TTA’s Blooming Spring 5: Hinge Health’s IPO, 23andMe bought by Regeneron, sans Lemonaid, WeightWatchers’ future, debuts of Smarter Technologies and Fuze Health, VA EHR update, more!

May 23, 2025 | by

 

23 May 2025

The major news this week was the Hinge Health IPO, the first for digital health in two years–but the downside was that it was at a lower valuation. Denouements abounded with most 23andMe genetic assets bought by Regeneron, without a drink of Lemonaid. WeightWatchers’ time may have passed, new heads for Calibrate and Oak Street, and two more ‘arranged marriages’, Smarter Technologies and Fuze Health. An update on the VA EHRM in the budget. Masimo’s recovering, as is Ted of Strata-gee. 

Remember our soldiers, sailors, airmen, and Marines who have passed on this Memorial Day. Our Monday newsletter will be on Tuesday.

News roundup 22 May: an inflight ‘save’ and AliveCor’s KardiaMobile, rolling out the VA/Oracle EHR in ‘waves’, Fuze Health formed from LetsGetChecked/Truepill, hacking and ransomware 92% of PHI data breaches (A renaming of a 2024 ‘arranged marriage’–can it be saved?)

News roundup: Hinge Health public @$32/share, lower valuation. Is WeightWatchers game over? Calibrate replaces CEO, new prez for Oak Street, NMC gets ‘Smarter’ rolling up 3 portfolio companies, another splash of investor ‘cold water’ (The first health tech IPO in 2 years and ‘smushing’ when they can’t)

Update: Masimo’s website status and an analysis of the Sound United sale (Getting up and running post-attack, but what happened?)

23andMe sold to Regeneron for $256M in court-supervised bankruptcy, sans Lemonaid. And is it worth it? (We come up with a number, it’s likely)

From last week: UnitedHealth Group changed out CEOs suddenly. The new one is a surprising ‘blast from the profitable past’ but that didn’t stop Mr. Market from taking the stock down down down. Another blast involves Elizabeth Holmes’ partner Billy Evans fronting a diagnostic testing- in-a-box startup.”Surprise, surprise!” No surprise that Holmes lost her appeal of an appeal–nor Omada Health filing for an IPO. Unfortunately, our investigator on all things Masimo met his own surprise walking on a sunny day–fortunately, Ted’s on the mend. More about BCIs with Apple integration, a chronic pain management startup, Parkinson’s data, two good raises, and what payers pay to keep their execs safe.

Short takes: Synchron BCI integrates with Apple devices, Shields Health partners with Duke on specialty pharmacy, raises for Cohere Health, Olio (More BCI action with Apple getting into it)

Theranos’ revenge? Holmes’ partner Billy Evans founds a startup for diagnostic testing, denies it is ‘Theranos 2.0’; Holmes loses Federal rehearing appeal. (Is Holmes advising long distance? Letters from a Texas Jail?)

News roundup: Omada Health files for IPO, UPMC-Redesign partner on chronic pain management, OK and PA AGs warn 23andMe users to delete data, Verily to build Parkinson’s dataset, what payers paid for exec security (Omada follows Hinge. But the last is surprising–between a lot and a little)

This just in: UnitedHealth Group CEO Andrew Witty steps down immediately, replaced by former CEO Stephen Hemsley (updated 15 May) (UHG may change out CEOs, but continues to be hammered by Mr. Market)

Best wishes to Strata-gee’s Ted Green on a fast recovery! (Ted, our ace Masimo investigator, was put rather suddenly in a bad place…use your eyes when you drive!)

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Update: Masimo’s website status and an analysis of the Sound United sale

May 22, 2025 | by

Things are apparently a lot more together for Masimo online. Their website structure has settled down since their cyberattack at the end of April brought down their websites, then by 6 and 13 May, a confusing and partial restoration [TTA 7 May]:

  • A new Masimo site at https://www.masimo.com/ that leads with Professional Health with a tab at the top for Consumer Health. Professional Health opens a series of sub-tabs leading with Technology and Products. A tab for Masimo Audio does not appear unless you open Consumer Health, leading to pages for their brands Bowers & Wilkins, Denon, and others. A new feature is at the top right with a dropdown for multiple languages/countries, including English and French for Canada, UK English, French, Spanish, and German. The footer is where the detail is for customer support, legal, investors, and internal links to pages–but not Audio. One drawback this Editor sees is that once on the foreign sites, you are unable to return to the US English website as the dropdown does not link back to the US.  
  • Entering masimo.com still redirects you to the Canadian shop domain and pages that feature the pulse oximetry device and app (SafetyNet Alert) monitoring prescribed opioid usage for difficulties in breathing (respiratory depression). Clicking on support features only ‘hearables’ and opioid safety–an educated guess is that this supports a specific Canadian initiative and is maintained for that only. Clicking on the tabs above will lead you to the new masimo.ca website pages which have no mentions or links back to opioid information. 

