TTA’s Blooming Spring 2: Teladoc buys UpLift to buck up BetterHealth, Novo Nordisk partners with Hims, other teleprescibers on Wegovy, Masimo’s former CEO claiming un-granted shares, Commure-HealthTap partner, more!

May 2, 2025 | by

2 May 2025

Cherry blossoms are starting to fall, much like Teladoc’s revenue for Q1 in our lead story. Can their acquisition of a small virtual mental health provider with insurance coverage help turn around BetterHelp? And what about their main business? Novo Nordisk would rather partner than fight with teleprescribers Hims & Hers, Ro, and LifeMD for GLP-1 Wegovy–will this be a trend? Commure adds to its ‘house that Jack built’ tech stack with a HealthTap partnership. And Masimo’s latest episode of its ongoing soap opera is that its former CEO (and major shareholder) is claiming ownership of shares as part of his severance–but they haven’t been granted and very much in dispute. (Irony alert: they’ve increased in value since his departure!)

This just in: Teladoc acquires UpLift for $30M, bolstering struggling BetterHelp telemental health; Q1 revenue down 3% (Can this telemental health be saved with one acquisition?)

News roundup: Hims, Ro, LifeMD and Novo Nordisk partner on Wegovy prescribing (updated); Commure partners with HealthTap for virtual care after hours; WebMD Ignite adds texting to member health ed; hellocare.ai raises $47M for virtual nursing  (When you can’t beat ’em in weight loss meds, join ’em. With a side of Commure’s interesting M.O. on acquisitions.)

Masimo updates: former CEO Kiani claims 13.2% ownership, and a review of the new management’s style (updated) (The soap opera continues)

From last week: Cherry blossoms are blooming (finally) and so is the news. The roundups include Walgreens’ continuing Aisle 9 cleanup of their Federal opioid prescribing allegations, a huge and mysterious breach of Google Analytics sending Blue Shield CA member info to Google Ads, and Veradigm’s interim CEO will be taking the summer off. Our big reads include two surveys: the first on the state of healthcare AI (more show than go) and the second on RPM utilization–and effectiveness. Two raises, a BCI/telehealth merge, and international initiatives.

Product & funding very short takes: South Australia 1st with Sunrise EMR; S. Korea pain research, new emergency services app; BCI + telehealth for stroke patients; VirtuSense monitoring launches at Emory; Series B raises for Nourish, Healthee

Short takes: Veradigm’s interim CEO departing, Blue Shield CA breached 4.8M members’ PHI to Google, advice on expanded M&A premarket notification rules (You can’t blame that CEO for ankling after all the trouble he’s seen! And Blue Shield has 2nd largest breach–involving Google Analytics. Bad timing for Google.)

News roundup: Walgreens’ $350M opioid settlement, only 30% of healthcare AI pilots reach production, Medicare RPM usage up 10-fold despite benefit limitations (Walgreens cleans up again, and two surveys on AI and RPM for weekend perusal)

Holding this over: The weekend read: why SPACs came, went, and failed in digital health–the Halle Tecco analysis/memorial service; why OpenAI is going to be a bad, bad business (Grab the cuppa and lunch for a good read and podcast. Updated–Also Tecco’s blog post on why she quit being an angel investor.) 

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Masimo updates: former CEO Kiani claims 13.2% ownership, and a review of the new management’s style (updated)

April 30, 2025 | by | 2 Comments

Medical device company Masimo may not be able to rid itself entirely of its meddlesome former CEO, Joe Kiani. In fact, if a court awards him the shares exercised under his various employment agreements, he could be 1) a billionaire and 2) the second largest shareholder in the company after Fidelity Investments (FMR). He currently and undisputedly holds 7.5% of Masimo’s shares (Nasdaq: MASI), trading today at over $163.00 and ironically up substantially since his departure. The latest is that Mr. Kiani cleverly filed with the SEC a mandatory “beneficial ownership” report (Schedule G/A, designating an amended form) stating that he owned 13.2% of shares.

The difference? The options, restricted stock units (RSUs), and performance stock units (PSUs) that he attempted to exercise, but have not been granted by the current management, controlled by Politan Capital Management, owner of 8.8% of common shares. Mr. Kiani maintains  that he resigned from Masimo on 19 September 2024, the day of the Annual Shareholders Meeting, “for good reason” after losing his board seat and control of the company to Politan. The new, Politan-controlled board on that day placed him on indefinite leave, named an interim CEO (Michelle Brennan), then in October expanded the board by two directors and formally terminated him on 24 October ‘for cause’, invalidating the terms of his eye-watering (and questionable) $400 million severance agreement. That difference–5.7%–is a whopping 3,226,702 shares on top of his existing 4,085,799 shares. In the Schedule 13G/A comments section, the non-granted shares are delicately termed as “subject to a dispute between the Issuer and the Reporting Person” (Mr. Kiani).

