TTA’s Blooming Spring 2: Teladoc buys UpLift to buck up BetterHealth, Novo Nordisk partners with Hims, other teleprescibers on Wegovy, Masimo’s former CEO claiming un-granted shares, Commure-HealthTap partner, more!

2 May 2025

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)

From last week: Cherry blossoms are blooming (finally) and so is the news. The roundups include Walgreens’ continuing Aisle 9 cleanup of their Federal opioid prescribing allegations, a huge and mysterious breach of Google Analytics sending Blue Shield CA member info to Google Ads, and Veradigm’s interim CEO will be taking the summer off. Our big reads include two surveys: the first on the state of healthcare AI (more show than go) and the second on RPM utilization–and effectiveness. Two raises, a BCI/telehealth merge, and international initiatives.

Product & funding very short takes: South Australia 1st with Sunrise EMR; S. Korea pain research, new emergency services app; BCI + telehealth for stroke patients; VirtuSense monitoring launches at Emory; Series B raises for Nourish, Healthee

Short takes: Veradigm’s interim CEO departing, Blue Shield CA breached 4.8M members’ PHI to Google, advice on expanded M&A premarket notification rules (You can’t blame that CEO for ankling after all the trouble he’s seen! And Blue Shield has 2nd largest breach–involving Google Analytics. Bad timing for Google.)

News roundup: Walgreens’ $350M opioid settlement, only 30% of healthcare AI pilots reach production, Medicare RPM usage up 10-fold despite benefit limitations (Walgreens cleans up again, and two surveys on AI and RPM for weekend perusal)

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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This just in: Teladoc acquires UpLift for $30M, bolstering struggling BetterHelp telemental health; Q1 revenue down 3%

Teladoc closed out a down Q1 with buying UpLift. The $30 million acquisition is clearly strategic in bolstering BetterHelp, their floundering direct-to-consumer mental health provider. It closed on 30 April, the same day as Teladoc’s Q1 results call. UpLift was bought in an all-cash transaction, with up to $15 million in additional contingent earnout consideration. UpLift’s 2024 revenue was approximately $15 million. It is small compared to BetterHelp’s Q1 revenue of $239.9 million, which fell 11% versus Q1 2024 and continuing a decrease from Q4 2024, when its revenue was $250 million, after sinking through the entire fiscal year. 

What UpLift adds is insurance-reimbursable mental health coverage with all major commercial insurers, including Medicare and Medicaid, something that the cash-pay-only BetterHelp lacked. It also adds coverage of 100 million lives and a network of over 1,500 mental health providers. According to the release, BetterHelp will work with its customers to help them access insurance coverage. Their network providers will “have an opportunity to be considered for inclusion in the benefits coverage network, based on the respective requirements, needs and interests”, which is an interesting way to present it.

Teladoc said in the release  and on the earnings call that UpLift will be reported under BetterHelp’s results, although it will be run separately under its current CEO Kyle Talcott. There is no further indication as to management transitions. The impression given from the release at least in the short term is that it will be run separately for management of their provider network, quality and patient outcome oversight and the acceptance and administration of insurance coverage. 

What does this mean? How much of a lift UpLift will give this year to BetterHelp is anyone’s guess, but adding insurance coverage is a much needed move by Teladoc, given BetterHelp’s expensive DTC cash model.

  • Teladoc has known for some time that lack of insurance coverage was a key part of BetterHelp’s performance problems. UpLift will help in that regard.
  • In the past 18 months, it moved from Teladoc’s great hope, one which former CEO Jason Gorevic bet ‘large’ on only for him to depart in a haze of red ink [TTA 5 Apr 2024], to a slowly eroding asset or worse, a rolling failure. It is particularly inexplicable given the growth of virtual mental health.
  • In the past year, BetterHelp operations were responsible for a $790 million impairment that hit Teladoc’s Q2 and a nasty, embarrassing rap by short seller Blue Orca Capital on ChatGPT being used in therapeutic responses [TTA 25 Feb], vigorously denied by Teladoc [TTA 25 Feb]. 
  • BetterHelp’s revenue for the remainder of 2025 is expected to shrink by up to 9.75%.

The main Teladoc operation, segmented as Integrated Care, also performs virtual mental health care within its services. This is noted in the release: “Teladoc Health’s Integrated Care segment offers a range of digital tools, coaching, therapy, and psychiatry services for employers and health plans (Editor’s emphasis), and completed nearly a million mental health visits in 2024.” Since those virtual mental health services are within Integrated Care, its performance is not public. 

Is a real solution a rebranding of BetterHelp when it is integrated (as it eventually will be) with UpLift?

HIT Consultant, FierceHealthcare, Mobihealthnews

Teladoc Q1 financial highlights:

There wasn’t much encouragement across the board in Teladoc’s Q1 report.

  • Total Q1 revenue decreased 3% to $629.4 million from prior year’s $646.1 million in First Quarter 2024
  • The bright spot was that their main business under Integrated Care had a revenue increase of 3% to $389.5 million 
  • As mentioned, BetterHelp’s revenue decreased by 11% to $239.9 million
  • By domestic versus international, US revenue decreased 4% to $525.0 million. International revenue grew 6% to $104.4 million.
  • Net loss also increased to $93.0 million, or $0.53 per share, versus prior year’s Q1 $81.9 million, or $0.49 per share.
  • Adjusted EBITDA for Q1  decreased 8% to $58.1 million, versus $63.1 million in the prior year. \
    • Integrated Care’s adjusted EBITDA increased 6% to $50.4 million.
    • BetterHelp’s adjusted EBITDA decreased 50% to $7.7 million.

The release also confirms full year 2025 revenue projections of $2,468 – $2,576 million. BetterHelp’s revenue is projected to continue to shrink by 3.75 to 9.75%.

These just in: drug compounders sue FDA over semaglutide scarcity removal; Sycamore’s Walgreens buy plans begin to show

What the telehealth prescribers can’t do, the compounders are. A major drug compounder association, the Outsourcing Facilities Association, along with member North American Custom Laboratories, LLC, both based in Texas, filed suit yesterday (24 February) against the FDA to vacate the final action removing semaglutide, the active ingredient in GLP-1 drugs, from the shortage list. The FDA announced that it was being removed from the shortage list effective April-May, after months of compounders legally creating semaglutide-based weight loss drugs as permitted during the shortage. This was certainly good news for Novo Nordisk, the pharmaceutical company that developed and markets Ozempic and Wegovy [TTA 25 Feb].

The compounding was a boon for telehealth providers such as Hims and Hers, Ro, 23andMe (Lemonaid), Future Health, Weight Watchers, Lark, and many others. It allowed them to customize injectable formulations for customers on weight loss programs at a far lower cost than standard branded products. The FDA allows this only during times of shortage (compounded by Section 503A pharmacies and Section 503B outsourcing facilities as “essential copies” of FDA-approved drugs). Exceptions are also made if the standard drug is in some way inappropriate for the patient who then medically requires a customized version, e.g. with adjusted dosage, method of dosing, or added/deleted ingredients, but these are not ‘mass’ circumstances or situations. 

Among the grounds presented in the suit against the FDA are that the shortage is still going on with delays in prescription filling, leading to patient harm; that FDA’s delisting was arbitrary without the required notice with public comment nor was it published in the Federal Register; and that it is ‘arbitrary and capricious’. Novo Nordisk has admitted publicly that supply constraints could still exists. 

Continued ‘customization’ is vital to telehealth prescribers’ revenue, while branding is vital to the pharmaceutical developers undercut by compounding. In 2024, Hims alone earned $225 million in revenue from compounded semaglutide and other GLP-1 type drugs. Both Novo Nordisk and Lilly (Zepbound) have pushed back on the compounders on safety and risk, along with lower prices in new delivery types such as vials versus autoinjectors.

