Healthcare ad/patient ed network PatientPoint combining with once-hot Outcome Health

Can’t retreat from advertising in a doctor’s office, at least in the US. Point of care ad/patient education ad network giant PatientPoint is combining with one-time unicorn Outcome Health. The combined company, called PatientPoint Health Technologies, will operate under the PatientPoint brand. The transaction is effective immediately and the company will be headquartered in Cincinnati. Financials are not disclosed, but claimed to reach 150,000 providers and 750 million patient visits a year.

Management of the combined company, and all the senior leadership, is from PatientPoint: CEO Mike Collette, Chief Client Officer Linda Ruschau, CFO Pat O’Brien, and Chief Provider Officer Chris Martini. The only two carry-overs from Outcome Health mentioned in the announcement are tech executives Glenn Keighley and Sean Barden. CEO Matt McNally and COO Nandini Ramani, who stabilized the company after Outcome’s 2017 advertiser fraud scandal, are thanked but not remaining with the company. The Outcome Health website has no leadership page and popups on every page announcing the new company. 

PatientPoint is now majority-owned by a group of investors, including funds managed by L Catterton and Littlejohn & Co., LLC. Both funds also backed Outcome Health, so one can assume their role in engineering the combination; the word ‘acquisition’ is nowhere to be found.

One-time $5.5bn unicorn Outcome Health lost its horn, rainbow sparkle, and its Chicago high-rise office building in autumn 2017 when Big Pharma/Biotech companies like Pfizer, Sanofi SA, and Biogen Inc. discovered that their advertising exposure was wildly inflated, affecting tens of millions in ad revenue, embarrassing investors like Goldman Sachs and Alphabet. By 2019, their principals were in Federal District Court in Chicago: former Chief Executive Rishi Shah, former President Shradha Agarwal, and former executives Brad Purdy (COO/CFO), and Executive VP Ashik Desai. Mr. Desai cooperated with the prosecution, leaving the rest to their tender mercies. The trial, now classified as a $1bn fraud, is still pending. PatientPoint release, MM&M, Chicago Tribune. TTA’s back file on Outcome Health here.

2017’s transition in digital health funding: is it maturity or a reconsideration?

Rock Health’s topline for 2017 digital health funding is impressively upbeat, casting it as “the end of the beginning in digital health, the start of a new era with new challenges”. Digging into it, there is a continued slowing that Rock Health itself predicted back in their 3rd Quarter report [TTA 3 Oct 17]. It seems that the big did get bigger, but if you weren’t on the train in 2016 or prior, 2017 wasn’t the year you left the station. Their findings bear this out, keeping in mind that their tracking is for US companies with deals over $2 million in value, which excludes much of the action from young and international companies:

  • No digital health IPOs this year, in a weak year in general for IPOs
  • For the companies already in public markets, they outperformed the S&P 500 31 percent to 19 percent
  • Average deals hit an all-time high of $16.7M ($5.8 bn over 345 deals) 
  • Big money went to better-developed, more mature companies like Outcome Health and Peloton exercise equipment at $500 million and $325 million. Rock Health duly notes Outcome Health’s troubles since. (To this Editor, Peloton is not a digital health company despite its glitzy overlay of video and exercise community.)  
  • Seven $100 million + mega-deals front-loaded in the first half of the year. Second half’s sole big deal was genetic testing and data marketer 23andme. The dominant category of business? Consumer health information represented by Outcome, 23andme, PatientPoint, PatientsLikeMe, and ShareCare, most with a B2B2C model.
  • Looking at deals by stage, not surprisingly the funding at D and later rounds soared to an average size of $74 million (from 2016’s $46 million). Seed and A rounds’ average funding at $7 million, while the majority, hasn’t varied much since 2011. Series B funding was also flat at $17 million on average.
  • Exits continued to be weak, indicating the reality of healthcare investing being long haul. M&A deals declined for the second straight year to 119–18 percent fewer than 2016 and 36 percent fewer than 2015

Also Modern Healthcare.

This Editor’s opinion? One damper on 2017 was the $900 million credulously blown on Theranos. Call it the Theranos Effect.

As usual we will look at StartUp Health‘s always numerically bigger report after release, but this Editor’s bet is that it won’t be ‘crazy’ like earlier in 2017. 

