TTA’s Brrrrr Season 1: Rock Health’s ’22 funding roundup; CVS talks primary with Oak Street, invests in Carbon Health; Teladoc boosts $; Verily lays off; global M&A/fundings; Theranos updates, more!

 

 

Weekly Update

A mulligan stew of a week. CVS moving in on primary care with (possibly) Oak Street, funding Carbon Health in-store clinics while the latter downsizes. Walgreens’ VillageMD closed on Summit Health and Teladoc paints a brighter revenue picture with BetterHelp. Rock Health quantified a deflated 2022 year in funding, but M&A/VC investment still proceeds in its ‘boring’ way. Verily, Alphabet’s wandering ‘bet’, finally gets a needed trim. And Theranos is still in the news from appeals to post-prison requirements.

Weekend short takes: Theranos’ Holmes post-prison mental health + more on Shultz and Balwani; global M&A, funding roundup
Rock Health puts a kind-of-positive spin on digital health’s ‘annus horribilis’ 2022–a boring 2023
Mid-week roundup: Teladoc gets BetterHelp to boost Q4 ’22 revenue; fundings for Array, Paytient, Telesair, three others; layoffs hit at Alphabet’s Verily, Cue Health
CVS works their plan in Oak Street Health buy talks, Carbon Health $100M investment + clinic pilot; VillageMD-Summit finalizes (updated)
Theranos trial updates: Holmes’ freedom on appeal bid opposed; Balwani files appeal to conviction

Two surprises not under the Christmas tree or New Year’s hat. The ITC upheld AliveCor patents and damages versus Apple, pending their PTAB appeal, and Amazon got its first state approval for One Medical. As expected, telehealth’s national Medicare reimbursement was extended for two years, setting policy for health plans. And NHS advanced rapid stroke diagnosis with Brainomix trial in 22 hospital trust trial, tripling near-full recoveries to 48%.

Weekend news roundup: GE Healthcare spins off, adds CTO; Allscripts now Veradigm; NHS Brainomix AI stroke trial success; Withings home urine scanner; Careficient buys Net Health EMR; CommonSpirit’s class action suit on data breach
Amazon-One Medical gains conditional OK in Oregon–a preview of coming scrutiny?
(What happens at the big state and Fed level?)
Telehealth extensions signed into US law with Federal FY 2023 omnibus bill (Major breakthrough to widen nationally reimbursed telehealth)
Split decision! ITC rules that Apple violated AliveCor patents; enforcement held for PTAB appeal (David v Goliath continues!)

A potpourri of news wraps 2022, starting with confirming how telehealth can stand on its own even in specialty care visits and its continued strength in mental health. In the US, most telehealth expansion is confirmed for two years. But as predicted, DEA is going hard after ADHD misprescribing — a unicorn may lose its horn as a result. Oracle is erasing Cerner’s home town presence as Epic stomps a patent troll. And beware of DDoS–it may distract from more nefarious cybercrimes.

We wish our Readers all the happiness of the season, as we look forward to the start of the New Year. We’ll be back with new articles after 2 January. 

We wish our Readers a happy, healthy holiday season and New Year!
News roundup: DDoS attacks may be ‘smokescreen’, DEA slams Truepill with ‘show cause’, telehealth claims stabilize at 5.4%, Epic squashes patent troll, Cerner meeting exits KC, MedOrbis, Kahun partner on AI intake (From cybercrime to Cerner, c-c-c-changes roll)
Telehealth two-year extensions included in US Federal ‘omnibus’ budget bill (Tucked into a Moby Dick-sized whale of a bill)
Few specialty telehealth visits require in-person follow up within 90 days: Epic Research study 2020-2022 (Findings, though, may be pandemically skewed)

It’s a week of contrasts as the holiday season starts. There are ‘green shoots’ in startups and fundings, yet so many organizations have run into the red, with a high human cost. A literal bright spot–a lighting system that can detect and report falls. And the Holmes Defense Team files an appeal for a new trial that may delay her delivery to Club Fed for a long time. (Hoping the Feds will forget?)