The suit was filed in the US District Court for the Northern District of Texas. Biopharma Dive

More intriguing details if Sycamore Partners takes Walgreens Boots Alliance private. Financial Times reported via Reuters that according to the usual “people familiar with the matter”, Sycamore’s plan is to separate WBA into three parts, like Gaul: US retail pharmacy, Boots UK, and US Healthcare (VillageMD, CareCentrix, and Shields Health Solutions). They would have distinct capital structures. There’s minimal information beyond that. Sycamore is not expected to have difficulty financing the take-private, and WBA chairman Stefano Pessina is expected to have an ownership stake. The news drove WBA shares up today about 5% and 10% in the last five days. But the news seems to be moving along. VillageMD’s on the market is assumed but it is not certain any sale would complete in time. Crain’s Chicago Business

Teladoc responds to Blue Orca’s report on BetterHelp’s AI ‘therapy’ (updated)

Teladoc formally responds to the Blue Orca Capital research report [TTA 25 Feb]. Their letter (PDF) via its legal counsel (King & Spalding) yesterday refutes Blue Orca’s allegations in a report on their stock (TDOC) that a “meaningful” number of BetterHelp patients are receiving AI therapy from therapists in the form of text/asynchronous and live messages, calling them “vague and unsubstantiated”.

The policy stated by Teladoc, quoted directly from this letter (Editor’s notes):

  • BetterHelp expressly prohibits therapists from disclosing any member personal or health information to third-party AI. (Editor’s emphasis)
  • BetterHelp has a Trust and Safety team dedicated to the detection and prevention of non-compliant use of AI and, if anything, has structured its platform (and its incentives to therapists) to promote live video calls over asynchronous messaging. (Another point made by Blue Orca)
  • BetterHelp’s Privacy Policy provides further disclosures to members concerning its AI practices. (The Privacy Policy is at the end of Section 1 Data Collection and Processing, and is specific as to AI being used for ‘manual, repetitive tasks’ in processing and to “help therapists manage and document sessions more effectively”.)

Readers will note that this Editor called Blue Orca’s statements in its report about AI therapy “allegations”. I also noted that Blue Orca was a short seller. I later clarified what a ‘short seller’ is and that short sellers profit when the stock goes down. Short sellers are also prohibited by securities law from spreading false information about a stock for the purposes of profiting from its decline (Rule 10b-5 under the Securities Exchange Act of 1934.)

The Teladoc counsel letter to Blue Orca Capital addresses other allegations in the Blue Orca report about their changes in reporting practices in FY 2022 that supposedly inflated Teladoc’s profitability. These are outside the scope of both articles and will not be commented on here.

Disclosure: Teladoc reached out to this Editor, supplying information about their response including the King & Spalding letter.

This Editor hopes, and would like to see confirmation, that any BetterHelp therapist using third-party AI to respond to patients in providing direct therapy, versus Teladoc/BetterHelp supplied management tools, customer service information, or security tools, is disciplined and released. The integrity, privacy, and security of a telementalhealth platform is essential to its operation and the confidence of its patients–and should be publicly confirmed.

Update: In response to this article, a spokesperson from Teladoc Health further elaborated:

“To be clear, BetterHelp expressly prohibits therapists from disclosing any member personal or health information to third-party AI. BetterHelp has clear, rapid processes for members to report negative experiences, switch therapists, and cancel memberships, when requested. If a therapist is found to be practicing in an unethical manner, they are investigated and terminated from the platform. The overwhelming majority of members stay with their matched therapist, even though they are free to switch their therapist at any time.” 

News roundup: DOJ investigating UHG on Medicare Advantage billing upcoding; Teladoc’s BetterHelp therapists using AI?–a short seller alleges; Hims whacked by FDA ending compounded GLP-1s (updated); some fired FDA staffers in CDRH reinstated

UHG’s annus horribilis gets more horribilis. News broke on Friday 21 February via the Wall Street Journal (paywalled) that UnitedHealth Group is reportedly under investigation by the US Department of Justice–again.  The DOJ is looking at UHG’s billing practices for members covered by UnitedHealthcare Medicare Advantage (MA) plans on diagnoses that were made to generate extra payments, a practice known in the industry as upcoding. This also involves the many practices that UHG owns or has relationships through Optum, about 10% of primary care practices. These practices are receiving visits from DOJ investigators, certainly something that would strike some fear into any doctor’s or practice manager’s heart. 

The WSJ reported that two providers cited in their article provided documentation, while another person said that the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) is involved in the probe.

It’s a real Mound of Misery for UHG.

  • MA plans and their set rates for additional benefits not covered under original Medicare have been under HHS/CMS scrutiny in the past year, and health plans have been running higher costs than anticipated as covered patients have returned back to care.
  • UHG’s OptumRx unit last year was reported as under investigation on antitrust grounds.
  • Optum’s Change Healthcare (contested by DOJ but approved) is still recovering from an unprecedented hacking and ransomwaring, with the huge expense of restoring systems plus notification and providing a reported 100 million with free credit monitoring services.
  • The proposed $3.3 billion deal with Amedisys for home care continues to be delayed by the DOJ antitrust suit.
  • Their UnitedHealthcare president was assassinated in New York, and his (alleged) killer is starting his trial here, a spectacle which will go into the summer. But the issue that supposedly tipped off the murder–claim denials and denials of care due to policies and the use of AI, isn’t going away–jumping in the fray is megainvestor Bill Ackman.

While Federal involvement with health plans comes with the territory, the adversarial relationship with DOJ far exceeds the norm. The share price reflects it, having cracked 26% in the past six months. Those accepting the 30,000 buyouts on offer may be grateful if they take them. CNBC, FierceHealthcare

Another backwash from the use of AI? Teladoc is receiving some bad publicity it can ill afford. There are allegations of their therapists using AI-drafted responses with patients–and this apparently is becoming more frequent. It’s been percolating on social media boards such as Reddit (see example here) for some time. The latest is a report from a short seller* of Teladoc, Blue Orca Capital, that alleges that BetterHelp therapists not only use ChatGPT for text responses outside of live sessions (messaging), but also during live chat sessions. This goes against Teladoc’s own stated policy against AI therapy as ‘dehumanizing’  in a lengthy blog post ranging from social media to job loss as a result as AI. Blue Orca includes first hand information from two BetterHelp patients, an allegation from a competitor that BetterHelp doesn’t care, and that therapists are actually incentivized on the word length of responses they give to a patient, overloading their schedule, and being available 24/7 to patients paying a reported $400/month. Given BetterHelp’s prominence in Teladoc’s earnings–according to them “accounting for 40% of the Company’s revenues and adjusted EBITDA since FY21”, adding in their other financial factors, their dim view is jarring if you like or own TDOC.  Developing. Hat tip to HIStalk 2/24/25

*Editor’s note: Blue Orca Capital, as a short seller, profits when a stock goes down. Blue Orca has a short position in TDOC. So our Readers should take their position into account. Short sellers are also prohibited by securities law from spreading false information about a stock for the purposes of profiting from its decline (Rule 10b-5 under the Securities Exchange Act of 1934.)

The Feds giveth and taketh away Hims’ weight loss business. Updated information. Friday’s good news was that FDA has reclassified the shortage of semaglutide, the active ingredient in GLP-1 drugs, as ‘resolved’, meaning It’s Over and it’s easier to get your Wegovy, Ozempic, Zepbound, etc. prescription. The bad news is that online prescribers that were authorized by FDA to use less expensive compounding to approximate or customize the branded versions of these drugs for weight loss, are now prohibited from doing so. They have till April or May to transition to branded injectable versions. This affects the bottom line of all these telemedicine prescribers such as Ro, Weight Watchers, Future Health (a heavy local radio advertiser), 23andMe, and Hims & Hers. Hims, the showiest in class, took a breathtaking 25% hit on their stock between Friday and Monday.

It is not only cost of branded drugs but also that so many competitors have jumped into the field, creating another shortage of the branded drugs, that looms. Suppliers of compounded drugs, the high volume compounding pharmacies (not your corner pharmacy that does compounding based on Rx), may be reluctant to continue supplying telemedicine prescribers in reasonable fear of FDA action or pharma lawsuits that could put them out of business.

