News roundup: Precision’s $102M raise, more on BCI; Withings clears BPM Pro 2; Nebraska 1st state to sue Change/UHG, related insider trading update; VA Oracle go-lives may resume; ATA intros CODE; ClearDATA HITRUST certified

December 19, 2024 | by

One more funding. A competitor of Elon Musk’s Neuralink, Precision Neuroscience. closed their Series C at $102 million. This round was led by General Equity Holdings, with participation from firms including B Capital; Duquesne Family Office, the investment firm of Stanley F. Druckenmiller; and Steadview Capital, bringing their total funding to $155 million. The total brings them according to their release as one of the best-funded brain-computer interface (BCI) company after Neuralink, whose funding is unknown. The funding will be used to advance its clinical research and expedite development of its cutting-edge brain implant. 

Precision is the developer of the Layer 7 Cortical Interface to treat motor paralysis. At the time of their last funding in January 2023, this Editor noted that their difference was to treat neurological illnesses and events such as stroke, traumatic brain injury, and dementia. Their focus remains largely there: severe spinal cord injury, stroke, ALS. So far, the investigational device has been tested its device in 27 patients through research partnerships and was designated by FDA as a Breakthrough Device.

More on BCI in this must-read article by Timmy Broderick for STAT. The upcoming issues around BCI now center around the engagement of CMS (Centers for Medicare and Medicaid Studies) for coding, coverage, and payment for devices after the investigational stage; privacy issues about neural data; and continued support after implantation. This last one is acute as these companies are young. There has already been the example of Second Sight’s bankruptcy, leaving subjects stranded with useless retinal devices in their eyes. BCI to this Editor will develop through 2025–and be a major focus of investment by 2026-2027.

Withings gains FDA clearance, intros BPM Pro 2. A professional-level product for hypertension and chronic heart failure (CHF) targeted to care teams to connect with their patients, the FDA clearance covers blood pressure and pulse rate measurement in adults with arm circumferences of 9 to 17 inches (22 cm to 42 cm) or 16 to 20 inches (40 to 52 cm). What is really interesting about the connected (Wi-Fi, cellular, BT) device is that care teams can program the device through the Patient Insights feature for the patient to interact with the device in real time. Through a small screen, it asks questions that help to track the patient’s condition, reinforce medication adherence, and assess their satisfaction. It also has a Retake Measure feature to retake a reading if results exceed predetermined thresholds and increases accuracy. Withings plans to upgrade the device to take a 1-lead ECG to detect atrial fibrillation; this is a separate clearance and expected to become available in 2025. The device is not yet CE Marked. Withings was named a CES 2025 Innovation Awards Honoree in the Digital Health category. (Photo, Withings website) Release, Mobihealthnews, MedCityNews

UHG’s Mound of Misery multiplies with Nebraska’s Change Healthcare lawsuit, plus separate but related insider trading. 

  • Nebraska became the first state to sue UnitedHealth Group, Optum, and Change Healthcare over those affected by the late February ALPHV/BlackCat hack of Change’s systems. In Nebraska alone, it affected 575,000 individuals. (It is actually hard to find someone who was not affected by the hacking of the leading exchange for major claims clearing and payments.) Nebraska’s attorney general Mike Hilgers is suing because of the company’s carelessness in handling data and, even worse, in its slow notification of those affected. Our Readers will recall that Change/UHG initially tried to push off notification on healthcare providers. When HHS threw the ball back to Change [TTA 5 June], notices didn’t go out until August-September. The charges in state law center on consumer law: financial data protection and consumer protection statutes, deceptive trade practices, and Federal standards on privacy (HIPAA, and HIT protection. The lawsuit was filed by the AG in the District Court of Lancaster County, Nebraska. Nebraska Examiner
  • The Change acquisition and later problems were possibly the catalyst for stock sales by senior/C-level UHG executives, including UnitedHealthcare CEO Brian Thompson. The $300 million Hollywood (Florida) Firefighters Pension Fund initiated a class action lawsuit alleging that the sales were made while the Department of Justice (DOJ) was considering an anti-trust action against UHG that would revisit the so-called ‘firewall’ between it and Change.  The complaint specifically mentions that UHG executives were aware of it as early as October 2023. The Wall Street Journal revealed the investigation on 27 February 2024–the same time as the Change breach was revealed, cracking the stock almost immediately. Executives including Thompson ($15 million), UHG CEO Andrew Witty, and board chairman Stephen Hemsley ($102 million) were named. The class action covers the period for stock purchased between 14 March 2022 and 27 February 2024. UHG has until 1 March 2025 to answer the complaint. Healthcare Finance News  (This is likely to affect the settlement of the Thompson estate–Ed.)

