News roundup #2: why Walgreens is considering selling to a PE, December fundings, 2024’s surprises, M&A ’25 predictions, Transcarent buying Accolade for $621M

January 8, 2025 | by

Why would Walgreens sell out to a private equity investor, reportedly Sycamore Partners? This news leaked early in December to the Wall Street Journal that this PE would either buy Walgreens Boots Alliance (WBA) in whole, in parts, or with partners [TTA 10 Dec 2024]. This MedCityNews article gathers the speculation from multiple financial executives, and the answer is a resounding Maybe.

  • Primary care was a losing bet–and their retail pharmacies are challenged by new models like Amazon Pharmacy and Cost Plus.
  • It will take about $9.2 to $10 billion, which is a lot for Sycamore to pony up. But it’s a bargain from what PE giant KKR offered in 2019– $70 billion.
  • Sycamore may have competition for buying WBA.
  • The 12,000 store network is now seen not as an asset, but a liability, not only for pharmacy but also for retail goods.
  • Sycamore may be more interested in the retail and e-commerce sides of Walgreens versus healthcare. For instance, WBA company Boots in the UK has leveraged its beauty business to nearly the prominence of health in their stores.
  • A private company may have more power to swiftly make the changes that Walgreens needs, versus a company having to report quarterly to shareholders. 

There was the usual rush to announce fundings by December’s end, a refreshing change from 2023’s end. MedCityNews helpfully rounded up five of the last-minute closings:

  • Already noted: Oura’s $200 million plus funding for a Series D from Dexcom ($75 million) and Fidelity Management. Our earlier reporting noted total financing at $223 million and the valuation at $5 billion.
  • Cleerly’s $106 million Series C led by Insight Partners. Cleerly developed AI-assisted detailed phenotyping of coronary artery disease.
  • Remodel Health gained $100 million in a funding led by Oak HC/FT and Hercules Capital. Remodel works with employers and employees to build and access Individual Coverage Health Reimbursement Arrangement (ICHRA) plans.
  • Cala Health raised $50 million from Vertex Growth Fund and Nexus NeuroTech Ventures. Cala is a bioelectronic medicine company which developed FDA-cleared, noninvasive devices for hand tremors.
  • Soda Health’s $50 million Series B, led by General Catalyst, is in the hot sector of ‘food as medicine’. Soda provides a ‘smart benefits’ card to use at approved retailers for food, health products, and pharmacy benefits.

2024 had its share of surprises in this two-part Mobihealthnews roundup. No surprise for our Readers in that GLP-1 drugs for weight loss went to radioactive-level hot (but this Editor predicts a collapse in 2025). The failure of retail clinics such as Walmart Health and VillageMD surprised many in the industry–as well as Optum shuttering its telehealth business. Developing: menopause and autoimmune health (and their relationship)–and food as medicine. On the insurance side, the troubles of the Medicare Advantage health plan model multiplied, not moderated. And AI? On top of everything, but you maybe shouldn’t develop your own LLM. Part One, Part Two

Predictions for 2025 mergers and acquisitions center on consolidations. There’s little foo-foo or froth in this Mobihealthnews article– instead, lots of New Reality. Many pandemic-born startups will die quiet deaths in sales, shotgun marriages, and shutdowns. Much caution in any M&A. The emphasis is on interoperability, which is widely defined as acquirer-acquiree and a clearly presented integrated value proposition to customers. Their industry leader panel cannot agree whether M&A will accelerate as a result of changes at FTC (Lina Khan’s departure and a new chair) or slow down. And at least one leader believes that Medicare Advantage will stabilize and recover.

But one buyer plays it high and wide in ’25–the deep-pocketed Transcarent, agreeing to buy Accolade for $621 million in 2025’s First Big Deal. Accolade is also in enterprise care navigation, as well as providing virtual primary care, specialist consultations, and patient advocates. It went public on Nasdaq in 2020. Transcarent’s offer is $7.03 per share in cash, an approximately 110% premium over the company’s closing stock price yesterday 7 January. The funding is coming from General Catalyst (!) and Glen Tullman’s 62 Ventures. Accolade will go private at the closing, expected to be Q2 following shareholder and regulatory approvals, and be integrated into Transcarent. The combined Transcarent will have 1,400 employer and payer clients. Release, Healthcare Dive

News roundup: CVS Health cedes 4 new board seats to Glenview, Oscar’s strong Q3, telehealth controlled substance prescribing in 3rd extension, new Revere Medical to buy CareMax assets (updated), Oura picks up $75M Dexcom financing and partnership

November 19, 2024 | by

This pre-Thanksgiving week stuffs the turkey, not with giblets and savory fillings, but with Big Developments on the Big Stories of the past few weeks.

