This just in #2: Masimo board director Bob Chapek resigns

February 1, 2025 | by

Cleanup on Aisle 3! Another episode in the Continuing Masimo Drama is that Bob Chapek has resigned from their board of directors. His letter, dated 30 January, was standard and did not cite a reason for his departure, other than stating that his resignation did not reflect any disagreements with the company. It was attached to a Masimo filing with the SEC, as is required when there is a change in the board.

Mr. Chapek’s resignation from the board and the audit committee is effective as of the next Masimo annual shareholders meeting. That date is not yet set but is typically in June or during the summer. 

Mr. Chapek was appointed to his directorship one year ago in January 2024. He is the former CEO of the Walt Disney Company, a post he held from 2020 to 2022 after a steady rise in multiple executive positions from 1993. After a controversial tenure, he was ousted by the board with his predecessor, Bob Iger, replacing him as CEO.  

During the proxy fight in September that ended in the ouster of Joe Kiani, both Chapek and another director, Craig Reynolds, actively urged Quentin Koffey of Politan Capital to avoid a war by not offering Politan-backed board candidates. Koffey did so anyway and won decisively against two Kiani-backed candidates. In October, board members Wendy Lane and Timothy Scannell were added. New CEO Katie Szyman joins them as of 12 February.

The sole remaining director from pre-Politan control times is Craig Reynolds. Appointed after Bob Chapek in March 2024, Mr. Reynolds does not currently sit on any committees. Previous to retiring, he was COO of Respironics then Philips Respironics, and sits on boards of other medical device companies. Big hat tip to Strata-gee today.

Round 2: Masimo former CEO Kiani counters Masimo lawsuits in New York, Delaware (updated)

January 30, 2025 | by

As expected, Masimo’s former CEO has filed to dismiss two lawsuits brought against him by Masimo’s new management. These were filed in the US District Court for the Southern District of New York on 23 January and in Delaware Chancery Court on 17 January.

The Southern District New York lawsuit by medical device manufacturer Masimo alleges that Joe Kiani and RTW Investments, plus 10 individuals and associated RTW entities, formed a group that violated Federal securities laws by manipulating last year’s Annual Shareholder Meeting vote on directors’ seats through a secret ’empty voting’ scheme that acquired 19% of shares [TTA 15 Nov 2024]. Kiani and RTW did this without filing a Schedule 13D as a group. Masimo is requesting an injunction based on 1) their forming a group to secretly manipulate the shareholder vote and 2) that this purported group continues and will cause ‘actual and imminent injury’ to Masimo.

RTW was already and remains a significant shareholder–it is a $6.5 billion hedge fund. The Kiani filing claims that contacting RTW before the shareholder meeting was routine, as CEOs do all the time with shareholders. The claim that Kiani’s contact of RTW meant that they acted as a group is ‘untenable’ and goes against established practice and case law. Masimo, now controlled by Politan Capital Management, in their suit claims “actual and imminent injury” by this “group” requiring injunctive relief. However, the vote went against Kiani and his directors on 19 September 2024 ending their efforts. Kiani is seeking dismissal on the grounds that 1) there was and is no Kiani-RTW group thus no need for a Schedule 13D filing and 2) with the September vote, any prospect of injury is over and, with RTW’s reduced shareholdings, future harm is hypothetical and speculative.

Kiani resigned from Masimo on 19 September 2024, the day of the Annual Shareholders Meeting, “for good reason” after losing his board seat and control of the company to Politan. The new board placed him on indefinite leave, named an interim CEO, in October expanded the board by two directors, then formally terminated him on 24 October ‘for cause’, invalidating the terms of his latest $400 million severance agreement.

The SDNY filing requests dismissal and alternatively, transfer to the US District Court for the Central District of California. Both Masimo and Kiani reside in Orange County.

Kiani’s Delaware Chancery Court filing requests dismissal of Masimo’s charges against the severance agreement as filed in the improper venue. Alternatively, it should be transferred to the earlier Kiani lawsuit against Masimo filed on 19 September 2024–immediately after the shareholder meeting loss–in California State Court [TTA 15 Nov 2024]. Masimo is incorporated in Delaware.

At this point, there is no estimate of when either court will rule on these filings.

These filings are separate from the SEC investigation of the “empty voting” scheme claim and whether Kiani and RTW formed an insider group in the proxy fight [TTA 6 Dec 2024, hat tip Strata-gee], but cover much the same ground as the SDNY lawsuit.