Hims also publicly took the hardest line against the pharma companies, implying in their now infamous Super Bowl commercial that their obesity drugs are priced “for profits, not patients”, unlike Hims’, of course. Novo Nordisk, the Ozempic and Wegovy manufacturer, in turn has taken a hard stance against the compounders pointing out that a compounded version isn’t standardized nor FDA-approved for safety and efficacy.

A custom, compounded version of a drug can only be sold when there is a shortage or if the branded drug is in some way inappropriate for the patient requiring a customized version, e.g. with adjusted dosage, method of dosing, or added/deleted ingredients. Look for Hims and other telemedicine prescribers to start pushing this POV. FierceHealthcare, MedCity News

Some FDA reviewers reinstated after DOGE cuts. The ~230 probationary and other employees who were let go with severance then partially reinstated are reported to be reviewers in the CDRH (Center for Devices and Radiological Health). The 183 reinstated reviewers are actually funded by the industry through the Medical Device User Fee Amendment (MDUFA) agreements to help speed the review and approval process. There is considerable confusion about this because phone calls went out over the weekend but as of today (Monday) there is no written confirmation from HR or the Office of Personnel Management (OPM). It remains murky as do layoffs in the rest of HHS. FierceHealthcare, Endpoints

Teladoc to buy Catapult Health in all-cash, $65 million deal

Teladoc lets loose with the cash, snaps up Catapult Health to get into preventative health services. Teladoc’s agreement with Catapult to acquire them for $65 million is their first significant purchase move by Teladoc since the $18.5 billion Livongo buy in 2020 and the first for new CEO Chuck Divita, who joined Teladoc last year. The strategy, as alluded to at the JP Morgan conference, is to widen the product breadth to deepen impact on healthcare outcomes.

Catapult is positioned significantly earlier in patient health than Teladoc, as their Virtual Checkup sends at-home diagnostic kits to employees or health plan members to return as a form of an annual checkup, for instance. The kits test for blood glucose, cholesterol, and blood pressure, plus BMI calculated by height and weight. If a condition is diagnosed, a virtual consult with a licensed provider is scheduled, and the employee is directed into an appropriate program or to their primary care provider. Employers and plans get data on the patient/member group to refine approaches and close care gaps. Earlier diagnosis and management save both employers and payers money–a claimed $1,400 over a three-year period.

The integration into Teladoc is logical as the ongoing patient management is planned to be steered to Teladoc and its programs/providers. Catapult at present has no app–their management approach is 1:1 on a video consult scheduled between the employee/member and Catapult’s provider.

Compared to the Livongo buy, Catapult is snack-sized. The deal is $65 million in cash, with an additional $5 million contingent earnout consideration. The transaction was 2.2 times Catapult’s trailing 12-month revenue through Q3 2024. Closing is expected to be this quarter. Catapult is private and over 15 years raised a modest $26.4 million from exiting investors Jeffrey Smith, Michael Woods, University of Colorado Health, and Health Enterprise Partners. As is becoming standard, there is no transition mentioned of Catapult employees, including CEO David Michel, except for a statement that it will operate within the Integrated Care segment of Teladoc. Catapult is based in Dallas and claims 3,500 employers and other organizations that cover 3 million lives.

Will Teladoc do better than they did with integrating Livongo? In the release, Teladoc stated that Catapult clinicians “will be able to directly enroll eligible members into Teladoc Health’s diabetes, hypertension, pre-diabetes and weight management programs, and seamlessly refer them to Teladoc’s virtual mental health therapists and primary care providers.” One can only hope that this integration goes better than Livongo’s. Former CEO Jason Gorevic touted it as seamless as late as mid-2022, but it turned out to be a potholed road with Livongo’s execs taking the money and running, then gradually losing (or cutting) most of its operational expertise in the chaos. Teladoc also aggressively leveraged Livongo and Teladoc’s longitudinal capabilities at the wrong time to the wrong markets 1) during an economic downturn and 2) to buyers not wanting their ‘premium spread’ but preferring less comprehensive but targeted solutions from competitors that were easier and cheaper to implement. The point of Catapult Health was, after all, to save employers money. We’ll see if a new Teladoc crowd has learned that hard lesson and to move softly, softly on the upselling. CNBC, Healthcare Dive, FierceHealthcare    For a more in-depth look at Teladoc’s and Amwell’s struggles in a changed market, see our 9 April 2024 article on What Happens Next in telehealth.

Short takes: Teladoc intros hospital bed fall risk detector, Veradigm’s AI scribe, Lucid’s pill-sized esophageal cancer diagnostic, Cortica’s $80M raise for autism treatment, LG NOVA startup winners

Turkey bites before Thanksgiving:

Teladoc debuts Virtual Sitter, a hospital bed system for fall detection risk. It uses AI to assess the risk of a patient falling from a hospital bed. The risk is determined by the patient moving within or outside set spatial boundaries (Bounding Box). It can also determine limb movements, whether the patient is sitting up or lying down, and can screen out other people in the room. The AI is coupled with human observation by a nonclinical trained staff monitor who can speak with the affected patient. Virtual Sitter integrates with Teladoc’s TV Pro devices and enables the live monitor to view up to 25% more patients. Falls out of beds are a major cause of hospital injury with over 1 million patients affected and 30% experiencing lasting injuries. TV Pro and Virtual Sitter are in Teladoc’s integrated care unit that has done fairly well in recent quarters. FierceHealthcare, Teladoc release in Yahoo Finance

Veradigm introduces a virtual scribe. The Veradigm Ambient Scribe is designed to ease the burden of EHR documentation. It uses  generative AI from AvodahMed to automatically capture and transcribe real-time patient-provider interactions into structured medical notes. It integrates into the Veradigm EHR. Veradigm release. Meanwhile, the long-drawn-out Veradigm sale has not advanced but betting is that it will be wrapped by year’s end [TTA 13 Nov].

Lucid Diagnostics introduces a diagnostic for detecting esophageal cancer cells without endoscopy. Esophageal cancer is deadly (50% mortality in Stage 1), difficult to detect but is common in those suffering from gastroesophageal reflux disease (GERD). Endoscopy for these high-risk patients is highly invasive, requires IV anesthetic, and its complexity is a barrier to detection of pre-cancerous cells, where it is most curable via ablation. The noninvasive EsoGuard biomarker test uses a detection device about the size of an easily swallowed vitamin pill and is attached to a thin catheter. The catheter collects cells in about a minute which are then analyzed for genetic markers associated with esophageal precancer and cancer. It was FDA-cleared in 2019 and is the only test of its type, but awaits coverage by Medicare and commercial insurers. MedCityNews 

Cortica raises $80 million for its childhood autism diagnosis and treatment offering. The raise was a venture round from Morgan Health, a unit of JP Morgan, Nexus NeuroTech, and Autism Impact Fund.  It provides applied behavior analysis, diagnostic testing, speech-language therapy, occupational therapy, counseling and other services through its 24 centers in eight states and also via virtual counseling in schools and homes. Its purpose is to integrate the often fragmented care autistic and neurodivergent children receive.  The current funding will be used to expand the number of center locations, for value-based contracts with insurers, and to integrate guarantees focused on faster evaluation, diagnosis and treatment, as well as clinical outcomes. Since 2018 it has raised $255 million. MedCity News, FierceHealthcare

And winding it up….

Korean electronics company LG throws its cap into the startup competition business. LG’s NOVA is not salmon or Brazilian music but the North America Innovation Center of LG Electronics. Ten startups presented at LG’s InnoFest in San Francisco, focusing on  life sciences, open innovation, health tech, AI, smart life, and cleantech. The three winners were chosen as the most promising in driving impactful change. 

  • First Place ($15,000): mDETECT Inc. – Developer of highly-sensitive cancer blood tests using DNA sequencing, offering a universal approach to monitoring therapy response and detecting cancer progression. 
  • Second Place ($10,000)Glidance – Independent mobility for people who are blind or have low vision with Glide, the first AI-powered intelligent guide, which enhances confidence, safety, and autonomy. 
  • Innovation for Impact ($10,000)Oncoustics – Transforming low-cost point-of-care ultrasound devices into powerful diagnostic tools for early detection and monitoring of liver diseases using AI. 