This Editor’s source is the excellent and detailed analysis done by Ted Green of Strata-gee. His reporting on Masimo is from close attention to their audio business as they attempt to shed Sound United, comprising major brands such as Polk, Marantz, Denon, and Boston Acoustics. As of this writing, that has not happened though in 2025 financial reporting, it is classified as a “discontinued operation”. His opinion on the strategy behind the unusual filing on shares claimed to be owned, but not in the possession of Mr. Kiani, is that it is a legal tactic thrown into the ongoing dispute around Mr. Kiani’s employment and severance/change of control agreements. Quentin Koffey, Masimo’s vice-chairman plus CIO of Politan, has argued that the previous board controlled by Joe Kiani signed off on compensation packages so rich that they threatened the company’s stability, among other things. 

As previously noted in our 6 March and 30 January updates, both Mr. Kiani and Masimo ever since have been going mano-a-mano in the courts–the Southern District of New York (SDNY), Delaware Chancery Court, and in California with the Private Attorneys General Act (PAGA) notice submitted to the California Labor & Workforce Development Agency (LWDA) alleging multiple Labor Code violations concerning wages, multiple stock options, and severance owed to Mr. Kiani under his employment agreements. None of these have been resolved yet to this Editor’s knowledge. 

Masimo has been going about its business, holding their annual stockholders’ meeting today. They’ve had good news since September regarding share price, with its rise largely maintained in this roller coaster market, despite a 2024 that was in the red. Strata-gee has an excellent delving into their SEC Schedule 14A filing issued in advance of the stockholders’ meeting. Mr. Green notes that it is full of disclosures and rationales on board and management duties, longer-term compensation structures, and more, written to be investor-friendly in contrast to the over-stuffed filings of the prior regime:

Written in a highly professional, precise, and clear tone, the company is changing many long-held policies – policies related to business management, board oversight, management performance, compensation, and more. And this document delves deeply into these many changes, often explaining what was done in the past, how it will be changed in the future, and why it needs to be done.

Mr. Green’s prognostication is that he expects all directors to be elected (there are no holdovers from the prior regime) and proposals to pass. Masimo’s emphasis on growth and R&D will mean developments in the medical device area. The company is now led by a 100% medical device CEO. They have a core market in hospital monitoring with some extensions into wearables. What direction they go in digital health will play out over this year and next.  

Update 30 April: The main website (masimo.com) has been ‘down’ for two days–unusual–while the ‘shop’ pages are still up but not really working. And their W1 watch is no longer for sale as ‘coming soon’. What is afoot?

Masimo updates: optimism around healthcare despite ’24 losses, former CEO Kiani files notice in California on compensation owed

March 6, 2025 | by

Masimo’s hurricane of change apparently hasn’t been an ill wind–at least in their investors’ view. Masimo, a medical device company with an audio brand unit, Sound United, had another year in the red. A net income loss of $304.9 million is usually enough to send investors and analysts into paroxyms of despair, but that didn’t happen on the Q4/FY24 investor call on Tuesday 25 February. Au contraire. Based on Ted Green’s excellent reporting on his audio business website, Strata-gee, the analysts were “thrilled”–and the stock climbed, ending $10 up today in a downer of a market. What gave them hope was a brand new CEO, Katie Szyman, with an impressive track record from BD and Edwards Lifesciences, CFO Micah Young, and the general energy of the team that contrasted sharply with previous management calls. Moreover, under that negative number was good news and a cleanup on Aisle 5 that Ted ferreted out from the large pile of SEC-filed documents:

  • Sound United, the giant barnacle on the Masimo ship, is well on its way to a sale. They have already written down $304 million for all remaining goodwill, the sale “is in the later stages of the process” and may be wrapped as early as Q1. Sound United will no longer be reported on for 2025, so forward reports will be only the healthcare portion of the business.
  • The $1.4 billion healthcare business grew 10% in constant currency (9% versus 2023). Importantly, based on 2024 performance, the forward business picture is excellent: the incremental value of new contracts was $432 million, they shipped over 232,000 technology boards and monitors, pulse oximetry consumables were up 14%, co-oximetry & hemodynamics consumables grew 13%, capnography & gas monitoring consumables grew 27%, and brain monitoring consumables grew 19%. In fact, all healthcare numbers were up versus 2023.
  • A strategic realignment that prioritized projects, reviewed the product portfolio, wrote off R&D, and had corresponding layoffs/severance charges was completed by December, resulting in charges of $128 million against Q4. 
  • Ancillary businesses (my term) have been wrapped up or disposed of: Willow Laboratories (formerly Cercacor Labs), Masimo Foundation, Like Minded Media Ventures (LMMV), and Like Minded Laboratories (LML).