Disclosure: This Editor received both filings and information from a strategic communications representative of Joe Kiani. The interpretations and summaries of the filings are your Editor’s. Mr. Kiani’s counsel’s statement is below:

“Politan continues to waste Masimo shareholder resources on a scorched-earth campaign to avoid paying Mr. Kiani what he is rightfully owed after delivering enormous value to shareholders and patients during his 35-year tenure at the helm of the company he founded in his garage. Immediately after being forced out of Masimo following Politan’s hostile takeover, Mr. Kiani anticipated that the Politan-led Board would try to withhold his severance benefits, and he brought a lawsuit in California to enforce his contract. As detailed in that complaint, Mr. Kiani has an unambiguous contractual right to the compensation he is seeking under his 10-year-old employment agreement, which was approved by shareholders in seven different votes and stemmed from a prior agreement entered into 30 years ago. The misplaced and meritless lawsuits subsequently filed by Masimo in Delaware and New York are part of a coordinated effort to circumvent Mr. Kiani’s lawsuit and evade jurisdiction in California, and they should be dismissed. We are confident that when these matters are fully litigated, the facts will demonstrate that Mr. Kiani is entitled to his severance compensation.”

Editor’s note: information on the SDNY filing has been revised after a closer reading of the contesting claims.

Masimo names new CEO, new board chair and vice chair. And confirms a fresh direction.

January 22, 2025 | by

After a dramatic 2024, Masimo settles in a new CEO and board. Joining from BD (Becton Dickinson) is Catherine (Katie) Szyman for the top spot and a board seat. With new board positions are interim CEO (since October and the resignation/ousting of Joe Kiani) and independent director Michelle Brennan as chairman of Masimo’s board and as vice chairman, lead independent director from Politan Capital Management, Quentin Koffey. The changes are effective on 12 February.

Ms. Szyman’s background in medical device and related is impressive, especially in joining a $1.5 billion company from a $6 billion one. She was briefly worldwide president of Advanced Patient Monitoring at BD after nine years at Edwards Lifesciences where she was corporate vice president and general manager, Critical Care, their unit for device and predictive analytics software. She is credited with Edwards obtaining the first AI clearance from the FDA for patient monitoring.  Edwards was acquired by BD last September. Prior to Edwards, she was at Medtronic for 24 years, rising from finance to president of their diabetes care unit. She has also held and still is on multiple board positions and is a Harvard MBA. According to the release and Ms. Brennan’s statement, Ms. Szyman will be “prioritizing our pipeline to focus on large opportunities, while developing a clear strategy for bringing our next generation patient monitoring platform to market”, which promises more professional monitoring products.

The double-down on the professional health side is backed by the makeup of the now nine-person board. Ms. Brennan is retired from a global leadership position at J&J. Tim Scannell and Bill Jellison both retired from Stryker as president and CFO respectively. Wendy Lane has extensive financial and investment background. Darlene Solomon was a chief technology officer and VP of Agilent Technologies in life science and chemical research. Strata-gee 21 October 2024. Holdovers from the Kiani era are former Disney CEO Bob Chapek and Craig Reynolds, a former COO of Philips Respironics.

With Ms. Szyman at the helm, one can easily predict that Masimo’s professional vital signs monitoring medical devices won’t stay concentrated in pulse oximetry and more on ‘large opportunities’, perhaps incorporating predictive analytics and AI. More will be changing at Masimo. Under the vague language of ‘alternatives’ and ‘strategic review’, Sound United will be sold, sooner rather than later as it will not be reported in their 2025 financials [TTA 17 Jan]. The release also confirms that the consumer healthcare business that encompasses smartwatches, fingertip pulse oximeter, a wearable thermometer, baby and infant monitors, and ‘hearables’ (the latter two with no product on the website), is on the block. Unless the consumer side can be developed, it’s too competitive. Politan is signaling wants to grow this investment big time.  A hat tip and bow to Ted of Strata-gee today for breaking this.

2024 earnings roundup, after a dramatic year: UnitedHealth Group and Masimo

January 17, 2025 | by

UnitedHealth Group’s annus horribilus closed out with a decent, but not up to earlier projections, financial report.

Having opened in February with the massive (and massively expensive) ransomware/hack of Change Healthcare, UHG didn’t have a lot of bright spots. Elevated utilization rates increased expenses; changes in Medicare Advantage reimbursements and the STAR ratings metholodogy changes reduced bonus payments.

