TTA’s Steamy Summer 2: fundings come alive for Huma, Thyme Care, Headway, others; Steward’s bottomless mismanagement; Masimo v. Politan rolls on; Walgreens needs a lift; Meta’s Reality Labs gone sideways; VA and AI, more!

 

 

It may be 90º+ out, but summer doldrums haven’t set in yet! Masimo v. Politan will be a summer-long soap opera, fundings have suddenly heated up, VA’s dipping a toe into AI, and payer earnings are looking OK despite the Change and utilization hits. But Walgreens needs some help, stat–there’s no bottom to Steward’s mismanagement–and Meta’s Reality Labs seems to be going sideways.

(What’s EiPaaS? Find out here!)

Perspectives: Embracing the Power of EiPaaS in 2024 and Beyond (A POV from Vorro)
Short takes: fundings for Huma, Truvian, Headway, ThymeCare, Freshpaint; Headspace’s new CEO; UK M&A RLDatix-Carebeans; Elevance earnings news, another Steward shocker; Meta’s Reality Labs AR unit sinking–is Meta? (Funding continues its roll)
News roundup: UHG’s cyberattack hit now $2.3B, Senate bill on cyberattacks intro’d, VA’s AI tech sprint awards, AliveCor’s new CPT codes
Masimo v. Politan goes into extra innings with two-month shareholder meeting delay, mucho maneuvering
(Now playing into September)
Walgreens’ Mound of Misery piles higher with shareholder class action lawsuit, skeptical industry opinion (Needs light at end of tunnel, stat!)

Three themes that will play out into the fall: fundings and M&A are picking up after a deathly 2023, healthcare AI skepticism is on the increase—and the VA faces a Section 508 and 501 Federal lawsuit on accessibility and discrimination in choosing Oracle Cerner. Masimo’s proxy battle drama will crescendo on 25 July, but latest move is to sell off their consumer business. Bubbling under this– Amazon and One Medical’s possible mishandling of older patients.

Mid-week news roundup: HarmonyCares $200M round, Risant to buy Cone Health, Courier Health’s $16.5M Series A; Coalition for Health AI loses HHS/FDA members; Weekend Read–reining in AI’s Wild West? (Signs of funding life–and AI skepticism)
Two debuts of note: Samsung’s Galaxy Ring, Watch upgrades; Alivecor’s InstantQT+KardiaMobile 6L Europe launch 
News roundup: Masimo has offer to JV consumer business for $950M or more, Get Well sold to SAI, One Medical scored on poor handling of urgent calls from Iora patients (Masimo’s many maneuvers before shareholder meeting–and One Medical’s little problem with older adults, a market they may not want)
VA sued in Federal court on Oracle Cerner EHR accessibility issues (A small lawsuit but legitimate big problem for Oracle)

Lots of follow ups this week on the Feds charging more people at Done, Walgreens finally giving up on VillageMD clinic concept in selling off, Boots’ managing director departs, Amwell’s reverse stock split, One Medical absorbing Amazon Clinic, Steward Health’s $7M spy business, MeMD sold to burgeoning Fabric, Masimo’s proxy fight continues.

Done Global Federal probe expands to five more people; company suspended from Google, TikTok ad platforms (Another shoe drops)
Short takes: Fabric buys Walmart’s MeMD telehealth arm, Geisinger data breach via vendor exposed ~1.2M records, UK’s Careium develops resilient rSIM, $50M funding for K Health, India’s Alyve’s $6M Series A, Upside Health closes
Follow up roundup: Amwell to reverse stock split to avoid delisting, Amazon Clinic folded into One Medical, Amedisys divesting to close UHG deal, latest on Steward Health’s antics and spying, Masimo’s shareholder fight 
Walgreens gives up on VillageMD, will sell to reduce stake below majority, closing underperforming stores, revising profit outlook– and in abandoning Boots sale, managing director James quits (Walgreens still sinking–why?)

AliveCor’s Kardia 12L compresses a 12-lead ECG into a single cable assisted by AI. There’s M&A activity at long last with eVisit and Sharecare going private along with some decent raises for Talkiatry, CipherHealth and Heyday. Medtronic tries but fails to keep its layoffs on the QT and Strictly HushHush. NeueHealth resurfaces with another daring loaner. And the Gimlet Eye resurfaces with a take on Cracked SPACS and recent IPOs.

Short takes/wrapup: fundings for Talkiatry, Heyday Health, CipherHealth; Brightside Health now 50 states for Medicare Part B; Neurabody’s sensor based posture therapy; below the radar global layoffs at Medtronic
News roundup: AliveCor launches FDA-cleared Kardia 12L ECG, eVisit buys UPMC’s inpatient teleconsult, UPMC and MedStar invest; NeueHealth gains $150M loan–with caveats–and NYSE non-compliance notice
A Gimlet Eye view on IPOs and Cracked SPACs: Altaris’ buys Sharecare for $518M, takes it private; a look at Waystar and Tempus AI post-IPO (Gimlet returns from the Remote Pacific Island–virtually, of course)

The first Federal prosecution on telemedicine prescribing against the leaders of Done. VA extended Oracle Cerner’s EHR implementation for another year. The UK Synnovis hack was ransomware, still affecting London hospitals. Still around Verily gets in on the GLP-1 craze. Pepper the Robot resurfaces in San Diego for mental health. And closing the week, Change/UHG finally getting required data breach notifications out along with three fundings.

Week-end short takes: Change Healthcare/UHG breach notification starting; fundings for Pomelo Care, Marigold Health, Humata Health (Green funding shoots?)
A lighter update: Pepper the Robot’s comeback at San Diego State University–now AI-equipped for mental health
News roundup: VA extends Oracle Cerner for 11 months; Amwell founders swap jobs; Alphabet’s Verily pivots to Lightpath with GLP-1, retiring Onduo; UnitedHealth hasn’t notified on Change breach
Done CEO, president arrested, charged with $100M fraud on Adderall distribution in first Federal case on telemedicine prescribing (updated) (First of many?)
UK pathology services Synnovis hacked by Qilin ransomwareistes, demand $50M, justify attack due to UK involvement in “wars” (One system, lots of vulnerability)

A week of ‘further developments’. Teladoc replaces its CEO in two months–record time. Waystar finally IPOs after two years. Steward Health gets the DIP bucks at the last minute to continue until it’s sold off. Devices and app systems like Dexcom and Aktiia make significant improvements that improve their marketability. Category consolidations in telemental health and behavioral health risk analytics. And are these the last appeals for Theranos’ Holmes and Balwani?

Short takes: Dexcom G7 now directly connects to Apple Watch, Brightside Health acquires Lionrock, Aktiia CALFREE gains CE Mark for optical BP monitoring not requiring calibration (Further telemental consolidation and digital health device upgrades)
Oracle’s Q4/FY 23 earnings push Cerner to background, stock price soars on AI deals; 81% of VA clinicals really can’t stand Cerner (Can this EHR be saved?)
News roundup: Teladoc’s new CEO from major payer, Steward Health lives with $250M injection, Waystar’s IPO raises $968M, NeuroFlow acquires Owl (A record time for CEO replacement)
Theranos’ Holmes and Balwani appeal fraud convictions, $450M investor restitution (One last try on appeal?)

NHS England made a lot of not-good news this week, with ‘serious harm’ linked to their multiple EPRs and by midweek, a third-party vendor ransomware attack crashing pathology systems in London hospital trusts. Theranos’ Elizabeth Holmes’ defense in court next week for appeal. Steward Health running out of operating money while being sold off in Federal Bankruptcy Court. Ascension breach scares health execs, but 1/3 don’t have contingency plans especially for vendor hacks. On the sunny side–some strong fundings for Eko, Sword, and Plenful.

Short takes: Holmes legal team appealing Tuesday 11 June; Steward Health asset sale OK’d, needs funding; fundings for Sword Health, Eko Health (Them’s that got, has $)
Breaking: multiple London hospitals, borough GPs declare ‘critical incident’ from ransomware attack via third party pathology vendor (Who’s responsible?)
News roundup: Change responsible for data breach notices; 37% of healthcare orgs have no cybersec contingency plan; health execs scared by Ascension breach; CVS continues betting on health services; Plenful’s $17M Series A
NHS electronic patient records linked to 100 ‘serious harm’ issues, with ~50% of NHS England trusts reporting patient issues: BBC News (Many fixes needed here before AI arrives)

 


Have a job to fill? Seeking a position? See jobs listed with our new job search partner Jooble in the right sidebar!


