet EyeLooking through her Gimlet Eye, Amazon Care is a win-win, even if the whole enterprise loses money. In this view, Amazon accumulates and owns national healthcare data far more valuable than the consumer service, then can do what they want with it, such as cross-analysis against PillPack and OTC medical shopping habits, even books, toys, home supplies, and clothing. Ka-ching!

A ‘bucket of cold water’ article, published in Becker’s Health IT last month, takes a Gimlety view of the shotgun marriage of healthcare and technology. Those of us laboring in those vineyards for the better part of two decades might disagree with the author in part, but we all remember how every new company was going to ‘revolutionize healthcare’. (The over-the-top blatherings of ZocDoc‘s former leadership provide a perfect example.) The post-Theranos/Outcome Health/uBiome world has demonstrated that the Silicon Valley modus operandi of ‘fake it till you make it’ and ‘failing fast and breaking things’, barely ethical in consumer businesses, are totally unethical in healthcare which deals in people’s lives. Then again, healthcare focused on ‘people as patients’ cannot stand either. Stephen K. Klasko, MD, President and CEO, Thomas Jefferson University and Jefferson Health in Pennsylvania, advocates for a change–far more concisely than Dr. Schoenburg. You may want to pass this along.

Two major moves and what they mean: Doctor on Demand, Grand Rounds to merge; Amazon Care will go national by summer (updated)

This week’s Digital Health Big Deal (as of Wednesday!) is the merger agreement between telehealth/virtual visit provider Doctor on Demand and employer health navigator Grand Rounds. Terms were not disclosed. It’s important because it extends Grand Rounds’ care coordination capabilities beyond provider network navigation and employee clinical/financial tools for six million employees into an extensive telehealth network with 98 million patients in commercial, Federal, and state health plans.

Both companies had big recent raises–$175 million for Grand Rounds in a September 2020 Series E (Crunchbase) and Doctor on Demand with a $75 million Series D last July (Crunchbase). The transaction is a stock swap with no cash involved (FierceHealthcare, CNBC), and the announcement states that the two companies will operate under their own brands for the time being. Owen Tripp, co-founder and CEO of Grand Rounds, will run the combined company, while Doctor on Demand CEO Hill Ferguson runs DOD and joins the board. The combined company is well into Double Unicorn status with over $2 bn in valuation. Also Mobihealthnews.

What it means. Smaller (than Teladoc and Amwell) telehealth companies have been running towards M&A, with the most recent MDLive joining Optum’s Evernorth [TTA 27 Feb] creating interstate juggernauts with major leverage. Doctor on Demand was looking at their options for expansion or acquisition and decided 1) the time and the $ were right and 2) with Grand Rounds, they could keep a modicum of independence as a separate line while enjoying integration with a larger company. The trend is profound enough to raise alarms in the august pages of Kaiser Health News, which decries interstate telehealth providers competing with small and often specialized in-state providers, and in general the loosening of telehealth requirements, including some providers still only taking virtual visits. Contra this, but not in the KHN article, this Editor has previously noted that white-labeled telehealth providers such as Zipnosis and Bluestream Health have found a niche in supplying large health systems and provider groups with customized telehealth and triage systems.

UPDATED. In the Shoe Dropping department, Amazon Care goes national with virtual primary care (VPC). To no one’s surprise after Haven’s demise, Amazon’s pilot among their employees providing telehealth plus in-person for those in the Seattle area [TTA 17 Dec 20] is rolling out nationally in stages. First, the website is now live and positions the company as a total care management service for both urgent and primary care. Starting Wednesday, Amazon opened the full service (Video and Mobile Care) to other Washington state companies. The in-person service will expand to Washington, DC, Baltimore, and other cities in the next few months. Video Care will be available nationally to companies and all Amazon employees by the summer.

