News roundup: SleepioRx clears FDA 510(k), Caregility adds AI fall detection, Otsuka releases Rejoyn depression app, MD Ally’s $14M Series A, Alcove launches CallConnect247 (UK), Health Catalyst buys Lumeon for $40M

August 15, 2024 | by

Big Health’s SleepioRx digital insomnia therapeutic gains 510(k) FDA clearance. The 90-day treatment is based on a prescription device delivering Cognitive Behavioral Therapy for Insomnia (CBT-I). The treatment adjunct is tailored to symptoms and provides daily sleep tracking, enables goal setting, and content for help falling asleep. Sleepio was originally developed in the UK (we covered in 2013!) but moved to San Francisco in 2015.  Their original Sleepio is marketed to employers and health plans to support treatment for sleep disorders and insomnia, along with other products for digital support for anxiety and depression. Their last funding was a Series C of $75 million raised in the palmy days of January 2022 and a year later acquired Limbix, provider of SparkRx, a depression management app targeted to adolescents. Release, Mobihealthnews

In my home state of NJ, Caregility announced an AI-powered fall detection upgrade to their acute care clinical observation platform. iObserver is used by hospital care teams for observation of patients at risk for falls or self-harm. Interestingly, the fall detection system is run on computer vision, which means it runs entirely on telehealth edge devices in the patient room with the AI capable of identifying and deriving information from objects and people in images and videos. Edge device use means that processing is done within the devices themselves, which eliminates bandwidth issues and upstreaming to the cloud, a failure point for privacy and as we now see, hacking risk. According to the release, the computer vision capability is available for use on every one of the more than 15,000 Caregility edge devices currently installed in hospitals around the globe. 

Otsuka Precision Health (OPH) launches Rejoyn digital therapeutic for depression.  As previewed earlier this summer [TTA 29 May], OPH launched Rejoyn, the first and sole prescription digital therapeutic cleared by the FDA for the adjunctive treatment of major depressive disorder (MDD) symptoms. Rejoyn was developed in conjunction with Click Therapeutics. It is for use by those aged 22+ on antidepressive medication. After being prescribed from the patient’s provider or Wheel Health, the Rejoyn app can be downloaded from major app stores after keying in an access code that is furnished to the provider by BlinkRx. It is currently being priced on a cash-pay basis at $50 for the six-week course, which will increase later to $200 for insurer coverage, though it is not yet covered. In a six-week trial, the use of Rejoyn reduced depression symptoms and improvement across multiple scales typically used by patients and clinicians to track depression improvement. The Otsuka release and commitment are significant as it’s also the first true involvement of a major pharmaceutical company in telemental health with a highly targeted clinical app that isn’t tied to one of their medications. It’s a long road with a lot of bumps, as Otsuka experienced with Proteus Digital Health’s smart pill tech for its Abilify MyCite, as well as failed companies like Pear and Babylon Health.  Release, Healthcare Dive

In funding news, emergency services telehealth company MD Ally now has $14 million in a Series A to add to its previous $11 million.  The raise was led by Frist Cressey Ventures, founded by Senator Bill Frist and Bryan Cressey, and anchored by General Catalyst, with participation from Techstars, Seae Ventures, Red & Blue Ventures, and Alumni Ventures. MD Ally’s value proposition centers on the non-emergency 911 call. Dispatchers and first responders, after determining the non-emergency status, can divert the call to other telehealth and community-based resources to assist the person plus a ‘care assistant’ for treatment plans and long term outcome management. MD Ally is currently in test in Phoenix and locations in Florida, Arizona, and California serving about 5 million patients. Release, Mobihealthnews

In UK related news:

Alcove expands TEC services with CallConnect247. It is a state-of-the-art 24/7 Alarm Receiving Centre (ARC) designed for communities and local authorities who are modernizing their call services for alarm management to incorporate virtual care and video welfare calls. It includes AI-powered and automated services to reduce false alarms and minimize the ‘white noise’ calls that often inundate traditional ARCs. It’s expected to grow coverage up to 8,000 users by October. Alcove release, Thiis.co.uk

Health Catalyst buys US/UK care management company Lumeon Ltd for $40 million. The $40 million purchase price was funded with a mix of $2.5 million in stock and $37.5 million in cash plus a potential recurring revenue-based earn-out of up to $25 million that, if achieved, would be paid solely in cash. (page 42 of SEC Form 10-Q). No information was provided concerning staff transitioning at Lumeon’s current HQs in Boston and London, where it adds a UK/EU footprint to Health Catalyst’s current data analytics and software businesses. Lumeon’s Care Orchestration automates care coordination processes for providers in outpatient, acute care, and post-acute settings.

Health Catalyst’s earnings were also reported in the 10-Q. Revenue for Q2 was up slightly from last year to $75.9 million, but burdened with a net loss of $13.5 million which was more than 50% reduced from Q2 2023’s $32.6 million. Q2 adjusted EBITDA improved to $7.5 million versus $3.5 million in prior year. Release, Mobihealthnews

News roundup: Waystar $1B IPO is on (updated); CVS looking for Oak Street PE partner; 23andMe net loss doubles to $667M, may go private; Otsuka dives into digital therapeutics; HoneyNaps’ $12M no snooze

May 29, 2024 | by

Waystar finally getting around to starring in its IPO. Again. The on-again/off-again public offering for this healthcare payments software platform developer is back on, according to their Form S-1 filed yesterday (28 May) with the Securities and Exchange Commission (SEC). Their first filing draft was in October 2023 on Nasdaq which would have valued the company at $8 billion. The IPO was again revived in December and postponed. This filing for WAY floats 45 million shares valued between $20 and $23 which would raise $1 billion with a far more reasonable valuation of $3.7 to $3.83 billion (latter updated per Waystar). Lead book-running managers are JP Morgan, Goldman Sachs & Co. LLC, and Barclays.

