TTA February’s New Year: EDITH NHS AI radiology trial, Teladoc buys Catapult, Sword Health to go telemental, Walgreens axes dividends, Veradigm and Evolent off block, 98point6 done?, more!

 

 

The shape of 2025 starts to show with which companies bet, hold, and fold. More and more AI deployments (at least termed that way) including a massive NHS trial. More fundings at better levels. Teladoc surprises and buys a company. Sword Health adding telemental health. But the holds and folds are evident in both Veradigm and Evolent Health going off the block, Walgreens suspending dividends after 91 years, and Transcarent maybe folding their 98point6 telehealth service?

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 (More and more AI)
Teladoc to buy Catapult Health in all-cash, $65 million deal (First buy since Livongo)
The table stacks–and clears: fundings for RadAI $60M, The Helper Bees $35M, Bicycle Health $16.5M. Walgreens suspends stock dividends after 91 years. And has Transcarent zeroed out 98point6? (The real start of the year)
This just in #2: Masimo board director Bob Chapek resigns (When you wish upon a star…)
This just in: Veradigm gives up on finding buyer, brings in ‘strategic advisory’ firm for “standalone” future (Surprised?)

A relatively quiet week that included only one significant acquisition and one product introduction. Three inevitables: cash-poor 23andMe needs a rescuer, Masimo and former CEO Kiani continue to sue and countersue, and UnitedHealthcare has a new CEO. 

News roundup: UnitedHealthcare names new president, Neuroflow buys Quartet Health, Owlet intros Owlet 360 (A mysterious sale by Quartet)
23andMe running low on cash, considers sale, “strategic alternatives” by Special Committee (The Perils of Anne Wojcicki, now on the tracks)
Round 2: Masimo former CEO Kiani counters Masimo lawsuits in New York, Delaware (Suits! Countersuits!)

Epic changes in DC are reverberating through HHS–and telehealth. It won’t be business as usual for Walgreens with a bombshell Federal illegal Rx dispensing lawsuit, nor UnitedHealth getting pressed by investors on denied claims. 23andMe may decide to do without Lemonaid, while Masimo recovers with a new CEO. Fundings and M&A get interesting. Quite a change from the ‘down round’ that was 2024 in Rock Health’s report!

Updates: ATA on telehealth policy priorities, UHG investor group demands denied care report, DOJ sues Walgreens on illegal Rx dispensing, VA nominee supports Oracle EHR deployment, RFK Jr. HHS nomination hits Senate (Not good news for UHG and Walgreens)
2024 another ‘down round’ for US digital health funding, with smaller deals and earlier stages: Rock Health (Concentrating–and less $)
Funding/M&A roundup: DarioHealth’s $25M, Innovaccer buys Humbi AI, Percipio Health launches with a $20M Series A, Iris Telehealth buys innovaTel (’25 steady so far)
Perspectives: Three Strategies to Bring Digital-First Care to Patients Through Telehealth 
Masimo names new CEO, new board chair and vice chair. And confirms a fresh direction. (Politan’s big bet))
Straws in the wind? 23andMe considering Lemonaid telehealth sale, announces Discover23 research offering with Lifebit (Shrinking and pivoting before ?)

Now past the ‘happy new year’ greetings, it’s time for the 2024 financial reports and 2025 forecasts–some good, some not. Companies are scoring decent raises for the first time in two years, while PE General Catalyst is cutting deals with AWS. M&A activity concentrates on consolidation and integration. And we highlight two social companions for seniors’ tabletops.

2024 earnings roundup: UnitedHealth Group and Masimo (Closing out an annus horribilis)
Short takes: UK’s Cera raises $150M, $105M for Qventus, Solera Health’s $40M; General Catalyst’s AWS deal, Virta Health hits $100M in revenue, powered by GLP-1 maintenance; VirtuAlly’s JC telehealth accreditation
M&A consolidation + integration continues with Health Catalyst-Upfront Healthcare, New Mountain-Access Healthcare and Machinify, SuperDial-Major Boost (As predicted)
Walgreens’ kicks off FY 2025 with a wider net loss of $265M; shares rise 25% as closures, sales, and cost-cutting continue (Prelude to a sale?)
AI-powered senior companions hit the tabletops at CES: ElliQ’s Caregiver Solution, ONSCREEN Joy (Making social communication easier for older people)

Our opening was devoted to rounding up the inter-holiday period and looking forward to 2025. 2024’s end held a few sneaky surprises such as NeueHealth going private via investor NEA, another General Catalyst consolidation, and a few more under the wire fundings. Not surprising was UHG and Amedisys extending their runway–as well as VA with Oracle Health rollouts. Looking at 2025, Walgreens and their inevitable sale, experts predict, and Glen Tullman’s Transcarent buys up the competition. 