Read Telehealth and Telecare Aware: https://telecareaware.com/  @telecareaware

Follow our pages on LinkedIn and on Facebook

We thank our advertisers and supporters: Legrand, UK Telehealthcare, ATA, The King’s Fund, DHACA, HIMSS, MedStartr, and Parks Associates.

Reach international leaders in health tech by advertising your company or event/conference in TTA–contact Donna for more information on how we help and who we reach. 


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

Thanks for asking for update emails. Please tell your colleagues about this news service and, if you have relevant information to share with the rest of the world, please let me know.

Donna Cusano, Editor In Chief
donna.cusano@telecareaware.com

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

Walgreens’ Mound of Misery piles higher with shareholder class action lawsuit, skeptical industry opinion

Walgreens Boots Alliance (WBA) faces shareholder, analyst discontent. The securities class action lawsuit filed by investor Rizwan Bhailain on 12 July in the US District Court for the Northern District of Illinois alleges that WBA misled investors with “overwhelmingly positive statements” about its pharmacy division while “concealing material (sic) adverse facts” such as the pharmacy division being “not truly equipped to handle ongoing challenges in its industry” and that “Walgreens would require significant restructuring to create a sustainable model.” The proposed class is for those who purchased shares between 12 October 2023, right before CEO Tim Wentworth started, to 26 June 2024. Wentworth, CFO Manmohan Mahajan, and chief pharmacy officer Rick Gates are also named in the lawsuit. The law firms involved are Lubin Austermuehle P.C., the Law Office of Terrence Buehler, both in Illinois, and Levy & Korsinsky, LLP in NYC. Crain’s Chicago Business, Scribd (lawsuit full text)

Industry stock analysts aren’t crazy about what is happening either. As the stock remains in the doldrums below $12, Walgreens’ billion-dollar ‘cut and sell’ strategy under Tim Wentworth has not led to optimism. Full year guidance was lowered only weeks ago after Q3 results were in. [TTA 2 July] The assumption based from the Q3 call that one-quarter of Walgreens’ 8,700 US store locations are candidates for closure by 2027 hasn’t bolstered confidence from one influential firm, Raymond James, where an analyst remarked in a recent report: “We are unaware of any retailer successfully adopting a ‘shrink to survive’ strategy.”

MedCityNews’s dismal headline, “Walgreens’ Finances Are in Dire Straits — But All Hope Is Not Lost”, interestingly had no counter from Walgreens per author Katie Adams’s requests. She tried to find some optimistic voices but the best she could manage was a sanguine view from Stephanie Davis, senior equity research analyst at Barclays. She approved of shrinking VillageMD as the largest drag on Walgreens’ financials, but acknowledged that the ‘headwinds’ in retail pharmacy justified an underweight or sell rating.

UpScript Health’s CEO Peter Ax was quoted at length pointing out other factors affecting both the ‘front’ of the store and pharmacy. In the front, there’s theft, lack of staff, supply chain shortages, and consumer wallet shortages. Over in the pharmacy section, shrinking margins, lack of pharmacists, and the squeeze between the current cost of capital and Walgreens’ financials will likely hamper reconfiguring stores and adopting efficient technologies. Another factor is that the patient blending between the pharmacies and primary care has proved to be extremely difficult. Walgreens, in trying to create a pharmacy/VillageMD closed system, now sees it as low margin/high cost, and wants to offload the cost onto additional investors. (Not much different than CVS with Oak Street Health, except that CVS got to the JV point faster. TTA 29 May

Even when locations are closed, some leases may be difficult to terminate or ‘repurpose’–and in these closures, Walgreens will be dealing with the anger of communities believing they will be shortchanged in access to pharmacy and healthcare, which knock on to the political and bad publicity that’s not needed.

The ride continues to be rough for Wentworth and Company. What Mr. Market is saying is that some very good news needs to be forthcoming, quickly. If Walgreens is ‘too big to fail’, as the Trilliant analyst quoted in the article put it, well, that hasn’t proved true for other companies in similar situations.

TTA’s Summer’s Here 3: Done’s Federal charges increase, Walgreens looking to sell off VillageMD interest, Amwell reverse stock split, Steward Health’s spying, One Medical absorbs Amazon Clinic, MeMD sold, more!

 

 

A lot of follow ups this week on the Feds charging more people at Done, Walgreens finally giving up on VillageMD clinic concept in selling off, Boots’ managing director departs, Amwell’s reverse stock split, One Medical absorbing Amazon Clinic, Steward Health’s $7M spy business, MeMD sold to burgeoning Fabric, Masimo’s proxy fight continues.

With the US Independence Day holiday and UK national elections, we are wrapping the week early–with an early Alert on Wednesday, then Friday, Saturday, and Monday. 

Done Global Federal probe expands to five more people; company suspended from Google, TikTok ad platforms (Another shoe drops)
Short takes: Fabric buys Walmart’s MeMD telehealth arm, Geisinger data breach via vendor exposed ~1.2M records, UK’s Careium develops resilient rSIM, $50M funding for K Health, India’s Alyve’s $6M Series A, Upside Health closes
Follow up roundup: Amwell to reverse stock split to avoid delisting, Amazon Clinic folded into One Medical, Amedisys divesting to close UHG deal, latest on Steward Health’s antics and spying, Masimo’s shareholder fight 
Walgreens gives up on VillageMD, will sell to reduce stake below majority, closing underperforming stores, revising profit outlook– and in abandoning Boots sale, managing director James quits (Walgreens still sinking–why?)

AliveCor’s Kardia 12L compresses a 12-lead ECG into a single cable assisted by AI. There’s M&A activity at long last with eVisit and Sharecare going private along with some decent raises for Talkiatry, CipherHealth and Heyday. Medtronic tries but fails to keep its layoffs on the QT and Strictly HushHush. NeueHealth resurfaces with another daring loaner. And the Gimlet Eye resurfaces with a take on Cracked SPACS and recent IPOs.

Short takes/wrapup: fundings for Talkiatry, Heyday Health, CipherHealth; Brightside Health now 50 states for Medicare Part B; Neurabody’s sensor based posture therapy; below the radar global layoffs at Medtronic
News roundup: AliveCor launches FDA-cleared Kardia 12L ECG, eVisit buys UPMC’s inpatient teleconsult, UPMC and MedStar invest; NeueHealth gains $150M loan–with caveats–and NYSE non-compliance notice
A Gimlet Eye view on IPOs and Cracked SPACs: Altaris’ buys Sharecare for $518M, takes it private; a look at Waystar and Tempus AI post-IPO (Gimlet returns from the Remote Pacific Island–virtually, of course)

The first Federal prosecution on telemedicine prescribing against the leaders of Done. VA extended Oracle Cerner’s EHR implementation for another year. The UK Synnovis hack was ransomware, still affecting London hospitals. Still around Verily gets in on the GLP-1 craze. Pepper the Robot resurfaces in San Diego for mental health. And closing the week, Change/UHG finally getting required data breach notifications out along with three fundings.

Week-end short takes: Change Healthcare/UHG breach notification starting; fundings for Pomelo Care, Marigold Health, Humata Health (Green funding shoots?)
A lighter update: Pepper the Robot’s comeback at San Diego State University–now AI-equipped for mental health
News roundup: VA extends Oracle Cerner for 11 months; Amwell founders swap jobs; Alphabet’s Verily pivots to Lightpath with GLP-1, retiring Onduo; UnitedHealth hasn’t notified on Change breach
Done CEO, president arrested, charged with $100M fraud on Adderall distribution in first Federal case on telemedicine prescribing (updated) (First of many?)
UK pathology services Synnovis hacked by Qilin ransomwareistes, demand $50M, justify attack due to UK involvement in “wars” (One system, lots of vulnerability)

A week of ‘further developments’. Teladoc replaces its CEO in two months–record time. Waystar finally IPOs after two years. Steward Health gets the DIP bucks at the last minute to continue until it’s sold off. Devices and app systems like Dexcom and Aktiia make significant improvements that improve their marketability. Category consolidations in telemental health and behavioral health risk analytics. And are these the last appeals for Theranos’ Holmes and Balwani?

Short takes: Dexcom G7 now directly connects to Apple Watch, Brightside Health acquires Lionrock, Aktiia CALFREE gains CE Mark for optical BP monitoring not requiring calibration (Further telemental consolidation and digital health device upgrades)
Oracle’s Q4/FY 23 earnings push Cerner to background, stock price soars on AI deals; 81% of VA clinicals really can’t stand Cerner (Can this EHR be saved?)
News roundup: Teladoc’s new CEO from major payer, Steward Health lives with $250M injection, Waystar’s IPO raises $968M, NeuroFlow acquires Owl (A record time for CEO replacement)
Theranos’ Holmes and Balwani appeal fraud convictions, $450M investor restitution (One last try on appeal?)

