News roundup: NHS announces EDITH breast cancer screening trial, Sword Health reveals mental health move in AI-first push, Evolent Health changes up board, Highmark’s enGen tech drops 208

February 6, 2025 | by

Over 700,000 women to be screened using AI-assisted radiology. The NHS announced on World Cancer Day (4 February) a massive trial of EDITH—Early Detection using Information Technology in Health. The intent is to reduce to one the number of radiologists needed to review a patient’s mammogram, freeing up short radiology resources, cutting waiting lists, and speeding early detection of breast cancer. The Department of Health and Social Care initiative that builds on smaller AI-enabled screening trials is part of the 10 Year Health Plan/Plan for Change. EDITH is backed by £11 million of UK Government support via the National Institute for Health and Care Research (NIHR). 30 testing sites across the UK will be used to screen women 50 to 71 already scheduled for their every-three-year exam. It’s not clear from the information if different AI assists will be used. Breast cancer in the UK affects 55,000 women and 400 men annually, second only to prostate cancer. The UK.Gov release and the Daily Mail article do not state the start nor the end of the EDITH trial, nor locations.

Virtual MSK provider to employers Sword Health leaked at JP Morgan on mental health, AI-first ambitions. CEO Virgílio Bento confirmed to STAT that they are going “AI-first” for their care models. Their ambition is to be known as an “AI care company that is going to reinvent all care delivery models that are 100% labor intensive.” The first area to get the Sword treatment is mental health, using their proprietary tablet model utilized for physical therapy. Talk therapy was derided by Mr. Bento for low-acuity conditions like anxiety, and he promised a model that would be “very disruptive.” Others ‘ripe for reinvention with AI’ are speech care, GI care, and cardiac care. His POV is that AI will enable us to move away from human-first health care. Sword Health raised in June 2024 a jumbo round of $130 million and now is valued at around $3 billion, then ‘put the sword’ to 17% of its clinicians. It has plump coffers and is rumored to be prepping for an IPO [TTA 13 November 2024].

Provider management services organization (MSO) Evolent Health adds to board, announces new chair. Rick Jelinek, who joined the board as an independent director in 2023, will be moving to the chairman position, succeeding Cheryl Scott. This will be effective at the 2025 Annual Meeting, date TBD. Mr. Jelinek is currently managing partner of Czech One Capital Partners and previously was a CVS Health executive VP. Added to the board is a new independent director, Brendan Springstubb. He is currently principal of Bedell Canyon LLC an advisor to public equity investment firms primarily in healthcare. Previously, he was a principal at one of Evolent’s major shareholders, Engaged Capital, LLC. The release also announced the planned addition of another independent director before the annual meeting.

Also upcoming: Evolent’s Q4 and year 2024 earnings call on 20 February, which should be interesting.

Starting in August last year, Evolent and Engaged Capital were moving towards a sale of part or all of the company. The number booted about was $4 billion for the package; interested parties were rumored to be Elevance, TPG, KKR, and Clayton, Dubilier & Rice (CD&R). At that time (late August), their stock on Nasdaq had hit a high of above $32. As late as early November, it traded at $25 then cracked after 7 November. At today’s close, it traded at $10.37. What happened on 7 November was the announcement of a poor Q3 due to a huge increase in medical costs that greatly affected their managed care organizations and required them to lower their guidance for the remainder of the year. The release emphasizes the skills now existing on the board in creating value for shareholders. 

And on a down note, Highmark Health’s enGen health tech subsidiary lost 208 people at the end of January. enGen provides technologies for health plans and providers in a ‘payvider’ model for operations, utilization management, provider data and reimbursement, and payment integrity. Last year in March and May, 277 were laid off from their 12,000 person workforce. enGen serves about 50 Blue and non-Blue plans with 20 million members. Highmark Health, based in Pittsburgh, is a Blue Cross Blue Shield and serves central/western Pennsylvania, including Philadelphia in the east, and parts of western New York State. Pittsburgh Business Times

M&A action news: Astrana Health buys up Prospect Health for $745M after Centene MSO unit buy, Veradigm nears $1B+ sale, Sword Health lays off 17% of clinicians prepping for IPO using AI instead, Cigna is not buying Humana–really! truly!