The investigation into the cyberattack that brought all Masimo IT systems down is ongoing. What is not known is 1) the type of the attack, 2) acknowledgement of the extent of the attack, and 3) any lasting damage to their internal systems, databases, and manufacturing systems. This Editor will be waiting to see if the new Masimo will be transparent with customers, investors, and the press as to what happened, the remediation of their systems, and securing their IT. Customers will need reassurance that their continuous monitoring and patient-worn monitoring devices are secure. Moreover, Health and Human Services’ Office of Civil Rights (HHS-OCR) requires reports of data breaches affecting or potentially affecting protected health information (PHI). I will also be waiting to see if their consumer health wearables bounce back and go back on sale (they are currently unavailable)–after winning their fights with Apple, it would be a shame if this investment is abandoned. 

More on this in Strata-gee 15 May. More good news–Editor Ted Green is recuperating and back at his desk, if only part-time. He has been invaluable for his inside looks at Masimo’s endless drama over the past few years. Thank you for the hat tip to TTA at the end of this article!

Masimo’s Sound United sale–the good and the not-so. Ted digs deep into the sale of Masimo’s ill-starred Sound United unit.  As we reported previously, Samsung’s Harman International unit picked it up for $350 million in cash, a mere one-third of its 2022 purchase price of $1.025 billion–a “shockingly low valuation for such great brands” such as Marantz, Denon, Bowers & Wilkins, Polk, Boston Acoustic, and others. Clearly, a sale was the desire of the new sheriffs running Masimo, Politan Capital, and shareholders, but a 66% haircut is still shocking. The share price rose prior to the annual meeting, but is now lower, likely from the cyberattack and uncertainty around tariffs affecting Masimo’s mainline medical device manufacturing.

Harman is the home of other storied audio brands such as Harman/Kardon, JBL, AKG, Mark Levinson, Arcam, and Revel. While a small part of giant Samsung, it is not puny in revenue, ending their 2025 at $10.2 billion. Because Strata-gee and Ted focus on the audio business, there is an extensive discussion here on how the Sound United brands will fit into the Harman portfolio and whether they will expand Harman’s business which has been rather flat. For Harman, consumer audio is their growth opportunity, from premium audio to headphones, and they just bought a quality group. The downside is that some of the brands collide in their market segments, notably B&W and Revel in the audiophile segment and Denon and Marantz versus ARCAM and JBL in audio video receivers (AVR). Interestingly, their largest segment is automotive electronics: car audio, telematics, and digital cockpits. For a more complete analysis, catch Ted’s Strata-gee article, ‘Temper Your Enthusiasm’, here.

TTA’s Blooming Spring 3: Masimo’s cyberattack takes it down, WW’s Chapter 11, Neuralink’s ALS success, UHG’s 1K bet on AI apps, NIH/CMS autism data project, a look at payer earnings, more!

May 9, 2025 | by

9 May 2025

This week’s drama was all about Masimo, developing literally as this Editor was writing. Their website outage was revealed to be from a cyberattack that took down nearly all their systems. Not good for a monitoring/tech company. But their good news was that they sold Sound United to Samsung–2/3rds off. The others deserving of more attention are Neuralink’s successful BCI implant in an ALS subject and UHG’s 1,000 app bet on AI. Not so dramatic: WeightWatchers’ prepackaged, quick bankruptcy, the NIH/CMS autism data project, and Amedisys divesting to salvage their UHG sale. 

Short takes: HHS forms NIH/CMS autism data project; Oscar Health beats Street w/Q1 $275M net; Centene’s $1.3B earnings; UHG has class action suit on earnings, 1K AI apps in production; Cedars-Sinai and Redesign Health partner on development; FDA, Lilly, Novo Nordisk win vs. compounders (Big step forward for autism research)

News roundup: WeightWatchers in 45-day prepackaged Ch. 11, Neuralink BCI successful in ALS subject, telehealth VR reduced TMD pain–study, AliveCor maxes up KardiaMobile 6L, TytoCare-Allina Health partnership, UHG-Amedisys divest some more (WW losing runway, a Neuralink win, Amedisys divesting to save their two-year-old UHG deal)

