Mid-week roundup: Cotiviti’s $10.5B stake to KKR; Cigna buys back $3.2B shares; VA Oracle Cerner faulty med records; LockBit ransomware websites cold-busted at every level, principals indicted; Trualta partners with PointClickCare

February 22, 2024 | by

Investor KKR announced their buy of a $10.5 billion stake in healthcare analytics Cotiviti. The stake comes from Veritas Capital, creating an equal share of ownership. The recapitalization will be used for commercial expansion, new product development, and technology-related opportunities. It is expected to close subject to regulatory approvals in Q2 this year. According to Axios and Bloomberg, it is financed by a $5 billion leveraged loan sale launched last week, with a $4.4 billion floating rate term loan led by JPM and a $600 million fixed rate term loan led by Goldman Sachs. This is Veritas’ second attempt to exit. While money is leaking back into private equity deals, the new trend is to finance them with more cash than debt. Cotiviti release

Cigna, having sold off its Medicare Advantage plans for $3.7 million to HCSC, is repurchasing $3.2 billion in stock (7.6 million shares) through agreements with Deutsche Bank and Bank of America. Cigna’s plan remains to repurchase $5 billion of common stock over H1 2024 after ending merger talks with Humana. FierceHealthcare, Cigna release

VA warned about faulty medication records in the Oracle Cerner Millenium EHR. The culprit is in the Health Data Repository, according to a government watchdog. David Case, deputy inspector general for the VA, reported at a House Veterans Affairs Committee Technology Modernization Subcommittee meeting last week, that while VA had no reports of harmful drug interactions, Case had at least one instance of a veteran not given a critical medication for adrenal insufficiency, leading to a near-disastrous outcome. The VA has also not informed the 250,000 veterans with prescription records in the Oracle Cerner system that the records may have errors.. In the VA facilities that have Oracle Cerner, providers, pharmacists, and frontline staff must perform complex manual medication safety checks to replace automated checks.

The Oracle Cerner rollout has been put on hold till summer this year–maybe [TTA 1 Nov 23]. At this hearing, Mike Sicilia of Oracle did show up and attributed the problems in the HDR to multiple systems being involved from VistA and other EHRs, into Oracle Cerner. However, after 10 separate fixes, the most recent software update had a similar data issue during final testing and was quickly pulled. Military.com

A victory versus ransomware. Updated. The LockBit ransomware group has been cold-busted “at every level” by the UK, US, and international law enforcement. According to the Department of Justice release and other sources, the UK’s National Crime Agency’s (NCA) Cyber Division led Operation Cronos, working in cooperation with the Justice Department, Federal Bureau of Investigation (FBI), and other law enforcement agencies worldwide. They seized numerous public-facing websites and domains used by LockBit to connect to the organization’s infrastructure along with servers used by LockBit administrators. Russian nationals Artur Sungatov and Ivan Kondratyev, also known as Bassterlord, were indicted in the US District Court of New Jersey in Newark, charged with deploying LockBit against numerous victims throughout the United States. Sungatov was also indicted in the Northern District of California. According to Europol, “Two LockBit actors have been arrested in Poland and Ukraine at the request of the French judicial authorities. The French and US judicial authorities have also issued three international arrest warrants and five indictments.” LockBit’s ‘heart’ is of course in Russia, where nearly all cybercrime is located–they are free to operate there as long as they don’t target anything in RU. Cybernews

Trualta partners with PointClickCare for family caregiver education and support. PointClickCare is a leading EHR for long-term and post-acute care (LTPAC) providers. Trualta provides educational resources to support family caregivers when a patient is discharged through logging in to the resource site, with the ability to access articles, videos, and modules that cover a variety of care topics including preparing for discharge, transitioning from hospital to home, and life after discharge.  Trualta’s information will be offered through PointClickCare’s Marketplace. A recent study by Trualta of caregivers using their materials found that 30 days of Trualta use can decrease annual unexpected hospital visits among care recipients by 20%. Trualta release