November 13, 2024 | by

A company most have never heard of is snapping up provider networks, health plans, and management services. Astrana Health, a Southern California-based value-based care (VBC) company formerly known as Apollo Medical Holdings, has agreed to acquire most of the assets of Prospect Health for $745 million:

  • Prospect Health System: 3,000 primary care providers and 10,000 specialists across Southern California, Texas, Arizona, and Rhode Island. It currently has 610,000 members across Medicare Advantage, Medicaid, and commercial lines of business.
  • Prospect Health Plan, licensed in California 
  • One hospital, Alta Newport Hospital dba Foothill Regional Medical Center in Tustin, California (Santa Ana area), a fully accredited acute care hospital with 177 licensed beds
  • Prospect Medical Systems, a management service organization (MSO) that provides administrative support to Prospect-owned affiliates and managed medical groups/independent physician associations (IPAs).
  • RightRx pharmacy

FTR: “Astrana plans to leverage its proven Care Enablement platform, a set of care management tools and technology, including value-based contracting and credentialing, AI-driven population health analytics, its NCQA-certified Healthcare Effectiveness Data and Information Set gaps in care engine, care management and disease management platform, and other administrative services to further advance improvements in patient outcomes.”

According to William Blair analysts Ryan Daniels and Jack Senft, quoted in FierceHealthcare, “Prospect is expected to generate $1.2 billion in revenue and $81 million in adjusted EBITDA on an annual basis in 2024, implying a transaction value at about 9.2 times adjusted EBITDA.” The $745 million purchase was financed by cash on hand and a $1,095 million 364-day senior secured bridge commitment provided by Truist Bank and JP Morgan. It’s not expected to close until mid-2025 and is subject to the usual Federal and multi-state regulatory reviews and approvals. Sounds like a deal that evades the new premarket notifications as complementary and not competitive. But we’ll see. Release, Healthcare Finance News

One wonders about that cash on hand as Astrana previously bought Collaborative Health Systems, a 17-state MSO with 129,000 original Medicare beneficiaries managed in 10 primary care shared savings accountable care organizations (ACOs in the REACH and MSSP models), a Maryland Care Transformation Organization CMS/state primary care model, and three independent physician associations (IPAs). CHS came with Centene’s acquisition of WellCare Health Plans in 2020 and was originally organized by Universal American in 2012. That closed in October at an undisclosed price paid to Centene, continuing its divestment of what they consider ancillary businesses to maximize cash. It was also positioned as Astrana remaining a key partner in Centene’s Medicare business, now known as Wellcare (Releases 25 July, 7 Oct).

Prior to that acquisition, Astrana was a relatively concentrated California/Western States diversified health services organization with about 10,000 providers and claiming a million patients, with one ACO in the ACO REACH program and another in the MSSP model. In absorbing CHS, they also divested a substantial number of people, mostly senior managers and leadership, who managed a wide number of ACOs in demanding CMS models at scale. (Disclaimer: Editor Donna was marketing director for CHS 2018-2020). One wonders if CHS will be merged into Prospect’s MSO, though in reality they offer vastly different services.

Back in August and prior, MSO Evolent Health put itself up for sale for an estimated $4 billion, with the most interested parties being Elevance and assorted private equity organizations. Nothing has publicly moved since then. But it did confirm that major money is now interested in this decidedly unsexy corner of the healthcare business.

Veradigm’s long-drawn-out sale may be reaching a conclusion. Reports this week state that McKesson, Oracle, and private equity bidder Thoma Bravo are all bidders for the company. CVS considered it but passed. It may be finalized by Thanksgiving for an estimated price in excess of $1 billion, its current market cap.