This Editor invites you to read more from Ted on the results as well as profiles of Ms. Szyman and Mr. Young. Ms. Szyman’s statement on why she was there and her purpose was the kind you’d wish your CEO would deliver. After complimenting the interim CEO Michelle Brennan, Mr. Young, and COO Bilal Muhsin on their plan in refocusing on healthcare:

“[I]n the big two weeks that I’ve been here, honestly, I think that Micah and Bilal know this business really well, and they’re the ones that put together the plan. So, I have a lot of confidence in the plan that was put together and the ability to drive profitable growth going forward. I think the area that I’m going to be focused on for the next quarter is really trying to better understand how to expand our leadership position in our core markets. And then, second, focusing on the healthcare innovation – this company has great technology and great innovation, and now that we’ve narrowed it down to the Healthcare space, I’ll be working with the team to build out how we actually execute on commercial excellence on soo many of these great innovations that we have. 

This is all a good start–and Mr. Market seems to be happy. Now to deliver on their value proposition. Masimo earnings release

On the legal front, it’s hardly been wrapped up. Former CEO Joe Kiani submitted a Private Attorneys General Act (PAGA) Notice (PDF attached) to the California Labor & Workforce Development Agency (LWDA) for  multiple Labor Code violations concerning wages, multiple stock options, and severance owed to Mr. Kiani under his employment agreements. The PAGA Notice alleges the six Politan directors acted in bad faith, first to force Mr. Kiani out of Masimo, then to “devise a post-hoc and pretextual termination for “Cause”” under his employment agreement over the following month. This follows on the Delaware Chancery Court January filing requesting dismissal of Masimo’s charges against the severance agreement as filed in the improper venue–Delaware, not California [TTA 30 Jan]–but takes a different approach direct to the LWDA.  It’s notable in being filed not only against Masimo but against the six board members. The penalties reaching back to the directors could total over $100 million in statutory penalties – 65% of which would be payable to California. There is no projection on how quickly the LWDA would act nor if their decision once reached could be appealed. Developing. Disclosure: This Editor received the PAGA Notice and information from a strategic communications representative of Joe Kiani. The interpretations and summaries of the filings are your Editor’s. 

Round 2: Masimo former CEO Kiani counters Masimo lawsuits in New York, Delaware (updated)

January 30, 2025 | by

As expected, Masimo’s former CEO has filed to dismiss two lawsuits brought against him by Masimo’s new management. These were filed in the US District Court for the Southern District of New York on 23 January and in Delaware Chancery Court on 17 January.

The Southern District New York lawsuit by medical device manufacturer Masimo alleges that Joe Kiani and RTW Investments, plus 10 individuals and associated RTW entities, formed a group that violated Federal securities laws by manipulating last year’s Annual Shareholder Meeting vote on directors’ seats through a secret ’empty voting’ scheme that acquired 19% of shares [TTA 15 Nov 2024]. Kiani and RTW did this without filing a Schedule 13D as a group. Masimo is requesting an injunction based on 1) their forming a group to secretly manipulate the shareholder vote and 2) that this purported group continues and will cause ‘actual and imminent injury’ to Masimo.

RTW was already and remains a significant shareholder–it is a $6.5 billion hedge fund. The Kiani filing claims that contacting RTW before the shareholder meeting was routine, as CEOs do all the time with shareholders. The claim that Kiani’s contact of RTW meant that they acted as a group is ‘untenable’ and goes against established practice and case law. Masimo, now controlled by Politan Capital Management, in their suit claims “actual and imminent injury” by this “group” requiring injunctive relief. However, the vote went against Kiani and his directors on 19 September 2024 ending their efforts. Kiani is seeking dismissal on the grounds that 1) there was and is no Kiani-RTW group thus no need for a Schedule 13D filing and 2) with the September vote, any prospect of injury is over and, with RTW’s reduced shareholdings, future harm is hypothetical and speculative.

Kiani resigned from Masimo on 19 September 2024, the day of the Annual Shareholders Meeting, “for good reason” after losing his board seat and control of the company to Politan. The new board placed him on indefinite leave, named an interim CEO, in October expanded the board by two directors, then formally terminated him on 24 October ‘for cause’, invalidating the terms of his latest $400 million severance agreement.

The SDNY filing requests dismissal and alternatively, transfer to the US District Court for the Central District of California. Both Masimo and Kiani reside in Orange County.

Kiani’s Delaware Chancery Court filing requests dismissal of Masimo’s charges against the severance agreement as filed in the improper venue. Alternatively, it should be transferred to the earlier Kiani lawsuit against Masimo filed on 19 September 2024–immediately after the shareholder meeting loss–in California State Court [TTA 15 Nov 2024]. Masimo is incorporated in Delaware.