Breaking–Masimo Mystery SOLVED–cyberattack, website down for days, new websites up–and where’s the public explanations? Sound United sold. (Another cleanup on Aisle 10–the Sound United albatross flys off)

From last week: Cherry blossoms are starting to fall, much like Teladoc’s revenue for Q1 in our lead story. Can their acquisition of a small virtual mental health provider with insurance coverage help turn around BetterHelp? And what about their main business? Novo Nordisk would rather partner than fight with teleprescribers Hims & Hers, Ro, and LifeMD for GLP-1 Wegovy–will this be a trend? Commure adds to its ‘house that Jack built’ tech stack with a HealthTap partnership. And Masimo’s latest episode of its ongoing soap opera is that its former CEO (and major shareholder) is claiming ownership of shares as part of his severance–but they haven’t been granted and very much in dispute. (Irony alert: they’ve increased in value since his departure!)

This just in: Teladoc acquires UpLift for $30M, bolstering struggling BetterHelp telemental health; Q1 revenue down 3% (Can this telemental health be saved with one acquisition?)

News roundup: Hims, Ro, LifeMD and Novo Nordisk partner on Wegovy prescribing (updated); Commure partners with HealthTap for virtual care after hours; WebMD Ignite adds texting to member health ed; hellocare.ai raises $47M for virtual nursing  (When you can’t beat ’em in weight loss meds, join ’em. With a side of Commure’s interesting M.O. on acquisitions.)

Masimo updates: former CEO Kiani claims 13.2% ownership, and a review of the new management’s style (updated) (The soap opera continues)

Holding this over: The weekend read: why SPACs came, went, and failed in digital health–the Halle Tecco analysis/memorial service; why OpenAI is going to be a bad, bad business (Grab the cuppa and lunch for a good read and podcast. Updated–Also Tecco’s blog post on why she quit being an angel investor.) 

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Breaking–Masimo Mystery SOLVED–cyberattack, website down for days, new websites up–and where’s the public explanations? Sound United sold.

May 7, 2025 | by

The Masimo website goes offline–coinciding with their investor meeting. When this Editor posted an article on former Masimo CEO Joseph Kiani’s “beneficial ownership” SEC filing (Schedule G/A, for amended) last Tuesday late evening (29 April), as we generally do, we included a link to the main corporate website. I noted the following day that the home page was down and displayed a ‘performing some maintenance’ message. This is not especially unusual in the evening, as our Readers know, but unusual to continue beyond that.

Checking Wednesday, the website remained down. Yet their consumer-direct sales ‘Shop’ and Investor Relations pages remained up if you linked to them directly, though the medical monitoring smartwatches listed on the shop page were ‘coming soon’. Consulting with Ted Green of Strata-gee, who follows Masimo from their now-sold audio business (see update below) and an excellent source for us, he followed up as it remained offline into Thursday. Press contacts there were unresponsive. An “inside source” provided the only answer obtainable, which was ‘we’re working on it’. Ted called their main line–and received a recorded message that “All circuits are busy, please try your call later”. Calling Customer Service as a final attempt, even they did not know what was going on with the website…and, while phones were working, their internal systems had gone down. Finally, late on Thursday, Ted received an email from a PR representative who pointed him to their changed message on their website stating that the website was down and that they were working to resolve the issue. Ted relates this far more entertainingly in his Search for Information. 

Certainly an unusual and embarrassing situation for a tech-based medical device company, especially one that, at least for investors, is backing up its claims of a new transparency to the max. (See their working Investor Relations page for their postings of their Q1 financial presentation, webcast, and press release). For those of us in the business, an extended ‘offline’ means that we automatically think ‘hack’–another victim of cyberattack or ransomware.

And that is exactly what it turned out to be. Masimo’s SEC Form 8-K filed yesterday led with the following:

On April 27, 2025, Masimo Corporation (the “Company” or “we”) identified unauthorized activity on the Company’s on-premise network. Upon detection, we activated our incident response protocols and implemented containment measures, including proactively isolating impacted systems. We promptly commenced an investigation and are actively working to assess, mitigate, and remediate the incident with the assistance of third-party cybersecurity professionals. The Company has also notified and is coordinating with law enforcement.

As a result of the incident, certain of the Company’s manufacturing facilities have been operating at less than normal levels, and the Company’s ability to process, fulfill, and ship customer orders timely has been temporarily impacted. The Company has been working diligently to bring the affected portions of its network back online, restore normal business operations and mitigate the impact of the incident.