NHS England made a lot of not-good news this week, with ‘serious harm’ linked to their multiple EPRs and by midweek, a third-party vendor ransomware attack crashing pathology systems in London hospital trusts. Theranos’ Elizabeth Holmes’ defense in court next week for appeal. Steward Health running out of operating money while being sold off in Federal Bankruptcy Court. Ascension breach scares health execs, but 1/3 don’t have contingency plans especially for vendor hacks. On the sunny side–some strong fundings for Eko, Sword, and Plenful.

Short takes: Holmes legal team appealing Tuesday 11 June; Steward Health asset sale OK’d, needs funding; fundings for Sword Health, Eko Health (Them’s that got, has $)
Breaking: multiple London hospitals, borough GPs declare ‘critical incident’ from ransomware attack via third party pathology vendor (Who’s responsible?)
News roundup: Change responsible for data breach notices; 37% of healthcare orgs have no cybersec contingency plan; health execs scared by Ascension breach; CVS continues betting on health services; Plenful’s $17M Series A
NHS electronic patient records linked to 100 ‘serious harm’ issues, with ~50% of NHS England trusts reporting patient issues: BBC News (Many fixes needed here before AI arrives)

This was a big post-holiday week, with Veradigm’s surprising bid for a buyer or ‘strategic alternatives’, a $1B Waystar IPO at last, a $34 million digital therapeutics merger, and an over-the-top Oracle response to last week’s Business Insider article. Clover markets Counterpart Assistant SaaS to other payers, CVS looks for an Oak Street investor, 23andMe looks to go private. Fundings for Wanda Health (UK) and Australia’s Updoc. And Done Health guests on Perspectives.

Short takes: Virtual Therapeutics, Akili in $34M merger; why health clinics are struggling; Dollar General, DocGo call it quits; Clover Assistant AI debuts; fundings for Wanda Health (UK), Updoc (AU); Telstra buys out Fred IT (AU)
Oracle’s Glueck kicks back hard at Business Insider’s ‘deadly gamble’ article, Epic’s Faulkner (A response written at maximum seethe)
Perspectives: How Collaborative Care Combats Physician Burnout (From Done Telehealth)
News roundup: Waystar $1B IPO is on (updated); CVS looking for Oak Street PE partner; 23andMe net loss doubles to $667M, may go private; Otsuka dives into digital therapeutics; HoneyNaps’ $12M no snooze (A big IPO after a year)
Breaking news: Veradigm may sell, merge, or seek ‘strategic alternatives’; appoints new interim CEO effective June (updated) (Parts worth more than whole?)


Have a job to fill? Seeking a position? See jobs listed with our new job search partner Jooble in the right sidebar!


Read Telehealth and Telecare Aware: https://telecareaware.com/  @telecareaware

Follow our pages on LinkedIn and on Facebook

We thank our advertisers and supporters: Legrand, UK Telehealthcare, ATA, The King’s Fund, DHACA, HIMSS, MedStartr, and Parks Associates.

Reach international leaders in health tech by advertising your company or event/conference in TTA–contact Donna for more information on how we help and who we reach. 


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

Thanks for asking for update emails. Please tell your colleagues about this news service and, if you have relevant information to share with the rest of the world, please let me know.

Donna Cusano, Editor In Chief
donna.cusano@telecareaware.com

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

Walgreens gives up on VillageMD, will sell to reduce stake below majority, closing underperforming stores, revising profit outlook– and in abandoning Boots sale, managing director James quits

Q3 results are in for Walgreens Boots Alliance (WBA) and it was largely a bummer, especially if you work for VillageMD. Their financials have taken a hit from crashing US consumer retail spending and the softening pharmacy business. Adjusted earnings per share (EPS) were $0.63, down 36.6% on a constant currency basis compared to Q3 last year. The full year guidance was lowered from Q2’s outlook of $3.20 to $3.35 EPS to $2.80 to $2.95, again citing US trends. Q3 sales were up 2.6% to $36.4 billion, up 2.5% versus last year. Release

Industry estimates are that fully one-quarter of Walgreens’ 8,700 US stores are being reviewed for performance and closure, based on industry estimates and Tim Wentworth’s remarks on the investor call last week. Healthcare Dive, FierceHealthcare

Mr. Market didn’t like the WBA news at all, dropping the share price from the call last week to today, closing at $11.58, its lowest level in years. Nine years ago, it traded just over $95 per share. Its consistently steady price and healthy dividend save the last couple of years gave it a broker nickname of a ‘widows and orphans’ stock.

The bad news for VillageMD is that it’s for sale. Walgreens plans to lower its ownership below a majority holding and not to grow that line of business, instead focusing on retail pharmacy. Lowering its ownership stake means it has to find a buyer or buyers for at least 14 points of its 63% share. And it’s been a money pit. It not only upped its share from about 30% to 63% in 2021 for $5.3 billion but subsidized the acquisition of Summit Health/CityMD by VillageMD in November 2022 for $8.9 billion ($3.5 billion from WBA). The rough calculation of $10 billion [TTA 28 Mar] spent under CEO Roz Brewer’s watch does make it a bit easier for CEO Tim Wentworth to slash away. 140 locations were closed by March with a total now estimated at 160.  

But where to find a buyer/investor? It won’t be Cigna. Last May, Cigna wrote off $1.8 billion of its 2022 $2.2 billion investment which gave it a ‘in the teens’ share [TTA 2 May]. WBA wrote it down as well; last quarter, a $12.4 billion non-cash impairment charge related to VillageMD goodwill netted a $5.8 billion writedown. It’s no moneymaker though its revenue this quarter grew 7%. An industry analyst estimated VillageMD’s 2023 losses at $800 million last April. Primary care is no longer a hot investment. Even mighty CVS is looking for a private equity investor in Oak Street Health, which implies that CVS doesn’t want to put more than the bare minimum into expanding OSH’s clinics [TTA 29 May].

This Editor’s own interesting take on an option. VillageMD’s new COO/president is a Centene ‘retiree’, Jim Miller. Previously, he had the same positions for two years at Magellan Health. He was there when it was acquired by Centene in 2022 and stayed on till retiring in April. Magellan’s holdings have largely been sold off since activist investor Politan stepped in [TTA 10 Apr]. Could it be that Miller may find investors to buy or spin it off and go private?

Shields Health not for sale and neither is Boots, which didn’t make the latter’s managing director happy. On the investor call, Wentworth also confirmed that specialty pharma operation Shields Health Solutions, bandied about as a sale candidate, will be retained. It grew 24% in Q3 versus year prior. Boots pharmacies in the UK will remain off the WBA selling block in another about-face. Right after last week’s investor call, Boots’ managing director Sebastian James announced his departure, effective in November (!) reportedly for a European eye surgery business. James had been with Boots as MD since 2018 and oversaw 13 consecutive quarters of market share growth including this one, with a 6% rise in UK comparable retail sales. It’s hard not to speculate that either James had lined up a buyer or he tired of the push me-pull you from management. Another factor that doesn’t inspire confidence. Morningstar UK

Wentworth continues to have a rough ride with some speculation as to why WBA continues to dig itself into a hole and when it will turn around.

Short takes: Virtual Therapeutics, Akili in $34M merger; why health clinics are struggling; Dollar General, DocGo call it quits; Clover Assistant AI debuts; fundings for Wanda Health (UK), Updoc (AU); Telstra buys out Fred IT (AU)

Two mental health companies with complementary digital therapeutics plan to merge. Virtual Therapeutics, which approaches mental health through VR-enabled games, and Akili Interactive, with online prescription games designed for ADHD and other cognitive impairments, yesterday announced plans to merge. The new company will retain the Virtual Therapeutics name and go private, with Akili operating as a subsidiary. The cash buyout to Akili shareholders will be based on $0.4340 per share of common stock (Nasdaq) or $34 million, a premium around 4%. Akili had announced on 29 April that it was seeking “strategic alternatives”. Shares were trading then at $0.235 so the offering is over an 80% premium to that time. In May, Akili announced a reduced Q1 2024 net loss compared to Q4 2023. The transaction is expected to close in Q3, subject to Akili retaining a specified cash position and a tender conversion. Management transitions have not been disclosed. Release, MedTechDive

Why are all the health tech clinics struggling–at once? CNBC polls a group of experts and deduces that what it calls the “2.0 version of primary care” in Walmart Health, CVS Minute Clinics (closing dozens of Minute Clinics in Southern California and New England), and  Walgreens’ VillageMD, is foundering under:

  • Thin to non-existent margins–reimbursements are low, but the expenses of running them are high
  • Lack of ‘volume selling’
  • Lack of workforce–doctors don’t want to go to rural areas, which was Walmart’s bet. Nurse-practitioners can’t care for patients (and bill) if they also are detailed to do cleanup 
  • Cross-selling a flop–if you’re in for a pint of milk, Advil, or shampoo, you’re not going into the clinic, and vice versa

A 3.0 model may have a lot of variants, such as One Medical’s subscription model ($9/month for Amazon Prime members). Walgreens is opening a few in-store health clinics in the Hartford, Connecticut area to be run by Hartford HealthCare. In Arizona, a local Be Well Health Clinic near Arizona State University operates in a Walgreens and treats only sexual health issues. Kroger’s Atlanta-area Little Clinics will focus only on senior care.