Then, in the early, dim morning of their 4 December investor day in NYC, UnitedHealthcare’s CEO Brian Thompson was murdered while entering the New York Hilton Hotel. The manhunt and the controversy set off by the perpetrator’s so-called ‘manifesto’ exploded into a hurricane of severe public criticism on how plans process claims and treat members, a traditional and social media/online storm that only diminished around Christmas and the rise of other news. In literal fear for their lives, health plan executives took the lowest profiles they could manage. 

UHG’s earnings, while positive overall, reflected this uncertainty with lower Q4 revenue causing them to miss Street estimates. Share price fell over 6% today (Thursday). 

  • UHG’s Q4 revenues were $100.8 billion versus $94.4 billion in the prior year, up 6.8%. Profit of $5.5 billion was flat versus prior year. UHG’s 2024 revenues were $400.3 billion, 7.7% higher than 2023’s $371.6 billion. 
  • Health plan unit UnitedHealthcare’s 2024 revenues were $292 billion, up 6%, with operating earnings of $15.2 billion. US commercial members grew by 2.1 million.
  • Their 2024 medical cost ratio — the percentage of premiums spent on medical care — rose to 85.5%, far higher than 2023’s 83.2%, exceeding analysts’ projections of 84.96% and far above the targeted 80%.
  • Optum’s revenue, affected by the Change Healthcare hack and ransomware payments, still rose to $253 billion, up $26.3 billion or 12% versus prior year. The Optum Insight unit, which includes Change, had revenues of $18.8 billion, declining 1% because of the $867 million loss due to business disruption.

UHG release, FierceHealthcare, CNBC 

UHG also announced:

  • The Optum Rx unit will now pass through 100% of rebates negotiated with drugmakers to their clients–insurers, states and unions. This is up from 98% since 2% have preferred other rebate models. FierceHealthcare
  • UHG and Amedisys filed last week in the US District Court of Maryland to have the November Department of Justice suit dismissed. They cited that the DOJ did not adequately prove that the $3.3 billion acquisition would be anti-competitive. For one, the DOJ did not adequately define or provide detail on the geographic markets that would become be non-competitive. FierceHealthcare  They extended their deal deadline to the end of 2025 last month.
  • Change Healthcare stated yesterday that it has ‘substantially’ completed notifying affected consumers of their breach. Interestingly, if you use a search engine to try to find the breach notice, you’ll have a great deal of trouble–because the source code contains a hidden “noindex” code on the notice. ‘Noindex’ code tells search engines to ignore the web page–and has been there, apparently, since 20 November 2024. UHG has also not publicly disclosed a more exact number of those affected beyond the long-ago estimate of 100 million. TechCrunch   The state of Nebraska has sued UHG, Optum, and Change over the breach [TTA 19 Dec 2024] 

Masimo, ending a dramatic year of its own, now firmly in the control of Politan Capital Management despite flying lawsuits with former CEO Joe Kiani and an SEC investigation announced last month, issued its preliminary 2024 closing financials and their 2025 guidance. What’s hot–their consumer and professional medical devices, including smartwatches, that measure vital signs including pulse oximetry. What’s not–their audio business under Sound United, which is on the block.

  • 2024 healthcare revenue was up smartly by 9% to $1.395 billion. 
  • 2025 healthcare revenue is projected to increase 8-11% in the range of $1.5 billion to $1.53 billion. Non-GAAP operating profit is projected for 2025 at $398 million to $406 million.
  • Non-healthcare revenue (a/k/a Sound United) was $699 million. That declined 10% decline on a reported basis. 
  • Non-GAAP EPS for 2024 was $4.10. 

For 2025, Masimo is ending reporting for the Sound United business nor providing 2025 guidance since they are selling it. The only guidance they are giving is on the healthcare business. If one does the math–selling off Sound United will take out $700 million from their revenue. One more thing…updated results will be postponed until their investor call, delayed until Tuesday, 25 February. Mass Device, Masimo release

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. 

Masimo v. Politan goes into extra innings with two-month shareholder meeting delay, mucho maneuvering

July 17, 2024 | by

In the history of proxy battles and hostile takeovers, Masimo v. Politan may be one for the business and law school case histories. The latest moves by health tech monitoring (and sound) company Masimo are to sue–both metaphorically for extra time and literally in a Federal court.

