Weekend short takes: Merative’s $25M funding, Risant closes on Cone Health, Aya buys Cross Country staffing for $615M, Supreme Group acquires Amendola PR

Merative data analytics raises $25 million from Morgan Health. The latter, a JPMorgan Chase business unit focused on employer-sponsored insurance, is investing in Merative to expand its capabilities for employers to manage data with integrated tools and have a more comprehensive, integrated view of health care quality and cost to make improvements. Merative’s products include the employer-focused platform Truven, their employer/payer analytics Health Insights, and their MarketScan databases of real world claims data plus insights for evidence studies. Merative’s markets include employers, health plans, healthcare providers, governments, life sciences, and benefits advisors. Their majority owner is Francisco Partners. Release, MedCity News

Risant Health closed on the purchase of Cone Health of Greensboro, North Carolina. It was originally announced in July. Cone has four acute care hospitals, a behavioral health facility, an insurance plan, and an ACO with 200,000 patients. It is located within the Piedmont Triad metro area and its surrounding counties. It is Risant’s second system after the founding system of Geisinger in Pennsylvania. There was no transaction cost but Risant will provide a minimum of $1 billion in capital to the system in the next five years.  Cone Health closed its 2023 fiscal year on 30 September with $2.8 billion in total operating revenue. Risant is Kaiser Permanente’s nonprofit/community-based hospital system initiative. FierceHealthcare, Cone Health Release

Healthcare staffing is worth some large cash, with Aya Healthcare buying Cross Country Healthcare for $615 million. Their offer for Cross Country shares, traded on Nasdaq, is for $18.61 per share, a 67% premium over the closing price on 3 December. The Aya deal will take it private with an expected closing in the first half of 2025. Aya’s expertise is in travel nursing, allied health, and staffing for professionals in per diem, permanent, interim leadership, locum tenens, and non-clinical roles. Cross Country will remain as a separate brand in healthcare staffing and include providing clinical services in non-clinical settings, such as schools and homes. Release, Benzinga, Mobihealthnews

And in one last acquisition, independent PR agency Amendola Communications is being acquired by Supreme Group. Purchase price was not disclosed but current head Jodi Amendola will continue as president of the agency as a standalone operation under Supreme Group. Amendola is the fifth acquisition by Trinity Hunt Partners-backed Supreme since June 2023. Ms. Amendola was one of our Perspectives contributors in April. We wish them the best! Release

News roundup: Babylon Health Q3 revenue up 3.9x; surprise–DOJ to appeal UHG-Change buy approval; Walmart loses senior health exec Pegus to JPM

Earlier this month, Babylon Health announced its Q3 financials. Both revenue and value-based care membership grew. Losses also grew but the margins narrowed considerably. Highlights of their release:

Comparing Q3 2022 to Q3 2021

  • Revenue increased by $288.9 million versus $74.5 million, an increase of $214.4 million or 3.9x. This was largely driven by a 285% increase in Medicare membership.
  • Losses were there but margins improved due to aggressive cost reductions. Q3 loss was $89.9 million, or a 31.1% loss for the Period Margin (percent of revenue). Last year’s loss was $66 million, or 88.6% Period Margin. This represented an improvement of 57 points. When looking at EBITDA, Adjusted EBITDA totaled $(54.3) million, an (18.8)% Adjusted EBITDA Margin. This compared to last year’s $(47.5) million Adjusted EBITDA, or (63.7)% Adjusted EBITDA Margin, an improvement of 45 points.
  • Value-based care membership grew 2.7x to approximately 271,000
  • They acquired Medicare Advantage members in New Mexico, and commercial members via a digital-first product for Centene’s Ambetter plans in six states
  • In the UK, their Bupa partnership was extended for three years. Bupa has 2.3 million health insurance customers.

For year 2022, Babylon is updating its revenue guidance from $1.0 billion or greater to $1.05 billion to $1.1 billion.

Babylon is selling Meritage Medical Network, an independent physician association (IPA) based in Northern and Central California with 1,800 providers in six counties serving 90,000 patients, advised by  a major investment bank. They will also comply with SEC reporting requirements for a domestic issuer versus previously as a foreign private issue. Babylon will report its Q4 and 2022 yearend results under U.S. GAAP. They are also proceeding with a 25-to-1 reverse stock split to boost share price and prevent a NYSE delisting [TTA 13 Oct]. Mobihealthnews

The Department of Justice (DOJ) wiped egg off its face Friday, appealing the District Court of the District of Columbia approval in late September of UnitedHealth Group’s acquisition of Change Healthcare. The two companies closed on the buy in early October. DOJ was joined in the appeal by New York and Minnesota. The surprising appeal, after six weeks and the closing, is unusual but not unprecedented. At the time, the DOJ statement was written so that industry observers expected an appeal.