One 3.0 experiment, DocGo’s vans in Dollar General parking lots, is over. Last year’s headscratching move to place DocGo’s urgent, preventative, and chronic care vans at specified hours in rural Dollar General parking lots [TTA 24 Jan 2023] was canceled some weeks ago. It never expanded beyond the three Tennessee locations, two in Clarksville and one in Cumberland Furnace that started last year. Endpoints

Health plan Clover to separately market their Assistant AI tool for clinical decision-making. Counterpart Assistant will be offered to other payers outside Clover Medicare Advantage along with providers in ACOs and value-based care enablers (sic) as an AI-assisted service, in a hybrid SaaS and per member per month (PMPM) shared-savings model. The pitch is to lower per-life customer acquisition cost and allow physicians to use one tool for all MA patients. FierceHealthcare

Fundings in UK and Australia:

UK’s Wanda Health adding a 30% investment from VC investment group NetScientific plc. Wanda Connected Health Systems Ltd. has operations in Bristol and Seattle.  It’s a second-time-around for NetScientfic, as it was an early Wanda investor but sold its 90% interest in Wanda US to Deeptech Disruptive Growth Investments Ltd in 2019. Wanda Health provides remote patient monitoring feeding into a virtual care platform. Insider Media

Australia’s Updoc telehealth raised A$20 million ($13.2 million) in investment from ASX-listed capital investor Bailador. It offers virtual consultations, online prescriptions, specialist referrals, pathology referrals, and medical letters for a single payment or on subscription. The funding will be used for international expansion and technology development. To date, it has served 200,000 Australians.  Mobihealthnews

In more news from Down Under, Telstra Health buys out the remainder of Fred IT Group. Telstra already owned 50% of the pharmacy IT solutions provider and is buying out the Victoria branch of the Pharmacy Guild of Australia and Paul Naismith, Fred IT co-founder and CEO. The CEO, management, and employees will remain in place. Fred IT, through eRx, is the only national electronic prescription delivery service in Australia since last year. Right Said Fred? Mobihealthnews

News roundup: Waystar $1B IPO is on (updated); CVS looking for Oak Street PE partner; 23andMe net loss doubles to $667M, may go private; Otsuka dives into digital therapeutics; HoneyNaps’ $12M no snooze

Waystar finally getting around to starring in its IPO. Again. The on-again/off-again public offering for this healthcare payments software platform developer is back on, according to their Form S-1 filed yesterday (28 May) with the Securities and Exchange Commission (SEC). Their first filing draft was in October 2023 on Nasdaq which would have valued the company at $8 billion. The IPO was again revived in December and postponed. This filing for WAY floats 45 million shares valued between $20 and $23 which would raise $1 billion with a far more reasonable valuation of $3.7 to $3.83 billion (latter updated per Waystar). Lead book-running managers are JP Morgan, Goldman Sachs & Co. LLC, and Barclays.

Cornerstone investors, who purchase stock before the formal listing, have expressed interest in buying up to $225 million in shares; these investors include funds managed by Neuberger Berman and a wholly-owned subsidiary of sovereign wealth fund Qatar Investment Authority. 

Underwriters have a 30-day option to purchase up to 6.75 million shares at the IPO price less the underwriter discount. Their current investors are EQT AB, Bain Capital, Francisco Partners, and the Canada Pension Plan Investment Board. The net proceeds from the offering will repay outstanding indebtedness. No timing is stated for when the IPO will happen. Usually, there are roadshows for institutional investors that showcase the prospectus (in the S-1) and positive points such as their $5 billion in annual transactions. After the listing, the current investors will still have substantial shares: EQT, CPPIB, and Bain will own about 29.2%, 22.3%, and 16.8% stakes respectively. 

Release, Morningstar, FierceHealthcare, Reuters

CVS Health is reaching out for a private equity partner to expand Oak Street Health’s clinics. Bloomberg News reported this unusual move by CVS with a handful of private equity firms to explore what was termed by ‘insiders’ as a joint venture. It’s all very preliminary and a JV may not be the final form. OSH is far smaller than rivals One Medical (Amazon) and VillageMD (Walgreens) but CVS apparently does not want to go it alone to fully take on the development cost. On February investor calls, CVS projected building out to 300 clinics by 2026. Reuters

Even in early 2023 with rivals Amazon (One Medical), Walgreens (VillageMD), and Walmart Health on primary care clinic buying and building binges, CVS’ buy for $10.6 billion for the ‘runt of the litter’ was widely derided as a waste of money [TTA 16 Feb, 2 Mar 2023]. OSH had only 169 offices in 21 states. It was also a money loser, $510 million in the red in 2022 and $200 million projected in 2023, with no breakeven predicted until 2025. A large part was due to OSH’s patient population, heavily skewed towards Medicare Advantage and underserved, high-risk patients. Those factors have gotten worse, not better. CMS has now tightened payments on MA with new rates and on reimbursement for diagnoses, making the growth of this population even riskier. Further dimming prospects for a willing partner: Walmart Health is shutting at end of June and VillageMD has shed or is shedding 140 locations to perhaps 620.  

23andMe’s losses double while revenue shrinks by 31%. Things continue to dim at the beleaguered genetics testing company. Their Q4 ending 31 March 2024 (FY24) closed with a net loss of $209 million on $64 million in revenue, compared to a net loss of $64 million on $94 million in revenue in the prior year Q4. In adjusted EBITDA, Q4 lost $33 million, compared to a loss of $39 million in prior year Q4. Net loss in full year FY24 was $667 million on revenue of $220 million, versus prior year’s loss of $312 million on revenue of $299 million. Adjusted EBITDA was $176 million versus prior year’s $161 million. As previously reported [TTA 20 Apr], CEO and co-founder Anne Wojcicki may offer to buy out the 80% of shares she does not already own. In developments, 23andMe has introduced an ancestry feature called Historical Matches, three new genetic reports for 23andMe+ members covering breast, colorectal, and prostate cancer based on polygenic risk scores, and some clinical trials moving forward. 23andMe also lost revenue in mid-year from GSK’s expiring agreement, had an impairment relating to Lemonaid Health, and of course (but not mentioned here) their massive 6.9 million record data breach. Shares closed today at $0.61, slightly up from April’s lows. Release

Otsuka America bucks the down trend, moves into digital therapeutics with Otsuka Precision Health. The Japanese pharmaceutical company’s US division is moving forward with a new digital health unit, Precision Health (OPH), headed by 14 year veteran Sanket Shah. Their first rollout later this summer will be based on the newly FDA-cleared Rejoyn, the first prescription digital therapeutic authorized for the adjunctive treatment of major depressive disorder (MDD) symptoms. Rejoyn was developed in conjunction with Click Therapeutics. Mr. Shah and Otsuka are taking the longer view in terms of development, that future developments will be about both partnerships and solo effort, and that the road is long–and littered with the burnt-out shells of failed companies like Pear Therapeutics, Babylon Health, and way back to Happtique. Otsuka has had its own digital health learning experience. They partnered in 2017 with Proteus Digital Health’s smart pill tech for its Abilify MyCite anti-depressant. After abruptly ending the partnership, Otsuka bought the smart pill technology out of bankruptcy [TTA 19 Aug 2020]. Release, Healthcare Dive 

One funding of note this week is HoneyNaps‘ $11.6 million Series B. Hi Investment Partners, QUAD Investment Management, and Industrial Bank of Korea led the South Korean sleep diagnostics company’s funding. HoneyNaps has an FDA-cleared (2023) bio-signal monitoring and AI-assisted sleep diagnosis software, SOMNUM, that will be introduced to the US market. In the release, the company CFO announced plans to “further advance the AI to expand its application to other critical areas such as cardiovascular disease, dementia, and Parkinson’s disease”. Mobihealthnews

News roundup: UHG CEO’s Bad Day at Capitol Hill; Kaiser’s 13.4M data breach; Walgreens’ stock beatup; Cigna writes off VillageMD; Oracle Cerner shrinks 50%; Owlet BabySat gets Wheel; fundings for Midi, Trovo, Alaffia, Klineo

It was a Bad Day at Boot (Capitol) Hill for UnitedHealth Group’s CEO Andrew Witty. On May Day, he was the Man In The Arena facing two Congressional grillings–the first from the Senate Finance Committee in the morning, and the second in the afternoon from the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations. The precipitating event was the Optum/Change Healthcare data breach and system hacking by ALPHV/BlackCat, a disruption which is as of today not fully resolved.  Millions of patients may have had data stolen and exposed–a number that has yet to be determined, but an outcome for which UHG, while paying the ransomwaristes, has prepared. Already, the VA has notified 15 million veterans and families of that possibility.