  • Masimo postponed on Tuesday 16 July their shareholder meeting, originally scheduled for next week–Thursday 25 July–to Thursday 19 September. The revised proxy statement will be filed with the Securities and Exchange Commission (SEC). This not only allows shareholders additional time to review materials but also, as requested by Politan Capital Management, a later ‘record date’  (deadline for share ownership) of 12 August. 
  • The downside of the postponement is that any shareholders who have already voted their proxies must vote again. Downside #2:  in this Editor’s view, conceding this allows Politan to accumulate additional shares beyond their current 9%.
  • Another reason for the delay: in a California Federal court, Masimo has filed for an injunction that seeks to force Politan Capital to correct “material misstatements and omissions” in its proxy materials.
  • Masimo also alleges in the complaint that Quentin Koffey, Politan’s chief investment officer and the company’s representative on Masimo’s board of directors, has assisted Politan’s counsel in litigation against Masimo.

The fight on the Masimo board of directors for two open seats pits the Masimo slate of CEO Joe Kiani and outside candidate Christopher Chavez, against Politan’s Darlene Solomon and William Jellison. Politan already holds two seats and with a win of two additional seats will control the company. Two outside proxy advisors, ISS and Glass Lewis have recommended that Masimo shareholders support both Politan nominees. Glass Lewis in particular accuses Masimo and Kiani in a form of proxy manipulation called ’empty voting’ by a 9.9% shareholder named RTW, a $5.9 billion fund described by Joe Kiani on the RTW website as a decades-long ‘trusted partner.’

Countering this are multiple conditional resignations from managers to leadership that would be effective if Politan controls the company, which would constitute a pyrrhic victory.

The bone of contention started in 2022 with the tussle over Masimo’s $1 billion purchase of Sound United’s consumer audio business, which made their share price crater. Masimo announced last week [TTA 10 July] plans to sell a substantial portion of that consumer audio and healthcare business to a to-date unnamed investor. MedTech Dive, Strata-gee.com, Masimo release

A few days earlier, Strata-gee summarized Masimo’s preliminary financials for Q2 2024 as strong for the Healthcare division with revenues of $344 million, up 22% at $63 million or 22% versus $281 million in Q2 2023. But the Sound United unit sank these good results with a 13% decline in revenues to $152 million–a decline that has been fairly consistent. Masimo needs to find another investor or sell off Sound United.

Stay tuned!

Davids (AliveCor, Masimo) v. Goliath (Apple): the patent infringement game *not* over; Masimo’s messy proxy fight with Politan (updated)

April 4, 2024 | by

Apple’s legal department certainly hasn’t been maxing their relaxing this year, what with DOJ and pesky upstarts taking them to court. The big one keeping them busy is the US Department of Justice (DOJ) giving Apple a dose of its own medicine in filing an antitrust lawsuit against Apple for monopolizing smartphone markets [TTA 22 Mar]. Apple also continues to fight antitrust and intellectual property (patent) infringement in Federal district courts, the US Patent and Trademark Office (USPTO)’s Patent Trial and Appeal Board (PTAB), and the International Trade Commission (ITC), brought by ECG reader AliveCor and Masimo‘s pulse oximetry reader and software. Masimo succeeded in disrupting Apple’s sales of the Watch Series 9 and Ultra 2 right at the Christmas holiday sales season [TTA 28 Dec 23], forcing Apple to disable the pulse ox feature [TTA 18 Jan] in future imports in one of Apple’s few losses.

The DOJ lawsuit does not address Apple’s copycat activities against either AliveCor or Masimo. Both companies worked with Apple.  AliveCor integrated its early KardiaBand (2016) with early Apple Watches, only to have cardiac readings integrated into the Apple Watch two years later (2018). Masimo and Apple were in mid-stages of a 2021 partnership that Apple broke off, but Masimo then accused Apple of hiring its employees working on the project [TTA 27 Oct 23].

AliveCor hasn’t been quite so successful as Masimo in challenging Apple, but it has been fighting Apple as a David v Goliath on multiple fronts for years. In February, AliveCor lost a round in the US District Court for the Northern District of California on the heart rate algorithm changes Apple made in 2018 that made their SmartRhythm app provided to Apple non-functional. That decision reportedly is still under seal. However, AliveCor has multiple Federal patent infringement lawsuits going against Apple. The differing rulings of the PTAB against and an ITC ruling finding for AliveCor went to the Federal circuit court level. According to CEO Priya Abani in an excellent MedCityNews article, AliveCor expects to see action on this by summer. Abani also scored Apple’s annoying (understatement) habit of IP infringement and broken partnerships. “Apple’s vast resources allow them to squash small innovators,” she said. “They have more lobbyists and lawyers on their payroll than we have employees.”