Rounding up fundings and startups: Override(ing) pain; brainy Synchron and In-Med Prognostics; Click off migraine; Cardiosense and CHF detection (A touch of seasonal cheer)
Smart lighting that detects and reports falls in older adults–and more–debuts in UK and Ireland (Lighting up fall detection is a big step forward)
10 reasons for a new trial? Elizabeth Holmes’ legal team files appeal, delay in prison start (updated) (Foot dragging strategy continues as financial penalty to be decided)
Mid-week roundup: Wisconsin’s Marshfield Clinic zeros out telehealth staff; Komodo Health lays off 9%; epharmacy Medly’s Ch. 11, PharmEasy layoffs; OneStudyTeam releases 25% (Coal in too many stockings)

Windups as the holidays and year-end loom. AliveCor loses its David vs Goliath patent battle with Apple, with consequences to come. The Theranos drama nears its end with Balwani’s sentence. But in new developments, robotics for care support and care becomes part of…energy management? And can VIMPRO help NHS manage its patient population crush?

Theranos’ Balwani gets an unlucky 13 year sentence, restitution to come (No tears, no dramatic statements, little media scrum, and a lighter sentence than expected)
AliveCor loses Patent Office ruling with Apple; three patents invalidated (This one isn’t over–the stakes are high)
News (and robot) roundup: ElliQ companion robot upgrades, named to 2022 TIME list; Robin the Robot introduced for older adult care; Utilita acquires Canary Care (UK) (Robots advance, interesting integration of care with energy management)
Perspectives: Could the telehealth VIMPRO model save the NHS from drowning in demand? (A smarter approach advocated in managing patient populations )
Optum Labs creates and funds digital health research hub at Cornell Tech NYC (Reviving NYC in digital health, or gathering ideas for Optum to develop elsewhere?)

Something a bit different this week with two maximum roundups. athenahealth may IPO–again. Amwell may bolster telemental health with Talkspace. Cerebral and former CEO dueling in court. Taking bets on where Theranos’ Elizabeth Holmes will spend her sentence–and when. Plus…year-end buys and fundings. 

Who’s buying, selling, funding wrapup: athenahealth IPO deux?, NextGen EHR buys reseller TSI for $68M, Cloudwave buys Sensato; fundings for Lumen, UpStream, Aide Health
“Big Story” update: where Elizabeth Holmes will spend 11 years, Cerebral sues former CEO Robertson, Amwell buying Talkspace? 

As usual in the rollup to (US) Thanksgiving, it was a light news week. Our two roundups include Babylon Health’s encouraging Q3 results, DOJ’s appealing to block the UHG-Change buy–already closed (!)–an senior exec move from Walmart Health to JPM, and digital health/health tech funding yellow flagged to 2025 by Very Important Investors.

Mid-week news briefs: House members’ ‘grave concerns’ on two deaths tied to Oracle Cerner VA rollout; care.ai’s $27M funding; Clear Arch’s new mobile RPM platform; digital health investment in rough times
News roundup: Babylon Health Q3 revenue up 3.9x; surprise–DOJ to appeal UHG-Change buy approval; Walmart loses senior health exec Pegus to JPM

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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

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.

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CVS works their plan in Oak Street Health buy talks, Carbon Health $100M investment + clinic pilot; VillageMD-Summit finalizes (updated)

CVS, Walgreens, Amazon, Walmart all chasing the same type of companies to expand their service continuum. During their Q2 2022 earnings call, CVS Health announced that they were determined to enhance their services in three categories: primary care, provider enablement, and home health. And CVS’ CEO Karen Lynch was pretty blunt about it: “We can’t be in the primary care without M&A” (sic). So CVS’ latest moves should come as no surprise.

