Ad tracker action heats up: Congress questions DTC telehealth companies on sensitive patient health data sent to advertisers

It looks like telemental and addiction counseling telehealth sites are routinely sending patient information to media ad platforms–Google, Facebook (Meta), TikTok, Microsoft, Snapchat, Bing, Pinterest, and Twitter–to serve ads back to patients. Four Senators sent letters this week to three telehealth companies treating patients: Monument (alcohol addiction), Workit Health (opioid and alcohol), and Cerebral (ADHD and other mental health). The letters questioned the use of ad trackers (pixels) such as Meta Pixel that collect information from telehealth sites and then use the information to send users targeted ads based on that information. Except that this is not about curtains or shoes, but medical treatment. 

Kicking this off was The Markup/STAT study in December, examining 50 telehealth websites.

  • 49 of 50 websites shared user/patient tracking data to advertising platforms. This captured data as routine as URLs and IPs, and as extensive as name, email, phone, questionnaire answers, when users created accounts, and cart behavior, such as a prescription medication or treatment plan.
  • 35 were found by the study to have trackers sending individually identifying information to at least one media platform that included names, email addresses, and phone numbers
  • 25 had at least one tracker that indicated when users added prescription drugs and other items to their cart or when they checked out with a subscription for a treatment plan
  • 13 had at least one tracker that collected patients’ answers to medical questions

Ad trackers then send that information to platforms, which then serve targeted ads back to the telehealth companies’ users and patients. For the telehealth companies, the data is monetized. Because ads are served, there is a revenue stream back to the telehealth companies. 

From the senators’ letter: “This data is extremely personal, and it can be used to target advertisements for services that may be unnecessary or potentially harmful physically, psychologically, or emotionally.” Markup/STAT

Users may well assume that because the telehealth companies eventually connect them to a provider covered by HIPAA, or sends them a prescription from a provider, such as migraine treatment, that their data is protected along the entire journey. That assumption has now been demonstrated to be incorrect. This included major, heavily advertised DTC providers such as Lemonaid, Keeps, Hims & Hers, Talkspace, and Roman (Ro). Many of them are now examining their pixel policies.

The December article linked above has all 50 companies and what information they found was sent to ad platforms. The only website that did not was Amazon Clinic–brand new and of course not wanting to share their information outside of Amazon.

This follows on the FTC’s still to be approved by a Federal court, but apparently successful $1.5 million action against med discounter GoodRx using the never-used-before Health Breach Notification Rule, enacted in 2009 [TTA 3 Feb]. 

Why this is significant: first, the FTC action using an old rule, followed by the senators targeting three prominent (and in Cerebral’s case, beleaguered) telehealth companies, and the red meat documentation provided by The Markup/STAT study provide grounds for endless follow-up by not only Congress, but also private and public (DOJ) litigation. Stay tuned.

Week-end roundup of not-good news: Teladoc’s Q2 $3B net loss, shares down 24%; Humana, Centene, Molina reorg and downscale; layoffs at Included Health, Capsule, Noom, Kry/Livi, Babylon Health, more (updated)

Teladoc continues to be buffeted by wake turbulence from the Livongo acquisition. The company took a $3 billion goodwill impairment charge in Q2, adding to the $6.3 billion impairment charge in Q1. The total impairment of $9.3 billion was the bulk of the first half loss of nearly $10 billion. While their revenue of $592.4 million exceeded analyst projections of $588 million, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $46.7 million were barely up from projections and were down from $66.8 million year prior. Losses per share mounted to $19.22, versus $0.86 in Q2 2021.

Another weak spot is their online therapy service, BetterHelp, which in the US is pursuing a substantial TV campaign. CEO Jason Gorevic in the earnings release pointed out competitors buying the business at low margins and consumer spending pullbacks. Teladoc’s forward projections are bolstered by Primary360 and Chronic Care Complete. Projected revenue for Q3 is $600 million to $620 million. Shares on Thursday took a 24% hit, adding to the over 50% YTD drop misery. At best, Teladoc will muddle through the remainder of the year, if they are lucky. MarketWatch, Mobihealthnews, FierceHealthcare

Health plans are also presenting a mixed picture. 