At this point, there is no estimate of when either court will rule on these filings.

These filings are separate from the SEC investigation of the “empty voting” scheme claim and whether Kiani and RTW formed an insider group in the proxy fight [TTA 6 Dec 2024, hat tip Strata-gee], but cover much the same ground as the SDNY lawsuit.

Disclosure: This Editor received both filings and information from a strategic communications representative of Joe Kiani. The interpretations and summaries of the filings are your Editor’s. Mr. Kiani’s counsel’s statement is below:

“Politan continues to waste Masimo shareholder resources on a scorched-earth campaign to avoid paying Mr. Kiani what he is rightfully owed after delivering enormous value to shareholders and patients during his 35-year tenure at the helm of the company he founded in his garage. Immediately after being forced out of Masimo following Politan’s hostile takeover, Mr. Kiani anticipated that the Politan-led Board would try to withhold his severance benefits, and he brought a lawsuit in California to enforce his contract. As detailed in that complaint, Mr. Kiani has an unambiguous contractual right to the compensation he is seeking under his 10-year-old employment agreement, which was approved by shareholders in seven different votes and stemmed from a prior agreement entered into 30 years ago. The misplaced and meritless lawsuits subsequently filed by Masimo in Delaware and New York are part of a coordinated effort to circumvent Mr. Kiani’s lawsuit and evade jurisdiction in California, and they should be dismissed. We are confident that when these matters are fully litigated, the facts will demonstrate that Mr. Kiani is entitled to his severance compensation.”

Editor’s note: information on the SDNY filing has been revised after a closer reading of the contesting claims.

Masimo names new CEO, new board chair and vice chair. And confirms a fresh direction.

January 22, 2025 | by

After a dramatic 2024, Masimo settles in a new CEO and board. Joining from BD (Becton Dickinson) is Catherine (Katie) Szyman for the top spot and a board seat. With new board positions are interim CEO (since October and the resignation/ousting of Joe Kiani) and independent director Michelle Brennan as chairman of Masimo’s board and as vice chairman, lead independent director from Politan Capital Management, Quentin Koffey. The changes are effective on 12 February.

Ms. Szyman’s background in medical device and related is impressive, especially in joining a $1.5 billion company from a $6 billion one. She was briefly worldwide president of Advanced Patient Monitoring at BD after nine years at Edwards Lifesciences where she was corporate vice president and general manager, Critical Care, their unit for device and predictive analytics software. She is credited with Edwards obtaining the first AI clearance from the FDA for patient monitoring.  Edwards was acquired by BD last September. Prior to Edwards, she was at Medtronic for 24 years, rising from finance to president of their diabetes care unit. She has also held and still is on multiple board positions and is a Harvard MBA. According to the release and Ms. Brennan’s statement, Ms. Szyman will be “prioritizing our pipeline to focus on large opportunities, while developing a clear strategy for bringing our next generation patient monitoring platform to market”, which promises more professional monitoring products.

The double-down on the professional health side is backed by the makeup of the now nine-person board. Ms. Brennan is retired from a global leadership position at J&J. Tim Scannell and Bill Jellison both retired from Stryker as president and CFO respectively. Wendy Lane has extensive financial and investment background. Darlene Solomon was a chief technology officer and VP of Agilent Technologies in life science and chemical research. Strata-gee 21 October 2024. Holdovers from the Kiani era are former Disney CEO Bob Chapek and Craig Reynolds, a former COO of Philips Respironics.

With Ms. Szyman at the helm, one can easily predict that Masimo’s professional vital signs monitoring medical devices won’t stay concentrated in pulse oximetry and more on ‘large opportunities’, perhaps incorporating predictive analytics and AI. More will be changing at Masimo. Under the vague language of ‘alternatives’ and ‘strategic review’, Sound United will be sold, sooner rather than later as it will not be reported in their 2025 financials [TTA 17 Jan]. The release also confirms that the consumer healthcare business that encompasses smartwatches, fingertip pulse oximeter, a wearable thermometer, baby and infant monitors, and ‘hearables’ (the latter two with no product on the website), is on the block. Unless the consumer side can be developed, it’s too competitive. Politan is signaling wants to grow this investment big time.  A hat tip and bow to Ted of Strata-gee today for breaking this.

Bad News Roundup updates: UHG/Optum defends Amedisys buy fast via a website, digging deeper into Forward’s fast demise, former Masimo CEO Kiani booted–and sued (updated)

November 15, 2024 | by

The other shoe drops, as UnitedHealth Group/Optum take their defense public a day later. This unorthodox approach to defending an acquisition against a Department of Justice lawsuit [TTA 13 Nov] is visible on a specially set up Optum page. ImprovingHomeCare.com predictably highlights the benefits of an Amedisys merger along with the divestitures to VitalCaring Group. The gauntlet thrown is unadorned: “The Amedisys combination with Optum would be pro-competitive and further innovation, leading to improved patient outcomes and greater access to quality care. We will vigorously defend against the Department of Justice’s overreaching interpretation of the antitrust laws.”