This Editor will be linking below to multiple articles and Mr. Witty’s prepared testimony. Interested Readers can also refer to YouTube for extensive links to video testimony. Highlights:

  • Both houses criticized the slow response and amount of financial assistance given to providers after the shutdown of Change’s systems prevented (and still is preventing) timely claims processing and payment. While ‘near normal’ volumes of medical claims and 86% restoration of payment processing sounds good, that leaves a lot of wiggle room on over two months of totally disrupted processing and payment. The billion or so cited sounds impressive but much of this is in loans. Most practices and groups simply do not have the financial cushion or billing skillset to bridge this disruption, to pay back loans, or to bookkeep this.
  • Also criticized at this late date was UHG being unable to determine how many individuals had PHI exposed in the breach.
  • As to cause, the description of UHG finding that surprise, surprise, Change’s systems were way out of date, stored on physical servers versus the cloud, and used Citrix remote access without multi-factor authentication (MFA) was utterly savaged. According to Mr. Witty, ALPHV after days of knocking around got in on the one server that did not have MFA authentication.

The blunt fact is that UHG had close to two years (January 2021-Oct 2022) before the buy closed. Due diligence consisting of a full audit had to have been done on Change’s IT systems. They processed what UHG wanted to buy. In this Editor’s estimation, Job #1! for UHG should have been ensuring that Change’s systems were hardened, then upgrading to what Mr. Witty called UnitedHealth’s standards. This Editor will go further. A minimum requirement for the sale should have been security hardening. There was time before the closing.

Senator Thom Tillis, R-North Carolina, had the best riposte. He brought a copy of “Hacking for Dummies” to the hearing, highlighting MFA. I doubt he was much moved by UHG now bringing in cybersecurity company Mandiant to both investigate and harden their systems, nor by UHG having to pay ransom, without knowing whose data was compromised.

  • Beyond the breach, UHG was called ‘monopolistic’ by both Republican and Democrat Members. There were calls to break up UHG as not ‘too big to fail’. UHG has grown by acquisition and consolidation of services. As this Editor has speculated, this is likely coming to an end with the new, much more stringent Merger Guidelines. This sentiment paints a large, unmissable target on UHG’s back for aiming FTC’s and DOJ’s missiles. (DOJ also has a huge score to settle with UHG dating back to the failure to block the Change sale.)

By the end of the day, Mr. Witty looked quite the worse for wear–tie and collar askew, slightly sweaty, versus the perfect poses of the various Members. Becker’s, FierceHealthcare, Axios, HealthcareDive    Mr. Witty’s Senate testimony statement, House testimony statement

Speaking of data breaches, Kaiser Permanente reported a big one to Health and Human Services (HHS). This relates to ad tracker information shared with third-party advertisers such as Google, Microsoft, and X. Kaiser used it in secured areas of their website and mobile apps. Information disclosed could be name and IP. Kaiser reported it on 12 April but only disclosed on 25 April that 13.4 million records may have been affected. The ad trackers have since been removed. TechCrunch, FierceHealthcare 

Walgreens stock not recovering. April was WBA’s worst month in five years and May is no better, with the stock muddling around $17.50. The month slid around 18%. Their 52-week high was $33. As of now, CEO Tim Wentworth’s actions such as closing locations and writing down VillageMD haven’t convinced Mr. Market of WBA’s worth, but in fairness it’s early in his tenure. In the Insult to Injury Department, it was revealed that the IRS is seeking to claw back $2.7 billion in unpaid 2014-2017 taxes. Crain’s Chicago Business

Cigna is also writing down its interest in VillageMD. Almost forgotten is that in late 2022, Cigna invested $2.5 billion into VillageMD. They have now written down $1.8 billion of that ‘low teens’ ownership. The planned tie was connecting Village Medical into Evernorth, Cigna’s medical services area. It was also supposed to provide Cigna with an annual return on investment, but one assumes it did not. The writeoff threw Cigna’s Q1 into the red with a net loss of almost $300 million versus a prior year profit of $1.3 billion, despite a strong quarter that grew revenue 23% versus prior year to $57.3 billion. Healthcare Dive

Oracle Health has been successful–in shrinking Cerner by close to half. Records of employment at Cerner’s Kansas City-based operation have declined from 11,900 people in 2022 (Kansas City Area Development Council) to a current 6,400 (internal documents). Cerner itself reported 12,778 local full-time-equivalent employees in 2022. Oracle had multiple layoffs of Cerner affecting Kansas City workers and has consolidated multiple office buildings and campuses. Becker’s

In more cheerful news:

Baby monitor Owlet announced a strategic partnership with Wheel for Owlet’s BabySat. BabySat is Owlet’s FDA-cleared prescription vital signs monitor for infants 1-18 months. Wheel clinicians can now prescribe BabySat which enables parents to order BabySat from Owlet and other suppliers. With Wheel, BabySat also integrates with durable medical equipment (DME) suppliers who accept and can bill for the product through many insurance providers for partial or full reimbursement. Wheel is a virtual care platform and physician/nurse-practitioner online network available direct to consumer and to enterprises. Owlet release

And rounding up funding:

MidiHealth closed a $60M Series B funding. This was led by Emerson Collective with participation from Memorial Hermann, SemperVirens, Felicis, Icon Ventures, Black Angel Group, Gingerbread Capital, Able Partners, G9, and Operator Collective for a total of $99 million in funding. Midi provides virtual support for women going through peri- and full menopause. The fresh funding will help them expand national insurance coverage, hire and upskill an additional 150 clinicians by end of year, diversify service lines, and scale to care for 1 million+ women per year by 2029. Release

Trovo Health launched with $15 million in seed funding, led by Oak HC/FT. The NYC-based AI-powered provider task assistance platform will use the funding to build its technology platform, clinical operations, and leadership team. Mobihealthnews 

In the same roundup, NYC-based Alaffia Health scored a $10 million Series A round. This was led by FirstMark Capital with participation from Aperture Venture Capital. Alaffia creates generative AI solutions for payment integrity in health insurance claims operations, with the aim of eliminating insurance fraud, waste, and abuse for health plans, third-party administrators, self-insured employers, stop-loss carriers, and government agencies. Their total raise to date is $17.6 million. Paris-based Klineo also raised €2 million for its oncology clinical trials search platforms, assisted by AI, for the use of doctors and patients. BPIFrance and business angels participated in the round.

Mid-week short takes: UnitedHealth’s $1.2B Q1 loss from Change attack, another Walgreens layoff, Dexcom-MD Revolution partner, Kontakt.io $47.5 raise, GeBBS Healthcare may sell for $1B

UnitedHealth Group rang up Q1 revenue of $99.8 billion, with adjusted earnings from operations $8.5 billion, but had a net loss of $1.22 billion (WSJ). (Ed. note–Becker’s has $1.4 million) The loss was created not only from the cyberattack on Change Healthcare’s systems ($0.74/share) but also a $7 billion charge due to the sale of UHG’s Brazil operations.