Monday roundup: Envision files Ch. 11, who’s to blame for Meta Pixel abuse?, CVS Health to shut clinical trials unit, Amino Health scoops $80M, DocGo flat but optimistic, Owlet way down in revenue

May 16, 2023 | by

What was envisioned last week came to pass for Envision Healthcare on Sunday. The hospital and physician staffing company filed for Chapter 11 reorganization five years after it was taken private by investment company KKR. At the time of that massive buyout, the value of the company was pegged at $10 billion. Things started to go south for Envision after 2020 with the pandemic drying up patient volumes for two years, with the added factors of regulations kicking in on ‘no surprise’ billing, inflation, staffing shortages, and major fights with health plans around out-of-network inflated charges plus a huge claims dispute with UnitedHealthcare [TTA 12 May]. Ironically, Envision won the main dispute with UHG; that $91 million won in arbitration in an insider’s view would have staved off the bankruptcy this year.

KKR will apparently lose its $3.5 billion equity in the company as $8 billion in debt restructuring takes place. What’s before the court is that the Envision staffing operation will be separated from the AmSurg surgical clinics. Senior lenders will have their debt rearranged into equity into one or the other company. Junior lenders, bondholders, and KKR will receive zero, or as we say locally, bupkis. It’s envisioned (sic) that the restructuring will take about three to four months.  Financial Times, Envision release

The hospitals, that’s who! If you believe Meta, it’s the hospitals that abused those poor Pixels, making them do things against their wishes to tattle all sorts of PHI and PII to Big Bad Meta which sends patients all those Nasty Intrusive Ads. Meta is being sued by parties from the ACLU to patients in class action lawsuits on how the Pixel was used on hospital patient portals and scheduling websites. Meta’s argument is that the health systems’ developers could but did not control how the ad trackers were used and that “Meta did not implement or configure” the Pixels used on the health systems’ websites. In fact, Meta claims that they have filtering tools that screen out sensitive data and that would alert the developer. “It’s ultimately the developer, not Meta, that controls the code on its own website and chooses what information to send,” according to the May 5 filing in that busy US District Court of Northern California.

This could influence outcomes in the multitude of lawsuits being filed against health systems like Kaiser Permanente, UCSF Health, and LCMC Health in New Orleans plus Willis-Knighton Health in northwest Louisiana (Healthcare Dive). If the District Court finds that Meta, and possibly other ad trackers such as those from Google, Twitter, or Bing were not inherently liable for personal health data violations that monetized PHI, then the health systems are 100% on the hook for the data breaches (or ‘wiretapping’ in a creative use of terminology). It also makes the potential paydays possibly less lucrative–in the eyes of this Editor, as Meta and Google have far deeper pockets than any ol’ health system. SC Media, Paubox   The Meta Pixel backstory here

CVS Health to shut its clinical trials unit by December 2024. CVS, like Walgreens and Walmart, jumped into the clinical trials business during the Covid-19 pandemic, seeing a need in the market with pharmaceutical companies and a ready-made, 100 million deep diverse base of patients among their pharmacy users. CVS cited to Healthcare Dive that the shutdown was to better concentrate on core business. Current active trials on the website include narcolepsy, rheumatoid arthritis, and kidney health. No disclosure as to profitability but CVS has a lot to digest with new buys Signify Health and Oak Street Health.

Amino Health’s $80 million funding is a bright spot in this sideways spring. With a digital guidance model that works with employers and health plans to help 1.6 million members navigate their care, their new funding will be used for technology scaling. Equity and debt financing were led by Transformation Capital, which will be joining the Amino board, and Oxford Finance LLC. Amino is being boosted by the Federal Transparency in Coverage (TIC) Rule which makes pricing disclosure a key part of plan navigation. Amino originally started with a direct-to-consumer model but shifted to enterprise, including brokers and third-party administrators. Amino’s total raise is now $125 million (Crunchbase). Mobihealthnews, Amino release

DocGo’s two services, mobile health and medical transport, essentially swapped revenue this quarter in a better-than-average picture. Their mobile health services area in Q1 fell 19% to $72.9 million from $90.1 million in Q1 2022, while transportation services grew 44% to $40.1 million from $27.8 million in Q1 2022. This added to total revenue of $113 million with a net loss of $3.9 million. Their 2023 revenue guidance remains at $500-$510 million with adjusted EBITDA guidance of $45-$50 million. 