The investigation of the incident remains ongoing, and the full scope, nature, and impact of the incident are not yet known. At this time, the Company believes that the incident appears unrelated to and is not affecting the Company’s cloud-based systems.

Comments below Ted’s Strata-gee article, from an anonymous commenter, said that the FBI had visited the Masimo Irvine headquarters, which lines up with the last sentence of the first paragraph. The filing confirms that the intrusion was detected on Sunday, 27 April–which does not mean that they started then, just that it was found.

It is also evidently broad and deep, not only affecting the website and internal systems used by customer service, but also internal systems used in manufacturing and at all Masimo locations are ‘locked down’ in the words of another commenter. It’s serious when orders can’t ship and most employees are reportedly being told to stay home for the better part of the week, according to commenting insiders.

According to the report in FierceBiotech, CEO Katie Szyman stated that the cyberattack will not dent the company’s financial guidance for the year.

What’s not here: what Masimo is doing to inform customers of the outage, how long it will be, changes in delivery dates of devices, and if performance of any devices has been affected.

Back to the ‘restored’ websites:

A questionable restoration of their website(s). As of Tuesday (6 May, 9 pm EDT), the Masimo website is back live–but it depends on how you enter the URL! There are apparently two websites: a finished corporate and professional product website with a Personal Health section under construction with placeholders, but other live web pages which are accessible, apparently mainly for Canada–or for US under construction or discarded designs. 

  • Masimo.com entered as this link (https://www.masimo.com) features a home page with Masimo SET and their professional products such as SafetyNet Alert, a ‘cloud-based telehealth platform’. It is a tidy, respectable, and up-to-date corporate website featuring the full line of Masimo’s many professional monitoring products. Links in header and footer are standard, including corporate information and links to investor relations. Where it is not complete: clicking on Personal Health in the footer links will take you to a URL with a path that indicates a US ‘Shop’ page but is titled Support–Masimo Customer Service. Links for four individual product areas, including ‘Health at Home & Opioid Safety’, lead only to customer support information and a repeated, annoying cookies permission popup. This website appears finished except for Personal Health.
  • But if you enter only Masimo.com, the URL immediately redirects to a Canadian shop domain page and path that features how their pulse oximetry device and app (SafetyNet Alert) can monitor prescribed opioid usage for difficulties in breathing (respiratory depression) which can prove, from their tragic case study example, fatal. The new Halo app can be downloaded on the Apple App Store or Google Play. Want to find out more about it? It goes to a page that no longer exists. 
  • Clicking on the Personal Health tab at the top, it links to another Canadian ‘Shop’ domain page highlighting that their noninvasive monitoring used by hospitals is now available for home use, but the only item for sale is the Denon PerL Pro earbuds with a Canadian dollar price. No mention of SafetyNet Alert. 
  • To find their personal health devices, one has to go to the links on the footer under Customer Service>>Track Order’. This takes you to the US ‘Shop’ path page. There three ‘Health at Home’ devices are featured without descriptions. Clicking on the ‘Shop All’ button takes you to a US path page featuring the MightySat home pulse oximeter, the W1 smartwatch, and the RadiusT temperature tracker. Unfortunately, clicking on the ‘Find A Retailer’ button on each individual page leads you to a 404 page–‘That Page No Longer Exists’. 
  • These pages are in layout and style unlike the corporate website. Formats vary all over the lot.
  • On other pages linked in the footer, it appears there are some new pages, along with old web pages restored without updating.
  • Extremely annoyingly, on every page or return to a page, a permission popup for accepting cookies blocks the page until you accept or decline.

Where’s the project/marketing manager supervising this? Again, it’s embarrassing for a digital health technology company, even post-cyberattack, to have this level of visible website disorganization, coupled with days offline and reports of complete disruption. The best approach would be a minimal website until a finished website, working on all URLs and paths, is completed. Other than the main corporate website, the ‘Canadian’ and other pages should be offline until discarded or finalized.

As of 13 May, there are still problems and ‘holes’ in the websites, with the tracking the same.

Update–Sound United sold. Also announced yesterday (6 May) was the $350 million cash sale of Sound United to HARMAN International, a wholly-owned subsidiary of Samsung Electronics Co., Ltd. The definitive agreement release did not mention staff transitions. HARMAN’s audio products include Harman Kardon, JBL, and AKG. The sale is scheduled to close by the end of 2025. The sale was mentioned several times during the Q1 earnings call but HARMAN was not mentioned. The sale is not included in Masimo’s 2025 forward outlook, versus the considerable impact of tariffs on their imports from China and Malaysia.