  • Humana announced a healthy earnings picture for the quarter and YTD. It earned $696 million in profit for Q2, up nearly 20% year over year. For first half, Humana earned $1.6 billion, an increase of 14.8% from 2021’s $1.4 billion. Cited were growth in their primary care clinics, Medicaid membership, and investment in Medicare Advantage. Earnings surpassed Wall Street projections and Humana increased its guidance to $24.75 in earnings per share. At the same time, they announced a reorganization of its operating units that separates their insurance services (retail health plans and related) and CenterWell for healthcare services including home health. Some key executives will be departing, including the current head of retail health plans who will stay until early 2023, ending a 30 year Humana career. FierceHealthcare, Healthcare Dive
  • Under new leadership, Centene posted a Q2 loss of $172 million which in reality was a significant improvement over Q2 2021’s $535 million and looked on favorably by analysts.
    • Their ‘value creation plan’ has sold off its two specialty pharmacy operations to multiple investors, using third-party vendors in future, and agreed this week to sell its international holdings in Spain and Central Europe — Ribera Salud, Torrejón Salud, and Pro Diagnostics Group — to Vivalto Santé, France’s third-largest private hospital company.
    • Medicaid, their largest business line, has been growing by 7%.
    • Centene is continuing to divest much of its considerable owned and leased real estate holdings, which marks a radical change from the former and now late CEO’s* ‘edifice complex’ to house his ‘cubie culture’. As a result, it is taking a $1.45 billion impairment charge.  Healthcare Dive. [* Michael Neidorff passed away on 7 April, after 25 years as CEO, a record which undoubtedly will never be matched at a health plan.)
    • A cloud in this picture: Centene’s important Medicare Advantage CMS Star quality ratings for 2023 will be “disappointing” which was attributed to the WellCare acquisition (accounting for most of the MA plans), two different operating models between the companies, and the sudden transition to a remote workforce. For plans, WellCare operated on a centralized model, Centene on a decentralized one, and the new management now seems to prefer the former. (Disclosure: your Editor worked over two years for WellCare in marketing, but not in MA.) Healthcare Dive
  • One of the few ‘pure’ health plans without a services division, Molina Healthcare, is also going the real estate divestment route and going full virtual for its workforce. Their real estate holdings will be scaled down by about two-thirds for both owned and leased buildings. Molina does business in 19 states and owns or leases space across the US. Net income for the second quarter increased 34% to $248 million on higher revenue of $8 billion. Healthcare Dive

Many of last year’s fast-growing health tech companies are scaling back in the past two months as fast as they grew in last year’s hothouse–and sharing the trajectory of other tech companies as well as telehealth as VCs, PEs, and shareholders are saying ‘where’s the money?’. 

  • Included Health, the virtual health company created from the merger of Grand Rounds and Doctor on Demand plus the later acquisition of care concierge Included Health, rebranding under that name, has cut staff by 6%. The two main companies continued to operate separately as their markets and accounts were very different: Grand Rounds for second opinion services for employees, and Doctor on Demand for about 3 million telehealth consults in first half 2020. As Readers know, the entire telehealth area is now settling down to a steady but not inflated level–and competition is incredibly fierce. FierceHealthcare
  • Unicorns backed by big sports figures aren’t immune either. Whoop, a Boston-based wearable fitness tech startup with a valuation of $3.6 billion, is laying off 15% of its staff. (Link above)
  • Digital pharmacy/telemedicine Capsule is releasing 13% of its over 900 member staff, putting a distinct damper on the already depressed NYC Silicon Alley.  FierceHealthcare also notes layoffs at weight loss program Calibrate (24%), the $7 billion valued Ro for telehealth for everything from hair loss to fertility (18%), Cedar in healthcare payments (24%), and constantly advertising Noom weight loss (495 people). Updated: Calibrate’s 150-person layoff was reported as particularly brutally handled with employees. Many were newly hired the previous week, given 30 minutes notice of a two-minute webinar notice, then their laptops were wiped. Given that the company makes much of its empathy in weight loss, facilitating prescription of GLP-1 along with virtual coaching, for a hefty price of course. HISTalk 8/3/22
  • Buried in their list are layoffs at Stockholm-based Kry, better known as Livi in the UK, US, and France, with 100 employees (10%).
  • Layoffs.fyi, a tracker, also lists Babylon Health as this month planning redundancies of 100 people of its current 2,500 in their bid to save $100 million in Q3. Bloomberg