CVS feeds the crocodile, gives Glenview Capital four new seats on the board. CVS’ startling move with the hedge fund Glenview Capital Management that adds Leslie Norwalk, Glenview CEO Larry Robbins, Guy Sansone, and Doug Shulman, expands their board of directors to an unwieldy 16. According to the CVS release, Norwalk, from Epstein Becker Green, will join the Health Services Committee. Sansone, CEO of H2 Health, will join the Audit Committee.  Shulman, chairman/CEO of OneMain Holdings, will join the Management Planning and Development Committee. It’s unknown whether Robbins will need to join a committee given his prime position.

Despite CVS’ lack of confirmation after their reported breakup/spinoff discussions that kicked off October [TTA 1 Oct], it’s apparent to anyone with clean glasses that Glenview is driving multiple changes at the company including the ouster of CEO Karen Lynch even after she took direct control of Aetna. She was replaced by a CVS ‘lifer’, David Joyner, head of CVS Caremark. Glenview owns 1% of CVS stock as of last report in October, according to the Wall Street Journal, but that 1% accounts for over $700 million of its $2.5 billion war chest. That gives them cause for concern–and leverage.

The board appears to be looking towards maximizing performance now, not later. The new executive chair of CVS Health, Roger Farah, from the release: “In our discussions with the leadership at Glenview, we agreed that we can deliver greater value from our integrated businesses to all of our stakeholders, including our customers, consumers, colleagues, and shareholders.” New faces tasked with quick turnarounds include group president Prem Shah and at the head of shaky Aetna, Steve Nelson from ChenMed [TTA 8 Nov]. That means achieving profitability and cash flow at a very tough time for nearly all insurers. CNBC, Becker’s

How Centene did it after a similar move by Politan Capital Management. Since early 2022, Centene has been selling off in pieces what turned out to be an abundance of ancillary, only partly digested businesses, such as Ribera Health, Magellan, Apixio, and most recently their MSO/ACO organizer Collaborative Health Systems [TTA 13 Nov, 5 May 2023, 30 July 2022], along with a deep portfolio of real estate such as a projected Charlotte HQ, all bought by the late CEO Michael Neidorff. These ‘fat pads’ were easy cuts along with several thousand people. CVS Health, however, may not have the padding that Centene had to generate ready cash from willing buyers as it has the reputation of being fairly lean. Their big missteps may have been in 2022 (FOMO Time) pursuing a management-led Big Objective of entering brick-and-mortar and buying never-profitable Oak Street Health primary care for $10 billion, buying home health’s Signify Health for $8 billion, and investing $100 million in Carbon Health, all at inflated post-pandemic prices with the latter two having significant issues within their lines of business. 

The proposal of splitting up the company sounds drastic to achieve profitability. It may be a ‘worst case scenario’ thrown out to keep the crocodile sated. Much depends on how both Glenview Capital and Mr. Market behave next year with the opportunities presented, while facing a new administration and HHS and CMS heads without ties to or fondness for payers. 

Meanwhile, Oscar Health, helmed by Aetna’s former and ousted head Mark Bertolini, posted a strong Q3 closing September 30. Versus prior year, their revenue went up 68% to $2.4 billion, medical loss ratio remained fairly stable at 84.6%, up 80 basis points (bps=.01%), and expenses improved by 3.6%, but importantly they narrowed their net loss to $54.6 million, or $(0.22)  of earnings per share, a $10.8 million improvement. Revenue for the year was adjusted upward to the $9.2 billion to $9.3 billion range, $200 million above the prior range of $9.0 billion to $9.1 billion. It’s quite a turnaround from the dancing-with-disaster Oscar of only 18 months ago. Look hard, there’s a schadenfreude-ish smile on the middle guy’s face….  Oscar release

