Peering through the cloudy crystal ball into 2024 healthcare investment and company health

January 25, 2024 | by

crystal-ballWill 2024 be the mirror image of 2023? This time last year, signs pointed to slow, steady growth after the bubble bath of 2020-early 2022 was followed by failures of tech-leveraged banks (SVB and Signature in March 2023) leading to a mid-year bust [TTA 11 Aug 23]. Some big deals kicked off the year (CVS’ Carbon Health investment, Oak Street mega-buy TTA 16 Feb 23). Then as the year went on, they were followed by sheer turmoil–huge losses and business divestitures (Cano Health, Bright Health, insurtechs like Clover and Oscar), bankruptcies and shutdowns (Babylon, Pear, Quil, OliveAI, Smile Direct, Cureatr, Rite Aid), IP lawsuits (Apple-Masimo, Apple-AliveCor, FruitStreet-Sharecare), C-levels walking the plank (Walgreens, Noom), and big layoffs nearly every week. Cigna and Humana called off merging again, perhaps because Cigna didn’t like what it saw. M&A fell to its lowest level in years and IPOs fell to zero.

To cap the year, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) issued new Merger Guidelines that made the M&A mountain even steeper, and will follow up this year with Pre-Merger Notification guidelines that will make that part even more costly. Both signal hard times for M&A. Add to that the overt hostility the chair of the FTC has to any kind of M&A and the weaponization of the tools government has at hand…..Even early-stage, independent companies which allegedly these agencies are trying to foster don’t catch a break. A change in the tax law hitting hardest in 2023 forces annual expenses in research and experimentation (R&E) to be amortized over five years versus one year which severely affects their financials. (Section 174 explained here)

The crystal ball promises to be more like a Magic 8 Ball this year. Other than a flurry of smaller-scale investments, a rumor of a $5 billion EHR company sale (Netsmart), and predictable layoffs in health systems, the start of the year in healthcare has been fairly (ominously?) quiet.

HealthcareFinance talked to two partners in law firm Akerman’s healthcare practice group to get their take, weaving in some findings from a PWC report: 

  • Buyer interest in acquiring practices and surgery centers
  • Partnerships on rise, for example Amazon’s One Medical with health systems 
  • Smaller hospitals in mid-America will merge as there is “safety in numbers’
  • More investment in life sciences and drug development, especially diabetes/weight loss drugs in the GLP-1 category
  • Anything around AI attracts interest

The two big factors: interest rates (the Federal Reserve has signaled no further increases, and maybe cuts in 2024) and (of course) a presidential election as well as all of the House, much of the Senate, and state gubernatorial offices.

Bubbling under this are reports of two big pending IPOs:

  • Home health, pharmacy, and eldercare services provider BrightSpring Health filed with the SEC on 3 January for a near-billion dollar IPO (publicly released on 17th). This is estimated to raise $960 million, valuing the company at about $3 billion. Common stock will debut between $15 and $18 on Nasdaq under the symbol BTSG. They are also selling 8 million tangible equity units at $50. Proceeds will go from the offerings to repay outstanding debt under various credit facilities and pay penalties associated with terminating its monitoring agreement with Kohlberg Kravis Roberts & Co. L.P. (KKR, the current owner) and Walgreens Boots Alliance. BrightSpring serves 400,000 daily patients and dispensed 34 million prescriptions in 2022. IPO timing is still to be announced. This is the second time the company has filed, abandoning its first attempt in late 2021 as the market softened in 2022. KKR is signalling an exit…will it happen this time? Release, FierceHealthcare
  • Waystar’s IPO is still pending after being announced late last year [TTA 26 Oct 23]. The RCM and payments software company delayed it to 2024 due to an uncertain market at year’s end. Reportedly the roadshows were postponed to December but there has been no confirmation that they took place. Will it happen?

Fasten your seatbelts…it may be a bumpy ride.