AliveCor and Masimo aren’t the only ones battling Apple. In the MedCityNews article, NYU Langone cardiologist Joseph Wiesel has sued Apple on patent infringement on his atrial fibrillation app (2021), also involving the USPTO, an action that is wending its way through courts now. While this Editor has long been mystified by Apple’s continued combativeness against small innovative companies when certainly it would be cheaper (and more respectful) to pay a license or settlement, FTA in MedCityNews citing Dr. Wiesel’s attorney Andrew Bochner, “Apple is known among the legal community to have a certain modus operandi: they do “not entertain any sort of real settlement discussions” and instead battle “tooth and nail” in order to wear out their rivals with fewer resources.” The shocker here is that Apple, in this case, stated to Bochner that it filed “roughly 10%” of the USPTO’s total post-grant proceedings, which take place after a patent has been granted and generally challenge a patent’s validity. One wonders whether DOJ will even take note of this anticompetitive activity involving Apple Watches in its blunderbuss action on iPhones and the US smartphone market.

Masimo itself is being roiled by a shareholder proxy fight over who controls the company. Masimo is a publicly-traded (Nasdaq) electronics company that is primarily focused on health devices, including smartwatches, and data software monitoring for the clinical and consumer markets, notably pulse oximetry.

  • Last week, activist investor group Politan Capital Management accused CEO Joe Kiani and others of mismanagement, announcing the nomination of two more independent candidates from Politan for the board of directors. Politan already has two seats on the BOD and a win here would give Politan majority control.
  • The bone being picked is Masimo’s February 2022 $1 billion acquisition of consumer audio brand Sound United (Polk, Marantz, Denon, and others) which didn’t mesh well with their health tech business. This drove down the share price from that time, with Politan subsequently swooping in and picking up shares, successfully winning two BOD seats in 2023.
  • Masimo announced on 22 March that their consumer ‘hearables’ division would be spun off.
  • Politan’s response on 26 March was to object to the spinoff on governance grounds, nominate the additional directors, and heavily criticize CEO Kiani’s ‘control and influence’. Strata-gee 26 March

Yesterday’s follow-up is that Kiani and Masimo are rebutting all of Politan’s claims and more. Strata-gee 2 April, Masimo release 1 April, MedTechDive

This Editor notes that products in their personal monitoring line combine both audio and vital signs monitoring–the (out of stock) Stork, that appears with its baby sock to be directly competitive with Owlet’s Dream Sock.

This will all play out at the yet-to-be-announced 2024 Shareholders Meeting. This Editor notes that Politan picks its battles and is rarely defeated. Our Readers may recall that Politan swooped in on Centene Corporation in late 2021, and in short order ousted long-time directors, added new friendly ones, shook up management and forcibly retired 25+ year CEO Michael Neidorff (since deceased). Masimo’s victory over Apple may go down as either not mattering much–or that Apple will be fighting a much deeper-pocketed backer that knows how to win.

Update: It gets stranger. Masimo’s Consumer (audio) division’s brand president and general manager Joel Sietsema announced on Tuesday that he is no longer with the company. He came to Masimo through the Sound United acquisition being with them for a decade. He announced his departure on LinkedIn. It was apparently a mutual decision that preceded the current turmoil. Strata-gee 4 April

News, deals, rumors roundup: Cerner’s DOD and VA go-lives, Akili’s ADHD therapy SPACs, Talkiatry’s $37M raise, Alto sings a $200M supper–and the Cigna-Centene rumors don’t stop

January 28, 2022 | by

While Cerner’s acquisition by Oracle is winding its way through regulatory approvals, their EHR implementations are moving forward through both the Military Health System (Department of Defense) and the Department of Veterans Affairs (VA).