DEA extended telehealth prescribing of controlled substances for a third round. The kicking the can down the road was easily predicted last month. The “Third Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications” exited the registry of the White House Office of Management and Budget (OMB) 14 November. On the 15th, the rule was posted to the Federal Register and officially published today (19 Nov). It gives the Drug Enforcement Administration (DEA) a clean extension of the pandemic time flexibilities on Schedule II-V remote prescribing. The industry will wait and see if the incoming Trump 47 administration will bring this up to Congress to repeal, as by a whisker the extension fell outside the 60-day vacate window. But it’s not a hot button issue and is very likely to continue into 2025. FierceHealthcare, ATA release

CareMax goes into Chapter 11, agrees to sell to the new Revere Medical. The senior healthcare provider based in Miami filed Chapter 11 on 17 November but already has entered an agreement to sell assets to Revere Medical, formerly Stewardship Health, sold out of Steward Health’s bankruptcy to Brady Health Buyer, an entity of Rural Healthcare Group-Kinderhook Industries [TTA 8 Nov]. The sale that had to be planned for some time is part of a restructuring plan approved by the company’s secured lenders, commonly called a pre-packaged bankruptcy. Revere is acquiring CareMax’s management services organization (MSO) and ACO assets, including the Medicare shared savings program (MSSP) part of its MSO business that supports about 80,000 Medicare beneficiaries. CareMax will wind down and exit their Medicare Advantage and ACO REACH businesses which will take some time, likely 2026. The operating clinic business assets will go to a third-party buyer. Further restructuring is part of a restructuring support agreement (the “RSA”) with lenders holding 100 percent of the Company’s secured debt obligations, according to the 17 November release. Becker’s  Update: CareMax was related to Steward Health as the exclusive value-based managed service organization (MSO) for Steward Health Care’s Medicare network. Steward’s failure was the final crack that broke CareMax’s back, as it had been losing money for several years, according to Paul Rundell, CareMax’s chief restructuring officer. Not helpful was their leasing many of their properties from real estate investment trust Medical Properties Trust, same as Steward.  HealthcareDive   And where in the world is Dr. de la Torre, Steward’s CEO?

Finland’s Oura health tracker ring now discloses where the money’s coming from. Oura picked up $75 million from Dexcom in a Series D funding round, their first since a $100 million Series C in May 2021 and an undisclosed venture round the following year. Their total financing is $223 million and the valuation at $5 billion. Dexcom and Oura are also in partnership to integrate Dexcom glucose data with vital signs, sleep, stress, heart health, and activity data from Oura Ring. The two-way integration will flow data between Dexcom and Oura products, including Dexcom glucose biosensors, Dexcom apps, Oura Ring and the Oura App. Oura release, FierceHealthcare Oura purchased Sparta Science earlier this month and metabolic tracker Veri in September. Veri, however, works with the Abbott FreeStyle Libre to guide users to the right foods, habits, and timing versus common health metrics such as sleep for their bodies. 

News roundup: Cerebral forfeits $3.7M on federal Rx charges, Aetna president named, Stewardship Health sold to Rural Healthcare, Oura buys data company Sparta Science, Brook Health-Linus Health remote cognitive assessment

November 8, 2024 | by

Cerebral settles its controlled substances distribution charges with DOJ and DEA. The $3,652,000 forfeited under the non-prosecution agreement (NPA) with the Department of Justice, Eastern District of NY, and the Drug Enforcement Agency acknowledges that Cerebral, between February 2021 and October 2022, had instituted internal measures to increase the prescriptions of controlled substances for ADHD such as Adderall, which are Schedule II drugs. The internal policies had the goal of boosting patient retention and, by extension, Cerebral’s revenue. “Today’s settlement holds Cerebral responsible for their failure to protect patients from the harms caused by the unnecessary or overprescribing of potentially-addictive ADHD medications. Cerebral’s exploitation of telemedicine flexibilities deceived patients who were legitimately seeking medical care, putting them at risk in exchange for profit,” said DEA Administrator Anne Milgram. 