News roundup #2: why Walgreens is considering selling to a PE, December fundings, 2024’s surprises, M&A ’25 predictions, Transcarent buying Accolade for $621M (Why should Glen Tullman wait on a big buy?)
News roundup #1: UHG-Amedisys extended, NeueHealth going private in NEA’s ‘deal deal’, Commure buying Memora Health, VA resuming Oracle rollouts–now mid-’26 (NeueHealth continues to defy gravity and Reality)

We wound it up for 2025 with a year’s end newsletter to our Readers with a few Quirky Predictions and some Santa Wishes. A lot of news around telehealth in the continuing US budget wrangle that was finally passed for a few months, raises making it inside the 2024 wire, UHG sued by Nebraska over Change and insider trading, Redesign Health’s fresh funding, Withings’ new BPM, removing language barriers using telehealth, and quite a bit more.

A year’s end newsletter to our Readers: a few wishes for Under the Tree, a few Quirky Predictions for 2025  (We stay true to being opinionated!)
News roundup: Precision’s $102M raise, more on BCI; Withings clears BPM Pro 2; Nebraska 1st state to sue Change/UHG, related insider trading update; VA Oracle go-lives may resume; ATA intros CODE; ClearDATA HITRUST certified (UHG’s Mound of Misery grows)
Rounding up last of 2024’s M&A/fundings: Redesign Health’s $175M, HEALWELL AI buys Orion Health, startup Tuva Health’s $5M (In the bank for 2024)
Federal budget continuing resolution battle could derail or delay telehealth extensions, physician fee increase, PBM reforms (updated 19 Dec) (Cut down by 90%, it may pass)
Perspectives: How Telehealth is Transforming Access for Limited English Proficiency (LEP) Patients (Removing a critical barrier)


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Telehealth & Telecare Aware: covering the news on latest developments in telecare, telehealth, telemedicine, and health tech, worldwide–thoughtfully and from the view of fellow professionals

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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

News roundup: Apple Watch flagships cease sale due to Masimo ITC ruling (updated); Noom, WW enter GLP-1 telehealth business; Oracle sees health side up despite Cerner drag; Cigna has multiple bidders for MA business

Apple Watch Series 9 and Ultra 2 going off sale in the US this week, upholding the ITC patent ruling favoring medical device developer Masimo. On 26 October, the International Trade Commission (ITC) ruled that Apple in the Series 6 and later violated Masimo’s patents on pulse oximetry (SpO2) sensors and software. [TTA 27 Oct] While this is awaiting presidential approval in the 60-day review period which ends on Christmas Day, Apple proactively restricted US sales of its flagship Series 9 and Ultra 2 watches which contain the blood oxygen sensors. (The SE model does not and continues to be available for direct sale.) According to 9to5Mac, online sales end on 3 pm Eastern Time on Thursday 21 December, while in-Apple Store sales stop after Christmas Eve. Of course, this won’t stop resales of existing stock through outlets like Amazon, Best Buy, and eBay. Under the ITC order, Apple cannot import either model after 25 December as the ITC issued a Limited Exclusion Order (LEO) plus a Cease and Desist Order (CDO). 

The ITC is rarely vetoed by the White House in patent actions. After that point, Apple is free to appeal in Federal District Court, which is highly likely and where the deepest pockets usually win. Also HIStalk 20 Dec and Strata-gee 21 Dec

There are other wrinkles with Masimo, though. Strata-gee.com earlier this month (13 Dec) timelines Masimo’s patent difficulties with the US Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) ruling against the very same patents, decisions upheld by the Federal Circuit Court. The PTAB also ruled against Masimo in the requested review of two Apple patents. Apple’s retaliation is to threaten lawsuits on Masimo’s new smartwatches. The icing on this messy cake is the November Delaware Chancery Court decision against Masimo, awarding $17.8 million in legal fees to activist investors/shareholders Politan Capital Management and Politan Capital NY LLC in a board fight that culminated in two seats to Politan directors.  One can sense that Apple is biding its time, though they could end all of this by negotiating a royalty to Masimo. Updated: see report on the stay effective 27 December here.