  • Setup is around present and future demand–and that providers have to be capable of investing and scaling to meet it. “70% of adults 65 or older will likely need some form of long-term care during their lives.” and 3 million Americans received home health services in 2020 (Editor’s note–in a pandemic year when visits were certainly curtailed).
  • Home health is highly fragmented both nationally and locally, thus the acquisition isn’t anti-competitive. “In metropolitan areas with approximately 500,000 residents, there are an average of 26 agencies serving the metro area. The combination of Optum and Amedisys would be a fraction of both home health and hospice–and there would be strong competition in both metro and rural areas.
  • The divestiture to VitalCaring would further preserve competition, and that VitalCaring is a quality competitor. The DOJ release made much of VitalCaring’s inadequacies, such as their lower quality scores, financial difficulties, and leadership. VitalCaring, headquartered in Austin, Texas, currently operates in six states with 58 locations with plans to expand. Their CEO April Anthony is cited as building multiple home health companies ‘from scratch’ such as Encompass Care.
  • Additional proof points stress streamlining of care across Optum’s areas of expertise, integrating technology, and improving value-based care coordination.

FierceHealthcare

Forward’s shut down continues to reverberate in a classic tale of overreach and misdirection. Their bet on kiosks, plus a ‘forward-tech’ approach to a concierge-on-the-cheap, no- insurance-accepted model of primary care over eight years, apparently led to what pilots call a death spiral–it begins wide and imperceptible until it tightens and accelerates fatally in a final dive. Business Insider, true to its name, spoke with 11 anonymous and now former employees who attributed the failure to putting all their chips on 3,200 CarePods installed in one year. Their CEO, Adrian Aoun, was obsessed with technology to the point where he wanted to replace his offices and doctors with CarePods and started to strip the clinics of services, despite only two CarePods installed. 

Most advanced, yet unacceptable*. Patients didn’t try out or use the CarePods, finding them less than inviting. Logistical challenges delayed placements in large markets like New York and Chicago. Then technical problems mounted: automated blood draws failed, lab tests were withdrawn. The coup de grace–patients kept getting trapped in the CarePods. They were insanely expensive–the first two CarePods cost over $1 million each. Then the huge units were unattractive to landlords who didn’t want to fight local building codes nor saw a profit in them. By the end of the summer, there were only two CarePods in place at a mall in Sacramento and in Chandler, Arizona, both gathering dust. (*Shout out to Raymond Loewy, Never Leave Well Enough Alone)

In the increasingly empty Forward clinic offices, the futuristic tech and breadth of services touted in social media adverts weren’t quite as advertised. The whole-body scanner glitched requiring manual checks. Their lab tests became limited to those that could be done in-house, eliminating genetic testing via 23andMe along with services such as simple dermatology removals.

Christina Farr in Second Opinion has a set of takeaways worth noting, with this Editor’s comments (in parentheses):

  • Subscription-based, out-of-pocket healthcare is possible–but hard. (WAY hard when basics are up 25%+! And insurance is almost a given, even if taken in part.)
  • Brick-and-mortar clinics make only limited sense–and space must be used economically, not easy to do in health tech. (Retail and in-person are perhaps anathema in the concepts of those in health tech.)
  • We’re not focusing on those who really need care (But they’re not sexy, wealthy, or relatable to the creators of said tech. Many of them are also on Medicare and Medicaid–truly not sexy.)
  • Primary care is a tough starting point for subscription care (Except the very highest, most exclusive end as she notes!) Specialties may be more amenable to this model. (But volume?) And different age groups want different relationships within this type of care.
  • Timing is everything. Perhaps if Forward had started its clinics today it would have had a far better chance of success? (Then look at bullets 1-4 and see how truly daunting a tech-first clinic setup can be for the tech mindset untempered by research and UX-minded marketing.)

Forward is yet another sad and expensive example of 1) a founder hyperfocusing on whiz-bang technology, 2) losing touch with the customers using it, 3) not improving delivery based on customer needs, and 4) forgetting where he ostensibly started–the mission of improving healthcare. This Editor is sure that his 30-odd investors, especially Vinod Khosla, will have something to say to him about running through $100 million in one year–and over $300 million over eight years.

Masimo’s now-former CEO booted from his company and sued–to boot! (updated) The new management formally terminated founder Joe Kiani on 24 October, as noted in an October SEC filing. In a classic ‘you’re fired..no, I quit!’ situation, after he lost the proxy fight for control of the company, he resigned on 19 September. Kiani immediately filed a lawsuit against Masimo in California state court to obtain a $400 million payout per his employment contract. It is reported to be a declaratory relief suit that hinges on a ‘resignation for good reason’. This is usually specified in the contract. An example is that the executive ceases to be part of senior management, along with others.