Weekend news and deals roundup: Allscripts closes sale of hospital EHRs, closing out CEO; DEA scrutiny of Cerebral’s ADHD telehealth prescribing; more telehealth fraud; Noom lays off; fundings; and why healthcare AI is only ML

May 6, 2022 | by

That was fast. Allscripts closed its $700 million March sale of its hospital and large physician practice EHRs to Constellation Software Inc. through N. Harris Group. The Allscripts EHRs in the transaction are Sunrise, Paragon, Allscripts TouchWorks, Allscripts Opal, and dbMotion. They reported their Q1 results today. According to HISTalk earlier this week, CEO Paul Black will be stepping down, with President Rick Poulton stepping in immediately. Update–this was confirmed on their investor call Thursday and the transition is effective immediately. No reasons given, but there were no effusive farewells.  Healthcare Dive

A damper on telemental health? Online mental health provider Cerebral, which provides talk therapy, audio/video telehealth, and prescriptions for anxiety, depression, insomnia, ADHD, and other conditions, is finding itself under scrutiny. This week, its main mail fulfillment pharmacy partner, Truepill, stopped filling prescriptions for Adderall, Ritalin, Vyvanse, and other controlled Schedule 2 pharmaceuticals. Cerebral is redirecting current patients with these prescriptions to local pharmacies and as of 9 May, will not prescribe them to new ADHD patients.

Based on reports, the Drug Enforcement Agency (DEA) is looking at Cerebral in particular as part of a wider scrutiny of telehealth providers and pharmacies filling telehealth-generated prescriptions due to allegations of overprescribing. It also didn’t help that a former VP of product and engineering plus whistleblower claims in a wrongful dismissal lawsuit that Cerebral execs wanted to prescribe ADHD drugs to 100% of diagnosed patients as a retention strategy. Bloomberg Law. Unfortunately, Insider is paywalled but you may be able to see a report in the Wall Street Journal. Becker’s Hospital Review, FierceHealthcare

Also troubling telehealth is recurrent fraud, waste, and abuse cases involving Medicare and Medicaid. Back in 2020 the National Healthcare Fraud Takedown took down over 80 defendants in telemedicine fraud [TTA 2 Oct 20, 30 Jan 21]. The Eastern District of NY based in Brooklyn has indicted another physician, an orthopedic surgeon, in a $10 million fraud involving durable medical equipment (DME). In exchange for kickbacks from several telemedicine companies, he allegedly prescribed without examination and with only a cursory telephone conversation DME such as orthotic braces. DOJ release

Some fundings and a sale of note–and a big layoff at a well-known digital health leader:

  • Blue Spark Technologies, an RPM company with a patented Class II real-time, disposable, continuous monitoring body temperature patch good for 72 hours, TempTraq, raised a $40 million intellectual property-based debt solution (??) to fund growth led by GT Investment Partners (“Ghost Tree Partners”) with support from Aon plc (NYSE: AON)  Release
  • Specialty EHR Netsmart acquired TheraOffice, a practice management platform for physical therapy and rehabilitation practices which will be added to its existing CareFabric platform. Neither terms nor management transitions were disclosed in the release.
  • ‘White label’ telehealth/virtual health provider Bluestream Health is implementing its systems in Mankato Clinic, with 13 facilities across southern Minnesota. It’s a rarity–physician-owned and led–and in business since 1916. This also fits into a new telehealth trend–providers working with ‘white label’ telehealth companies and not with the Big 5. Release
  • Ubiquitously advertised (in US) weight-loss app Noom is laying off a substantial number of employees–180 coaches plus 315 more employees. Reportedly they are pivoting away from on-demand text chat to scheduled sessions that don’t require so many people. While profitable in 2020 ($400 million) and with Series F funding of over $500 million in 2021, it’s come under criticism that while its pitch heavily features easy behavioral change achieved through cognitive behavioral therapy (CBT), their real core of weight loss is severe calorie restriction. Engadget
  • Element5, an administrative software provider for post-acute facilities, raised a $30 million Series B from Insight Partners. They claim that their software is AI and RPA (robotic process automation) based. Release, Mobihealthnews

And speaking of the AI pitch in healthcare, a VC named Aike Ho explains why she doesn’t invest in healthcare AI companies because there’s no such thing in healthcare–it’s just machine learning. On that, Ms. Ho and your Editor agree. She also makes the point that the market they address is ancillary and not core services, plus they have difficulty clinching the sale because they don’t relate well to achieving or can’t prove at this stage improved clinical outcomes. Ms. Ho’s looooong series of Tweets is succinctly summarized over at HISTalk (scroll down halfway).