Noom and WW enter the weight loss drug-by-telehealth race. Ozempic and Wegovy, GLP-1 agonists, are increasingly popular in off-label use for obesity to produce weight loss, prescribed and managed by telehealth teams.

  • Noom, previously stressing behavioral change via app coaching direct-to-consumer, in October announced at HLTH Noom Med, a drug-focused program prescribing medications such as Saxenda (liraglutide), Wegovy (semaglutide), and the new Zepbound (tirzepatide), a dual GLP-1/G1P, all of which are injectable medications along with other GLP-1 medications such as Ozempic.
  • WW or WeightWatchers last week announced the WeightWatchers Clinic program. Via their recently acquired telehealth weight loss platform Sequence, it will offer weight loss meds and team management.  

They join Teladoc in developing weight loss programs, though Teladoc supports a physician-based care product for employers [TTA 21 April]. Both Noom and WW emphasize that member patients must qualify for the programs based on weight, BMI, and medical condition. Participants are educated through materials, coaching on behavioral management, managing appetite, and nutrition, especially in maintaining adequate protein as these medications not only induce weight loss, but also muscle loss (sarcopenia). One hopes that their teams are also knowledgeable on how these medications that slow down digestion to induce a feeling of fullness don’t mix well with surgical sedation, and that they issue cautions to patients before elective surgery. MedCityNews, FierceHealthcare, Forbes   

Noom has also replaced most of its top management since its new CEO joined in July. There’s a new CFO, chief technology officer (CTO), general counsel, two senior VPs (corporate development and partnerships, healthcare sales and services) a senior director of brand and communications, chief growth officer, chief product officer, and head of people. FierceHealthcare

Oracle Q2 results miss forecasts in rebuilding Cerner. Oracle Health, including the former Cerner, and slowing cloud growth were the culprits in their fiscal Q2 2024. Total revenue was $12.9 billion, up 5% in US dollars (4% in constant currency). Analysts expected $13.05 billion. Excluding Cerner, growth would have been 6% though Oracle did not separately break out revenue for the Cerner EHR business. Investors have noted two consecutive quarters of off-track growth and a weaker forecast for the remainder of the year. According to CEO Safra Catz and chairman Larry Ellison on the earning call, many upgrades and “modernizations” are being made to Cerner Millenium that will wrap up this FY. Half of Millenium customers will be moving over to Oracle Cloud Infrastructure (OCI) by February. They are also “rewriting” Cerner’s health and data intelligence platform, Cerner HealtheIntent, to get into population-scaled health management. ‘Transforming healthcare’ is an expensive proposition indeed. No word on the VA.  FierceHealthcare, Oracle release

And a quick follow up on Cigna’s sale of their Medicare Advantage business. Two payers so far–Health Care Service Corp. (HCSC) and Elevance–are reported to be bidding for Cigna’s MA business. The value of the business is estimated to be about $3 billion and with just under 600,000 members as of September. Both HCSC and Elevance are much larger players in MA. HCSC has over 1 million MA members in Blue Cross Blue Shield affiliates in Illinois, Texas, New Mexico, Oklahoma, and Montana. Elevance, the former Anthem, has over 2 million MA members. Bidding is expected to close this week. While MA is losing money for Cigna, they could refuse to sell if bids are unsatisfactory. FierceHealthcare, Becker’s

Teladoc narrows loss in Q3 and YTD, grows revenue, adjusted profits…but stock sinks?

Teladoc seemingly can’t get any respect from Mr. Market. 2023 seems to be a waypoint in the company’s recovery after their disastrous 2022 (TTA 4 May 22, 23 Feb). Focusing on operational efficiencies since then, Teladoc posted some decent numbers compared to 2022 in their Q3 report:

  • Q3 revenue increased 8% to $660.2 million; nine-month revenue increased 10% to $1,941.9 million
  • Q3 net loss went down 10 cents per share to a total of $57.1 million, or $0.35 per share. Nine-month net loss was $191.5 million, or $1.17 per share (2022’s was $61.09)
  • Adjusted EBITDA in Q3 increased 73% to $88.8 million; nine-month EBITDA increased 40% to $213.7 million
  • Finally, cash flow from operations was $105.6 million in Q3, a 68% increase. For the nine months, $219.9 million, up 77%.