  • Q1 revenue was up $7.9 billion versus same quarter 2023.
  • Their year 2024 forecast of the damage done by the ALPHV cyberattack on Change is $1.6 billion ($1.15 to $1.35 per share).
  • Optum’s Q1 revenues of $61 billion grew by $7 billion over prior year, led by Optum Health and Optum Rx due to continued strong expansion in the number of people served

Someone at HIStalk did some counting and noted that the Optum Solution Status dashboard for Change Healthcare shows 109 of 137 applications remain down, not much different than when we eyeballed it on 3 April. CNBC, UHG release, HIStalk, Becker’s, MSN/WSJ

Walgreens continues to cut staff–this go-around, it’s corporate support center employees both in Chicago and working remotely. No total was provided by the Walgreens spokesperson contacted by Crain’s Chicago Business. This adds to 900 corporate staff laid off in several waves earlier this year and last fall, VillageMD staff due to 140 closures, and 646 distribution center staff laid off last month. Walgreens stock is down 33% this year. 

In cheerier news, Dexcom is partnering with remote patient monitoring (RPM) provider MD Revolution to add its continuous glucose monitoring (CGM) system to MD Revolution’s RPM platform. MDR is a startup company marketing its RPM platform to large practices, health systems, and healthcare organizations. Current raises date back to 2015 totaling under $60 million mostly from venture round funding (Crunchbase). Release

Inpatient data analytics company Kontakt.io raised a Series C investment of $47.5 million, led by Growth Equity at Goldman Sachs Asset Management (Goldman Sachs). This adds to a modest $21.5 million from various investors from 2013 to 2022 (Crunchbase). Kontakt provides patient flow analytics to health systems to optimize patient, staff, and resource flows, improving safety, coordination, and service delivery. It uses a combination of RTLS property tracking, cloud, and AI to provide real-time location data and orchestrate staff, equipment, and clinical spaces around a patient’s care journey. The additional funds will be used for sales expansion and AI development. HIStalk, Release 

GeBBS Healthcare Solutions on the block, may fetch $1 billion. The LA-based business process outsourcing (BPO)/revenue cycle management (RCM) company, currently owned by ChrysCapital of New Delhi, is on the market for a reported $800 million to $1 billion. This would be a tidy payday for ChrysCapital which back in 2018 acquired an 80% stake in GeBBS for $140 million with a valuation then of $175 million. ChrysCapital is India’s largest home-grown PE investor. Economic Times-India Times, HIStalk

News roundup: VillageMD sued on Meta Pixel trackers; Cerebral pays $7.1M FTC fine on data sharing, cancellation policy; VA may resume Oracle Cerner implementation during FY2025; Epic-Particle Health dispute on PHI sharing

It’s all about personal health data–sharing, bad sharing, and bad transfers in this roundup.

VillageMD takes another hit, this time on Meta Pixel ad tracker issues. A class-action lawsuit filed on 10 April charges VillageMD (formally Village Practice Management Company), via its Village Medical website, of using the Meta Pixel ad tracker for disclosing user-protected health information (PHI) and other identifiable information generally classified as PII. This included visitors to their website villagemedical.com seeking information and patient users of Village Medical’s web-based tools for scheduling and the patient portal. The lawsuit by a “John Doe”, a patient since January 2023 resident in Quincy, Massachusetts but brought by three Midwest law firms in the US District Court for the Northern District of Illinois, states that VillageMD used trackers that transferred this personal information to Meta Networks’ Facebook and Instagram, as well as other third parties like Google, for use in targeted advertising, in violation of HIPAA and other regulations. The lawsuit seeks 1) an injunction stopping Village Medical from using ad trackers and 2) monetary redress via damages–actual, compensatory, statutory, and punitive for the entire affected class. The suit also alleges that VillageMD violated its own internal procedures. Crain’s Health Pulse, Healthcare Dive

Readers will recall that in June 2022, STAT and The Markup published a study and follow-ups on Meta Pixel and ad tracker use by healthcare organizations. Ostensibly, the ad trackers were there to better track website performance and to tailor information for the patient [TTA 17 June, 21 June 2022], but they sent information to third parties that violated HIPAA and privacy guidelines. Ad trackers were also monetized. Meta blamed the health systems [TTA 16 May 2023] for misuse though they used the data for ad serving.  Congressional hearings, FTC, and DOJ followed later in 2022 and 2023. Multiple class action lawsuits against providers large and small have ensued. Providers have pushed back on FTC and HHS rules on ad trackers, stating the restrictions hamper their ability to build better websites based on customer usage and to serve individuals with useful information. 

Another ‘oversharing’ company, troubled telemental Cerebral, whacked with $7.1 million FTC fine on disclosing consumer information via ad trackers plus ‘negative option’ cancellation policy. The proposed order for a permanent injunction filed by the Department of Justice (DOJ) and docketed on 15 April has to be approved by the Federal District Court for the Southern District of Florida. The fine for the company only penalized the following:

  • Cerebral released 3.2 million consumers’ information to third parties such as practices, LinkedIn, and TikTok. This included PHI and PII such as names, medical histories, addresses, IP addresses, payment methods including insurance, sexual orientation, and more. Even more outrageously, they also used the mail for postcards that had sensitive information such as diagnosis printed on them. The insult on injury was that Cerebral failed to disclose or buried information on data sharing to consumers signing up for their ‘safe, secure, and discreet’ services. Cerebral now has to restrict nearly all information to third parties.
  • Cerebral also set up their service cancellation as a ‘negative option’ cancellation policy, which in reality meant that it was renewed indefinitely unless the customer took action to cancel. It was not adequately disclosed in violation of the federal Restore Online Shoppers’ Confidence Act (ROSCA). Then Cerebral made it extremely difficult to cancel by instituting a complex procedure that required multiple steps and often took several days to execute. They even eliminated a one-step cancel button at their then-CEO Kyle Robertson’s direction. The order requires this to be corrected including deleting the negative option.
  • Former employees were not blocked from accessing patient medical records from May to December 2021. It also failed to ensure that providers were only able to access their patients’ records.

Cerebral’s settlement with the FTC and DOJ breaks down to $5.1 million to provide partial refunds to consumers impacted by their deceptive cancellation practices. They also levied a civil penalty of $10 million, reduced to $2 million as Cerebral was unable to pay the full amount. The decision and fine do not cover charges to be decided by the court against the former Cerebral CEO Robertson due to his extensive personal involvement in these practices. Those have not been settled and apparently were severed from the company as a separate action (FTC case information). Since 2022, Mr. Robertson has consistently blamed company management and investors for pushing for bad practices such as prescribing restricted stimulant drugs. Cerebral countersued him for defaulting on a $49.8 million loan taken in January 2022 to buy 1.06 million shares of Cerebral common stock. More to come, as the order also does not address other Federal violations under investigation, such as those under the Controlled Substances Act.  FTC release, FierceHealthcare  

VA to possibly resume Oracle Cerner EHR implementation at VA sites before the end of FY 2025, even if not in budget. During House Veterans’ Affairs Committee hearings on FY 2025 and 2026 budgets, VA Secretary Denis McDonough last Thursday (11 April) said that the VA intends to resume deploying the Oracle Cerner EHR as part of VA’s Electronic Health Records Modernization (EHRM) before the end of FY 2025. As Federal years go from October to September, FY 2025 starts October 2024 and ends September 2025. When asked if VA plans to maintain the “program reset” as they termed it in April 2023 for all of FY25, Secy. McDonough said that “we do not.”However, there is no budget allocated for additional implementations in either FY. The plan is to use carryover funding.

Oracle Cerner’s Millenium EHR was implemented at five VA locations before suspending in April 2023 for a massive re-evaluation which involved reworking systems such as the Health Data Repository which created critical scheduling and pharmacy problems detailed by the Office of Inspector General (OIG)  [TTA 28 Mar]. The joint VA and MHS/Genesis Lovell FHCC implementation, which went live in March, is not included.  NextGov/FCW, Healthcare Dive

And in another dispute about data sharing, leading EHR Epic cut off requests made by some Particle Health customers, expressing concern about privacy risks. Particle Health is a health data exchange API platform for developers. Both Epic and Particle are part of Carequality, a large scale data exchange group that connects 600,000 care providers, 50,000 clinics, and 4,200 hospitals to facilitate the exchange of patient medical records On 21 March, Epic filed a dispute with Carequality that some of Particle’s users “might be inaccurately representing the purpose associated with their record retrievals.” and stopped responding to some Particle Health customer queries. This has now degenerated into a ‘who said what‘ dispute, with Particle and their CEO alleging that Epic implied that it completely disconnected Particle Health and its customers from Epic’s data, while Epic has said that after a review by its 15-member Care Everywhere Governing Council, they flagged three companies who were using Particle’s Carequality connection to access data not related to patient care or treatment. There’s also a larger concern being brought up by providers on the use of these mass data exchanges for fraudulent extraction of data or use that would violate HIPAA guidelines. FierceHealthcare, CNBC, Becker’s, Morningstar

VillageMD names new president and COO as it shrinks to 620 locations

Jim Murray retires from Centene to take the role of VillageMD’s president and chief operating officer. The appointment was effective on 1 April. He will be responsible for leading operations of Village Medical, Summit Medical, and CityMD.  Last October, VillageMD named new divisional heads: Rishi Sikka, MD as president of Village Medical, Dan Frogel, MD as president and chief clinical officer of CityMD, and Becky Levy, JD as president of Summit Health and Starling PhysiciansVillageMD release, Crain’s Chicago Business

As noted previously, VillageMD has been retreating quickly from its aggressive plans circa 2022 for expansion into Walgreens locations to closure of the co-locations and already established free-standing offices. The planned 140 closures are well above the originally estimated 50, then 85 locations, including all in Florida and six in its home state of Illinois. Majority owner Walgreens has already taken a $5.8 billion writedown of its estimated $9-10 billion investment. Industry analyst Brian Tanquilut, a health care services equity research analyst at Jefferies, estimated to Crain’s that VillageMD lost $800 million in 2023.