Sound United’s sale for a third of its purchase price is the finale of a very big, very bad billion-dollar bet made by Joe Kiani and his management team in 2022. The ‘vision’, such that it was, was that the audio brands would leverage consumer health wearables into retailers such as Best Buy. It didn’t. The buy immediately tanked the value of the company by an estimated $5 billion in one day, and kicked off a long trail of investor unrest that resulted in a takeover by Politan Capital and the ouster of Kiani and his board members last year. The rest, as they say, is history. (And Joe Kiani is likely enjoying a good bottle of vintage Pol Roger and shivering with schadenfreude.) Wall Street Journal

Masimo updates: optimism around healthcare despite ’24 losses, former CEO Kiani files notice in California on compensation owed

March 6, 2025 | by

Masimo’s hurricane of change apparently hasn’t been an ill wind–at least in their investors’ view. Masimo, a medical device company with an audio brand unit, Sound United, had another year in the red. A net income loss of $304.9 million is usually enough to send investors and analysts into paroxyms of despair, but that didn’t happen on the Q4/FY24 investor call on Tuesday 25 February. Au contraire. Based on Ted Green’s excellent reporting on his audio business website, Strata-gee, the analysts were “thrilled”–and the stock climbed, ending $10 up today in a downer of a market. What gave them hope was a brand new CEO, Katie Szyman, with an impressive track record from BD and Edwards Lifesciences, CFO Micah Young, and the general energy of the team that contrasted sharply with previous management calls. Moreover, under that negative number was good news and a cleanup on Aisle 5 that Ted ferreted out from the large pile of SEC-filed documents:

  • Sound United, the giant barnacle on the Masimo ship, is well on its way to a sale. They have already written down $304 million for all remaining goodwill, the sale “is in the later stages of the process” and may be wrapped as early as Q1. Sound United will no longer be reported on for 2025, so forward reports will be only the healthcare portion of the business.
  • The $1.4 billion healthcare business grew 10% in constant currency (9% versus 2023). Importantly, based on 2024 performance, the forward business picture is excellent: the incremental value of new contracts was $432 million, they shipped over 232,000 technology boards and monitors, pulse oximetry consumables were up 14%, co-oximetry & hemodynamics consumables grew 13%, capnography & gas monitoring consumables grew 27%, and brain monitoring consumables grew 19%. In fact, all healthcare numbers were up versus 2023.
  • A strategic realignment that prioritized projects, reviewed the product portfolio, wrote off R&D, and had corresponding layoffs/severance charges was completed by December, resulting in charges of $128 million against Q4. 
  • Ancillary businesses (my term) have been wrapped up or disposed of: Willow Laboratories (formerly Cercacor Labs), Masimo Foundation, Like Minded Media Ventures (LMMV), and Like Minded Laboratories (LML).

This Editor invites you to read more from Ted on the results as well as profiles of Ms. Szyman and Mr. Young. Ms. Szyman’s statement on why she was there and her purpose was the kind you’d wish your CEO would deliver. After complimenting the interim CEO Michelle Brennan, Mr. Young, and COO Bilal Muhsin on their plan in refocusing on healthcare:

“[I]n the big two weeks that I’ve been here, honestly, I think that Micah and Bilal know this business really well, and they’re the ones that put together the plan. So, I have a lot of confidence in the plan that was put together and the ability to drive profitable growth going forward. I think the area that I’m going to be focused on for the next quarter is really trying to better understand how to expand our leadership position in our core markets. And then, second, focusing on the healthcare innovation – this company has great technology and great innovation, and now that we’ve narrowed it down to the Healthcare space, I’ll be working with the team to build out how we actually execute on commercial excellence on soo many of these great innovations that we have. 

This is all a good start–and Mr. Market seems to be happy. Now to deliver on their value proposition. Masimo earnings release

On the legal front, it’s hardly been wrapped up. Former CEO Joe Kiani submitted a Private Attorneys General Act (PAGA) Notice (PDF attached) to the California Labor & Workforce Development Agency (LWDA) for  multiple Labor Code violations concerning wages, multiple stock options, and severance owed to Mr. Kiani under his employment agreements. The PAGA Notice alleges the six Politan directors acted in bad faith, first to force Mr. Kiani out of Masimo, then to “devise a post-hoc and pretextual termination for “Cause”” under his employment agreement over the following month. This follows on the Delaware Chancery Court January filing requesting dismissal of Masimo’s charges against the severance agreement as filed in the improper venue–Delaware, not California [TTA 30 Jan]–but takes a different approach direct to the LWDA.  It’s notable in being filed not only against Masimo but against the six board members. The penalties reaching back to the directors could total over $100 million in statutory penalties – 65% of which would be payable to California. There is no projection on how quickly the LWDA would act nor if their decision once reached could be appealed. Developing. Disclosure: This Editor received the PAGA Notice and information from a strategic communications representative of Joe Kiani. The interpretations and summaries of the filings are your Editor’s. 