Yet the share price has taken a tumble from July’s end above $29, closing today at $16.09.

This Editor is no stock picker, but informed heads think that CEO Jason Gorevic has emphasized operational efficiencies over sales and profitable revenue growth. Yet EBITDA is booming with a 2023 guidance of $320-330 million. Amazon’s aggressiveness in taking over virtual care is much on the minds of these ‘informed heads’. In this context, too much pullback on sales and growth is not a positive sign of Teladoc’s long-term future, an indication that Mr. Gorevic, now trimmed, needs to trim his sails to the now-prevailing winds to increase share value. The much-touted BetterHelp in telemental health is not quite panning out with flat revenue and wobbly EBITDA. There’s such a thing as depending on one part of the business, with the rest going too lean and not having capacity, walking away from growth while the competition picks off your business. Seeking Alpha

Is Amazon a chimera of blue smoke and mirrors? The comparison with Amazon is despite their being a target of the Federal Trade Commission (FTC) on monopoly and anticompetitive charges (see the FTC release and the Vox discussion on why the US government wants to break up Amazon). More pain points are AWS’ slowing growth and emerging difficulties (ahem) in implementing their healthcare strategy with One Medical and Amazon Clinic, which this Editor has previously noted. What we view as a juggernaut is facing more than their share of distractions and changing circumstance. Even Jeff Bezos is pulling back his support of the Washington Post. (Need we remind our Readers that 2024 is a general election, and Amazon Hater Senator Elizabeth Warren is up for reelection?)

Mid-week news roundup: $105M senior debt to Headspace; Nextech bought for $1.4B; Teladoc’s Better(Help) Q2 boosts 10%; Peppermint’s online ‘clubhouse’ for seniors, PathAI lays off 87

Mostly good news this midweek…

Headspace gained some needed cash–a $105M senior debt facility–from Oxford Finance. The company can use it. Their more recent headlines were for layoffs (15% earlier this month) and the telemental health space, which boomed during the pandemic, now can best be described as challenged. Headspace expanded to the UK in January. As noted with the layoffs, Headspace never SPAC’d but after acquiring Ginger for a $3 billion valuation back in the crazy days of 2021, hasn’t had an easy time of it. Their financing will be used for expansion and for opportunities. The problem is that telemental health has too many lookalike/soundalike competitors including the 9,000 lb. elephants (see Teladoc) all going after the same targets–direct to consumer, enterprise, and health plan markets. It’s a rocky road to that cliché, a path to profitability. Business Wire, FierceHealthcare

Nextech was bought by TPG for a tidy $1.4 billion. Nextech is a healthcare IT company with cloud-based specialty EHRs, analytics, and practice management systems. Specialties they cover are dermatology, ophthalmology, orthopedics, plastic surgery, and med spa. TPG is investing in Nextech through TPG Capital, its US and European late-stage private equity platform. The exit was made by Thomas H. Lee Partners. TPG has previously invested in Lyric (formerly known as ClaimsXten), WellSky, and IQVIA. TPG release, FierceHealthcare

Teladoc had good Q2 news for investors, with a 10% boost aided by BetterHelp’s performance.  TDOC beat The Street ever so slightly with a 10% quarterly revenue boost to $652 million. They also narrowed net loss to $65 million, or a loss of 40 cents per share. BetterHelp’s performance was up 18% in revenue, with $292 million in Q2, hardly dented by their $7.8 million FTC settlement in March. Integrated care was up 5% for $360 million in revenue. In Q2 2022, Teladoc took a $3 billion impairment charge as the second part of writing off its Livongo buy [TTA 30 July 2022]  and their Q1 wasn’t much better with a $6.6 billion writeoff [TTA 4 May 2022]. It showed in TDOC’s share price which has been up about $5 since the announcement on 25 July.  On the investor call, CEO Jason Gorevic is betting on BetterHelp and weight management [TTA 21 April] being introduced this quarter, though for the latter recent health concerns on Ozempic as a weight loss drug, insurers increasingly refusing to pay for it (Medicare does not, and it costs upwards of $1,000/month), and substantial competition from other weight loss players may cloud the outlook. FierceHealthcare, Q2 earnings

