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

News roundup: Proteus dissolves with Otsuka, EHRs add 16 min. per patient, DrChrono mobile EHR raises $20M, CareBridge LTSS launches, ‘flyover healthtech’ soars

January 17, 2020 | by

The much-touted partnership of Proteus Digital Health with Otsuka Pharmaceutical of Japan for a digital version of Abilify has ended prematurely. Abilify MyCite was the first drug cleared by FDA with a digital tracking system in November 2017 [TTA 14 Nov 17]. Otsuka was also going to fund Proteus for further development of drug tracking.

In the payout for the Proteus license, Otsuka has the right to use Proteus’ technology for its own mental illness drug research. Proteus will abandon its research in mental illness and cardiovascular conditions and concentrate on digital meds in cancer and infectious disease. Before the holidays, we saw reports that ‘Proteus may be no-teous‘ and that layoffs and office closures were in the works. STAT reports that the Proteus-Otsuka breakup is one of several recently: Sandoz and Pear Therapeutics, Sanofi and Alphabet’s Onduo.

Where does a doctor’s time go? EHR use, for one. A study of 155,000 ambulatory medical subspecialists and primary care physicians in 2018 clocked EHR use per encounter at over 16 minutes on average, with chart review, documentation, and ordering functions accounting for most of the time (33, 24, and 17 percent, respectively). Percentages changed by subspecialty. PhysiciansWeekly,  ACP Annals of Internal Medicine (abstract only) 

Speaking of EHRs, DrChrono, one of the first mobile-friendly EHRs/practice management/revenue cycle platforms, raised $20 million in a Series B led by ORIX Growth Capital. Its total funding in nine years tops $48 million. Crunchbase, Mobihealthnews

Long term care (LTC) has been ‘about to be hot’ for at least 10 years. Where the real money may be made is in the ‘back end’. This week, a new long-term support services (LTSS) firm, CareBridge launched out of Nashville, backed with $40 million in fresh funding with a BOD helmed by a former US senator and physician, Bill Frist. Created in part through the acquisition of two other companies, HealthStar and Sinq Technologies, it will concentrate on electronic visit verification by caregivers for in-home service delivery, provide real-time sharing of clinical information, support members with enhanced tablet-based telehealth services, and is building a predictive model for service support. BusinessWire

Flyover tech soars, indeed. We note that CareBridge is in Nashville, which snobs on both coasts demeaningly call ‘flyover country’. Well, there’s gold in Middle America’s hills when it comes to health tech, with some of the choicest high flyers at this week’s JP Morgan Healthcare Conference from places like Nashville, Minneapolis, Ann Arbor, Denver, and Iowa. Utah alone has enough tech to earn it the nickname ‘Silicon Slopes’. Utah’s highlighted company is one this Editor found back in 2013—Owlet–still (baby) socking it to them, cutely. Others, unfortunately, are wince-worthy–the prize goes to the Ōmcare med dispenser, which makes darn sure via two Wi-Fi-enabled interactive cameras that those pills are not only being taken, but also being swallowed. Really. Observer

Breaking: FDA approves the first drug with a digital ingestion tracking system

November 14, 2017 | by | 1 Comment

Not many drug approvals warrant an FDA press release, but this one did and deservedly so. The US Food and Drug Administration (FDA) approved a version of the psychiatric drug Abilify (aripiprazole) equipped with the Proteus Digital Health ingestible tracking system. Abilify MyCite has been approved for the treatment of schizophrenia, acute treatment of manic and mixed episodes associated with bipolar I disorder and for use as an add-on treatment for depression in adults. It is the first approved commercial version of a drug equipped with the Proteus Discover system, which tracks the ingestion of the pill from a sensor in the tablet activated by gastric juices to a patch worn by the patient and then to a smartphone app. The patient, caregivers, and physicians can track medication usage (timing and compliance) through the app, adjusting dosage and timing as needed.

The Proteus press release states that the rollout is gradual through select health plans and providers, targeting a limited number of appropriate adults with schizophrenia, bipolar I disorder, or major depressive disorder. It is contra-indicated for pediatric patients and adults with dementia-related psychosis.

Abilify, developed by Japan’s Otsuka and originally marketed in the US with Bristol-Myers Squibb (BMS), has been generic since 2015. This Editor finds it interesting that Proteus would be combined with a now off-patent drug, creating a new one in limited release. Proteus’ original and ongoing tests were centered on combining their system with high-value (=expensive) drugs with high sensitivity as to dosage times and compliance–for instance, cardiovascular and infectious disease (hepatitis C, TB). Here we have a focus on managing serious mental illness and treatment. 

Editors (Steve and Donna) first noticed Proteus as far back as September 2009. Looking back at our early articles, Proteus has come a long way from ‘creepy’ and ‘tattletale’. With nearly half a billion dollars invested and a dozen funding rounds since 2001 (Crunchbase), approvals were long in coming–nine years from submission of patch and tablet sensor to the FDA (2008), seven years from the patch approval (2010), five years from the tablet sensor approval (2012), to release of a drug using the Proteus system. The only thing this Editor still wonders about is what happens to the sensors in the digestive tract. They contain copper, magnesium, and silicon–copper especially can be toxic. If the sensors do not dissolve completely, can this be hazardous for those with Crohn’s, colitis, or diverticulitis/diverticulosis?  Hat tip to Bertalan Meskó, MD, PhD, via Rob Dhoble, on LinkedIn.

Also, if you can stand it, a lengthy article from the New York Times with lots of back and forth about the existential threats of monitoring drugs, potential coercion (preferable to injected Abilify), how some with schizophrenia already manage, and Proteus as a ‘biomedical Big Brother’. (Some commenters appear to have the very vapors about any digital trackers, including AiCure and etectRx.)