Veradigm put itself up for sale last May. In August, reported bidders included private equity Thoma Bravo, which took NextGen EHR private in September 2023, Roche, and Vista Equity Partners, owner of the Greenway EHR. Thoma Bravo is the only carryover from this initial list. Apparently, Roche and Vista have dropped out. As reported then, the company is apparently in good shape but unwieldy, with healthcare data services and systems that make it an interesting buy for one or more companies. Though outwardly crippled by years of financial reporting problems due to a still unsorted software problem, which led to its Nasdaq delisting last February, it has been profitable (though unaudited) and is trading OTC above $11. Axios  Hat tip to HIStalk 13 Nov

Virtual MSK provider Sword Health lays off 13 physical therapists, about 17% of its clinicians, as it preps for a mid-2025 IPO. Therapists contacted by Business Insider stated that the layoffs also coincided with a doubling-plus of clinician caseload from an average 2-300 at the start of 2024 to 700 by year-end. In a statement to BI, Sword maintained the cuts were ‘performance based’ and that they had open positions.

Information obtained by BI in interviews with Sword executives clearly states that they mean for AI to be the ‘master expert’ of their virtual therapy model, vetted (of course) by humans. According to the therapists interviewed by BI, “Sword began using AI-generated messages for patient conversations in the spring. The technology allows physical therapists to accept an AI-generated message, edit it, or reject it.” The big push is to scale Sword for more employer contracts in an outcomes-based model, paralleling Transcarent’s USP. Sword in June received a jumbo round of $130 million and now is valued at around $3 billion. Profitability is projected to be at the end of 2024 to preface the mid-2025 IPO. A competitor also considering its own IPO is Hinge Health [TTA 3 Oct]. MSN  Hat tip to HIStalk 13 Nov

And finally, truly, really–Cigna is NOT buying Humana! This was evident on the investor call 31 October by their CEO David Cordani [TTA 31 Oct] but it seems that the rumors persisted until Cigna issued an official statement that yes, it’s using free cash to buy back shares, yes, it will make strategic acquisitions, and no, it’s not buying Humana as it doesn’t fall into the second category. (It also is under Federal and FTC scrutiny about their pharmacy benefit management business under Express Scripts, TTA 1 Oct.) From the Cigna release: “Additionally, in light of recent and persistent speculation, The Cigna Group expects to communicate that the company is not pursuing a combination with Humana Inc. The Cigna Group remains committed to its established M&A criteria and would only consider acquisitions that are strategically aligned, financially attractive, and have a high probability to close.” You wonder who’s been fluffing along this rumor to this extent, and why. The tale of the tape? Cigna shares are up 4.5% in the past five days, while Humana’s are down 4%. FierceHealthcare

Short takes: Holmes legal team appealing Tuesday 11 June; Steward Health asset sale OK’d, needs funding; fundings for Sword Health, Eko Health

June 5, 2024 | by

Elizabeth Holmes may be in Bryan, Texas serving time, but the appeals go on. Her legal team will appear before the US Court of Appeals for the Ninth Circuit at 9am next Tuesday 11 June. Her initial appeal was filed in December 2022 [TTA 15 Dec 2022] with full 132-page legal briefs in April 2023 [TTA 19 Apr 2023].

Holmes’ team is seeking a complete overturn of the trial and verdict. The appeals center on an unjust conviction based on prosecutorial misrepresentations, such as Holmes being told that the Theranos technology worked and thus not misrepresenting it to investors at that time, and actions by Judge Edward Davila in the presentation of evidence in including evidence favorable to the prosecution and not including defense-favorable evidence. The appeal also includes, according to earlier reports, an accusation that Judge Edward Davila used the wrong legal standard in sentencing Ms. Holmes and thus over-sentenced her. Holmes will not be present for the appeal as is customary.

Her 11 year sentence is currently, based on Bureau of Prisons standards for good behavior, cut down to about 9 years. Her chances are slim that the appeal will succeed, based on overall rates, Judge Davila’s reputation for thoroughness, and his presiding over two identical cases, the other for ‘Sunny’ Balwani with the same evidence and a similar but longer sentence. There is no public word on whether Mr. Balwani is also appealing. He is serving his time at Terminal Island, California. Mercury News  Our back file on Theranos is best accessed through TTA’s search tab, keyword Theranos or Holmes.