Jim Murray retired as Centene’s chief transformation officer on 29 March, just in time to move to VillageMD.  His planned retirement was announced by Centene last May. Previously, he had been president and chief operating officer at Magellan Health from January 2020 to its acquisition by Centene in January 2022. Subsequently, Centene sold parts of Magellan such as Specialty Health and Rx. His experience crosses both provider and payer, at Dallas-based PrimeWest Health, the Dallas-based hospital system LifeCare Health Partners, and prior to that, 28 years at Humana, departing as chief operating officer. It does show one how close the circles are at the C-level. St. Louis Today

Facing Future 2: Walgreens writes down $5.8B for VillageMD in Q2, lowers 2024 earnings on ‘challenging’ retail outlook

Walgreens unsparing in FY 2024 Q2 results, affected by VillageMD closures, weak retail, and inflation. In a financial report released Thursday, remarkably devoid of happy talk, Walgreens Boots Alliance (WBA) presented a ‘picture adjustment’ that wrote down VillageMD’s losses even while locations are being closed. WBA also factored in for full year 2024 the ‘challenging retail environment in the US’ as well as the blurry picture of the US Healthcare division that includes VillageMD, Summit Health/CityMD, Shields Health Solutions (pharmacy), and CareCentrix (home care). 

For WBA in total, the first six months of their fiscal year, through 29 February 2024, reflected a tidy increase in sales: 8.1% from the year-ago period (7.2% in constant currency) to $73.8 billion. Operating loss was $13.2 billion, versus prior year/same period loss of $6 billion.

  • Most of the operating loss was attributable to VillageMD’s exits from Florida, Indiana, Chicago, Boston, Rhode Island, and Las Vegas. The total number of locations will be 140, not the earlier reports of 50 that grew to 85. Both were confirmed by a company spokesperson to Forbes.
  • Financially, the impact is a $12.4 billion non-cash impairment charge related to VillageMD goodwill, resulting in a $5.8 billion charge attributable to WBA, net of tax and non-controlling interest.
  • The six-month net loss: $6.0 billion versus $3.0 billion in prior year/same period, again taking into account non-cash impairment charges.
  • This totals to a loss per share of $6.93 compared to loss per share of $3.50 in prior year/same period.

As noted earlier, this Editor’s math is that Walgreens in the US sank close to $10 billion in VillageMD including their minority then majority interest, plus subsidizing their purchase of Summit Health. This write-off is well over half. The fact that the write-off of closing markets, locations, and goodwill is not being delayed past the fiscal mid-year is aggressive. Contrast this to Teladoc, which waited a full year to write down Livongo.

US Healthcare as a whole for Q2 rose 33.2% in sales, narrowed operating loss to $34 million versus last year’s $159 million, and came up positive in EBITDA with $17 million, a $127 million increase versus the same quarter prior year. For the full year, WBA is projecting a breakeven of plus/minus $50 million.

Retail sales continued to weaken, with a 4.5% decrease for the quarter ending 29 February. Comparable retail sales decreased 4.3% versus same quarter in prior year. Pharmacy sales were higher, driven partially by higher drug costs, with a 8.7% rise.

Rounding out the picture, for the full year, WBA’s earnings per share guidance lowered to $3.20 to $3.35.  WBA earnings release, FierceHealthcare,CNBC    CEO Tim Wentworth will have an interesting next six months to turn this ship around.

Mid-week roundup: UK startup Anima gains $12M, Hippocratic AI $53M, Assort Health $3.5M; Abridge partners with NVIDIA; VillageMD sells 11 Rhode Island clinics; $60 for that medical record on the dark web

It may be a little chilly out, but it feels like Springtime For Early Round Funding and Big Partnerships.

Anima, a London-based startup fresh out of Y Combinator, now has a $12 million Series A raise. It was led by Molten Ventures, with participation from existing investors Hummingbird Ventures, Amino Collective and Y Combinator. Its platform combines online consultation with productivity tools for integrated care enablement in one dashboard for primary care. Their founders position it as a single source for patient truth across care settings, avoiding missed diagnoses. As of today, Anima is deployed in over 200 NHS clinics in England caring for a combined 2 million patients and a monthly request volume of over 400,000 requests. They also claim to halve the time the time practices spend on coding, processing, and filing documents and resolve 85% of patient inquiries within a day. Shun Pang, co-founder and CEO of Anima, who trained as a doctor at Cambridge University, told TechCrunch. “The entire clinic collaborates in a real-time multiplayer dashboard, like Figma, and can ping cases to each other, and chat with a Slack-like UX.” he said. He also added that Anima’s processing system can “autonomously ingest any document, like handwritten, diagrams, imaging, and output a summary, with structured fields.” Anima has not entered the US market yet. Anima blog/release, Tech.EU

Hippocratic AI raised a jumbo $53 million Series A for what they term the first safety-focused Large Language Model (LLM) for healthcare. AI of course is the hottest funding area in healthcare. With two previous rounds raised in mid-2023, their total funding is $118 million (Crunchbase), creating a valuation estimated at $500 million. Investors were co-led by Premji Invest and General Catalyst with participation from SV Angel and Memorial Hermann Health System as well as existing investors Andreessen Horowitz (a16z) Bio + Health, Cincinnati Children’s, WellSpan Health, and Universal Health Services (UHS). Their product is a novel staffing marketplace where health systems, payors, and others can “hire” auto-pilot generative AI-powered agents to conduct low-risk, non-diagnostic, patient-facing services to help solve the massive healthcare staffing crisis. This is now being released for phase three safety testing with 5,000 licensed nurses, 500 licensed physicians, and the company’s health system partners. Release

San Francisco-based startup Assort Health now has a seed round of $3.5 million to advance its generative AI approach to healthcare call centers. Its goal is to eliminate front desk stress and call center/service holds. Their system in development uses AI and NLP (natural language processing) to understand a caller’s intent, then to integrates with the medical providers’ EHR, including Epic, to resolve patient inquiries without human intervention. Funding was led by Quiet Capital (!) joined by Four Acres, Tau Ventures, and a number of angel investors from tech companies. Release

Another generative AI company with a substantial Series C under its belt, Abridge, is partnering with super-hot NVIDIA.  The partnership also comes with undisclosed funding from NVIDIA’s VC arm, NVentures, to add to last month’s $150 million raise. Abridge is developing conversational AI technology using LLM and speech recognition to ease the burden of taking notes during the doctor’s appointment, with fluency in 14 languages across 55 medical specialties. Abridge’s technology is designed to capture clinician-patient conversations and structure the scribing. NVIDIA’s partnership will give Abridge access to NVIDIA’s computing resources, foundation models, and expertise in efficiently deploying AI systems at scale. Release

Another episode in the continuing Walgreens Restructuring Saga has VillageMD selling 11 practices to Arches Medical Partners. The practices are located in the Providence metro area of Rhode Island and consist of three urgent cares and eight offices with a total of 50 physicians and 75,000 patients. It is unusual because it is the first time that VillageMD sold their practices instead of closing the offices, which they are doing with 85 to 90 offices. Transaction cost was not disclosed but closed on 2 March. Arches is based in Cambridge, Massachusetts. They acquired these practices but also deploy software from its wholly-owned technology subsidiary, New Era Medical Operations (NEMO), to enable IPAs to negotiate and manage global risk contracts. Arches release, Becker’s, Crain’s Chicago Business

Wondering why ransomwareistes, their affiliates, and hackers in general are attracted to healthcare? It’s the value of a medical record. Going rates on the ‘dark web’ are now topping $60, according to CNBC’s source, a cybersecurity researcher Jeremiah Fowler. By comparison, Social Security number are a bargain $15 and a credit card number but $3. It’s also easier to hack than ever due to affiliate relationships termed ransomware-as-a-service or RaaS. The ransomware is supplied, the affiliate hackers do the work, and they share in the rewards–most of the time (see ‘notchy’ being scammed by BlackCat/ALPHV on the Change Healthcare cyberattack TTA 5 Mar). But this doubles or triples the potential for company extortion, with multiple ‘actors’ attacking a company, extorting a ransom, and then keeping healthcare data and selling it through their channels.