While the merger is closed, an appealed decision, if favorable to the DOJ, would force a separation of the businesses. Of course, UHG believes that “the appeal is without merit.” Stay tuned to see if this goes anywhere. Becker’s, Healthcare Dive

Walmart loses another healthcare exec. Cheryl Pegus, MD, will be departing Walmart as EVP of health and wellness and joining Morgan Health as a managing director. At Morgan, she will be focusing on population-based health initiatives and bringing clinical expertise to mental health, diabetes, and other chronic diseases. She is also joining Atria, a physician-owned organization of heart specialists.

During two years at Walmart, Dr. Pegus helmed development of a low-cost private brand analog insulin, expanded Walmart’s retail health center network across major markets, and the company’s pandemic response. Morgan Health was set up in 2021 to improve the quality, affordability, and equity of employer-sponsored healthcare. It has opened advanced primary care centers in Ohio. JPM a few weeks ago opened a Life Sciences Private Capital group [TTA 2 Nov]. Becker’s, Healthcare Dive

Walmart, despite their size, has had a certain wobbliness in their strategy. Aggressively starting out of the gate in 2018 with high-profile exec Sean Slovenski leading and plans to open up 1,000 clinics, he departed in 2020 and that put the brakes on the clinic strategy for awhile. In 2021, they bought privately held telehealth provider MeMD. Earlier this year, they announced the opening of more health ‘superstores’ in Florida, having established 20 in Arkansas, Illinois, and Georgia starting in 2019. Meanwhile, Walgreens is going big with VillageMD and its acquisition of Summit Health, and CVS Health is snapping up Signify Health to expand into value-based care and home health.

News and funding roundup: patient outreachers Relatient, Radix merge; health apps top 350,000; Morgan’s $50M in Vera Health; Communicare247, Doro, TeleAlarm join Scottish Digital Telecare’s list

Patient engagement meets…patient engagement. Two relatively small players in patient outreach, Relatient and Radix Health, are merging. By no coincidence, the former announced that they received $100 million in growth equity capital from Brighton Park Capital and its affiliates. Brighton Park led an undetermined investment round for Relatient in November 2019. No valuation or management transitions were announced.

Tennessee-based Relatient sends text messages to patients as appointment reminders, patient chat, and broadcast messaging. It is a 2020 Best in KLAS winner for Patient Outreach. Relatient claims that in 2020 it sent 200 million messages and integrates with over 85 practice management systems and electronic health databases. Atlanta-based Radix Health has a somewhat different software set for patient scheduling, contactless check-in, appointment reminders, and reminders for medical groups, health centers, and hospitals prior to procedures. Earlier this year, Radix rolled out a Covid-19 vaccine location and scheduling system for their mid-sized and large provider clients, which by February scheduled 200,000 appointments and about 100,000 vaccinations. Both companies were founded in 2014. The merged organization will be headquartered in Franklin, Tennessee, with offices in Cookeville TN, Atlanta, and Pune, India. Release, Mobihealthnews

Consumer health apps top 350,000. The IQVIA Institute for Human Data Science latest report on digital health trends tracked over 90,000 released last year alone. Managing health conditions makes up nearly half (47%, up from 28% in 2015) of apps. About two-thirds of digital therapeutics and 40% of digital care products treat either neurologic or mental health conditions. At this point, who’s counting? And are all of them working? Mobihealthnews, link to IQVIA report (registration and download required).

JP Morgan Chase’s new Morgan Health invested $50 million in Vera Whole Health, a western US primary practice group. Vera Whole Health operates on a membership flat-fee model and is fully at risk in a value-based, technology-enabled coordinated care model. Morgan Health adds to Vera’s coffers after the majority sale of the company to CD&R for an undisclosed amount and a valuation at $400 million. JP Morgan sunsetted its unsuccessful three-year joint venture, Haven, in January, but remains interested in health for profit and for employees, who will be given the opportunity to join Vera. Healthcare Dive, Mobihealthnews

Communicare247, Doro, and TeleAlarm receive Scottish Digital Telecare nod for digital alarms. Communicare247’s Archangel Care Cloud, Doro’s CareIP Mobile, Eliza 4G, and the icareonline platform, and the TeleAlarm TA74 GSM and TeleAlarm Cloud Services have been added to the Scottish Digital Telecare Security-Assessed Suppliers Scheme. They join Alcuris and Enovation, as reported in the past two weeks. Communicare247, Doro, and TeleAlarm releases.