Short takes: £150 million for UK social care tech out of £1 billion, bias by design in medical device use investigated, Netsmart buys Remarkable Health, Vinehealth seed rounds £4.1 million

December 8, 2021 | by

The Department of Health and Social Care (DHSC) has presented to Parliament a £1 billion, three-year healthcare system reform plan. The white paper, People at the Heart of Care, highlights the following as part of a larger 10 year program:

  • £300 million in housing investment for supported housing
  • new technology and digitization backed by at least £150 million to improve care quality and safety, support independent living and allow staff to provide focused care where it is needed 
  • £500 million for 1.5 million adult social care workforce career training and qualifications 
  • £70 million to assist local authorities and improve the delivery and standard of care
  • up to £25 million to support unpaid carers

Part of the tech upgrading includes 80% of social carers having digitized care records that connect to a shared care record by March 2024. The improvements will be funded through the 1.25% Health and Social Care levy. Gov.uk, HealthcareITNews

The UK DHSC is investigating whether the design and use of medical devices such as pulse oximeters could be potentially biased by race. This stems from the disproportionate death rate during COVID-19 of blacks, Asians, and other minorities. The review announced will look at whether AI tools can be biased in their algorithms and whether pulse oximeters may be inaccurate due to darker skin color. HealthcareITNews

Behavioral health continues its hot streak, with specialty EHR provider Netsmart acquiring Remarkable Health, a practice management software developer for behavioral health. Their CT|One electronic health record (EHR) and Bells, the first virtual clinical documentation solution created for behavioral health and human services organizations, will be integrated into Netsmart’s EHRs. Acquisition cost and management transitions were not disclosed. Release

UK-based Vinehealth, an oncology support app that also gathers patient-reported outcome (PRO) data for drug development and clinical trials, closed a seed round of $5.5 million (£4.1 million). Expansion plans include an introduction in the US. Funders were led by Talis Capital with participation from previous investors Playfair Capital and Ascension, plus an extensive list of angel investors including KHP MedTech Innovations, a collaboration between King’s College London, King’s College Hospital NHS Foundation Trust, and Guy’s and St Thomas’ NHS Trust. The Vinehealth app has had 15,000 downloads since January 2020. TechCrunch, 

The mixed picture of health tech investment: a potpourri

March 25, 2016 | by

One picture is generally positive–plenty of opportunity in the aging and ill population, particularly in data integration from various sources, and value-based care. Everyone loves the excitement that a startup with a novel technology or way it can make knowledge more useful brings to the field.  Another picture is one of pitfalls aplenty, from overhyping technology (poster child, Theranos) to overestimating growth, overspending and especially picking the wrong (nervous, impatient) investors at the wrong time, which have left a general patina of mistrust around digital health. There’s also the fact that healthcare is a highly, confusingly regulated, long-cycle business that’s challenged money-wise, whether in the US, UK, Europe or Asia. Some advice to startups contained in these two articles, including from the principals of StartUp Health accelerator (who’ve seen it all), has to do with building trust, finding the right investors, the right advice/advisors, collaboration (though that is difficult with IP), finding proven (affordable) management and a sustainable (and resilient) culture. Underpromise, overdeliver.  TechCrunch, Healthcare Dive

No wonder that investment was flat in 2015, and that much of the news is around acquisitions that rearrange companies and/or offerings. The latest today is Allscripts‘ and GI Partners’ acquisition of behavioral EHR/care coordination company Netsmart for $950 million; Allscripts is moving its homecare business into Netsmart’s CareFabric suite. Kansas City Business Journal, Healthcare Dive  In addition we’ll cite our earlier Mo’ Money article on the $600 million in various digital health investments. UPMC, which had invested in Vivify Health’s telehealth/RPM platform, is spreading $3 million around partly in-house to six health tech projects developed under the Pittsburgh Health Data Alliance. And in an example of Wearables Confusion, investors put $16 million into LifeBeam to develop another DTC ‘holistic’ health wearable (LifeBeam’s origins are sensors for aerospace and defense) while early wrist fitness entrant Pebble has laid off 40 staff in an attempt to refocus on…fitness.

Early-stage companies are also alliancing and merging. Fresh out of Newark and the New Jersey Institute of Technology’s NJ Innovation Institute, the merger of Practice Unite (which knits together secure mobile clinician/patient communications into a customized platform) and Uniphy Health (physician engagement), is an example of complimentary enlargement. This expands care collaboration offerings and shades over into patient engagement if you look at the PHM quadrant here. According to Director/Chief Medical Officer Stuart Hochron, MD (who was a Practice Unite founder), “We’re really pleased with the outcome of this merger. It’s given us the capital and resources that we need to scale.” It’s also good to see that both the founders and the CTO are moving into the new Uniphy Health–and staying in Newark.  Release