‘Record-shattering’ Q2 for digital health deals: Rock Health’s volte-face

In a pirouette worthy of Nureyev in his prime, Rock Health’s latest Digital Health Funding review for Q2 and the first half of 2017 bangs the drum loudly. With $3.5 bn invested in 188 digital health companies, it’s a record in their tracking. (∗See below for their parameters, which focus on larger fundings and omit others by type.) Q2 reversed the muddling results of Q1 [TTA 11 April] and then some. If the torrid pace is maintained and the market doesn’t take a pratfall, this year will easily surpass 2016’s full year venture funding at $4.3 bn and 304 investments.

Looking at trends, the average deal size has ballooned to $18.7 million from the 2015-16 range of $14 million. Seven $100 million+ deals led the way: Outcome Health, Peloton, Modernizing Medicine, PatientPoint, Alignment Healthcare, PatientsLikeMe, and ShareCare. Of these, three are consumer health information (Outcome, PatientPoint, ShareCare), with PatientsLikeMe closely related with a patient community focus; as the lead category of investment overall, there’s now gold in consumer health. All seven businesses are located outside of Silicon Valley, a refreshing change. A surprise is Modernizing Medicine in the settled (we thought) EHR-clinical workflow category. There’s also an interesting analysis of the shift in top categories from last year to this, which takes out the $100 million+ deals (click to enlarge): [grow_thumb image=”https://telecareaware.com/wp-content/uploads/2017/07/Top-Funded-Categories-Midyear-Funding-Report-2017-1200×744.png” thumb_width=”200″ /]

Other changes from the usual: no IPOs and a slowing pace of M&A: 58 this year versus first half 2016’s 87 and full year 146. Their public company index is brighter, with positive gains in first half led by Teladoc (up 110 percent YTD), Care.com (up 80 percent), and consulting favorite Evolent Health (up 70 percent–with United Healthcare’s acquisition of The Advisory Board’s healthcare practice, can an acquisition be far away?). Remaining in the doldrums are NantHealth, Fitbit, and Castlight Health. Rock Health Digital Funding Review First Half 2017

Soon up will be StartUp Health’s first half analysis, which takes a different cut at the companies and looks at the balance of deals by funding series.

∗ Rock Health tracks deals over $2 million in value from venture capital, excluding government and grant funding. They omit non-US deals, even if heavily US funded; healthcare services companies (Oscar), biotech/diagnostic companies (GRAIL), and software companies not solely focused on healthcare (Zenefits), but include fitness companies like Peloton. 

Dr. Topol in the AT&T house: a reboot of ForHealth?

HIMSS14 will tell. The big news that kicked off this snow-bound week in large parts of the US was Dr. Eric Topol joining Dallas, Texas-based AT&T ForHealth as Chief Medical Advisor. Well-known for his personality and evangelism of all things mHealthy, certainly Dr. Topol lends a certain star power to Big Blue’s efforts in this area–a shine that went completely dark in 2013 after a promising start in 2011 and strong partnering moves in 2012 (Alere and WellDoc diabetes management TTA 10 Aug 12VRI monitoring in May). The quietude of 2013 deserves a closer look. Dr. Geeta Nayyar joined with fanfare in September 2011 as Chief Medical Information Officer and departed exactly two years later to join engagement company PatientPoint with the same title. ForHealth made no waves at International CES save for being an example in the controversial ‘sponsored data’ plan announcement (GeekWire). Even finding ForHealth on the AT&T website is not easy. It is buried under ‘Business>>Enterprise Business‘ and then in a dogpile of footer links as ‘Healthcare Solutions‘–not ForHealth. In marketing, this is a state usually termed ‘dead in the water.’ The fact that Dr. Topol is remaining as Chief Academic Officer at Scripps Health also indicates that he is no direct replacement for Dr. Nayyar, despite being cited by AT&T SVP Chris Hill as a “change agent” who will help “drive our competitive strategy”. We’ll see if HIMSS14 on 23-27 February where AT&T will be exhibiting and their subsequent activity marks a genuine reboot for ForHealth, putting Dr. Topol’s impressive abilities to work beyond a twinkle. AT&T press release, MedCityNews article