News roundup: Masimo has offer to JV consumer business for $950M or more, Get Well sold to SAI, One Medical scored on poor handling of urgent calls from Iora patients

July 10, 2024 | by

Slow early July? Not quite.

Masimo’s maneuvering continues with a potential $950 million offer to buy into its consumer audio and health business. The unnamed offeree listed in Masimo’s latest Form 8-K is a potential joint venture (JV) investor negotiating with Masimo since 7 May. Masimo would sell off the majority stake of its consumer audio and consumer health businesses to the partner, that would make 1) a cash payment to Masimo and 2) contribute cash. The 2 July update confirms that the potential partner is offering in the range of $850 million to $950 million on a cash and debt free basis. It’s by no means a done deal as Masimo is pressing for more cash and for retaining certain intellectual property rights. For instance, Masimo’s IP would be for use solely within the consumer field, not healthcare. The Apple litigation on IP infringement on their pulse oximetry (SpO2) sensors and software would remain with Masimo.

The consumer audio business would include the international audio brands acquired in the $1 billion buy of Sound United in 2022: Bowers & Wilkins, Denon, Polk Audio, Marantz, Definitive Technology, Classé, and Boston Acoustics. Their consumer healthcare includes smartwatches and the Stork baby monitor.  MedTechDive

This is an interesting Act 3 Curtain Raiser to Masimo’s ongoing proxy fight with ‘activist investor’ Politan Capital Management, which is attempting to take two more seats on the board of directors and wrest control from the current board controlled by CEO/founder Joe Kiani. Hundreds of Masimo staff have threatened to resign if Politan takes over. The shareholder meeting is on 25 July. TTA 2 July

Get Well, a patient engagement platform, has been acquired by SAIGroup for an undisclosed amount. Get Well serves health plans and systems with patient engagement at point of care, digital care plans, and AI-enabled care navigation. SAI will integrate their existing advanced predictive + generative Eureka AI platform into Get Well’s offerings. SAIGroup has two other AI-related companies in its portfolio: ConcertAI and generative AI RhythmX AI. Michael O’Neil will continue as Get Well Founder and CEO. Release    Hat tip to HIStalk 7/10/24

A story highly critical of Amazon’s One Medical broke over the holiday weekend with a PBS News story about patients put at risk by sloppy call handling. The patients were former Iora Health members, acquired with One Medical, who are older 65+ adults in Medicare Advantage and Medicare Shared Savings Programs (MSSP) ACOs including the advanced ACO REACH model. In March, calls to Iora Health offices were shifted to what Amazon termed ‘mission control’ in Tempe, Arizona. The call center reps did not have access to their records and were not medically trained. The patients were calling with acute symptoms–one of 17 ‘red flag’ symptoms such as symptoms of a blood clot, sudden rib pain, stomach pain and blood in their stool. At the call center, they were not triaged to immediate assistance and instead were given appointments later that day or later in the week. Amazon is claiming that as far as they know, no patients were harmed. Becker’s

As TTA backgrounded on 6 March, the former Iora offices were rebranded, if not closed, as One Medical Senior and they would shift to existing One Medical offices. FTA: Existing patients, many with multiple chronic conditions, reported cutbacks in callbacks, appointment length, physician load, and services provided such as transportation. One clinic had 20 staff cut back to five with patients pushed out to virtual visits–hardly appropriate for a high needs, older, less technologically savvy patient population in value-based care, quality-measured models.

How will these high care needs patients in tightly monitored, intensive programs such as MA and ACO REACH, mesh with the cheap efficient approach that Amazon takes with everything–including One Medical?

Davids (AliveCor, Masimo) v. Goliath (Apple): the patent infringement game *not* over; Masimo’s messy proxy fight with Politan (updated)

April 4, 2024 | by

Apple’s legal department certainly hasn’t been maxing their relaxing this year, what with DOJ and pesky upstarts taking them to court. The big one keeping them busy is the US Department of Justice (DOJ) giving Apple a dose of its own medicine in filing an antitrust lawsuit against Apple for monopolizing smartphone markets [TTA 22 Mar]. Apple also continues to fight antitrust and intellectual property (patent) infringement in Federal district courts, the US Patent and Trademark Office (USPTO)’s Patent Trial and Appeal Board (PTAB), and the International Trade Commission (ITC), brought by ECG reader AliveCor and Masimo‘s pulse oximetry reader and software. Masimo succeeded in disrupting Apple’s sales of the Watch Series 9 and Ultra 2 right at the Christmas holiday sales season [TTA 28 Dec 23], forcing Apple to disable the pulse ox feature [TTA 18 Jan] in future imports in one of Apple’s few losses.

