TTA’s Blooming Spring 4: UnitedHealth’s CEO change doesn’t stop market pummeling, Omada’s IPO, Theranos redux, Holmes loses appeal, Synchron BCI and Apple, exec security cost, raises, more!

May 16, 2025 | by

 

16 May 2025

One after another surprise this 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!)

From last week: 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 flies off)

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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Best wishes to Strata-gee’s Ted Green on a fast recovery!

May 13, 2025 | by

Our expert on all things Masimo is down, but certainly not out. Last Monday (5 May) Ted Green, the founder of audio business website Strata-gee, while out power walking, was hit by something (spaceship, meteorite–your Editor will let him tell you), and wound up hospitalized for a few days with a variety of injuries. He’s now recuperating at home. Our very best wishes for his recovery from multiple bang-ups, bruises, and a nasty shoulder.

If you like audio, Ted’s website is a must-read for the business behind the brands. Even if you are old-school audio like me, you’ll find it fascinating and written from the perspective of a real Business Insider. 

He digs deep. Right before his ‘airborne’ event, Ted’s last Masimo story for Strata-gee dated 1 May investigated what was going on with their website. I had casually mentioned to Ted that the Masimo website was down after picking up his analysis of former CEO Joseph Kiani’s claim to 13.2% share ownership. Ted is the one who investigated that Masimo’s website remained down with no explanations that made sense and it had spread internally. He was the first to bring to everyone’s attention on the healthcare side that Masimo Had A Problem, and it was bigger than a temporary outage. Commenters weighed in with updates. Masimo finally admitted in their SEC Form 8-K on 6 May that they had a cyber incident that affected most of their systems, including manufacturing and customer service. The story developed last week as you’ll see here—while Ted was in the hospital–as well as the Sound United sale.

If you’ve liked our coverage on Masimo–and the ‘hits’ indicate that you, our Readers, have–you can thank Ted.

Add your good wishes to comments under his story on his ‘event’. (BTW, the care he received at JFK Hospital in Edison, New Jersey was excellent.)

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. 

Masimo update: SEC announces investigation of RTW Investments and role in proxy war voting

December 6, 2024 | by

The Securities and Exchange Commission comes knocking on RTW Investments’ door…and they have no sense of humor. Though the proxy war is over now for two months and Politan Capital Management is firmly in control, with losing founder Joe Kiani departing in a classic ‘you’re fired/I quit’ scenario that’s dissolved in a flurry of lawsuits from New York to California [TTA 15 Nov], the next shoe dropping can land Kiani and his ally Roderick Wong of RTW into some extremely hot soup, to strain two metaphors.

The SEC is now investigating the “empty voting” scheme apparently used by Kiani’s side in the proxy war. Masimo had already sued Kiani and RTW in the US District Court for the Southern District of New York charging that they used empty voting to manipulate the shareholder vote in favor of Kiani. Masimo is claiming that this action rigged 19% of the vote under Kiani’s and allies’ control. As noted in our November article, 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.

Strata-gee yesterday (5 Dec) reported that Bloomberg News (paywalled), during last week’s pre-Thanksgiving ‘news black hole’, broke that the SEC is probing RTW, a $6.5 billion hedge fund. Its head Roderick Wong is cooperating with the probe. He characterized it to his investors as a ‘fact-finding investigation’ and accurately characterized it as “the existence of a probe doesn’t mean laws were broken” in a message on Monday 25 November. A SEC probe is not necessarily safe as milk–see the last part of this article.

However, as Strata-gee reports, empty voting is not necessarily illegal. It is Masimo’s stating that it has evidence that Kiani and RTW conspired to form an insider group–and insider groups always ring bells for the SEC especially during a proxy fight. And where there’s the SEC, there is the Department of Justice. Witness the interest in insider trading in the form of stock sales by executives at UnitedHealth Group while a DOJ probe was happening but not public–and the resurgence of interest in UHG’s legal difficulties as part of the shocking recent events–which have caused industry executives to scrub their profiles from corporate websites. Healthcare Dive.

Why this matters to us in healthcare tech. Masimo makes consumer and professional medical devices, including smartwatches, that measure vital signs including pulse oximetry where they have a brace of patents. Their global revenue in 2023 was over $2 billion. Medical Design and Outsourcing  Last year at this time, Masimo was the David wrestling Goliath Apple to the mats with  ITC (International Trade Commission) bans on the new Apple Watch 9 and Ultra 2 last Christmas season, forcing Apple to pull them from sale and disable the feature violating the Masimo patents. Masimo continues to challenge Apple patents in court with mixed results, most recently reported in mid-October. Since the new Masimo is actively selling or spinning off its audio brands, what remains is their healthcare technology business.

A cautionary tale. This Editor, as a subscriber to Strata-gee (an audio business specialist website) after finding Editor Ted Green’s talented writing there in following the Masimo Mess, wanted to share from today’s subscriber email his description of a SEC probe at a former employer. Basically, the SEC doesn’t launch investigations unless they have good reason to do so, and they turn your company’s life upside down doing it. Mr. Wong will be holding court for a group of guests for awhile. Editor Ted has a reminiscence of when it happened at the well-known audio brand Onkyo, which was treated as a suspect in the legendary Crazy Eddie (“his prices are insaaaaane!”) retail electronics chain fraud.