Bad News Roundup updates: UHG/Optum defends Amedisys buy fast via a website, digging deeper into Forward’s fast demise, former Masimo CEO Kiani booted–and sued (updated)

November 15, 2024 | by

The other shoe drops, as UnitedHealth Group/Optum take their defense public a day later. This unorthodox approach to defending an acquisition against a Department of Justice lawsuit [TTA 13 Nov] is visible on a specially set up Optum page. ImprovingHomeCare.com predictably highlights the benefits of an Amedisys merger along with the divestitures to VitalCaring Group. The gauntlet thrown is unadorned: “The Amedisys combination with Optum would be pro-competitive and further innovation, leading to improved patient outcomes and greater access to quality care. We will vigorously defend against the Department of Justice’s overreaching interpretation of the antitrust laws.”

  • Setup is around present and future demand–and that providers have to be capable of investing and scaling to meet it. “70% of adults 65 or older will likely need some form of long-term care during their lives.” and 3 million Americans received home health services in 2020 (Editor’s note–in a pandemic year when visits were certainly curtailed).
  • Home health is highly fragmented both nationally and locally, thus the acquisition isn’t anti-competitive. “In metropolitan areas with approximately 500,000 residents, there are an average of 26 agencies serving the metro area. The combination of Optum and Amedisys would be a fraction of both home health and hospice–and there would be strong competition in both metro and rural areas.
  • The divestiture to VitalCaring would further preserve competition, and that VitalCaring is a quality competitor. The DOJ release made much of VitalCaring’s inadequacies, such as their lower quality scores, financial difficulties, and leadership. VitalCaring, headquartered in Austin, Texas, currently operates in six states with 58 locations with plans to expand. Their CEO April Anthony is cited as building multiple home health companies ‘from scratch’ such as Encompass Care.
  • Additional proof points stress streamlining of care across Optum’s areas of expertise, integrating technology, and improving value-based care coordination.

FierceHealthcare

Forward’s shut down continues to reverberate in a classic tale of overreach and misdirection. Their bet on kiosks, plus a ‘forward-tech’ approach to a concierge-on-the-cheap, no- insurance-accepted model of primary care over eight years, apparently led to what pilots call a death spiral–it begins wide and imperceptible until it tightens and accelerates fatally in a final dive. Business Insider, true to its name, spoke with 11 anonymous and now former employees who attributed the failure to putting all their chips on 3,200 CarePods installed in one year. Their CEO, Adrian Aoun, was obsessed with technology to the point where he wanted to replace his offices and doctors with CarePods and started to strip the clinics of services, despite only two CarePods installed. 

Most advanced, yet unacceptable*. Patients didn’t try out or use the CarePods, finding them less than inviting. Logistical challenges delayed placements in large markets like New York and Chicago. Then technical problems mounted: automated blood draws failed, lab tests were withdrawn. The coup de grace–patients kept getting trapped in the CarePods. They were insanely expensive–the first two CarePods cost over $1 million each. Then the huge units were unattractive to landlords who didn’t want to fight local building codes nor saw a profit in them. By the end of the summer, there were only two CarePods in place at a mall in Sacramento and in Chandler, Arizona, both gathering dust. (*Shout out to Raymond Loewy, Never Leave Well Enough Alone)

In the increasingly empty Forward clinic offices, the futuristic tech and breadth of services touted in social media adverts weren’t quite as advertised. The whole-body scanner glitched requiring manual checks. Their lab tests became limited to those that could be done in-house, eliminating genetic testing via 23andMe along with services such as simple dermatology removals.

Christina Farr in Second Opinion has a set of takeaways worth noting, with this Editor’s comments (in parentheses):

  • Subscription-based, out-of-pocket healthcare is possible–but hard. (WAY hard when basics are up 25%+! And insurance is almost a given, even if taken in part.)
  • Brick-and-mortar clinics make only limited sense–and space must be used economically, not easy to do in health tech. (Retail and in-person are perhaps anathema in the concepts of those in health tech.)
  • We’re not focusing on those who really need care (But they’re not sexy, wealthy, or relatable to the creators of said tech. Many of them are also on Medicare and Medicaid–truly not sexy.)
  • Primary care is a tough starting point for subscription care (Except the very highest, most exclusive end as she notes!) Specialties may be more amenable to this model. (But volume?) And different age groups want different relationships within this type of care.
  • Timing is everything. Perhaps if Forward had started its clinics today it would have had a far better chance of success? (Then look at bullets 1-4 and see how truly daunting a tech-first clinic setup can be for the tech mindset untempered by research and UX-minded marketing.)