The winners’ next step is collaborating in LG NOVA’s Mission for the Future Program which includes marketing, partnerships, and additional resources.  LG release

News roundup: Teladoc’s improved Q3, PursueCare resuscitates Pear’s apps, AMA removes 16-day RPM requirement in 2026, PatientPoint intros Innovation Network, PeopleOne’s $32B raise, Cigna-Humana again a no-go

Teladoc beat the Street for Q3–even with a still gasping BetterHelp. Their Q3 under new CEO Chuck Divita was an improvement over their dismal Q2 [TTA 1 Aug] where Teladoc posted a $838 million net loss, largely made up of a $790 million impairment on BetterHelp’s sinking performance. BetterHelp, the direct-to-consumer mental health portion of their business, continues to sink in an overcrowded market even though telemental health remains in or near the lead in competitors’ recent funding rounds. Revenue this quarter decreased 10% to $256.8 million. CFO Mala Murthy admitted that BetterHelp is a “business in transition,” although the from-and-to remain opaque. 

That bit of bad news aside, Q3’s net loss was only $33.3 million, a big improvement over Q2 2023’s $57 million loss. This quarter also included $3.6 million in restructuring costs related to severance and office space reductions. Revenue declined by 3% to $640.5 million, following on Q2’s 2% decline, which is not a good trend. Adjusted EBITDA was $83.3 million, down 6%. Integrated Care (their main business) segment revenue increased 2% to $383.7 million.

For the nine months of 2024, revenue was off 1% versus prior year at $1.9 billion with a cumulative net loss of $952.8 million. Integrated Care’s revenue grew 5% to $1,138.2 million, with BetterHelp again declining 8% to $790.9 million. 

Divita and Murthy both attributed slowing growth to increased acquisition costs which impact the DTC model of BetterHelp–and that isn’t expected to change. They see greater opportunities for overall growth in international business, which also has less expensive international ad spending. The analyst quoted by FierceHealthcare believes that Teladoc is still in the process of adjusting to a slower growth model and focusing on profitability. Shares remain up slightly at around $9 since yesterday’s report, an improvement over their August lows at $6-7. Release

PursueCare revives Pear Therapeutics’ two FDA-cleared addiction apps. Both RESET and RESET-O have been relaunched by PursueCare, a Connecticut-based addiction recovery and behavioral health virtual care service. The two apps were cleared under Pear’s ownership and to date are the sole the only FDA-cleared prescription digital therapeutics (PDTs) for substance use disorder (SUD) and opioid use disorder (OUD). They provide a self-guided 12-week course of cognitive behavioral therapy (CBT), in which patients are incentivized to complete lessons, adhere to treatment, and abstain from drug use. PursueCare’s virtual clinic model uses a smartphone app and utilizes a care team model to provide telehealth treatment for opioids, alcohol, stimulants, and other substances, including medication assisted treatment (MOUD), counseling, psychiatry, case management, pharmacy, and treatment for addiction-related health conditions. Mobihealthnews, PharmaPhorum, Release

Not covered by Mobihealthnews is the backstory on PursueCare’s acquisition of Pear’s PDTs. As we reported when Pear was sold off by the US District Court in Delaware in bankruptcy to four companies, one of the big acquirers of Pear assets was its former CEO, Corey McCann MD, doing business as Harvest Bio LLC. Harvest paid $2 million for the ISF licenses and patents, plus Pear assets related to schizophrenia, multiple sclerosis, depression, and the remaining pipeline projects. They also bought the corporate trademarks, the PearConnect commercial platform, and the rights to the FDA-cleared reSET and opioid-specific reSET-O programs/apps. The two RESET apps were then sold to PursueCare last December along with RESET-A for alcohol addiction for an undisclosed price. This has FDA breakthrough device designation but is not yet marketed by PursueCare. PursueCare also raised $20 million in a Series B in January led by T.Rx Capital. McCann, one of T.Rx Capital managing partners, joined PursueCare’s Board of Directors at that time. Healthcare IT Today  Does this begin to resemble about three degrees of separation?

The American Medical Association (AMA) made life a little more marketable for remote patient monitoring (RPM) companies. As of 2026, the AMA in its remote physiologic monitoring CPT codes will no longer require 16 days of continuous monitoring within 30 days in order to qualify for coding reimbursement. It’s a pity it won’t kick in for over a year, so RPM companies will just have to hang in there till then. FierceHealthcare

PatientPoint launches Innovation Network, names chief experience and innovation officer. The digital health company that provides health information at 35,000 patient point-of-care locations announced at HLTH that their new CEO, Sean Slovenski, will be forming a network that connects leaders from various industries with a vision of transforming healthcare. The founding partner is Verizon joined by LG, GoodRx, and Thrive Global. Its purpose is to “foster collaboration to develop patient-first solutions that address some of healthcare’s most pressing challenges.” PatientPoint’s new chief experience officer Shawn Nason joined from his own consultancy six months ago as chief of staff and head of experience and is considered to be expert in disruptive innovation and human-centered design. Release

PeopleOne Health‘s value-based primary care hybrid model received a nifty $32.3 million Series B funding. It was led by GV (Google Ventures), with participation from investors including healthcare entrepreneur and Transcarent CEO Glen Tullman. Their nine clinics are presently in Pennsylvania with their newest expansion in Palatka, Florida, south of Jacksonville. Their model is employer-focused; employees are fully covered by employers with no copays, deductibles, or coinsurance. It’s claimed that they save up to 30% on healthcare costs. Mobihealthnews, Release

Cigna quashes Humana buy rumors–again. These revived in late summer like pumpkins, but on an investor call Thursday (today), Cigna CEO David Cordani said that instead, their free cash would be used to buy back shares. Unlike other payers, Cigna beat the Street with total revenue of $63.7 billion, up 30% versus prior year. Shareholders’ net income for Q3 was $739 million, less than prior year’s $1.4 billion. The positive picture was powered by strong demand for specialty drugs in Evernorth Health Services but dragged down by a May $1.8 billion write-off of Cigna’s investment in VillageMD [TTA 1 May]. Healthcare Dive, Release

News roundup 23 Oct: views on a CVS breakup and CEO replacement, Amwell’s interesting new CFO, CopilotIQ/Biofourmis merge (updated), raises by HealthEx, Counsel Health, Oshi Health

How CVS Health grew into a juggernaut…and why it may pull back to survive. October kicked off with the bombshell [TTA 1 Oct] that CVS Health was considering a breakup into at least two units. Based on Reuters’ insider information, CVS was considering separating their Aetna health plan side from their retail operations. Up in the air was where the now problematic pharmacy benefits management (PBM) units would reside. CVS’ revenue and profitability crunch is biting hard, with Glenview Capital Management and other investors tiring of declining share value (-25% YTD).

Last week’s bombshell was the immediate (17 October) replacement of CEO Karen Lynch with CVS Caremark’s (PBM) president, David Joyner. Lynch, one of the US’ most powerful top female CEOs, took the helm after Larry Merlo’s February 2021 retirement. She had been Aetna head and with the company a total of 12 years, including the pandemic. In August, trying to stave off a two-headed decline that has hit both health plans and retailers, she ousted Aetna’s president Brian Kane and took over direct control. It didn’t take long for this to be viewed as not working. Joyner is a CVS Health ‘lifer’, having started with Aetna as a rep close to 40 years ago, then with an independent Caremark and rising through the ranks. His tenure is starting at a low point with the medical loss ratio (MLR) topping 95%, medical costs soaring, MA ratings cratering, competition from other PBMs, Amazon, and Mark Cuban Cost Plus, plus Federal scrutiny of PBMs on insulin pricing. This is causing a reset on their FY financial guidance which won’t be revealed until early November. FierceHealthcare

MedCityNews did a smart analysis on this, going back in time to 2018 when CVS laid out $70 billion for Aetna. Last year, CVS, in pursuit of integration/expansion goals laid out by top management, acquired Signify Health (home health) and then Oak Street Health (OSH) primary care practices for a combined $18-19 billion. The experts they consulted largely look on a breakup/spinoff as a short term fix, though CVS is right now, to quote Dr. Robert Pearl of Stanford, FTA: “They’re sitting in the place where all the headwinds are.” Will they stick it out or will their investors like Glenview, facing their own headwinds, go for the short term solution?