There is an additional fine of $2,922,000 which Cerebral cannot pay at this time. It is being deferred for the term of the NPA (30 months) as long as Cerebral is in compliance with the NPA and waived at the conclusion, unless Cerebral is determined to be able to pay in part or full. If Cerebral violates the NPA, Cerebral can be prosecuted for any of the conduct that gave rise to the NPA and any newly discovered criminal activity. The DOJ-Eastern District release documents Cerebral’s violations.  Healthcare Dive

CVS Health reports mixed results, names a new Aetna president and CVS group president. Q3 revenue was $95.4 billion, up 6.3% versus prior year. Net income though fell to $71 million, versus $2.3 billion in prior year. The Aetna insurance unit was responsible for much of the reduction due to anticipated losses in Q4 2024 within the Medicare and individual exchange product lines. There were major miscalculations in Medicare Advantage utilization (higher than anticipated) with an increased medical loss ratio, plus lower payments for state Medicaid plan coverages. Release, Healthcare Dive

Named with the Q3 earnings were Aetna’s new president, Steve Nelson,  who will be expected to improve on this situation sooner, not later. He was previously the CEO of value-based primary care company ChenMed and CEO of UnitedHealthcare from 2016 to 2019. Also named as a new group president for CVS Caremark, CVS Pharmacy, and Health Care Delivery businesses is Prem Shah. He was previously EVP/president of Pharmacy and Consumer Wellness. Release

Stewardship Health closes sale out of bankruptcy. Practice group Stewardship Health was finally approved by the Massachusetts Health Policy Commission (HPC) for acquisition by Brady Health Buyer. This is an entity set up by private equity company Kinderhook Industries, LLC, on behalf of its existing investment, Nashville-based Rural Healthcare Group. The sale was originally submitted through the Texas Federal court handling the Steward Health bankruptcy and approved by the judge 22 August for a price of $245 million [TTA 16 Aug]. The practices have been rebranded as Revere Medical. Healthcare Finance

Oura buys Sparta Science. For health tracker ring Oura, it is its third acquisition in two years, following Proxy in 2023 and metabolic health developer Veri this past September. Sparta Science was acquired to bolster Oura’s enterprise offering, Oura Business and the Oura Teams platform. Sparta’s Trinsic platform tracks health vitals for enterprise clients collecting, analyzing, and delivering human health and performance information.  It will be integrated into Oura Teams which combines data from customer EMRs and other third-party data sources. The overall goal is to support population health through measuring and analyzing over 20 biometrics as factors in sleep, activity, readiness, stress, resilience, women’s health, and heart health. Oura Ring 4 was introduced last month. Oura will be sunsetting Sparta’s legacy force plates at the end of the year. Transaction cost nor financing were disclosed. Release, Mobihealthnews, TechCrunch

Brook Health partners with Linus Health for remote cognitive impairment assessments. Boston-based Linus Health, which has developed a series of digital cognitive assessment tools for Alzheimer’s and other dementias, has partnered with remote patient care software company Brook Health for a remote digital cognitive assessment tool that allows primary care physicians to screen and assess patients for mild cognitive impairments (MCI), sending them home with a treatment plan–all on the same day. It also provides support via a 24/7 remote clinical care team. The ability not only to diagnose MCI and initiate treatment are critical in supporting primary care physicians who generally do not have the tools or ability within their practices to perform this preventative screening. Release

News roundup: Owlet expands to EU, mPulse buys Zipari, New Mountain PE merges 3 payment integrity firms in $3B smush, Candid Health’s $29M raise, Oura buys Veri, Bloomer Tech’s cardio bra

September 18, 2024 | by

It’s a dogpile of catchup news.

Owlet announced that it’s expanding its European distribution of the Dream Sock. The new countries are Greece, Poland, the Czech Republic, Romania, Slovakia, Hungary and Bulgaria. It is currently, according to its website, available in France, Belgium, the Netherlands, and Luxembourg. It received its CE Mark certification in May. The Dream Sock is a non-prescription device that reports, for babies 1-13 months and 6 to 30 pounds, pulse rate, oxygen, wakings, and sleep trends in real-time via the Owlet Dream App. The app also allows alerts outside of range to be set. Owlet’s financials have improved substantially, though still in the loss column, as detailed in the Mobihealthnews article.

mPulse acquired Zipari for an undisclosed price. Both companies are in the healthcare ‘consumer experience (CX)’ segment which broadly includes using consumer information to ‘personalize health journeys’ that enhance the consumer experience for its health plans. Zipari is apparently more the back end of CX software solutions for insurers, third party administrators, and healthcare payers. There was no disclosure of sale price nor of transition of Zipari staff or the brand name. mPulse now covers 400+ leading healthcare organizations, including 29 of the 30 largest health plans in the country. mPulse is private and controlled by PSG. Release