The new board of directors has now turned the tables. Masimo is now suing Kiani and RTW Investments in the US District Court for the Southern District of New York. The complaint alleges collusion to violate Federal securities laws by secretly manipulating the shareholder vote through an ’empty voting’ scheme. 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. The suit proposes that Kiani and RTW did precisely that, rigging the vote by acquiring control of over 19% of shares. Evidently, the BOD has proof. The lawsuit and more details are in Strata-gee.

(Editor’s opinion: this is a bare-knucks attempt to claw back Kiani’s contract payout by the new controlling company, Politan Capital Management. And both lawsuits could be true. Pass the popcorn.)

Insult upon injury for Joe Kiani is that shareholders now have some hope that management can save the company by concentrating on healthcare tech. Shares are up. Masimo’s Q3 results reported on 5 November were strong though net income declined. Sound United, the main anchor dragging down the company, is now termed ‘a discontinued operation’. Exhaustive detail on their results is in Strata-gee here.

What’s next for: Steward CEO now in criminal contempt of Congress; Walgreens’ Pessina’s fortune vanishes by 97%; Masimo’s Kiani now a man without a company

September 26, 2024 | by

Senate unanimously votes to hold Steward Health CEO in contempt. The resolution passed on Wednesday 25 September refers the contempt charges against Dr. Ralph de la Torre, the CEO of Steward Health, to the Department of Justice (DOJ). The Senate Committee on Health, Education, Labor and Pensions (HELP) voted on 19 September to recommend two contempt charges–criminal and civil–to the full Senate. It is the first time since 1971 that a criminal contempt charge has been passed. The DOJ’s actions can include prosecution by the District of Columbia’s US Attorney which can mean arrest and possible incarceration, with a fine that doesn’t exceed $100,000, or civil contempt which usually involves a fine and another subpoena to appear. FierceHealthcare, Becker’s

The threatening language of the HELP committee members such as Bernie Sanders and Ed Markey surely did not encourage de la Torre or his legal counsel to appear on 12 September, with the anger across the board among all members regardless of party. All that it promised to be was, in street language, the worst kind of beatdown. Formally, the appearance was rejected because of Steward’s bankruptcy in adjudication in the US Bankruptcy Court for the Southern District of Texas supervising the sale of Steward assets. There is also a court order that prevents de la Torre from commenting during the sale process. To the press, his legal counsel depicted the HELP committee hearing as “a pseudo-criminal proceeding in which they use the time, not to gather facts, but to convict Dr. de la Torre in the eyes of public opinion.” TTA 14 Sept

Steward Health’s spectacular collapse opens even more Pandora’s Boxes for de la Torre. He possibly faces additional lawsuits attempting to ‘pierce the corporate veil’ to claw back his bank and personal, sizeable maritime and aviation assets–or hold him criminally liable, far more complicated, long-term, and damaging. A cynical view would be that de la Torre would be well advised to get on his $40 million yacht or one of his private aircraft–and depart for a destination that is reluctant to extradite to the US. 

Walgreens Boots Alliance’s troubles drastically shrink executive chairman Stefano Pessina’s personal fortune. Chairman Pessina, who holds 17% of WBA stock and is the single largest shareholder, has seen his holdings shrink in value by 97%, from $12 billion in 2015 to a current $1.3 billion, according to Bloomberg data. The 83-year-old WBA head has seen hard times before. He pulled a rabbit out of the proverbial hat in 2007 by going private with Boots and then merging it with Walgreens in 2015, but time and Mr. Market are not on his side with taking on the debt load necessary.

Is WBA or Walgreens attractive to an acquirer? With stock trading at a record low of around $8 and a market capitalization of about $7.5 billion, it may be a bargain if an investor ignores or doesn’t blanch at the debt load. But those who understand the business cannot buy due to US antitrust regulations, which rules out any retail competitor or PBM. Or the company could be parted out to healthcare providers or a health insurer, but that ignores their miseries, such as reduced Medicare Advantage reimbursements. Their mistakes such as VillageMD and unprofitable locations are in the middle of being worked out and the company is shrinking. Meanwhile, their 15 October full-year earnings report will be dripping with red ink, as their Q1-3 lost $314 million versus prior year earnings of $1.2 billion. Crain’s Chicago Business

Vanishing for Joe Kiani is his day job at Masimo after a dramatic proxy fight. The founder of the audio and health monitor company was voted out of his board seat by shareholders. He followed by resigning as CEO after founding the company 35 years ago. Michelle Brennan, a board member (from Politan) has been appointed as interim CEO. Previously, she was a senior executive at Johnson & Johnson’s companies, including international experience in business development, for over 30 years. She also is on the board of Cardinal Health. Korn Ferry is coordinating the search for a permanent CEO.