The article concludes that healthcare execs need to get very, very serious about protecting their data. Yet this year has marked healthcare downsizing IT departments in order to save money. This is as security software has proliferated–but has to be purchased and managed. Another distressing fact: this Editor only last week attended a major NYC conference on cybersecurity. Healthcare was mentioned only in passing as a market. Worse, till this Editor questioned a speaker from the floor, was the massive Change Healthcare attack even mentioned–and unfortunately she knew more about it than the speaker!

Walgreens’ latest cuts affect 646 at Florida, Connecticut distribution centers

Walgreens closes two distribution centers to ‘streamline capacities to best support our stores’. Two large centers serving Walgreens retail stores, in Orlando, Florida and Dayville (Killingly), Connecticut, are closing permanently in May, with workers discharged on or before 17 May. Affected are 324 workers in Orlando and 322 workers in Dayville who according to Walgreens will receive severance, additional separation pay, on-site career fairs, and/or outplacement services. While workers in Orlando have a better employment situation locally with unemployment at 3%, Dayville, in northeastern Connecticut’s rural Windham County near the Rhode Island border, is up to 5%. WARN notices were filed in both states about 14 March. Crain’s Chicago Business, Becker’s 

Press accounts do not mention corresponding closures of Florida or New England Walgreens stores. The puzzle is that Florida, particularly central Florida, is a growing market with a permanent population as well as seasonal/tourism. Yet all 52 Village Medical co-located offices have closed in that state [TTA 22 Feb]. Reasons why range from too small co-locations unable to support full practices to lack of doctors and medical saturation.

Walgreens, after several quarters of losses, is cutting to the bone expenses, with layoffs, consolidations, and closures everywhere from their Illinois headquarters to VillageMD. Despite the $1 billion in cuts for 2024 announced last October, Mr. Market is not responding–Walgreens’ stock price continues its downward trend and has lost 15% sharply since January. The new CEO Tim Wentworth has already positioned Walgreens’ recovery as ‘not a 12-month turnaround story’. Walgreens, over the past three years, drilled a lot of holes. Some worked out well, such as Shields, but the $10 billion investment in VillageMD may be a dry hole.  In the strategic review he announced earlier this month, Boots may be on the block, not Shields, but there will be more and deeper cuts to come–if WBA’s closely held ownership agrees. Based on the distribution center closures, expect more closures of retail locations served by those centers to be announced. 

Update: VillageMD lays off 49 in first two of six Village Medical closures in Illinois

VillageMD starts releasing staff in soon-to-shut Illinois clinics. Layoffs have already started in the Illinois clinics owned and operated by Walgreens-owned VillageMD. As reported in Crain’s Chicago Business, two of their six Village Medical clinics have given notice to doctors, practice managers, medical assistants, registered nurses, and ultrasound and radiology technicians. This eliminated 24 positions at the Lincoln Park (Chicago) office and 25 positions at their Wheeling clinic, both free-standing independent locations. The layoffs took place between 20 February and 5 March. It is not clear from the article or the WARN Notice filed 20 February with the state Department of Commerce whether the layoffs take effect by or on 19 April or if the clinics are being run by a skeleton staff before closure. 

A website check of Village Medical locations in Illinois has banners on each location’s page confirming that they will close on 19 April. Illinois WARN notices have not been posted yet for the four other locations.The only co-located Walgreens-Village Medical location is in Elk Grove, so the five free-standing locations may not have been part of the 2021-22 expansion or had been acquired in separate transactions.

VillageMD is headquartered in Chicago with an original footprint mainly in the Midwest to Texas, expanding to the East (plus specialty and urgent care) when it acquired Summit Health/CityMD in January 2023 for $8.9 billion

A VillageMD spokesperson told Crain’s that laid-off full-time employees will receive an ‘exit package’ which indicates that part-time employees may receive little to no assistance. “Support for patients” is limited to urging them to contact their insurance company for help in locating a new physician and office, then assisting in transferring their records. The spokesperson did not disclose if current patients are in the process of being notified nor how.

Based upon these initial layoff numbers, Village Medical’s layoffs in Illinois will be upwards of 150 at minimum. Their spokesperson declined to reveal the full number of layoffs in Illinois. If 25 per location is extrapolated to 85 locations across Village Medical, layoffs will be ~ 2,125.

VillageMD has been remarkably silent to the press about the closures and reorganization. It has not issued a press release since last October. Additional background TTA 29 Feb.

Facing Future: Walgreens CEO moves company into strategic review–will he get WBA board alignment?

Walgreens’ CEO Wentworth positions for turnaround. “This is not a 12-month turnaround story” said Mr. Wentworth at the TD Cowen healthcare investor conference. To this Editor, the public honesty and lack of cant (a/k/a “PR Speak”) was refreshing. His unobvious caveat though was aligning the board around what he and the new executive team–very few if any carryovers from the prior regime–see as the direction of the company and asset management.

The WBA board is led by executive chairman Stefano Pessina, who has a vested interest in a turnaround. He is the lead individual shareholder of WBA with apparently 10% of shares with other insiders (including the COO of WBA International, Ornella Barra, spouse of Mr. Pessina) having about 17%. Large institutional investors (Vanguard, State Street, etc.) have over 60% of the company. The share price has fallen about 40% in the past year (from early March 2023) and 55% from this time in 2022. (Derived from WBA and Yahoo Finance)

Example: This Editor has estimated from public information that Walgreens sank north of $10 billion into VillageMD, from initial and then controlling interest, then funding the buy of Summit Health/CityMD. This is a huge and recent investment that is going sideways in a span of less than three years. It does take some nerve to walk it back. TTA 22 Feb

Other key points Mr. Wentworth made, according to the most complete report in Crain’s Chicago Business, was that this was not a prelude to some massive unveiling of a New Walgreens, that it would be a ‘starting gun’ for the work to be done, and that investors would be updated through the process. The review will include:

  • Evaluating its 8,000+ location footprint based on current and projected population and type of usage
  • US Healthcare assets including the already shrinking VillageMD [TTA 29 Feb], home care benefit management services primarily for payers CareCentrix, and specialty pharmacy Shields Health Solutions.
  • Shields is apparently no longer up for sale per earlier reports but Boots now may be
  • Smaller assets around clinical trials and pharmacy fulfillment centers

The next earnings call is 28 March, when undoubtedly more will be revealed.

FierceHealthcare caught up to this as well.

Editor’s POV on ‘musts to avoid’: Walgreens’ chief medical officer, Dr. Sashi Moodley, was interviewed during ViVE24 by Mobihealthnews, It is only remarkable in how he sidestepped direct questions beyond the first two lengthy ones on a virtual care initiative, generating a fog of non-answers around VillageMD closures and corporate strategy that became peasoup thick by the last question. (Kudos to Jessica Haden for not going wobbly.) The dubious wisdom of placing a C-level in front of the press at a ‘hard and tough news’ time, one whose expertise is clinical in nature, most comfortable in speaking to that and not corporate strategy, plus evidently has a hard time editing/limiting responses, should be rethought. 

Breaking: VillageMD exiting Illinois clinics–in its home state–as closures top 80 locations

VillageMD to cut six locations in the Chicago area–five standalone, one attached to a Walgreens store. The clinics will close on 19 April.

The irony is that VillageMD is headquartered in Chicago.

In October, Walgreens announced that 60 Village Medical clinics would close. The Florida closings announced last week were in two phases, 14 and 38, a total of 52. With Illinois, the total would be 58. However, Crain’s Chicago Business stated late on Wednesday in its article that 12 Massachusetts locations closed in February. Last month, three locations in New Hampshire and all 12 Indiana clinics closed, bringing the total to 85.

This story will be updated as it develops.