Telehealth kiosk HealthSpot gains trials with Rite Aid, Mayo Clinic

November 11, 2014 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2014/05/Healthspot-stationbooth.jpg” thumb_width=”150″ /] HealthSpot Station, which was one of the higher points of this past May’s ATA, in the past month has announced two significant pilots. The retail pilot is with Rite Aid, the US’ third largest drug store chain (4,600 stores), with telehealth/telemedicine kiosks located in select Rite Aid locations in Ohio–Akron/Canton, Cleveland and Dayton/Springfield areas. The usage of the kiosks will be limited to common health conditions, such as cold, earaches, sore throat, sinus infections, upper respiratory infections, rashes, skin and eye conditions. HealthSpot Station kiosks are enclosed, free-standing units which use both video consults and real-time interaction with telehealth devices for remote diagnosis. They connect to a network of board-certified medical professionals at Cleveland Clinic and other major health systems across Ohio. Start date and duration were not disclosed.

This follows the October announcement with Mayo Clinic of an in-house pilot in Austin and Albert Lea, Minnesota with approximately 2,000 Mayo Clinic Health System employees (more…)

A kudo for kiosks: HealthSpot Station adds $8 million funding

May 9, 2014 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2014/05/booth-Dr.-Jenkins-with-attendant-300dpi-website.jpg” thumb_width=”150″ /] In a week of small funding announcements, HealthSpot announced an add of $8 million to its 2013 $10 million round, totaling $18.3 million of a $20 million offering (SEC filing). Investors are not disclosed. In three years, HealthSpot has raised an impressive total funding of $23 million (CrunchBase), although the company is still in pilot in a handful of locations around their Ohio HQ and reports minimal revenue. The company’s hosted, fully enclosed kiosks with both telehealth monitoring and virtual consult capabilities debuted at the end of 2012 at International CES New York. According to their website, their markets are facility waiting rooms, pharmacies, schools, military bases and prisons. Their partnerships have been notable: EHR Netsmart, telemedicine network Teladoc and a co-location arrangement with Canadian pharmacy kiosk MedAvail [TTA 23 Jan]. They are also on the board of the Alliance for Connected Care lobbying advocacy group [TTA 13 Feb], which will certainly aid their cause by plumping for increased telehealth coverage by Medicaid beyond the present 20 states and Medicare beyond rural special programs. Yes, they will be at ATA 2014, if you are attending. Mobihealthnews

HealthSpot Station kiosks add telepharmacy

January 23, 2014 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2014/01/booth-with_new_attendant.jpg” thumb_width=”180″ /]’Virtual consult’/staffed kiosk HealthSpot Station [TTA 29 Oct], most recently adding behavioral health EHR Netsmart and telemedicine provider Teladoc [TTA 5 Sept], as well as several health system providers, is expanding into telepharmacy through a strategic alliance with Canada-based MedAvail. MedAvail’s kiosks fill prescriptions in clinics, hospitals and office locations, including live assistance from a pharmacist, though the website video doesn’t explain how drugs not in stock in the kiosk are handled. What’s notable? Large kiosks are moving towards full-scope onsite clinics. HealthSpot in its three years of existence has quietly accumulated over $15 million in funding, $10 million in 2013 alone–a fact that is not included in Rock Health’s Digital Health 2013 report, unless this Editor overlooked it. Is this not digital health delivered? Correct me if I’m wrong. HealthSpot/MedAvail press release. Also see Editor Charles’ post on ‘The Future of Doctors’ below for more on this trend and its consequences.

HealthSpot, Netsmart ally for telemedicine kiosks

May 7, 2013 | by

HealthSpot, which debuted its staffed telemedicine/telehealth Stations at CES 2013 (and this Editor previewed at CES New York in November), is partnering with behavioral health EHR/practice/clinical case management software provider Netsmart to add that capability to its kiosk consults. Announced at ATA yesterday, the MedCityNews article is sketchy on exactly how this will be integrated–will it be an option or will select kiosks be dedicated to behavioral health only–but this is likely a first for telementalhealth (another term in our lexicon!) Kiosk placements can be especially useful in rural areas which have a paucity of mental health/psychiatric providers (see TTA on Forefront TeleCare’s ATA announcement). It also follows this year’s ATA theme of telemedicine to more effectively serve rural US areas. HealthSpot also announced a pilot with Nationwide Children’s Hospital in its hometown of Columbus, Ohio; their CEO claims it has orders for 150 units in hand for its now three health system partners. Surprisingly, as of April they are already at Series C funding with a $10.4 million financing (of a $20 million offering) from giant Cardinal Health and other private investors.