Another fine legal mess is unfolding in Texas with the US Bankruptcy Court, Southern District of Texas, hearings on Steward Health’s dissolution.

  • On Monday 3 June, Judge Christopher Lopez approved a two part plan for the asset sale. Part 1 would be about the Massachusetts assets, with most of the system’s hospitals (eight) and its physician group. Bid deadline is 24 June and the first sale hearing is timed for 11 July. Massachusetts is the most contentious of the states Steward operated in, with state regulators taking the most actions against the company. Part 2 is the Florida and Texas asset sale, timed for a bid deadline of 12 August and first sale hearing of 22 August.
  • The US Department of Justice filed an objection 30 May to the sale, stating that it does not allow enough time for their regulatory review of the physician group sale to UnitedHealth Group’s Optum [TTA 18 Apr] and insisting that it must be reviewed before any sale. This effectively holds up the Part 1 sale. FierceHealthcare
  • The other spanner in the works for the DOJ is that Steward is flat out of money to run their hospital and practice assets. Without additional funds, on 14 June they will be broke, busted, skint by two Fridays from now. Steward’s lenders were before Judge Lopez yesterday (4 June) to try working that out. Current debtor-in-possession (DIP) Medical Properties Trust, which put up $75 million, won’t put up any more money until assets are sold. Other lenders want to put up only limited amounts of money. To lure lenders, Judge Lopez approved an emergency motion on Monday to permit a “commitment fee” offer of up to $6.75 million to third-party lenders and up to $750,000 to reimburse one or more lenders for expenses incurred during due diligence. Healthcare Dive. Will that attract another DIP? Only time, and not a lot of it, will tell.

In happier news, there are fundings for two health tech companies:

  • Sword Health announced a $130 million round in an unlabeled mix of primary and secondary sale. Their total funding is now $340 million, with lead from Khosla Ventures. Valuation is up to $3 billion, up 50% from its Series D valuation. The funding announcement was made in conjunction with a product announcement by the digital/remote MSK therapy company for Phoenix, the AI Care Specialist, which will be integrated across their entire offerings. Release
  • Eko Health’s Series D raised $41 million from ARTIS Ventures, Highland Capital Partners, NTTVC, and Questa Capital. Eko’s device and platform enhance the early detection of cardiac and pulmonary diseases during physical exams. Most recently, the FDA cleared Eko’s Low EF detection AI [TTA 5 Apr]. The new funding will be used for US expansion and expansion into key international markets, supported by new strategic investments from Double Point Ventures in the U.S., Singapore-based global investor EDBI (the corporate investment arm of the Singapore Economic Development Board), and LG Technology Ventures, backed by the LG Group of South Korea. Cardiac detection powered by AI are ‘perfect together’, at least for investors. Release, Axios

Who needs Watson Health? 10 startups using AI (for real) in medical diagnostics, clinical decision making, and more

February 25, 2022 | by

Our Readers over the years (since 2012!) have been tracking the rise–and fall–of IBM Watson Health. Now sold to Francisco Health [TTA 22 Jan], multiple companies have taken up chunks of their all-too-unwieldy mission, from oncology analytics and diagnostics to clinical decision making, and managing (and, in one case, reversing) chronic conditions. MM+M (Medical Marketing and Media) profiled ten companies–5 in diagnosis and 5 in treatment–in two articles. The first five are closer to the original Watson than the second group.

  1. Heartflow–diagnosis of coronary artery disease
  2. PathAI–machine learning for pathology in bladder and skin cancer detection
  3. Paige.AI–AI and pathology in prostate cancer detection
  4. Exo–medical imaging
  5. Proscia–dermatology diagnosis for melanoma
  6. Atropos Health–converting EHR information for clinical decision making and follow up
  7. Virta Health–prescribing food plans to people to reverse Type 2 diabetes, management via AI to doctors
  8. Sword Health–virtual care for patients with musculoskeletal (MSK) pain, managed by pairing them with digital therapy, monitoring by motion sensors
  9. Omada Health–personal interventions in chronic conditions
  10. Twin Health–sensor based monitoring and machine learning to reverse chronic diseases

Part 1 and Part 2