VA confirms that additional Oracle EHR implementations may go live in 2025, after 18 months of dead stop. The Oracle Cerner EHR is reportedly ‘running better’ at the current six sites where it is operating: five VA only (including 20 community clinics and about 100 support sites), and the sixth at Lovell jointly with the Military Health System (MHS). The restart of EHR Modernization (EHRM) was confirmed earlier during budget hearings by Kurt DelBene, assistant secretary for information and technology and chief information officer. Crash and lag downtimes are reduced by half and incident tickets by 60% since the last updates in August.  Timing remains indefinite for 2025 (FY ends 30 September 2025) but current VA Secretary Denis McDonough confirmed that primarily VA staff will continue to work on it under the Trump Administration. “The overwhelming majority of VA professionals who work on EHRM will be working on EHRM on January 21st, just as they were on January 19th,” McDonough said at an 11 December press conference. Federal News Network

Short takes:

  • The American Telemedicine Association (ATA) launched its new ATA Center of Digital Excellence (CODE) last week. CODE is constructed as an alliance with leading health systems for the development and implementation of digital health best practices that prioritize patient-centered care, equitable access, and improved clinical and operational outcomes. Tools span enhancement of workflows and patient engagement to improve healthcare accessibility. ATA release
  • ClearDATA’s CyberHealth platform and cloud managed services have earned Certified status by HITRUST for information security. ClearDATA provides healthcare specific managed cloud security, compliance and operations solutions. HITRUST, the Health Information Trust Alliance, is a non-profit that sets standards for data organizations through the HITRUST CSF framework. Release

Masimo update: SEC announces investigation of RTW Investments and role in proxy war voting

December 6, 2024 | by

The Securities and Exchange Commission comes knocking on RTW Investments’ door…and they have no sense of humor. Though the proxy war is over now for two months and Politan Capital Management is firmly in control, with losing founder Joe Kiani departing in a classic ‘you’re fired/I quit’ scenario that’s dissolved in a flurry of lawsuits from New York to California [TTA 15 Nov], the next shoe dropping can land Kiani and his ally Roderick Wong of RTW into some extremely hot soup, to strain two metaphors.

The SEC is now investigating the “empty voting” scheme apparently used by Kiani’s side in the proxy war. Masimo had already sued Kiani and RTW in the US District Court for the Southern District of New York charging that they used empty voting to manipulate the shareholder vote in favor of Kiani. Masimo is claiming that this action rigged 19% of the vote under Kiani’s and allies’ control. As noted in our November article, empty voting is done through put options or by selling the shares after the record date but before the shareholder meeting. It’s a way for an investor to build up share control and sway the outcome of a shareholder vote at little cost.

Strata-gee yesterday (5 Dec) reported that Bloomberg News (paywalled), during last week’s pre-Thanksgiving ‘news black hole’, broke that the SEC is probing RTW, a $6.5 billion hedge fund. Its head Roderick Wong is cooperating with the probe. He characterized it to his investors as a ‘fact-finding investigation’ and accurately characterized it as “the existence of a probe doesn’t mean laws were broken” in a message on Monday 25 November. A SEC probe is not necessarily safe as milk–see the last part of this article.

However, as Strata-gee reports, empty voting is not necessarily illegal. It is Masimo’s stating that it has evidence that Kiani and RTW conspired to form an insider group–and insider groups always ring bells for the SEC especially during a proxy fight. And where there’s the SEC, there is the Department of Justice. Witness the interest in insider trading in the form of stock sales by executives at UnitedHealth Group while a DOJ probe was happening but not public–and the resurgence of interest in UHG’s legal difficulties as part of the shocking recent events–which have caused industry executives to scrub their profiles from corporate websites. Healthcare Dive.

Why this matters to us in healthcare tech. Masimo makes consumer and professional medical devices, including smartwatches, that measure vital signs including pulse oximetry where they have a brace of patents. Their global revenue in 2023 was over $2 billion. Medical Design and Outsourcing  Last year at this time, Masimo was the David wrestling Goliath Apple to the mats with  ITC (International Trade Commission) bans on the new Apple Watch 9 and Ultra 2 last Christmas season, forcing Apple to pull them from sale and disable the feature violating the Masimo patents. Masimo continues to challenge Apple patents in court with mixed results, most recently reported in mid-October. Since the new Masimo is actively selling or spinning off its audio brands, what remains is their healthcare technology business.

A cautionary tale. This Editor, as a subscriber to Strata-gee (an audio business specialist website) after finding Editor Ted Green’s talented writing there in following the Masimo Mess, wanted to share from today’s subscriber email his description of a SEC probe at a former employer. Basically, the SEC doesn’t launch investigations unless they have good reason to do so, and they turn your company’s life upside down doing it. Mr. Wong will be holding court for a group of guests for awhile. Editor Ted has a reminiscence of when it happened at the well-known audio brand Onkyo, which was treated as a suspect in the legendary Crazy Eddie (“his prices are insaaaaane!”) retail electronics chain fraud.

Have I ever told you the story about the day, many years ago, when about 20 agents of the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI) came storming through the main entrance of Onkyo USA, marched into the President’s office (who was in a meeting that was hastily dismissed) and delivered a Search Warrant? (This is not a joke!) I learned a few things that day about the men and women of the SEC: 1) Most of them were armed with weapons that could deliver deadly force; 2) They were as serious as a heart attack; and 3) They would take office space in our facility and stay for weeks, as they forensically examined everything about our business. It turned out that this was part of an investigation into Crazy Eddie, a New York dealer that they suspected had engaged in illegal activities. As one of their top suppliers, Onkyo was considered a potential co-conspirator until we proved we weren’t…which, thankfully, we did – and they came to see us as one of the victims of Eddie Antar’s scheme and NOT a partner.

No apologies rendered, I’d guess. Or payback for the sandwiches and coffee.