News and deals roundup: AHA opposes Optum buy of Change Healthcare; big raises by Komodo Health, Evidation Health, Ro’s $500M; Appriss acquires PatientPing

Sometimes $13bn Mega Deals run into powerful opposition. The nearly 5,000 member American Hospital Association (AHA) is opposing UnitedHealth Group’s Optum‘s acquisition of software/analytics/revenue cycle management (RCM) company Change Healthcare. The AHA is urging that the Antitrust Division of the Department of Justice (DOJ) review it on anti-competitive grounds. Their position is that the OptumInsight integration of Change, planned for Q2, will drastically reduce competition for health care information technology (IT) services to hospitals and other health care providers, driving up costs to hospitals and patients. Optum is already one of the largest in this sector. It would also shift data from a third-party company to a subsidiary of the US’ largest payer. Change is the largest independent provider of health IT services for payments and RCM. Though substantial divestitures are part of the deal, the AHA opposition may kick off the same from other healthcare groups and successfully force DOJ to take action. FierceHealthcare, AHA letter to DOJ (PDF link).

Dizzy Digital Health Deals Continue This Week. Data analytics companies haven’t been as hot as other areas of digital health closer to telehealth and behavioral health, but Komodo Health just completed a big Series E of $220 million. This follows their snack-sized January Series D of $44 million (Crunchbase). Komodo feeds their 325 million patient encounter database drawn from EHR, pharma, lab, and government data into their proprietary software for analytics to drive better health outcomes across therapeutic areas. Their primary markets are life sciences and pharma for R&D, clinical trials, and medical affairs. The Series E was led by Tiger Global Management, which earlier this month invested in Tyto Care and Dispatch Health [TTA 4 March], with Casdin Capital plus existing investors ICONIQ Growth, Andreessen Horowitz, and SVB Capital. Release 

Evidation Health, another data aggregation and analytics company, raised $153 million in a Series E led by OMERS Growth Equity and Kaiser Permanente Group Trust for a total funding since 2012 of $259 million. This will be used for building out their virtual health analytics and research platform, Achievement. Release

In direct-to-consumer healthcare, integration gets tighter. For those who can stand their tacky commercials for Roman, you’ll be seeing many more of them because parent DTC/telehealth company Ro just raised $500 million in a Series D round, led by General Catalyst, FirstMark Capital, and TQ Ventures. The intent of co-founder Zachariah Reitano is to combine a nationwide telemedicine, pharmacy distribution, and in-home care network. Their total funding since 2017 is $876 million. According to the TechCrunch article, Ro is building out a patient-centric ‘vertical optimization’ model with 10 pharmacies scheduled for 2021 and the ability to provide 500 common drugs at $5 per month. Earlier this year, Ro acquired Workpath, a software platform that enables healthcare companies to offer on-demand, in-home care, and diagnostic services. Look for Ro to make another acquisition or two this year to bolster their telehealth capabilities. Release

PatientPing, a care coordination software that connects providers to create continuity of patient care to notify them of patient events, is in an agreement to be acquired by Appriss Health, a 25-year-old SaaS software company primarily known for behavioral health care coordination and data analytics solutions to identify and mitigate substance use disorders. The combined company will cover 1 million professionals, 2,500 hospitals, 7,500 post-acute facilities, 25,000 pharmacies including every national pharmacy chain, and 43 state governments. Terms of the transaction were not disclosed, nor valuation or management transition, but closing is expected in Q2. Release