The proxy battle wasn’t even close, according a CNBC report reported by Strata-gee. Quoting an inside source, the Politan slate of two directors, Darlene Solomon and William Jellison, received twice as many votes as Joe Kiani and Christopher Chavez on the Masimo slate. 

The company is continuing ‘strategic alternatives’ (read: sale) of its consumer health and audio businesses, the latter mostly acquired in the utterly snakebit 2022 acquisition of Sound United’s consumer audio brands. Masimo is using Centerview Partners and Morgan Stanley as financial advisors and Sullivan & Cromwell as a legal advisor. Presumably, the Kiani-arranged sales to or joint ventures of these units with unnamed investors is off. Masimo will be retaining their professional healthcare and pulse oximetry products. For Q3 2024, Masimo reiterated its financials from early August, with earlier guidance here.

Whether others will depart with Kiani is too soon to tell. During the proxy fight in July, Masimo’s chief operating officer, Bilal Muhsin, promised to resign if Kiani was forced out, specifically citing that he would refuse to work with Quentin Koffey, a Masimo director and chief investment officer of Politan Capital. Other managers signed similar letters around the same time.  However, in the Masimo release on the Kiani resignation, financials, and management changes, CFO Micah Young and Muhsin stated that would provide more details on an earnings call in October.

The Strate-gee view was that shareholders got tired of hearing promises about Sound United and that Kiani was high-handed with them–treating it as his personal company and not theirs. Healthcare Dive

Follow up roundup: Amwell to reverse stock split to avoid delisting (updated), Amazon Clinic folded into One Medical, Amedisys divesting to close UHG deal, latest on Steward Health’s antics and $7M spying, Masimo’s shareholder fight (latest)

July 2, 2024 | by

Amwell will reverse stock split to fix their pending delisting on the NYSE. The board of directors approved on 28 June a 1 for 20 reverse split. This will remedy their non-compliance with NYSE regulations requiring an average closing price of above $1.00 over a consecutive 30 trading-day period [TTA 5 Apr]. Shareholders approved the move at their meeting on 18 June. The NYSE notice was given on 2 April and the reverse split will happen at the market open on 11 July, well within the six-month window. Amwell Class A shares closed yesterday at $0.27 so that condensing 20 shares will bring the share price around $5.40. Amwell’s 2024 is forecast with revenue in the range of $259 to $269 million and adjusted EBITDA in the (less) red between ($160) million to ($155) million, with no breakeven in sight until 2026. Their Q1 posted a $73.4 million net loss. Amwell has also released 10% of staff since the palmier days of 2023. Amwell, like Teladoc, continues to struggle in a stand-alone urgent care model that is now obsolete. Release, Healthcare Dive

Update 11 July: Amwell shares opened today at $6.52, and as of midday were trading at $7.51. So short term, the reverse split is working to plump up the shares.

Amazon says goodbye to Amazon Clinic by folding it into One Medical. This should come as no surprise to Readers who noted the  May departure of Clinic’s general manager Nworah Ayogu, MD to VC Thrive Capital with no replacement or search. Amazon’s announcement on 27 June was typically upbeat in renaming the service as One Medical’s Pay-per-visit telehealth. The improvements they claim are:

  • Pay-per-visit telehealth for 30+ common but minor conditions, like pink eye, the flu, or a sinus infection
  • A One Medical monthly or annual membership plan that includes on-demand virtual care and same or next-day appointments at 150+ One Medical primary care offices
  • More affordable–messaging/asynchronous visits are now $29, formerly $35, and video visits at $49, formerly $75. 

The catch–existing Clinic members have to log into One Medical to access their records and the service. Amazon is also propping up One Medical through Prime membership, offering a better deal at $99/year and non-Prime individuals for $199 per year. Amazon does not disclose users, growth, or revenue for either Clinic or One Medical. Healthcare Dive

The long-delayed UnitedHealth-Amedisys home health deal moves closer to closing. Amedisys and UHG’s home health operation under Optum will be divesting some of their locations to VitalCaring Group to avoid Department of Justice anti-trust concerns. The divestiture is contingent on the acquisition closing, now projected in second half of this year. The number of locations was not disclosed though earlier speculation had estimated it at 100. UHG’s offer to acquire Amedisys was made in June 2023 for $3.3 billion in an all-cash deal. It would be additive to its earlier $5.4 billion buy of LHC Group, now part of Optum. With the divestiture, analysts do not see any impediments to a closing, though it had faced opposition in Oregon in March and DOJ opposition since it was announced. This Editor remains sanguine about a successful closing. After UHG won versus DOJ in the Change Healthcare acquisition, “DOJ has a long memory, a Paul Bunyan-sized ax to grind, and doesn’t like losing.” Expect a few more impediments tossed in their direction over the next months. FierceHealthcare , Zack’s Research