Oak Street Health: CVS is in talks with this value-based care primary care provider for primarily older adults in Medicare and Medicare Advantage plans. With 100 offices nationally, it’s not too small, not too large to combine with other operations. As a public company traded on the NYSE but puttering along in the $13-$22 per share range since the fall from a high of $30 in August, the news of CVS’ interest has boosted them above $28 and a market cap of just under $7 billion. Although Oak Street has previously maintained that they have no interest in a sale, it has never been profitable and is on track to lose $200 million this year. That is not a good look for CVS but they are working a strategy. Previously, CVS walked away from primary care group Cano Health [TTA 21 Oct 22]. Bloomberg News (paywalled) reported that CVS could pay $10 billion which would be over $40 a share. Healthcare Dive, Reuters

Carbon Health: CVS leads their Series D with a $100 million investment plus piloting Carbon Health operations in primary and urgent care clinics in their retail stores. However, the deal came at a price. Last week, prior to the investment announcement, Carbon announced that it would wind down lines of business in public health, remote patient monitoring, hardware, and chronic care programs, cutting 200 jobs in addition to a June cut of 250, at the time about 8% of their workforce. Carbon will now concentrate on their clinic core business. 100 are presently located across Arizona, Nevada, Colorado, Kansas, Florida, Massachusetts, and California (San Francisco, Bay Area, and San Jose).

In the last two years, Carbon raised $350 million and grew by acquiring four clinic chains. It diversified by buying Steady Health (chronic care management in diabetes) and Alertive Health (remote patient management)–both businesses they are departing. Reportedly last month they bought Inofab Health, an Istanbul-based digital health platform for patients with asthma, chronic obstructive pulmonary disorder, and cystic fibrosis. Crunchbase, FierceHealthcare, Mobihealthnews, SF BizJournal,

CVS is still working its Signify Health acquisition past the Department of Justice (DOJ) and the Federal Trade Commission (FTC). It went into a Second Request for information in late October under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which adds 30 days to the review timetable after the Second Request has been complied with. There is some competitive overlap between CVS and Signify in home health management and accountable care organization (ACO) operations, and some divestitures may be necessary. A closing in Q1 as planned seems optimistic. Acquiring Oak Street may complicate matters since their clinics operate as a Direct Contracting Entity (DCE, now ACO REACH). This present administration is not friendly towards healthcare consolidation of any type, especially with entities participating in Federal programs. (See UHG’s acquisition of Change Healthcare, with court approval being appealed by DOJ.) Reaching (so to speak) deep into CMS programs could be a red flag.

Walgreens’ VillageMD finalized their Summit Health acquisition for $8.9 billion yesterday (9 Jan) (updated). Now with 680 provider locations in 26 markets and 20,000 employees, the group adds to VillageMD’s primary care practices specialty practices in neurology, chiropractic, cardiology, orthopedics, and dermatology plus 150 City MD urgent care locations. 200 VillageMD locations are already adjacent to Walgreens locations. Walgreens Boots Alliance (WBA) and Evernorth, the health services business of Cigna, were the two investors. WBA raised full-year sales guidance from $133.5 billion to $137.5 billion. The current chair and former chief executive officer of Summit Health, Jeffrey Le Benger, MD, will be the interim president until VillageMD finds a permanent president reporting to VillageMD CEO Tim Barry. Release, RevCycleIntelligence, Forbes  At this point, Walgreens hasn’t moved forward with the rumored acquisition of ACO management services organization Evolent Health [TTA 1 Oct 22], which would be far more complex. 

Amazon is still awaiting Federal approval for One Medical as well as in multiple states (Oregon only the first; expect scrutiny). It is also closing Amazon Care and opening asynchronous non-face-to-face telehealth service Amazon ClinicWalmart continues on an internal strategy of opening Walmart Health clinics in underserved areas. Earlier in 2022, they announced the opening of more health ‘superstores’ in Florida, having established 20 in Arkansas, Illinois, and Georgia starting in 2019. Walmart’s approach to retailing health services and products, since getting serious about it in 2018, has wavered with multiple changes of strategy and executive departures [TTA 22 Nov 22]

Babylon Health exits last NHS hospital contract as a ‘distraction’, looks to US market for growth

Babylon Health’s rollercoaster ride continues. Today’s news was that their last of three NHS Trust contracts, with Royal Wolverhampton NHS Trust (RWT), was ended by Babylon two years into a ten-year contract. This follows the end of two other contracts that drew a fair amount of controversy (see our index here)–the 2020 one-year Royal Berkshire NHS Foundation Trust with an accident and emergency triage app that was discontinued by Babylon, and with University Hospitals Birmingham NHS Foundation Trust (UHB) for a virtual A&E app that was ended in July.

