The final reorganization is to sell everything. Today’s report in Axios states that Olive AI’s remaining business has been sold to revenue cycle management/payments software Waystar Health and to Humata Health, a startup (see update below). Olive’s Clearinghouse and Patient Access business units went to Waystar and its Prior Authorization business unit to Humata. Sale prices and staff transitions were not disclosed. OliveAI’s business lines centered on automating routine tasks in healthcare so that more time could be spent on patient care and higher value tasks.
Olive’s statement was simple and brief, in part reading “These products represent the heart of Olive’s business and we believe this decision will provide important stability and a bright future for these customers. With the sale of our core business units, Olive will wind down the remainder of its business.” Other than this message, their website was almost totally disabled except for a customer login on a product named Lighthouse. In the message, there is no information on handoffs nor on the fate of remaining staffers.
This follows on our reporting of Olive AI’s slow bleed starting July 2022 when they pink-slipped 450 employees, or one-third of staff, followed by additional layoffs of 35% of staff (215 workers) this past February, then the sale of various businesses to an undisclosed sister company, business intel to BurstIQ, and its utilization management tool to Availity all between February and June. They had a lot to sell in refocusing on core business. Since its founding in 2012, Olive had pivoted its business model 27 times according to its CEO, which sounds to this Editor more like a constant pirouette. The final layoff reported was in July of another 450 staff, another one-third. An Axios report in April 2022 demolished much of their credibility with examples of overpromising on their technology producing savings and efficiencies, then underdelivering, an assessment echoed by KLAS. HISTalk
OliveAI’s demise as it reaches the end of the runway for near-total hull loss is almost in the Theranos class as a Unicorn Fail. They were valued at one point at $4 billion and burned through over $850 million in nine rounds of funding up to a Series H, including from top VCs General Catalyst, Tiger Global, and Vista Equity Partners. General Catalyst is now moving into the transformation business with the awkwardly named HATco, The Health Assurance Transformation Corporation, announced at HLTH earlier this month and defined as “a more affordable, accessible and proactive system of care”. As this Editor noted then, HATco’s promise is a song we’re heard before. (The Gimlet Eye would say it should be played on a tinny, out-of-tune piano.)
One of the remaining business buyers, Waystar Health, filed only two weeks ago to be the first IPO in digital health in over a year, for an estimated valuation of $8 billion. Mr. Market’s bad behavior though is delaying its roadshow till December at the earliest due to weakness. The IPO will be 2024. Sometime. [TTA 26 Oct] The cycle begins anew.
Even so, yet another demise of a once-promising company is sad news. This is developing and will be updated.
Update on Humata Health (see comment below). Turns out it is a startup that will be headed by a former Olive president for their payer business, Jeremy Friese, MD. According to his LinkedIn profile, Dr. Friese had that position November 2020 to September 2022 after the sale of Verata Health, where he was co-founder and CEO from 2017 until they sold their prior authorization business to Olive AI. Three former Olive employees contacted the author of Axios’ coverage, Erin Brodwin, after she published the original article on 31 October. So Dr. Friese, who lists a ‘stealth startup’ from April 2023 in his profile, is apparently taking back his prior authorization business. Does this seem reminiscent of Pear Therapeutics’ CEO, Corey McCann, obtaining backing to acquire many of Pear’s assets out of bankruptcy for a paltry $2.03 million [TTA 24 May]?
Was Olive AI a scam? HISTalk has an interesting discussion today on whether it met the definition, as some have claimed. Their POV is that it was not, but investors and customers didn’t do their due diligence despite poor KLAS reviews (except for prior authorization) and especially in the hothouse of 2020-2021 did not see past the hype. For those evaluating companies, whether to take them on as a vendor or to go work for them, there are three cautionary points that stood out in their seven lessons:
- Companies can be wheezing their last even as they pay big money for impressive exhibits and sponsored events at conferences.
- Rapid company expansion, acquisitions that look like an attention-diverting shell game, and a product line that is too confusing to summarize in a single “what does your company do” sentence are reasons for skepticism.
- All companies and investors look smart when the economy is booming.
HISTalk’s Curbside Consult columnist Dr. Jayne takes on Olive AI, which in her health IT world is being much talked about. She and this Editor are on the same page about these running-out-of-funding runway startups which she summarizes so well:
In talking with friends who know the industry well, most are in agreement that it’s time for a lot of companies to pay the proverbial piper since they can’t deliver on the promises they made in exchange for startup funding. They forecast that many more companies will be trying to reinvent themselves over the coming months. Those that are successful may live to fight another day, but others may become the stuff of fire sales or ultimately closures.