The latest episodes in the continuing soap opera of Steward Health involve both Optum and James Bond moves on their critics. Optum had offered back in March to buy their practice groups under Stewardship Health, which stalled with first the Massachusetts Health Policy Commission (HPC), then their bankruptcy. That offer is now off, leaving Steward in the lurch. It was critical to $75 million of Steward’s debtor-in-possession (DIP) financing as recently as 13 June [TTA 14 June]. The deal would have been problematic anyway for Optum as they are under DOJ scrutiny not only for Amedisys but also because Optum controls or has arrangements with 10% of US physicians, 90,000 to date. Healthcare Dive They also settled recently with DOJ for $20 million on Optum Rx’s filling orders from a mail-order pharmacy in Carlsbad, California between 2013 and 2015 for Schedule II drugs: opioids, benzodiazepines, and muscle relaxants. Healthcare Dive

Adding to Steward’s piles of misery are the latest revelations that Steward financed a $7 million spy operation on their critics. This loony aspect to the Steward endgame involved contracting with UK investigators on surveilling a critical former executive, a British financial analyst, and a Maltese politician to find compromising actions between 2018 and 2023. The investigations were allegedly authorized and prioritized by Steward’s top executives while Steward struggled to pay bills for its hospitals and practices. Payments to the investigators were routed through Steward’s Malta operation against their critics in Malta and elsewhere. Steward at the time was embroiled in a dispute around their management of hospitals in Malta, which was eventually investigated and terminated by a Maltese court last year.

One example: the UK firm Audere “collected embarrassing personal information and photographs of a former Steward employee after Steward feared he would leak financial information to its auditor.” Another was the investigation and harassment of a British financial analyst, Fraser Perring, critical of Steward’s actions in its dealings with Medical Properties Trust (MPT). He was followed, his home CCTV was disabled, his home was broken into, family members and his partner were followed. Perring was also being smeared on Twitter through an account set up by Audere. There is much more on this in OCCRP’s report, published (paywalled) in the Boston Globe and Times of Malta. OCCRP’s full report and findings are here. FierceHealthcare

Electronics, audio, and medical device company Masimo continues to fight a hostile activist investor, Politan Capital Management. In December 2023, Masimo notched a significant win via the International Trade Commission versus Apple’s Series 6 and later Watches that forced Apple to disable its pulse oximetry (SpO2) sensors and software that violated Masimo’s smartwatch patents [TTA 28 Dec 2023]. Politan descended on Masimo in April accusing CEO and chairman Joe Kiani and others of mismanagement, including the 2022 acquisition of Sound United’s audio brands. It won two seats on the Masimo board of directors at the last shareholders’ meeting and is demanding two more seats at this year’s meeting on 25 July which would give it effective control.

The latest in the proxy fight is that the chief operating officer, Bilal Muhsin, will depart after 24 years at Masimo if Joe Kiani is forced out. The brief conditional resignation was sent to Masimo’s lead independent director, Craig Reynolds. Mentioned in the resignation was that he would refuse to work with Quentin Koffey, a Masimo director and chief investment officer of Politan Capital. More letters like this may be coming as reportedly Masimo management has urged employees to sign similar letters. Strata-gee, MedTech Dive  

Politan was the investment group that upended Centene Corporation and ousted most of Centene’s board plus 25-year CEO Michael Neidorff in 2022 shortly before his death on 7 April 2022 [TTA 18 Dec 2021]

Update: 300 engineers in Masimo’s healthcare division expressed specific support for Joe Kiani against Politan and Quentin Koffey in an open letter. “We wish to convey our deepest concern if Quentin Koffey and Politan Capital take control and Joe Kiani is removed. We are committed to Masimo because of the vision and innovation he pushes and drives us to deliver. The prospect of losing our founder and CEO threatens to derail the progress we have made and jeopardize the future of Masimo.” They also expressed that they may leave. “We, the undersigned from Masimo Healthcare Engineering, wanted you to be aware that we may not continue with the company if Joe Kiani is replaced by Quentin Koffey and Politan Capital.” This follows on other letters written by international regional managers and presidents in June also stating their support and warning that they may leave if Kiani leaves. The annual shareholder meeting is scheduled for 25 July.   MedTech Dive

However, Masimo is also embattled on other fronts: earlier in June, DOJ and FDA announced their investigation of problems with their Rad-G and Rad-97 SpO2 devices leading to a recall and the SEC is investigating potential accounting irregularities and internal control deficiencies. MedTechDive