Have I ever told you the story about the day, many years ago, when about 20 agents of the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI) came storming through the main entrance of Onkyo USA, marched into the President’s office (who was in a meeting that was hastily dismissed) and delivered a Search Warrant? (This is not a joke!) I learned a few things that day about the men and women of the SEC: 1) Most of them were armed with weapons that could deliver deadly force; 2) They were as serious as a heart attack; and 3) They would take office space in our facility and stay for weeks, as they forensically examined everything about our business. It turned out that this was part of an investigation into Crazy Eddie, a New York dealer that they suspected had engaged in illegal activities. As one of their top suppliers, Onkyo was considered a potential co-conspirator until we proved we weren’t…which, thankfully, we did – and they came to see us as one of the victims of Eddie Antar’s scheme and NOT a partner.

No apologies rendered, I’d guess. Or payback for the sandwiches and coffee.

What’s next for: Steward CEO now in criminal contempt of Congress; Walgreens’ Pessina’s fortune vanishes by 97%; Masimo’s Kiani now a man without a company

September 26, 2024 | by

Senate unanimously votes to hold Steward Health CEO in contempt. The resolution passed on Wednesday 25 September refers the contempt charges against Dr. Ralph de la Torre, the CEO of Steward Health, to the Department of Justice (DOJ). The Senate Committee on Health, Education, Labor and Pensions (HELP) voted on 19 September to recommend two contempt charges–criminal and civil–to the full Senate. It is the first time since 1971 that a criminal contempt charge has been passed. The DOJ’s actions can include prosecution by the District of Columbia’s US Attorney which can mean arrest and possible incarceration, with a fine that doesn’t exceed $100,000, or civil contempt which usually involves a fine and another subpoena to appear. FierceHealthcare, Becker’s

The threatening language of the HELP committee members such as Bernie Sanders and Ed Markey surely did not encourage de la Torre or his legal counsel to appear on 12 September, with the anger across the board among all members regardless of party. All that it promised to be was, in street language, the worst kind of beatdown. Formally, the appearance was rejected because of Steward’s bankruptcy in adjudication in the US Bankruptcy Court for the Southern District of Texas supervising the sale of Steward assets. There is also a court order that prevents de la Torre from commenting during the sale process. To the press, his legal counsel depicted the HELP committee hearing as “a pseudo-criminal proceeding in which they use the time, not to gather facts, but to convict Dr. de la Torre in the eyes of public opinion.” TTA 14 Sept

Steward Health’s spectacular collapse opens even more Pandora’s Boxes for de la Torre. He possibly faces additional lawsuits attempting to ‘pierce the corporate veil’ to claw back his bank and personal, sizeable maritime and aviation assets–or hold him criminally liable, far more complicated, long-term, and damaging. A cynical view would be that de la Torre would be well advised to get on his $40 million yacht or one of his private aircraft–and depart for a destination that is reluctant to extradite to the US. 

Walgreens Boots Alliance’s troubles drastically shrink executive chairman Stefano Pessina’s personal fortune. Chairman Pessina, who holds 17% of WBA stock and is the single largest shareholder, has seen his holdings shrink in value by 97%, from $12 billion in 2015 to a current $1.3 billion, according to Bloomberg data. The 83-year-old WBA head has seen hard times before. He pulled a rabbit out of the proverbial hat in 2007 by going private with Boots and then merging it with Walgreens in 2015, but time and Mr. Market are not on his side with taking on the debt load necessary.

Is WBA or Walgreens attractive to an acquirer? With stock trading at a record low of around $8 and a market capitalization of about $7.5 billion, it may be a bargain if an investor ignores or doesn’t blanch at the debt load. But those who understand the business cannot buy due to US antitrust regulations, which rules out any retail competitor or PBM. Or the company could be parted out to healthcare providers or a health insurer, but that ignores their miseries, such as reduced Medicare Advantage reimbursements. Their mistakes such as VillageMD and unprofitable locations are in the middle of being worked out and the company is shrinking. Meanwhile, their 15 October full-year earnings report will be dripping with red ink, as their Q1-3 lost $314 million versus prior year earnings of $1.2 billion. Crain’s Chicago Business

Vanishing for Joe Kiani is his day job at Masimo after a dramatic proxy fight. The founder of the audio and health monitor company was voted out of his board seat by shareholders. He followed by resigning as CEO after founding the company 35 years ago. Michelle Brennan, a board member (from Politan) has been appointed as interim CEO. Previously, she was a senior executive at Johnson & Johnson’s companies, including international experience in business development, for over 30 years. She also is on the board of Cardinal Health. Korn Ferry is coordinating the search for a permanent CEO.

The proxy battle wasn’t even close, according a CNBC report reported by Strata-gee. Quoting an inside source, the Politan slate of two directors, Darlene Solomon and William Jellison, received twice as many votes as Joe Kiani and Christopher Chavez on the Masimo slate. 

The company is continuing ‘strategic alternatives’ (read: sale) of its consumer health and audio businesses, the latter mostly acquired in the utterly snakebit 2022 acquisition of Sound United’s consumer audio brands. Masimo is using Centerview Partners and Morgan Stanley as financial advisors and Sullivan & Cromwell as a legal advisor. Presumably, the Kiani-arranged sales to or joint ventures of these units with unnamed investors is off. Masimo will be retaining their professional healthcare and pulse oximetry products. For Q3 2024, Masimo reiterated its financials from early August, with earlier guidance here.

Whether others will depart with Kiani is too soon to tell. During the proxy fight in July, Masimo’s chief operating officer, Bilal Muhsin, promised to resign if Kiani was forced out, specifically citing that he would refuse to work with Quentin Koffey, a Masimo director and chief investment officer of Politan Capital. Other managers signed similar letters around the same time.  However, in the Masimo release on the Kiani resignation, financials, and management changes, CFO Micah Young and Muhsin stated that would provide more details on an earnings call in October.

The Strate-gee view was that shareholders got tired of hearing promises about Sound United and that Kiani was high-handed with them–treating it as his personal company and not theirs. Healthcare Dive