What’s promising here is that it’s a SPAC that didn’t crack like practically every other. DocGo pointed out in their release that they have a backlog of $205 million in total contract value over approximately three years and they have doubled their RFPs. Their patient target for 2023 is 50,000. Share price today on Nasdaq ticked up to $8.77. Considering their high last year of $11.08, they are not doing badly in this time at all. Mobihealthnews .We last saw DocGo providing mobile clinics in a Tennessee pilot with Dollar General [TTA 24 Jan] which now is tied in with the state of Tennessee, plus a pilot in NY and NJ with Redirect Health. They provide services in 26 states and the UK.  

This Editor is trying to be as cheerful as the baby at left about baby sock/monitor Owlet, which has had a rough ride in the past two years. Their revenue dropped to $10.7 million in Q1 2023 versus $12 million in Q4 2022 and $21.5 million in Q1 2022. Owlet ended 2021 with a nastygram from the FDA that pulled their original Smart Sock off the market [TTA 4 Dec 2021] but rebounded early in 2022 with the Dream Sock and Dream Duo [TTA 16 Feb 2022] that avoided the claims that sent them into 510(k) Marketing Neverland.  Still, they were delisted by the NYSE in December 2022. On the positive side, Owlet wound up 2022 with $69.2 million in revenue and a good-sized private placement of $30 million in February [TTA 18 Mar]. It has submitted to FDA for two products, including the steep de novo climb on an enhancement to the Dream Sock. Now a much smaller company than it was last year, they have reduced operational expenses to $15.1 million from $24.1 million in Q4 2022 to get to breakeven by end of this year and to be relisted on the NYSE in the future. Having followed them since the early ‘telehealth for the bassinet set’ days of 2012-2013, this Editor wishes them bonne chance. Owlet release, Mobihealthnews

Walgreens Boots going private in the largest ever leveraged buyout: reports

November 14, 2019 | by

Even bigger than CVS-Aetna may be the leveraged buyout (LBO) being discussed by Walgreens Boots Alliance and private equity firm KKR. It’s conservatively valued at over $70 billion–$56 million in valuation accompanied with about $15 million in debt. 

There are highlights and consequences to going private, not all of which are favorable:

  • Walgreens Boots would have to sell a huge $55 billion of debt, not attractive to lenders both world markets and not even in the strong US market. Recent and far smaller debt packages have struggled to find lenders.
  • The CEO, Stefano Pessina, who is the company’s largest shareholder with a 16% stake, would likely have to roll his equity into the deal
  • The WBA strategy continues to be store-oriented, despite recent closures (150 clinics, 200 stores). It remains the largest retail pharmacy in the US and Europe, with more than 18,750 stores in 11 countries. Additional stores are being opened in retail outlets such as supermarkets.
  • Yet online retailers such as Amazon continue to cut into retail store and pharmacy share
  • Walgreens also has strong pharmacy management benefit relationships with insurers such as Blue Cross Blue Shield group. Would an LBO affect these relationships which often involve Federal and state programs?

A final consequence most of interest to those in health tech and looking for support. While an LBO frees a company from shareholders, it puts the company into a cycle of payments to lenders that must be made on time–and tends to put that first in company priorities. Innovation and new initiatives take a back seat.

Whether this will come to pass is debatable–and even pointed to as the end of the stock market rally. With this on the company’s agenda, WBA will likely put any health tech deals on the far back burner.  MarketWatch, Bloomberg, Reuters