  • Within the MHS, Brooke Army Medical Center and Wilford Hall Ambulatory Surgical Center, both in the San Antonio (Texas) Market, went live with MHS GENESIS on 22 January. The change most visible to patients is the transition from TRICARE Online to the MHS GENESIS Patient Portal which enables 24/7 access for visit notes, secure messaging, test results, appointment scheduling, and online prescription renewal. MHS covers military retirees, active military, and family beneficiaries. According to the MHS’s website, the goal this year is to get to halfway–to implement MHS GENESIS in more than half of all military hospitals and clinics. It’s been taking place since 2017 and, in true military fashion, it’s planned in waves. Coming up are Naval Medical Center Camp Lejeune in South Carolina on 19 March and William Beaumont Army Medical Center in El Paso in summer.
  • VA is moving far more slowly, just getting to its second hospital. The Columbus VA go-live has been pushed back from 5 March to 30 April, citing training slowdowns due to a spike in staff COVID cases. Walla Walla, Washington is set for after Columbus, but the date is to be confirmed. The first, failed implementation at Spokane’s Mann-Grandstaff VA Medical Center in late 2020 was the subject of Federal hearings and a complete redo in VA’s plans and procedures in cutting over from VistA to Cerner Millenium. TTA 28 July and previous. Federal News Network

Akili Interactive, which has developed tech-driven, game-based cognitive therapies for ADHD and other psychiatric and neurological conditions, has gone public through a SPAC via a merger with Social Capital Suvretta Holdings Corp. I, The transaction is expected to close in mid-2022. Akili will be listed on the Nasdaq stock market under the new ticker symbol AKLI.

The SPAC is expected to provide up to $412 million in gross cash proceeds and value the company at over $1 billion. Investors in the $162 million PIPE are Suvretta Capital Management’s Averill strategy, Apeiron Investment Group, Temasek, co-founder PureTech Health, Polaris Partners, Evidity Health Capital, JAZZ Venture Partners, and Omidyar Technology Ventures. The funds raised will support the commercial debut of EndeavorRx, a FDA-cleared and CE-marked prescription digital therapeutic for pediatric ADHD. The technology is termed the Selective Stimulus Management Engine (SSME) and will be rolled out for ADHD, ASD, MS, and MDD treatment.

TTA noted Akili last year in a trial of AKL-T01 at several hospitals for treatment of long-COVID-related cognition problems. Unfortunately, the writing in their SPAC release made this Editor feel like she needed a few treatments.

Mentalhealthtech (psychtech?) continues to attract funding. Psychiatric care startup Talkiatry topped off its July $20 million raise with an additional $17 million from Left Lane Capital for a $37 million Series A financing round. CityMD founder Dr. Richard Park, Sikwoo Capital Partners, and Relevance Ventures also participated. Talkiatry uses an online assessment for a preliminary diagnosis and then matches you with a participating psychiatrist.  It is in-network with payers such as Cigna, Aetna, UnitedHealthcare (Oxford Health Plan), Oscar, and Humana. Funding will be used to expand beyond NYC. Mobihealthnews

Digital pharmacy is also hot. Alto, which promises same-day filling and courier delivery, raised a $200 million Series E led by Softbank Vision Fund. Their total to date is over $550 million. Alto serves selected areas mainly in California, Nevada, Texas, and NYC (Manhattan, Queens, Brooklyn). Competitors Capsule had another raise of $300 million in April for a total of $570 million and Medly raised a $100 million Series B in 2020. Mobihealthnews

In the wake turbulence of Centene’s dramatic management shakeup last month [TTA 18 Dec], rumors continue to surface that insurer Cigna is interested in acquiring all, or possibly part, of Centene. Bloomberg News in publishing its article earlier this week cited ‘people familiar with the matter’ said that talks took place last year, but that they are not ongoing. Seeking Alpha picked this up, adding market activity boosting Centene. Perhaps the disclosure and the ‘denials’ align with what this Editor has heard–that it’s very much ongoing but under wraps.

A Centene buy makes sense, but only with Cigna. While Cigna is almost double the market value of Centene, it does not have the sprawling business model the latter has, nor do their businesses overlap much. However, some divestiture would be needed to do a deal, given the constrained regulatory environment in the US on the Federal and state levels. Any insurer merger is seen as anti-competitive, unless it is an acquisition of a smaller, struggling plan. 

It certainly would vault Cigna into the top rank of insurers with non-Centene branded exchange, Medicare Advantage and Medicaid plans, a provider network, an established MSO, and other lines of business including Magellan behavioral health management. Cigna might also value Centene’s international holdings, such as private hospitals Circle Health in the UK and Ribera in Spain. A sale would also create a quick and profitable ROI for Politan Capital Management, the activist investor company that initiated the retirement of 25 year CEO Michael Neidorff last month, rather than managing and reorganizing the sprawl of Centene’s businesses to make it more profitable.