Cornerstone investors, who purchase stock before the formal listing, have expressed interest in buying up to $225 million in shares; these investors include funds managed by Neuberger Berman and a wholly-owned subsidiary of sovereign wealth fund Qatar Investment Authority. 

Underwriters have a 30-day option to purchase up to 6.75 million shares at the IPO price less the underwriter discount. Their current investors are EQT AB, Bain Capital, Francisco Partners, and the Canada Pension Plan Investment Board. The net proceeds from the offering will repay outstanding indebtedness. No timing is stated for when the IPO will happen. Usually, there are roadshows for institutional investors that showcase the prospectus (in the S-1) and positive points such as their $5 billion in annual transactions. After the listing, the current investors will still have substantial shares: EQT, CPPIB, and Bain will own about 29.2%, 22.3%, and 16.8% stakes respectively. 

Release, Morningstar, FierceHealthcare, Reuters

CVS Health is reaching out for a private equity partner to expand Oak Street Health’s clinics. Bloomberg News reported this unusual move by CVS with a handful of private equity firms to explore what was termed by ‘insiders’ as a joint venture. It’s all very preliminary and a JV may not be the final form. OSH is far smaller than rivals One Medical (Amazon) and VillageMD (Walgreens) but CVS apparently does not want to go it alone to fully take on the development cost. On February investor calls, CVS projected building out to 300 clinics by 2026. Reuters

Even in early 2023 with rivals Amazon (One Medical), Walgreens (VillageMD), and Walmart Health on primary care clinic buying and building binges, CVS’ buy for $10.6 billion for the ‘runt of the litter’ was widely derided as a waste of money [TTA 16 Feb, 2 Mar 2023]. OSH had only 169 offices in 21 states. It was also a money loser, $510 million in the red in 2022 and $200 million projected in 2023, with no breakeven predicted until 2025. A large part was due to OSH’s patient population, heavily skewed towards Medicare Advantage and underserved, high-risk patients. Those factors have gotten worse, not better. CMS has now tightened payments on MA with new rates and on reimbursement for diagnoses, making the growth of this population even riskier. Further dimming prospects for a willing partner: Walmart Health is shutting at end of June and VillageMD has shed or is shedding 140 locations to perhaps 620.  

23andMe’s losses double while revenue shrinks by 31%. Things continue to dim at the beleaguered genetics testing company. Their Q4 ending 31 March 2024 (FY24) closed with a net loss of $209 million on $64 million in revenue, compared to a net loss of $64 million on $94 million in revenue in the prior year Q4. In adjusted EBITDA, Q4 lost $33 million, compared to a loss of $39 million in prior year Q4. Net loss in full year FY24 was $667 million on revenue of $220 million, versus prior year’s loss of $312 million on revenue of $299 million. Adjusted EBITDA was $176 million versus prior year’s $161 million. As previously reported [TTA 20 Apr], CEO and co-founder Anne Wojcicki may offer to buy out the 80% of shares she does not already own. In developments, 23andMe has introduced an ancestry feature called Historical Matches, three new genetic reports for 23andMe+ members covering breast, colorectal, and prostate cancer based on polygenic risk scores, and some clinical trials moving forward. 23andMe also lost revenue in mid-year from GSK’s expiring agreement, had an impairment relating to Lemonaid Health, and of course (but not mentioned here) their massive 6.9 million record data breach. Shares closed today at $0.61, slightly up from April’s lows. Release

Otsuka America bucks the down trend, moves into digital therapeutics with Otsuka Precision Health. The Japanese pharmaceutical company’s US division is moving forward with a new digital health unit, Precision Health (OPH), headed by 14 year veteran Sanket Shah. Their first rollout later this summer will be based on the newly FDA-cleared Rejoyn, the first prescription digital therapeutic authorized for the adjunctive treatment of major depressive disorder (MDD) symptoms. Rejoyn was developed in conjunction with Click Therapeutics. Mr. Shah and Otsuka are taking the longer view in terms of development, that future developments will be about both partnerships and solo effort, and that the road is long–and littered with the burnt-out shells of failed companies like Pear Therapeutics, Babylon Health, and way back to Happtique. Otsuka has had its own digital health learning experience. They partnered in 2017 with Proteus Digital Health’s smart pill tech for its Abilify MyCite anti-depressant. After abruptly ending the partnership, Otsuka bought the smart pill technology out of bankruptcy [TTA 19 Aug 2020]. Release, Healthcare Dive 

One funding of note this week is HoneyNaps‘ $11.6 million Series B. Hi Investment Partners, QUAD Investment Management, and Industrial Bank of Korea led the South Korean sleep diagnostics company’s funding. HoneyNaps has an FDA-cleared (2023) bio-signal monitoring and AI-assisted sleep diagnosis software, SOMNUM, that will be introduced to the US market. In the release, the company CFO announced plans to “further advance the AI to expand its application to other critical areas such as cardiovascular disease, dementia, and Parkinson’s disease”. Mobihealthnews