Notably, and buried way down in the glowing articles, Amazon is not engaging with payers on filing reimbursements for patient care. Video Care and Care Medical services will be billed directly to the individual who must then send for reimbursement to their insurance provider. The convenience is compromised by additional work on the patient’s part, something that those of us on the rare PPO plans were accustomed to doing back in the Paper Age but not common now. It also tends to shut out over 65’s on Medicare and those on low-income plans through Medicaid. It is doubtful that Amazon really wants this group anyway. Not exactly inclusive healthcare.

TechCrunch, FierceHealthcare. Jailendra Singh’s Credit Suisse team has a POV here which opines that Amazon continues to have a weak case for disruption in VPC, along with their other healthcare efforts, and an uphill battle against the current telehealth players who have already allied themselves with employers and integrating with payers.

Rock Health’s ‘Another record-breaking first half’ in digital health funding is actually–flat. (With a Soapbox Extra!)

The Breathless Tone was the clue. “It’s déjà vu for digital health, with yet another record breaking half for venture funding.” It was déjà vu, but not of the good sort. This Editor hates to assume, so she checked the year-to-year numbers–and first half 2018 versus 2017 broke no records:

  • 2018:  $3.4 bn invested in 193 digital health deals 
  • 2017: $3.5 bn invested in 188 digital health companies [TTA 11 July 17]

But ‘flat’ doesn’t make for good headlines. Digging into it, there are trends we should be aware of — and Rock Health does a great job of parsing–but a certain wobbliness carried over from 2017 even though the $5.8 bn year finished 32 percent up over 2016, analyzed here [TTA 5 Apr 18]. Their projection for 2018 full year is $6.9 bn and 386 deals.

Let’s take a look at their trends:

  • “The future of healthcare startups is inextricably linked to the strategies of large, enterprise-scale healthcare players—as customers, partners, investors, and even potential acquirers.” It’s no mistake that the big news this week was Amazon acquiring tiny, chronic-conditions specializing prescription supplier PillPack after a bidding war with Walmart for an astounding $1bn, making its 32 year-0ld founder very rich indeed and gaining Amazon pharmacy licenses in 49 states. (Prediction: Walmart will be pleased it lost the war as it will find its own solutions and alliances.) 
    • Enterprise healthcare players are cautious, even by Rock Health’s admission, but the big money is going into deals that vertically integrate and complement, at least for a time–for example, Roche’s purchase of Flatiron Health. And when it doesn’t work, it tends to end in a whimper–this May’s quiet sale by Aetna of Medicity to Health Catalyst for an undisclosed sum. Back in 2011, Aetna bought it for $500 million. (Notably not included in the Rock Health analysis, even though they track Health Catalyst and the HIE/analytics sector.)
  • The market is dependent on big deals getting bigger. If you are well-developed, in the right sector, and mature (as early-stage companies go), you have a better shot at that $100 million B, D, E or Growth funding round. B rounds actually grew a bit, with seed and A rounds dipping below 50 percent for the first time since 2012. 
  • The Theranos Effect is real. Unvalidated, hyped up claims don’t get $900 million anymore. In fact, there’s real concern that there’s a reluctance to fund innovation versus integration. The wise part of this is that large fundings went to companies validating through clinical trial results, FDA clearance (or closing in on it), and CDC blessing.
  • The dabbling investor is rapidly disappearing. 62 percent of investors in first half had made prior investments in digital health including staying with companies in following rounds.
  • Digital health companies, like others, are staying private longer and avoiding public markets. Exits remain on par with 2017 at 60. Speculation is that Health Catalyst and Grand Rounds are the next IPOs, but there hasn’t been one since iRhythm in October 2016. The Digital Health public company index is showing a lot less pink these days as well, which may be an encouraging sign.
  • Behavioral health is finally getting its due. “Behavioral health startups received more funding this half than in any prior six-month period, with a cumulative $273M for 15 unique companies (nearly double the $137M closed in H1 2016, the previous record half for funding of behavioral health companies). Of these 15 companies, more than half have a virtual or on-demand component.”