Over at Oscar Health, their CEO Mark Bertolini, engineer of the Aetna/CVS deal and later ousted from the CVS board, must be smiling as Oscar is Back In Black.

Amwell, which is facing headwinds of hurricane force, named a new CFO. Mark Hirschhorn joins from his most recent spot as CEO of TapestryHealth, a post-acute care telemedicine provider. He is replacing Robert Shepardson, who stated last week he would resign effective Friday 11 October.

Hirschhorn was formerly with Teladoc, from which he resigned in 2018 under reports of insider trading and on top of it, an inappropriate relationship with a subordinate [TTA 20 Dec 2018]. He then was president/COO for two years at cracked SPAC Talkspace, from which he resigned after an internal review regarding his behavior at an offsite company event. Talkspace and Amwell discussed a merger back in the palmy days of 2022 [TTA 22 June 22] which never happened.

Hirschhorn’s last company, TapestryHealth, announced their new CEO effective a little over a month ago on 16 September, with Craig Anderson joining from UnitedHealth Group [TapestryHealth release]. In their release, Hirschhorn was described as pursuing other opportunities with Sopris Venture Capital. Fintel does not list Sopris as an investor or shareholder in Amwell, but this information could be outdated.

This Editor will restrain herself from further comment and wishes the best for Amwell. Healthcare Dive

Two home healthcare-focused companies, CopilotIQ and Biofourmis, announced their merger at HLTH this past Monday. CopilotIQ’s focus has been on in-home delivery of connected care including RPM and nursing for chronic conditions through an AI-assisted software platform, while Biofourmis’ system and market has concentrated more on health systems, payers, and pharmaceutical companies for in-home delivery of complex care. The combined company will be headed by CopilotIQ’s CEO David Koretz. Merger transitions and costs were not disclosed. Investors in both companies–General Atlantic, Openspace Ventures, and Bessemer Venture Partners–are listed as investing into the combined business. Release 

Update: What’s interesting is that CopilotIQ appears to be a relatively small company with only two funding rounds listed on Crunchbase. It was listed as one of Fast Company‘s most innovative companies of 2024 back in March and closed 2023 with 10,000 members, up from 200 at the start of 2022.  Biofourmis, founded in Singapore and moving to Boston in 2019, at one point was a unicorn with $464 million in 10 rounds of funding up to a Series D. Yet the company will be headed by the smaller company’s CEO. It could be a merger arranged, as nowadays many are, by the funders. It also may not be, because the release does not disclose the financials of these two private companies and positions it as a merger. But this is one merger that makes sense to provide wider availability of integrated in-home services. What is odd: Crunchbase is listing it as an acquisition by Biofourmis, which is not what the release states nor other sources.

Meanwhile, Biofourmis’ former CEO and one of their founders, Kuldeep Singh Rajput, has founded a health tech company based in Singapore that is focused on generative AI. OutcomesAI is using a LMM (large multi-modal model) called Glia to work with SingHealth for clinical companion AI. Mobihealthnews Update: Rajput transferred his 96.6 million shares in Biofourmis to 19 existing investors immediately prior to the merger, according to filings with ACRA, Singapore’s Accounting and Corporate Regulatory Authority. DealStreetAsia

A quick rundown on fundings touted at HLTH:

HealthEx, a company with a tech model for healthcare organizations to manage data around patient preferences and consent, announced a $14 million seed/Series A funding. It was “hatched”, according to the release, by General Catalyst. 

Counsel Health scored $11 million in Series A funding. Counsel provides on-demand, high-quality, personalized medical advice from expert physicians within minutes. It apparently is a blend of an advice, counseling, and telehealth model. Counsel currently claims to serve tens of thousands of patients through its health plan and provider partnerships in California, New York, Massachusetts, Florida, and Texas. Funding will be used for platform development and nationwide expansion..The round was led by Andreessen Horowitz (a16z) Bio + Health, with participation from Asymmetric Capital Partners, Floodgate Fund and Pear VC. Release

Oshi Health won this week’s Big Raise with a $60 million Series C. Oshi is a virtual-first gastrointestinal care clinic integrating evidence-based medical care and behavioral health support for patients with Crohn’s Disease, irritable bowel syndrome (IBS) and ulcerative colitis. Funding was led by Oak HC/FT with existing investors CVS Health Ventures, Flare Capital Partners, Takeda Digital Ventures, Bessemer Venture Partners, and First Cressey Ventures. Mobihealthnews, Release

Breaking: another exit at Teladoc, with COO resigning effective 31 December

The corporate exits and reorganization at Teladoc continue. Mike Waters, chief operating officer (COO) of Teladoc since mid-2022, has handed in his resignation effective 31 December. The reason given by Teladoc in an SEC 8-K regulatory filing (see item 5.02) is “a change in the Company’s executive reporting structure” which under US law is a resignation ‘for good reason’ as explicitly specified in his employment agreement. He is off the executive leadership webpage.

The parting will not be a difficult one. Mr. Waters will have:

  • nine months of continued base salary
  • up to nine months of premiums for continued medical, dental or vision coverage pursuant to COBRA
  • any earned but unpaid annual bonus in respect of 2024
  • accelerated vesting of all time-based equity awards granted to Mr. Waters prior to the Separation Date, which are unvested as of the Separation Date and are scheduled to vest in the nine months following the Separation Date
  • continued eligibility to vest in awards subject to performance-based vesting conditions if and to the extent the performance conditions are satisfied during that nine-month period.

In return, Mr. Waters will remain an employee through the 31 December separation date. He also has to execute a separation and release agreement that releases any further claims against Teladoc. It also includes a post-termination nine-month non-compete and non-solicit agreement. General non-compete agreements are controversial with new laws limiting them but if baked into an older employment agreement are likely spelled out.

Mr. Waters’ business operational roots are in health systems and practices. He was previously with the Providence health system in Washington, first with Swedish’s practice groups, then in senior executive positions with the system, for a total of over 14 years. 

Teladoc’s top-level executive churn has been substantial this year. At the CEO level, Chuck Divita replaced ousted Jason Gorevic in June after a short under two-month vacancy. Richard Napolitano, the chief accounting officer, departed in May and joined Thomson Reuters where he is now chief accounting officer (LinkedIn). He was replaced by Joseph Catapano from Pitney Bowes in September.  Laizer Kornwasser, the president of enterprise growth and global markets, formerly president of CareCentrix prior to its acquisition by Walgreens, was terminated in July in another reorganization and apparently has not been replaced.  Healthcare Dive

Breaking: Teladoc’s Q2 sinks on $790M BetterHelp impairment; Wojcicki files to take 23andMe private

Teladoc posts Q2 loss of $838 million, takes $790 million impairment on BetterHelp’s sinking performance. New CEO Chuck Divita had nothing but bad news to deliver to Mr. Market (right below). It was so bad that they withdrew their FY2024 outlook for both consolidated operations and BetterHelp stated in April and all three-year outlooks. TTA Q1 Teladoc results and outlook  

  • Q2 revenue declined 2% versus prior year to $642.4 million. Integrated Care (main business) segment revenue increased 5% to $377.4 million while BetterHelp declined 9% to $265 million. Readers will recall that previous CEO Jason Gorevic assured investors that BetterHelp would carry Teladoc to profitability. Au contraire, along with his job.
  • The bright spot was that adjusted EBITDA increased to $89.5 million, up 24% versus prior year, but adjustments reflect all sorts of financial legerdemain, including impairments.
  • First half results were essentially flat versus prior year, with revenue up 1% to $1,288 million with Integrated Care up 7% to $754.5 million–but BetterHelp again sinking results with a decrease of 7% to $534.0 million.