Peppermint appealing to older adults with online ‘clubhouses’. Out of NYC-based VC/developer Redesign Health , Peppermint’s purpose is to address senior loneliness through virtual clubs. Older adults can practice hobbies or contribute their knowledge as ‘experts’. Peppermint is kicking off with $8 million in seed funding partly out of Primetime Partners and partnering with senior centers affiliated with the Massachusetts Council on Aging (MCOA). This Editor wonders if $9.99 per month (nearly $120/year) with a 30-day free trial is a sustainable model for those minding their dollars in this inflationary time. Release, MedCityNews

AI pathology company PathAI is releasing 87 employees, according to a Massachusetts-filed WARN notice. Of the 87, 51 live in the Bay State with 36 mainly remote workers outside it. It’s considered to be one of Massachusetts’ largest health tech companies with an estimated 600 employees. The layoffs are effective 31 July. The company has had over $255 million in funding through a 2021 Series C including General Atlantic and Labcorp. (Crunchbase) One month ago, they added a new president of biopharma and chief business officer, Matt Grow (release).  BostInno (paywalled), Becker’s

Legal roundup: Teladoc class-action suit dismissed; NextGen EHR $31M Federal settlement; significant AliveCor-Apple antitrust ‘spoiliation’ update; class action suits filed against HCA, Johns Hopkins

The latest legal activity in digital health and cybersecurity:

Teladoc’s pending class action lawsuit by shareholders was tossed. This was originally filed in June 2022 after the crash of Teladoc’s shares after The Big Livongo Writeoff in May 2022. Shareholder Jeremy Schneider, represented at the time by Jeremy Alan Lieberman of Pomerantz LLP, filed a lawsuit in the US Federal Court for the Southern District, located in downtown Manhattan, representing shareholders who purchased Teladoc shares between 28 October 2021 and 27 April 2022. The lawsuit cited materially false statements that Teladoc made on its business, operations, competition, and prospects that were overly positive and inflated share value. Judge Denise Cote agreed with Teladoc’s 20 January motion to dismiss based on specific disclosures that Teladoc made in multiple SEC filings in that period from the 2020 10-K on that countered claims made in the class action lawsuit.

Reading Judge Cote’s decision, Teladoc used specific limiting and warning language (what marketers call ‘downside’ language) on the risks around the merger. Their executives in public statements indicated that operations and competition were challenging.  The class action suit failed to prove conclusively that the statements it identified were ‘materially misleading’ and would mislead a reasonable investor. Other statements made by executives were “largely non-actionable statements of opinion and/or expressions of corporate optimism”, a/k/a “puffery”. Class action suits of this type that go to Federal courts (versus state courts) rarely succeed due to the high bar of proof and volumes of case law at the Federal level.

This Editor noted that this particular class action did not include Mr. Schneider nor Pomerantz LLP. Different plaintiffs were represented by Labaton Sucharow LLP and The Schall Law Firm. Teladoc reportedly had no comment.  Judge Cote’s opinion (Casetext), Mobihealthnews, Healthcare Dive

Easier to settle for $31 million than fight the Feds. Charged with violating the False Claims Act (FCA) and providing illegal incentives for referrals (the Anti-Kickback Statute that applies to Federally funded healthcare), NextGen Healthcare decided to settle with the Department of Justice (DOJ) for a whopping $31 million. The settlement does not admit wrongdoing by NextGen, which in its defense told Healthcare Dive that the claims made were over a decade old–and they were. At the time, their EHR used an auxiliary software that was designed only to perform the certification test scripts, thereby gaining 2014 Edition certification criteria published by HHS’s Office of the National Coordinator (ONC). In this Ur-time of EHRs, fixes like this weren’t (ahem) unusual. Compounding it was that the EHR then lacked certain additional required functionalities, including the ability to record vital sign data, translate data into required medical vocabularies, and create complete clinical summaries. Making NextGen’s decision the proverbial ‘no-brainer’ was that the controversial US Supreme Court ruling in June ruled that under the FCA, defendants are now liable for claims they suspect or knowingly believe are false, versus the previous objective standard. The Anti-Kickback Statute violation was blatant.  NextGen was giving credits often worth as much as $10,000 to current healthcare customers whose recommendation of NextGen’s EHR software led to a new sale, along with incentives such as tickets to sports and entertainment events. Anti-Kickback is one of those ‘biggies’ that the average healthcare employee is trained on within their first 60 days. DOJ release

The AliveCor-Apple Federal antitrust case had a small but important split decision regarding ‘spoiliation’ in the discovery process that could impact the case’s outcome–and future litigation. This June US District Court for the Northern District of California order went against AliveCor in part of what it sought–that Apple’s deleted emails to and from Apple’s then Director of Health Strategy should be considered adverse by a jury. But Apple was then found at fault for deleting them despite their relevance to the case with a ‘duty to preserve’ that started on 25 May 2021 with the antitrust litigation. In general, emails such as these to and from relevant people are subject to a litigation hold.