The DOJ lawsuit does not address Apple’s copycat activities against either AliveCor or Masimo. Both companies worked with Apple.  AliveCor integrated its early KardiaBand (2016) with early Apple Watches, only to have cardiac readings integrated into the Apple Watch two years later (2018). Masimo and Apple were in mid-stages of a 2021 partnership that Apple broke off, but Masimo then accused Apple of hiring its employees working on the project [TTA 27 Oct 23].

AliveCor hasn’t been quite so successful as Masimo in challenging Apple, but it has been fighting Apple as a David v Goliath on multiple fronts for years. In February, AliveCor lost a round in the US District Court for the Northern District of California on the heart rate algorithm changes Apple made in 2018 that made their SmartRhythm app provided to Apple non-functional. That decision reportedly is still under seal. However, AliveCor has multiple Federal patent infringement lawsuits going against Apple. The differing rulings of the PTAB against and an ITC ruling finding for AliveCor went to the Federal circuit court level. According to CEO Priya Abani in an excellent MedCityNews article, AliveCor expects to see action on this by summer. Abani also scored Apple’s annoying (understatement) habit of IP infringement and broken partnerships. “Apple’s vast resources allow them to squash small innovators,” she said. “They have more lobbyists and lawyers on their payroll than we have employees.”

AliveCor and Masimo aren’t the only ones battling Apple. In the MedCityNews article, NYU Langone cardiologist Joseph Wiesel has sued Apple on patent infringement on his atrial fibrillation app (2021), also involving the USPTO, an action that is wending its way through courts now. While this Editor has long been mystified by Apple’s continued combativeness against small innovative companies when certainly it would be cheaper (and more respectful) to pay a license or settlement, FTA in MedCityNews citing Dr. Wiesel’s attorney Andrew Bochner, “Apple is known among the legal community to have a certain modus operandi: they do “not entertain any sort of real settlement discussions” and instead battle “tooth and nail” in order to wear out their rivals with fewer resources.” The shocker here is that Apple, in this case, stated to Bochner that it filed “roughly 10%” of the USPTO’s total post-grant proceedings, which take place after a patent has been granted and generally challenge a patent’s validity. One wonders whether DOJ will even take note of this anticompetitive activity involving Apple Watches in its blunderbuss action on iPhones and the US smartphone market.

Masimo itself is being roiled by a shareholder proxy fight over who controls the company. Masimo is a publicly-traded (Nasdaq) electronics company that is primarily focused on health devices, including smartwatches, and data software monitoring for the clinical and consumer markets, notably pulse oximetry.

  • Last week, activist investor group Politan Capital Management accused CEO Joe Kiani and others of mismanagement, announcing the nomination of two more independent candidates from Politan for the board of directors. Politan already has two seats on the BOD and a win here would give Politan majority control.
  • The bone being picked is Masimo’s February 2022 $1 billion acquisition of consumer audio brand Sound United (Polk, Marantz, Denon, and others) which didn’t mesh well with their health tech business. This drove down the share price from that time, with Politan subsequently swooping in and picking up shares, successfully winning two BOD seats in 2023.
  • Masimo announced on 22 March that their consumer ‘hearables’ division would be spun off.
  • Politan’s response on 26 March was to object to the spinoff on governance grounds, nominate the additional directors, and heavily criticize CEO Kiani’s ‘control and influence’. Strata-gee 26 March

Yesterday’s follow-up is that Kiani and Masimo are rebutting all of Politan’s claims and more. Strata-gee 2 April, Masimo release 1 April, MedTechDive

This Editor notes that products in their personal monitoring line combine both audio and vital signs monitoring–the (out of stock) Stork, that appears with its baby sock to be directly competitive with Owlet’s Dream Sock.

This will all play out at the yet-to-be-announced 2024 Shareholders Meeting. This Editor notes that Politan picks its battles and is rarely defeated. Our Readers may recall that Politan swooped in on Centene Corporation in late 2021, and in short order ousted long-time directors, added new friendly ones, shook up management and forcibly retired 25+ year CEO Michael Neidorff (since deceased). Masimo’s victory over Apple may go down as either not mattering much–or that Apple will be fighting a much deeper-pocketed backer that knows how to win.

Update: It gets stranger. Masimo’s Consumer (audio) division’s brand president and general manager Joel Sietsema announced on Tuesday that he is no longer with the company. He came to Masimo through the Sound United acquisition being with them for a decade. He announced his departure on LinkedIn. It was apparently a mutual decision that preceded the current turmoil. Strata-gee 4 April