BetterHelp’s rolling failure is almost inexplicable, with telemental health being the ‘IT’ clinical category in digital health funding. Spring Health just scored a $100 million Series E [TTA 31 July]. Younger companies such as Talkiatry and Brightside Health seem to have no problem raising funds or gaining partners/customers. One would think that with established customers in the enterprise space, Teladoc would have no problem adding on telemental services. This Editor has previously analyzed the problems that have led to the decline of both Teladoc and Amwell, but Teladoc stands apart in one factor. It is still recovering in its huge failure in buying and failing to integrate Livongo. But in the telemental health space, the profitable companies are largely in the enterprise and payer space. Even DTC, they have slicker solutions and extensive networks. It’s a cost-sensitive market, both to benefit admins and to prospective members. 

Here’s the pivot. On the earnings call, CEO Divita and CFO (former acting CEO) Mala Murthy announced a pivot for BetterHelp to international, non-English-speaking markets, where customer acquisition costs are lower. (This Editor would add that competition is also less.) They also blamed advertising cost inflation and jacked-up acquisition costs during a US election year–something that is completely predictable and should be baked in the 2024 marketing expenses. Unbelievably, if advertising costs remain high, Murthy stated that they expect a low double-digit revenue decline, whatever that means.

The shocker here is that it finally dawned on them that the big problem with BetterHelp is that it does not accept insurance and has a high DTC cost. Their leavers in research cite both as reasons why. Hellooooo? What took so long?  So their fix is to negotiate insurance coverage–but that won’t take effect till 2025. 

From FierceHealthcare in an on-point close of their article: “Divita was adamant that Teladoc runs BetterHelp well and that it’s an important part of the company.”  Morningstar (Teladoc release)  How much more can Mr. Market stomach? This story is developing.

As we predicted, CEO/founder Anne Wojcicki has made an offer to take 23andMe private. She has filed with the Securities and Exchange Commission (SEC) amendments to their Schedule 13D form that confirm that on 29 July, she sent a non-binding proposal to the Special Committee that has been looking at alternatives since late March [TTA 20 April]. The Exploding Plastic Inevitable offer of $0.40 per share is to shareholders of Class A and B common stock. It became public yesterday (31 July). The current price is around $0.40, so there is no premium. 23andMe is also on a six-month delisting deadline with Nasdaq from November, which they have since passed but may have been extended due to the Special Committee formation.

Wojcicki holds supervoting privileges that have always given her effective control of the company. According to analyst TD Cowen, she currently holds 22.5% of the company’s outstanding Class A common stock and 59.2% of outstanding Class B common stock. In going private, she would be right in line to be paid out by outside funders (Other People’s Money). Other alternatives to her buyout, such as Chapter 11 or 7 bankruptcies, are even more bleak and would leave shareholders with effectively 0.

As TTA noted in our April coverage, the company is yet another cracked SPAC (2021) hitting a $4.8 billion valuation, acquiring companies, and falling precipitously. It never found a recurring revenue model, being largely ‘one and done’ on ancestry and genetic reports. Recently, it lost a lucrative contract with GSK for research data. It stumbled badly after a major data breach in Fall 2023 that exposed 6.9 million records. Then, they blamed members for their poor cyberhygiene and lack of security. This once bright light has burnt out; is it even relevant anymore other than giving the CEO a job? Yahoo Finance, CNBC, MedCityNews  Developing. Our recent 23andMe coverage: 29 May (FY24 earnings and the committee’s poor choices), 2 Feb (data breach timeline, financials)

News roundup: Teladoc’s new CEO from major payer, Steward Health lives with $250M injection, Waystar’s IPO raises $968M, NeuroFlow acquires Owl

Teladoc wraps up CEO search in record time–two months. On Monday, Charles “Chuck” Divita joined the company as chief executive officer with a board of directors seat. Divita comes from GuideWell, where he was executive vice president, commercial markets, earlier chief financial officer, and previously group VP and chief accounting officer at Florida Blue for a total of over 12 years. GuideWell is the parent of Blue Cross Blue Shield health plans in Florida and covers 38 million people in 50 states through Florida Blue, Triple-S Salud (Puerto Rico), Truli for Health, Florida Health Care Plans, and Capital Health Plans. Interim CEO Mala Murthy resumes her CFO position

Long-time CEO Jason Gorevic departed in early April in a haze of red ink. Mr. Divita will find the turnaround situation facing him at Teladoc a real challenge compared to Blue Health Plan World. Undoubtedly he was hired due to his extensive CFO experience plus understanding of the payer market. Teladoc needs to achieve profitability, something never accomplished in 20 years. It also faces heavy competition, the growing obsolescence of its foundational model accelerated by the boom/bust pandemic, self-inflicted damage created by the Livongo acquisition, the underperforming BetterHelp, and frankly, its mixed track record in good judgment and accountability [further analysis–TTA 9 Apr]. Mr. Market barely responded with a continuing deterioration in share price. Do not be surprised when (not if) there are major changes and cuts at Teladoc, including removing its HQ from high-tax Purchase, New York to Florida, the new CEO’s home state.  Release, FierceHealthcare, Healthcare Dive

Steward Health beats deadline of 14 June, finds $250 million to pay the bills. The lenders announced Tuesday 11 June are existing FILO (first in last out) private credit lenders Sound Point Capital and Brigade Agency Services, Chamberlain Commercial Funding, WhiteHawk Finance LLC, Owl Creek Investments I LLC, OneIM Fund I LP, MidOcean Credit Fund Management; Brigade Capital Management, LP which are now debtors in possession (DIP). They will be presented to the US Bankruptcy Court, Southern District of Texas, later this week, which is conducting Steward Health’s dissolution with sales starting in July. The FILO lenders were approached earlier, starting in March and up through last week, but could not come to an offer until now. The $250 million is structured as $75 million of the loan immediately upon court approval, with the remaining $150 million “available in draws not to exceed $50 million per draw.” The funds will keep Steward operations going and ‘maximize value’ until they can be sold in July and August. Healthcare Dive, FierceHealthcare, Release

Waystar finally drops IPO, raises $967.5 million. The offering of 45 million shares debuted at $21.50 a share on Nasdaq, midpoint in the indicated range and giving Waystar a fully diluted valuation of $3.69 billion.  It is the largest health tech IPO since 2022. Back in October 2023, Waystar projected an $8 billion valuation which was a non-starter [TTA 29 May]. WAY closed near-flat today at $21.70. Previous funders will continue with shares in the company, with EQT AB, Canada Pension Plan Investment Board (CPPIB), and Bain Capital will beneficially own approximately 29.2%, 22.3%, and 16.8%. Its payment and RCM tools claim 30,000 customers representing approximately 1 million distinct providers, but lost money in 2022 and 2023. FierceHealthcare, Reuters

Behavioral health platform NeuroFlow acquires Owl. Purchase price was not disclosed. Both companies are in the data insights and analytics portion of telemental health delivery and integration into care management programs. The combination now integrates NeuroFlow’s platform across primary and specialty care settings to provide a 360-degree view of a population’s behavioral health risk. In 2023, NeuroFlow acquired Capital Solution Design, the parent company of Behavioral Health Lab and BHL Touch which have provided workflow support to clinical teams at the Department of Veterans Affairs for over 15 years and other care organizations. The combined organizations will cover 17 million lives on the platform with payers and providers in all 50 states, including Atlantic Health System (NJ), Emory Healthcare (GA), and Colorado Access, Centennial State’s Medicaid plan. Eric Meier, Owl’s chief executive officer, will transition to NeuroFlow’s president of behavioral health markets. Other transitions and headquartering are not disclosed.Their funding topped $52 million between 2019 and 2022. Release, Mobihealthnews

Teladoc’s Q1: increased revenue, increased net loss, dealing with slowing growth–as is CVS Health

Teladoc had a passable Q1, given the sudden departure of their CEO, a lackluster 2023, and a downbeat (realistic?) 2024 forecast. The highlights were versus Q1 prior year:

  • Revenue increased 3% to $646.1 million. This exceeded their 2024 projection of $630 to $645 million but the percentage increase is below the 5.2% Teladoc is forecasting for the full year. Their US revenue grew 1% to $547.6 million while international revenue grew 13% to $98.5 million.
  • But net loss also increased far more on a percentage basis–18% to $81.9 million, or $0.49 per share. Some of the loss was due to stock-based compensation expense, severance expenses, and amortization of acquired intangibles. Due to these, the increased revenue did not offset or narrow losses.
  • Adjusted EBIDTA increased 20% to $63.1 million, which is positive.