Private equity company New Mountain Capital, in a $3 billion move, merges three payment integrity companies. New Mountain merged The Rawlings Group, Apixio’s Payment Integrity business, and Varis into a single $3 billion, 2,000 employee company around payment accuracy using various technologies. Rawlings is the largest with over 1,400 employees. It identifies third parties responsible for paying medical claims and is over 40 years old. Apixio provides administration, clinical, and financial program services for payers, previously part of Centene. The remainder of the company–its connected care platform and value-based care services–will be acquired by Datavant. Varis provides overpayment identification solutions including diagnosis-related groups (DRG) and ambulatory payment classification (APC) prospective payments. ‘Smushing’ makes sense if there is one controlling investor and the services dovetail with each other; from the description, the main company will be Rawlings. One hopes that they work out the ‘big bang’ details. FierceHealthcare

In a rare fairly large Series B funding, Candid Health scored $29 million. Candid is a revenue cycle automation and integration platform that simplifies billing for providers through API integrations with current system. The raise was led by 8VC with participation from existing investors First Round Capital, BoxGroup, and Y Combinator. Their total funding since 2019 is $47 million. Release

The Oura ring from Finland is not only still around, but is acquiring a metabolic health company, Veri. One of those ‘neat ideas’ which this Editor thought was gone is still around, having sold 2.5 million rings both direct and through Best Buy currently for $69.99 annually plus local tax, and now tracks over 20 biometrics around sleep, activity, heart health, and stress. Oura has had $148 million of funding since 2013, with its last big $100 million Series C back in the Palmy Days of 2021, with a small venture round in 2022. Veri is also Finnish, already partners with Oura, and has an app that via CGM (Abbott FreeStyle Libre) guides users to the right foods and habits for their bodies. Oura will be launching in conjunction with Veri a new feature, Meals, to help members to see how meal timing affects health metrics like sleep, stress, and recovery. Many of Veri’s team will be joining Oura, including their three founders. Release, Mobihealthnews 

An ECG that looks and wears like a bra. That is the device designed by Bloomer Tech, a MIT spinout. This wearable violates the “smaller and less obtrusive is better” dictum to collect more and more accurate data. The bra design places sensors all around a woman’s torso, the best position for heart data, in an accustomed way to collect data on heart function, lungs, hormones, and metabolism. It connects to an app that collects information and sends it to the wearer’s health provider. Bloomer Tech’s market will be women at risk or with heart disease, with the bra as a prescription item. Its first clinical trial was launched in March, funded by a $1.9 million grant from the National Institutes of Health. It comes in 12 sizes from 32B to 44C, Axios Boston

The two women founders, Chong Rodriguez and Aceil Halaby met in the MIT’s masters degree program, founding it in 2018. They named it after Amelia Bloomer, a 19th Century American suffragette, social reformer, publisher/writer, and advocate for less restrictive forms of dress than the whalebone corsets and tight dresses customary of the period. MedCityNews

En Vogue: smart clothing and wearables to track COVID spread and progression

July 29, 2020 | by

Wearables and smart clothing are having a ‘moment’ in the tracking of COVID symptoms and spread. After TTA noted Nanowear’s clinical trial with two major New York metro health systems last week, both POLITICO and Mobihealthnews catalogued additional trials and uses of innovative clothing and devices for detection: 

  • Apple watches and Fitbits
  • Oura rings (!) by the NBA to detect temperature and heart rate–at about $300 and up
  • Northwestern University and Shirley Ryan AbilityLab have developed a sensor that adheres in the visible dip at the base of the throat to monitor respiratory symptoms
  • Tufts University’s sweat sensor embedded in clothing, to analyze elements in perspiration such as electrolytes (sodium and ammonium ions), metabolites (lactate) and acidity (pH). NPJ Flexible Electronics
  • Paris-based Chronolife, which debuted the Nexkin smart T-shirt in December. It monitors heart rate, abdominal and thoracic breathing, body temperature, physical activity, and pulmonary impedance.

Part of the problem of wearable adoption is that without a specific ‘reason why’, wearables haven’t been all that compelling for the mainstream market beyond the trendy and pricey Apple Watch. Wearables have tried corporate wellness programs that almost give away the devices with the promise of lowering health costs long term. Venture funding (see the POLITICO chart) has been flowing into these companies for a decade. But in the eyes of many, wearables are a solution without a clear and compelling problem. COVID may resolve that.