Keep in mind that Rock Health tracks deals over $2 million in value from venture capital, excluding government and grant funding. They omit non-US deals, even if heavily US funded. 

Their projection for 2018 full year is $6.9 bn and 386 deals. Will their projection pan out? Only the full year will tell!

A Soapbox Extra!

Rock Health, like most Left Coast companies, believes that Vinod Khosla is a semi-deity. This Editor happens to not be convinced, based on predictions that won’t pan out, like machines replacing 80 percent of doctors; making statements such as VCs have less sexual harassment than other areas, and even banning surfers off his beach. He was at a Rock Health forum recently and made this eye-rolling (at least to this Editor) statement:

Is there one area in the last 30 years where the initial innovation was driven by an institution of any sort? I couldn’t think of a single area where innovation—large innovation—came from a big institution. Retailing wasn’t disrupted by Walmart, it was by Amazon. Media wasn’t changed by CBS or NBC, it was by YouTube and Twitter. Cars weren’t transformed by Volkswagen and GM—and people said you can’t do cars in startups—but then came Tesla.

Other than making a point that Clayton Christensen made a decade or more ago, the real nugget to be gained here is that formerly innovative companies that get big don’t grow innovation (though 3M tends to be an exception, and Motorola didn’t do too badly with the cell phone). They can buy it–and always have. 

Go back a few more decades and all of these companies were disrupters–and bought out (or bankrupted) other disrupters. CBS and NBC transformed entertainment through popularizing radio and then TV. VW created the small car market in the US and saved the German auto industry. GM innovated both horizontally (acquiring car companies, starting other brands) and integrated vertically (buying DELCO which created the first truly workable self-starting ignition system in 1912).

YouTube? Bought by innovator Google. Twitter? Waiting, wanting to be bought. Innovation? Khosla is off the beam again. Without Walmart, there would be no Amazon–and Amazon’s total lifetime profit fits nicely into one year of Walmart’s. Tesla is not innovative–it is a hyped up version of electric car technology in a styled package that occasionally blows up and remains on the borderline of financial disaster. (Model 3, where art thou?)

I’d argue that Geisinger, Mayo Clinic, and Intermountain Healthcare have been pretty innovative over the last 30 years. Mr. Khosla, read Mr. Christensen again!

Unicorns to Series A–health tech funding gained in (perhaps) the nick of time

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2015/08/1107_unicorn_head_mask_inuse.jpg” thumb_width=”150″ /]Money, money everywhere–unicorns get the headlines, but the companies are still (largely) small

Up until early August, this Editor would have assumed that our Readers would look at this funding roundup as a bracing windup to a largely positive eight months and a veritable Corvette Summer for healthcare technology funding. We may have to give back the keys a little sooner than we imagined. Will the dropping market affect digital health as 2008-9 did–‘out of gas’ for years? Or will it barely affect our motoring onward? Despite the Dow Jones average hitting an 18 month low today, we hope it’s closer to the latter than the former. though the new and big entrant to digital health investing is the country most affected, China.

Our roundup of the August Action includes ZocDoc, Fitbit, Alphabet, PillPack, Owlet and more, along with a few comments:

**ZocDoc, a NYC-based online medical care appointment service that matches patients with doctors by location and schedule, had the most sensational round with last week’s Series D funding of $130 million, giving it a valuation of $1.8 bn. It took over a year after the filing (June 2014) and was led by two foreign funds (London-based Atomico and Edinburgh-based Baillie Gifford) with additional funding from Founders Fund, which previously participated in raises of $95 million.

Though it claims 60 percent coverage in the US  and ‘millions of users’ (numbers which have been quoted for some years), ZocDoc won’t disclose profitability nor volume–metrics that would be part of any IPO.

Direction? Points given for deciphering this windy statement (quoted from Mobihealthnews): (more…)