Looking at their main market segments, their Integrated Care segment revenue grew 8% to $377.1 million, Once again, BetterHelp, their behavioral telehealth unit and one-time hope for growth, continued to disappoint with a 4% decrease in revenue to $269.0 million.

The forecast for Q2 is: 

  • Revenue $635 – $660 million
  • Net loss per share ($0.45) – ($0.35), slightly lower than Q1
  • Adjusted EBITDA $70 – $80 million

Integrated Care’s forecast is an increase of 2 to 5% in revenue, while BetterHelp’s remains weak with a decrease of 4 to 8% in revenue.

So far, cutting costs, higher margins, cutting jobs in data science and engineering, third-party (supplier?) costs, and getting on that ‘path to profitability’ has had limited results, at least to Mr. Market which continues to drop the stock–40% to date and deteriorating. On the earnings call, interim CEO and CFO Mala Murthy, in referring to this, said “We are not waiting. We have a plan to deliver, we have investments to execute, and that is absolutely our focus.” Will Mr. Market believe this in a shrinking market? The search for a permanent CEO is underway, and the replacement is expected to be named later this year. Teladoc release, Mobihealthnews, FierceHealthcare

The broader meaning? This Editor explored what happened at Teladoc and the aftermath after some of the dust settled [TTA 9 April]. The Teladoc foundational model as a stand-alone, mostly urgent care service is not growing but shrinking. It doesn’t coordinate care nor does it integrate well into providers. While the pandemic gave that model a lift, it also boosted integrated services as modules into patient portals, EHRs, population health, and other provider-based platforms. Among higher care need Medicare beneficiaries, usage was there but minimal detailed in two recent studies. Even asynchronous and telephonic telehealth gained since they were reimbursed or low cost. Before, during, and after the pandemic, there were too many telehealth companies for the limited demand. Add in the continuing proliferation of telementalhealth providers, still popping up like tulips in spring–another reason why BetterHelp, one of the earlier entrants, isn’t getting traction. FierceHealthcare adds more points such as over-supply cratering price (and the revenue model) and hybridization: white-labeling with providers, virtual specialty clinics such as those under Included Health’s, and partnerships with health plans and employers. 

CVS Health’s Q1 also wasn’t swell for reasons that are impacting their full year. High medical costs affected their Aetna plans, with high utilization in Medicare Advantage, inpatient admissions, and outpatient services were all high in Q1–$900 million higher than CVS expected. Lower MA STAR ratings will affect their forward Federal reimbursements, with one of their largest MA plans falling from 4.5 to 3.5 rating in 2024. According to CEO Karen Lynch, most of this utilization was from a patient usage reversion to pre-pandemic patterns. Their Q1 revenue of $88.4 billion was up 4% versus prior year with net income falling by almost half to $1.1 billion, both significantly below analysts’ expectations. CVS adjusted their full year downward, which led to their stock falling another 19%. Change Healthcare’s data breach is also affecting their forecasts with delayed claims, leading CVS to set a reserve of $500 million. HealthcareDive

Opinion: Further thoughts on Teladoc, Amwell, and the future of telehealth–what happens next?

The end of last week marked an Apocalypse Light in telehealth, but it was coming in this Editor’s opinion. And Pepper the Robot has nothing to do with it, other than representing telehealth’s state, and perhaps this Editor’s.

Two events–the forced exit of 15-year CEO Jason Gorevic from Teladoc and both Teladoc’s and Amwell’s continued market weakness and long roads to breakeven, if ever–have caused many in the field to think hard about our direction and where telehealth is going.

Both Teladoc and Amwell are the pioneers in provider-to-patient telehealth, going back over 20 years. While Amwell is no longer the #2 to Teladoc’s #1, both were in the forefront of how remote consults have transformed healthcare. The ability to remotely diagnose and provide care at distance is now a ‘given’ that has shifted the baseline for providers, patients, and payers. Nearly every entrant has or has acquired a remote in-person or app feature, whether care management, diagnostics, health education, or telemental health.

Because Teladoc’s struggles are writ large in the industry, we might benefit from a closer look at What Happened–and what in this Editor’s opinion might happen next.

What Happened?

The pandemic. Yes, it provided a major boost to any telehealth provider’s business whether corporate or provider-based. It mainstreamed telehealth. Smaller players like MDLive and Included Health snatched market share. But it also introduced ‘silly money’ that led companies to think that all they had to do was hold out the buckets, fill them with cash, and buy business. By late 2020, practices had reopened–and telehealth usage nosedived quickly, stabilizing to around 5% of medical claims, over 60% of which is mental health according to the FAIR Health end of 2023 telehealth tracker. 

The integration of telehealth into multiple platforms is now commonplace. This Editor observed in her work with her then-employer in early 2020 that the population health platform they had introduced already had integrated HIPAA-compliant telehealth platforms as a module–all that was needed to get the practices up and running on it–and coding correctly. Health systems now integrate telehealth into their patient portals. EHRs even for the small practice market now have integrated telehealth. As mentioned, specialized telehealth such as telemental health took off during the pandemic and, after a cleanout period, have largely stayed with us. Asynchronous telehealth has also become acceptable to consumers. (Interestingly, the leading asynchronous diagnoses are for hypertension and respiratory diseases that benefit companies like Amazon Clinic and triage-type systems.)

People use it when needed, but the enterprise payment model is subscriber-based. Teladoc has long claimed its subscriber base is 90 million people–but user data from HHS (ASPE 3/2023) indicates that only one of four use it. For an enterprise, paying for subscribers, this is a big fat line item ready to cut. Payers have also integrated telehealth into their coverage. Teladoc has, to its credit, created payer partnerships such as with Aetna, but so have others.

Bottom line: there’s no more ‘blue water’ market left for a big player like Teladoc with a model dependent on growth and on enterprise sales that are inherently price-driven. It’s a hard and painful change to realize that your technology is no longer the future, and that you have to slug it out in the mud with everyone else. 

A closer look at Teladoc. 

After 20 years, why wasn’t it profitable? A look back on our Teladoc coverage prior to the pandemic indicated growth was created by buying up smaller competitors, domestic and international, at premium prices. InTouch Health was a notable one, acquired January 2020 for $600 million. But Teladoc was way overdue on turning a profit before 2020, at which point it should have firmly moved into the black. And then reality hit by early 2022.

Where was the board in all this? This Editor does not pretend to know the minds of those far more experienced in the financial aspect of business than she. But after 15 years of CEO Jason Gorevic and the 2022 $6.6 billion write-down of Livongo which precipitated the long 90%+ loss in market value slide, why was he given walking papers only last Friday? Boards are supposed to be wise heads, looking out for the business and the shareholders. Did they get caught in the hype or hope that BetterHelp would save the company? Did something else happen? (Fun fact: Mr. Gorevic remains on the board.)

A track record of flawed judgment and recovery. In December 2018, their COO/CFO was dismissed after charges of insider trading and sexual misconduct. There have been two COOs since then, the first, David Sides, moving to CEO of NextGen Healthcare in 2021. In May 2019, Teladoc’s NCQA accreditation, first won in 2013, was placed under an unusual “corrective action” by NCQA which was termed by the CEO ‘much ado about nothing’. Au contraire, it was a black eye at the time and the industry never quite knew what happened. And then there was Livongo….