Forward is yet another sad and expensive example of 1) a founder hyperfocusing on whiz-bang technology, 2) losing touch with the customers using it, 3) not improving delivery based on customer needs, and 4) forgetting where he ostensibly started–the mission of improving healthcare. This Editor is sure that his 30-odd investors, especially Vinod Khosla, will have something to say to him about running through $100 million in one year–and over $300 million over eight years.

Masimo’s now-former CEO booted from his company and sued–to boot! (updated) The new management formally terminated founder Joe Kiani on 24 October, as noted in an October SEC filing. In a classic ‘you’re fired..no, I quit!’ situation, after he lost the proxy fight for control of the company, he resigned on 19 September. Kiani immediately filed a lawsuit against Masimo in California state court to obtain a $400 million payout per his employment contract. It is reported to be a declaratory relief suit that hinges on a ‘resignation for good reason’. This is usually specified in the contract. An example is that the executive ceases to be part of senior management, along with others.

The new board of directors has now turned the tables. Masimo is now suing Kiani and RTW Investments in the US District Court for the Southern District of New York. The complaint alleges collusion to violate Federal securities laws by secretly manipulating the shareholder vote through an ’empty voting’ scheme. Empty voting is done through put options or by selling the shares after the record date but before the shareholder meeting. It’s a way for an investor to build up share control and sway the outcome of a shareholder vote at little cost. The suit proposes that Kiani and RTW did precisely that, rigging the vote by acquiring control of over 19% of shares. Evidently, the BOD has proof. The lawsuit and more details are in Strata-gee.

(Editor’s opinion: this is a bare-knucks attempt to claw back Kiani’s contract payout by the new controlling company, Politan Capital Management. And both lawsuits could be true. Pass the popcorn.)

Insult upon injury for Joe Kiani is that shareholders now have some hope that management can save the company by concentrating on healthcare tech. Shares are up. Masimo’s Q3 results reported on 5 November were strong though net income declined. Sound United, the main anchor dragging down the company, is now termed ‘a discontinued operation’. Exhaustive detail on their results is in Strata-gee here.

Short takes: both Clover and Oscar in the black; Aetna prez booted after 11 months; Ava-VSee bedside robot; updates on Change, OneBlood ransomware, Masimo proxy fight

August 8, 2024 | by

Clover Health’s milestone–a first-ever profitable operating quarter. Not only that, but it was an impressive turnaround from the prior year. With results in their Q2 operating net income of $7.2 million, versus a $28.9 million loss in 2023, these results were far more favorable directionally than the adjusted EBITDA which was $36.2 million versus $9.9 million for the prior year. Insurance revenue was also up 11% to $349.9 million, attributed to member retention and an improved medical cost ratio (MCR) of 71.3%, down from 77.9% in the prior year. Additional revenue from other operations, such as the recently introduced Assistant AI, is minimal. The 2024 forecast stays ‘in the clover’ with raised forecast revenue of $1.35 to $1.375 billion and adjusted EBITDA of $50 million to $65 million. Also helpful is their lifted Star rating from 3 to 3.5 for 2025. FierceHealthcare, Clover earnings release

Rival Oscar Health also stayed Back in Black for the second quarter running–CEO Bertolini wouldn’t have it any other way (or else–see below right). Q2 net income rose to $56.2 million which was a a $71.7 million improvement versus prior year. Adjusted EBITDA also nicely improved to $104.1 million, a $68.6 million improvement. Revenue increased to $2.2 billion, a 46% increase over the prior year. Their MCR went down .9 points. The overall forecast for the year wasn’t provided. Membership was up over 600,000 in their main business of individual and small group insurance, with Bertolini pointing out that this was powered by plan growth in 80% of the states where they operate. Oscar exited Medicare Advantage at the end of 2023, and is shifting to marketing ICHRA, or individual coverage health reimbursement arrangements that permit small businesses to offer employees individual health plans subsidized by employer contributions. After this year, the 58,000 members left in the unprofitable Cigna co-branded small group program will exit [TTA 10 May]. Oscar release, FierceHealthcare

Back in Mr. Bertolini’s old stand, Aetna, results weren’t so cheerful–and their president walked the plank after less than one year. The reorganization announcement was made on the earnings call yesterday, effective immediately. CVS Health CEO Karen Lynch will oversee the daily operations of the health benefits segment along with Aetna’s CFO. CVS VP/chief strategy officer Katerina Guerraz will move over to become Aetna’s chief operating officer.