  • The director departed Apple only one week prior, 14 May 2021. His emails were auto-deleted at some point in accordance with company policy. In the discovery process, through other documents, AliveCor determined over a year later that the director was, indeed, relevant to the case.
  • The order states that Apple should have preserved his emails from the start as he was an individual with potentially relevant information. From the order, “[the director] worked on strategic health initiatives, and the record shows that he regularly corresponded about the Apple Watch and AliveCor with individuals Apple did identify as relevant.” “Apple did not take reasonable steps to preserve electronically stored information that should have been preserved in the anticipation or conduct of litigation…” While it may have been “irresponsible and careless”, it wasn’t purposeful which then would have been considered for sanctions, but there is considerable strong language in the order that Apple’s counsel didn’t disclose the loss of this information even while under oath in a deposition. 
  • In the ‘adverse’ consideration, AliveCor did not gain what it wanted, which was an assumption that the lost emails were prejudicial–that they contained relevant material to AliveCor and Apple’s strategy of eliminating competition. “To the extent they existed, additional emails relevant to these topics may have been useful to enhance AliveCor’s case, but AliveCor has not shown that the absence of these emails will prevent it from proving its antitrust claims.”

AliveCor provided this Editor with a statement on the order:

“The Northern District of California judge’s description of Apple’s actions as ‘irresponsible and careless, and perhaps even grossly negligent’ in their handling of emails belonging to its former Director of Health Strategy that supported our pending antitrust case speaks to Apple’s usual playbook of shamelessly using legal tactics to steamroll innovative companies like AliveCor. Even though the judge stopped short of granting our motion to instruct the jury that they should assume the deleted emails were negative for Apple’s case, we are confident in the outcomes of our antitrust case and grateful for the outpouring of support we have received as we continue to hold Apple accountable.”

Editor’s note: she thanks an AliveCor representative for sharing this information along with the redacted court order. Apple is free to contact this Editor with its own statement.

Recent AliveCor versus Apple coverage on patents: ITC presidential review, ITC vs. PTAB, PTAB decision

Last but certainly not least, a class action lawsuit against HCA. To no one’s surprise, it was filed last week (12 July) in the US District Court for the Middle District of Tennessee, as HCA is headquartered in Nashville. The plaintiffs are named Gary Silvers and Richard Marous, two HCA patients living in Florida, and was filed by two law firms, Shamis & Gentile and Kopelowitz Ostrow Ferguson Wieselberg Gilbert. The suit claims that HCA failed in their duty of confidentiality to protect sensitive information– personally identifiable information (PII) and protected health information (PHI)–that was contained in the hacked records. While HCA has released that the records did not include the most sensitive clinical information as it was used for email communications, the volume of 27 million rows of data that was apparently unencrypted potentially affects 11 million individuals [TTA 12 July]. The suit charges HCA with failure to safeguard ‘Private Information’ as a reasonable expectation using reasonable security procedures in light of current regulations (HIPAA, FTC), plus the susceptibility of healthcare organizations to cyberattacks which is well known. It seeks monetary damages plus injunctive and declaratory relief. This lawsuit is likely the first of many. Healthcare DiveHealthcare IT News, HIPAA Journal

These lawsuits based on hacking and cybersecurity responsibility are becoming routine. On 7 and 10 July, Johns Hopkins was sued twice. This was for a May ransomware data breach on a software vulnerability called MOVEit that was exploited by a Russian ransomware group called CLOP. This may have compromised, according to the first suit, tens to hundreds of thousands of records, including sensitive PHI. Both suits allege negligence, breach of fiduciary duty, breach of confidence, invasion of privacy, breach of implied contract, and unjust enrichment. They seek monetary damages and injunctive relief. Both were filed in US District Court for the District of Maryland.  Becker’s, Healthcare Dive, HIPAA Journal