The Livongo deal killed Teladoc; saying the quiet part out loud. As this Editor stated at the time, the $18.5 billion purchase price of Livongo was dangerous for Teladoc (see ‘Gimlet Eyes’ from August 2020 here and here). It was a too-fast too-much too-soon deal that closed in three months at the summer peak of the pandemic and lockdowns looking like forever. The very notion that Livongo would open doors in hospitals and cross-selling to enterprises was suspect even at the time. The deal that Gorevic and 7WireVentures’ Glen Tullman and Livongo CEO Zane Burke concocted was ‘Grand Theft Auto’–for Livongo and their leadership, especially if they sold their Teladoc shares. It was never a merger of equals nor was it additive in value. Teladoc then made multiple, continuing transitioning and management errors, including not retaining Livongo executives, which have been well documented. And again–where was the board on this?

Where are the analysts? They seem to accept a storyline that ‘all is OK’ for 2024 now that Gorevic is gone. But standing pat on the Q1 and 2024 guidance as nearly all have done is suspect. Unlike Amwell, Teladoc has not forecast when it will achieve breakeven, much less profitability.

What’s Next? Given all the above, when will the aftershocks hit? Sooner or later?

If one looks to Walgreens as an example, where disaster hit quickly and hard last summer, a board member, Ginger Graham, took the acting CEO position. She took front and center on investor calls and executing reorganizations, which for an interim is unusual. Almost immediately, the cleanout began at the CIO and CFO levels and moved downward. Tim Wentworth joined as CEO in mid-October 2023 seven weeks after Roz Brewer was separated. VillageMD was identified quickly as a large part of the problem. He took the writedown even before locations were fully closed and made multiple moves to cut costs starting at the corporate level before moving into the field. This is not to make light of the human damage and the jury remains out on the wisdom of some of the moves. But Wentworth has moved quickly, decisively, and positioned it realistically in saying ‘this is not a 12-month turnaround’ and wisely caveating that board alignment around the strategic review was essential. Timid he is not.

Teladoc needs to move quickly, and intelligently–now, not later. While acting CEO Mala Murthy, backed by the board, makes decisive moves, Teladoc must find and appoint a Tim Wentworth-type at the helm for the turnaround. Quickly. It’s important not only for Teladoc but also for the telehealth industry.  But neither Mr. Market, judging on share price, nor this Editor, based on their track record, are hopeful.

Can digital health RPM achieve meaningful change with type 2 diabetics? New metastudy expresses doubt.

A metastudy from the Peterson Health Technology Institute (PHTI) has reservations about the efficacy of digital diabetes management tools. Over $50 billion has been invested in the sector between development, investments, mergers, and acquisitions. Generally, the claim around digital management tools for diabetes to aid self-management and prevent poor outcomes, particularly for those at high risk, has been that they can 1) deliver meaningful and lasting clinical benefits in reduction of HbA1c (glycemic control) and 2) reduce long-term costs of poor control, benefiting patients. In the US, diabetes affects 11% of the population and is an expensive chronic condition. It also disproportionately affects people of color and those with lower income, especially as they age.

The systematic literature review of 1,100-plus studies was augmented by interviews with physicians, patients, digital health experts, along with companies. They included 120 clinical references from DarioHealth, Omada, and Virta. The PHTI grouped digital tools into three types of solutions for Type 2 diabetes in adults. All used standard glucometers, not continuous glucose monitors/CGM as well as apps to provide real time feedback to a virtual or actual coach or care team:

  1. Remote patient monitoring (glucometer plus feedback): Glooko
  2. Behavior/Lifestyle modification (glycemic feedback plus coaching features): DarioHealth, Omada Health, Perry Health, Teladoc (Livongo), Verily (Onduo), and Vida
  3. Nutritional ketosis (dietary guidance that restricts carbohydrates and monitors the patient’s glycemic and ketone levels): Virta Health

The findings did not meet their expectations in demonstrating “clear, substantial, and durable progress toward glycemic control in people with type 2 diabetes, resulting in a lower prevalence of uncontrolled type 2 diabetes across the population.”

  • They did not deliver clinically meaningful benefits compared to ‘usual care’. Only three out of 10 comparative HbA1C studies achieved a meaningful difference of 0.5 percentage points (Minimal Clinically Important Difference or MCID) in patients. Their range was 0.23 to 0.60 percentage points compared to usual care.  The nutritional ketosis program had greater benefits as long as patients maintained the rigorous requirements of the therapeutic regimen.
  • The average price impact of the solution exceeds the savings achieved from the clinical benefits. The PHTI analysis looked at commercial insurance, Medicare, and Medicaid over three years. Provider reimbursement and pricing exceed cost savings from avoided care.

So where is the worth? The PHTI study recommended that:

  • Payers use these solutions for the highest risk and diverse/underserved populations
  • Regularly analyzing outcomes and tie contracts to clinical performance
  • Focus on patients with higher starting HbA1c newly starting insulin
  • Payers could also recommend nutritional ketosis as the Virta program had greater benefits.
  • Solutions could also evolve to include GLP-1 drugs, CGMs, and nutritional ketosis.

PHTI study (free download of full report, four sections, and appendices). PHTI press release.

PHTI is also offering a free webinar on Thursday 28 March at 2pm US Eastern Time on assessing digital diabetes management tools–registration here.

Teladoc closes 2023 with improved $220M loss, but weak forecast for 2024 leads to stock skid

A falling tide sinks most boats. If you were riding the telehealth pandemic tide, as Amwell [TTA 15 Feb] and Teladoc did, these last two years were the worst kind of shock. Teladoc’s 2022 was an annus horribilis–the Livongo acquisition went $6.6 billion worth of sideways [TTA 3 Feb 23], wiping out their 2022 with writedowns culminating in a $13.7 billion annual loss. Their 2023 was a lot better, beating analysts’ estimates, but forecast growth is slowing to a crawl.

  • Q4 revenue was up 4% to $661 million, powered by a 15% gain in international revenue of $96 million and a 2% increase in US revenue to $565 million. Hopes for the heavily promoted mental health business BetterHelp fell flat too at a flat $277 million. Their integrated care segment providing telehealth services to health plans, employers, and health systems brought in $384 million, up 8%. Net loss was $29 million versus $3.8 billion in 2022.
  • 2023 notched an 8% increase from $2.4 billion to $2.6 billion, with integrated care accounting for $1.5 billion, up 7%, with BetterHelp revenue reaching $1.1 billion. But losses continued at $220.4 million–versus $13.7 billion in 2022.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization) increased in Q4 22% to $114 million, with 2023 up 33% to $328 million. BetterHelp’s Q4 increased 11% to $58 million, 19% to $136 million for the year.

This cheerful picture was negated by Teladoc’s downbeat forecast for 2024. Q1 is projected between $630 and $645 million, lower than the analyst take of $673 million. 2024 full year is forecast between $2.635 billion and $2.735 billion, with the analyst take at $2.77 billion. The analysts forecast a 6.8% increase versus Teladoc’s forecast of 5.2%, but the difference was enough to drop their share price by 25%. According to CEO Jason Gorevic, the forecast will be for growth at best in low single digits, which is not what Wall Street wanted to hear. This could be sandbagging–or reality. Telehealth visits dropped 45% in 2022 from 2020 (Trilliant Health), with more recent CMS Medicare data on visits falling 73% in Q2 2023 from Q2 2020. Other factors: telehealth modules in EMRs and population health platforms, many more competitors like Included Health (Grand Rounds/Doctor on Demand) and MDLive.

Teladoc post-Livongo writedown has assiduously focused on cutting costs, higher margins, and getting on that ‘path to profitability’, cutting jobs in data science and engineering, third-party (supplier?) costs, and more. Yet on the Q4/2023/2024 earnings call, the CEO talked up making technology deals for differentiating technologies such as machine learning and (of course) AI, as well as ‘tuck in’ M&A deals. After the Livongo embarrassment, perhaps Mr. Gorevic could give it a rest until notching a few more solid quarters. Quartz, FierceHealthcare, Healthcare Dive, Teladoc release