What initiated it: while health benefits’ revenue stayed in the black, going the wrong way were operating income decreasing 39.1%, the medical benefits ratio (MBR) soaring to 90% from 86% in prior year and the medical loss ratio (MLR) going up to 89.6% from 86.2%. These were attributed to increased utilization, the decline in Medicare Advantage Star ratings, Medicaid acuity, and a revised risk adjustment in the individual exchange business. Something in this immediately doomed now former president Brian Kane, who joined only last September. His last post was at Humana as chief financial officer and leader of their primary care business. CVS Health release, FierceHealthcare, Healthcare Finance

Marrying robots with telemedicine, VSee is partnering with Ava Robotics to create an autonomous robot for telepresence use in hospital intensive care units. This would enable remote emergency physicians to be present at the point of patient care, interact with patients, consult with onsite staff and make treatment decisions. The projected market is smaller regional hospitals and ICUs.  VSee already markets telemedicine carts and portable diagnostic and home care kits. Availability is not disclosed. VSee release, Mobihealthnews

VSee also announced a partnership with Wichita, Kansas community health provider Stand Together for its Aimee telehealth services. Telehealth at their centers will be available to participants for a monthly charge of $4.99 or a single virtual urgent care appointment for $9.99. VSee release

Ransomware strikes again. Non-profit blood donation organization OneBlood was hit on 29 July by a despicable ransomware attack that disabled much of its blood collection services for over 250 hospitals in the southeastern US. They continued to operate at reduced capacity and called for donors of O positive blood, O negative blood and platelet donations. The perpetrator, ransom demands, and breached information were not disclosed. On Monday 5 August, systems were partially restored in time for Tropical Storm Debby’s assault on many southeastern states. From a OneBlood spokesperson: “Our critical software systems have cleared reverification and are operating in a reduced capacity. As we begin to transition back to an automated production environment, manual labeling of blood products will continue. Additionally, we are beginning to return to using our electronic registration process for donors.” DataBreaches.net, FierceHealthcare, HealthcareITNews

Hard-hit Change Healthcare is still playing games with reporting to HHS’ Office of Civil Rights (OCR). Parent UnitedHealth Group reported the ransomware shutdown and data breach to OCR, a full five months after its occurrence. The number reported is the OCR minimum of 500, when it is well known that it affected millions of patients. UHG started direct patient notification on 31 July after weeks of delay, but stated to OCR that they are still determining the number of individuals affected. Provider notifications started in late June [TTA 21 June]. This followed after a hostile dispute earlier that month where UHG tried to push patient notifications onto providers, which HHS decided was 100% UHG’s responsibility. [TTA 5 June]. OCR FAQ update, HealthcareITNews

Masimo and activist shareholder Politan Capital continue to slug it out down to the 19 September shareholders meeting. Back in mid-July, Masimo postponed the meeting, originally scheduled for 25 July. At that time, Masimo filed a complaint in the US District Court for the Central District of California against the two Politan representatives on their board of directors plus Politan’s two nominees that proxy materials contained false statements and violations of the Exchange Act. The suit added that board member Quentin Koffey, also Politan’s chief investment officer, was secretly conspiring with a plaintiffs’ bar law firm currently in litigation with Masimo.

The latest revelation per Strata-gee 7 August: Politan’s countersuit in the Delaware Court of Chancery states that the charges filed by Masimo in the District Court are based on ‘unnamed sources received from a third-party opposition research firm…’ and Masimo’s outside counsel does not know the identity nor ever spoke to the sources. This was filed against CEO Joe Kiani, independent director Craig Reynolds, and director Bob Chapek as a breach of Delaware law.

To date, Masimo has not confirmed their sources to the Delaware court. 

As previously reported [TTA 17 July], the proxy fight was triggered by the value of the company, reduced substantially after Masimo’s snakebit 2022 acquisition of Sound United’s consumer audio brands, Politan’s move to control the company, and kick out the CEO Joe Kiani.  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. Masimo plans to sell the consumer audio and healthcare (baby monitoring) businesses to another unnamed investor, retaining their professional healthcare and pulse oximetry products.

Stay tuned to the next episode of this soap opera.

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!