In the UK, Babylon will continue its GP At Hand service that took over a GP office in Fulham, London in 2016. It now currently covers about 155,000 patients. It will also maintain the AI-based chatbot used for triaging patients. GP At Hand is not profitable. GP practices work on a flat fee per patient that averages £155 ($183) per patient per year.

Babylon and RWT contracted in 2021 for a digital-first primary care service that would cover 55,000 patients, with a patient portal that would enable them to view their health records and view appointments. The app would also monitor conditions and like the AI chatbot, help to diagnose illness and actions. Babylon is ending the ten-year contract after two, which would make it 2023.

From the bubbly Digital Enthusiasm of former Health Minister Matt Hancock (left) in 2018 to the storm around @DrMurphy11, a GP who raised performance issues with the Babylon chatbot that escalated to BBC Two’s Newsnight in February 2020, founder and CEO Ali Parsa is now in an unenviable position in two countries. He 1) has semi-exited the UK market, 2) ruthlessly cut costs to the bone because the stock is down 90%, and 3) shifted to the far larger but unforgiving market of the US. The bright spot here is that US patients covered have already topped 6 years of effort in the UK. Parsa has now moved to the US.

Parsa noted in a recent results call [Seeking Alpha-Ed.] with analysts. “Those two or three small NHS contracts that you refer to—and those are not our significant primary-care contracts— those are marginal contracts for us, more in that category of contracts where we could not see a significant contribution to our profit margin,” he said. “And they also had a rather small contribution to our revenue. And therefore we saw them as a distraction and terminated those contracts.”

This Editor has previously noted Babylon’s layoffs/redundancies of at least 100 staff to save $100 million by Q3, which we are now in. Expansion in the US has to take place with static staff to make goal. And as to the US being unforgiving: VCs are snapping their capacious purses shut, Mr. Market’s gone into rehab, and inflation is shrinking healthcare budgets from providers to payers to self-insured companies. The Big Kahunas with Big Bucks–CVS Health, Allscripts, UnitedHealth Group, Amazon, Walgreens, Walmart–and out-of-left-field players like Option Care Health bidding on Signify Health, are snapping up, as we’ve earlier put it, “healthy health tech companies at the right (discounted) price that fill in their tech gaps”. And making life difficult for single players like Babylon Health. Wired. And a snappy hat tip to HISTalk.

Week-end wrapup: CVS plans to expand primary care, home health; Cera Care raises £264M; Linus Health’s AI enabled dementia screener, Cognito’s cognitive therapy slows brain atrophy

The sandal (it’s summer) drops at CVS Health in primary care–and maybe more. On their Q2 earnings call, CVS discussed that they are determined to enhance their services in three categories: primary care, provider enablement, and home health. The footwear that dropped was from CEO Karen Lynch: “We can’t be in the primary care without M&A” (sic). It was inevitable, given that rival Walgreens has a $5 billion deal with VillageMD for freestanding Village Medical clinics, Amazon with the pending One Medical buy–which it passed on only weeks prior [TTA 7 July], and Walmart picking along the edges with in-store clinics and telehealth. CVS’ criteria: strong management team, strong tech stack, strong scale, strong ability to build a pathway to profitability. (Certainly not an easy set of hurdles) CVS’ urgent care and in-store MinuteClinics have been doing well, with business up 12% to 2.8 million patient visits year to date. HISTalk, FierceHealthcare, Motley Fool transcript of earnings call

London-based Cera Care Ltd. raised £263.6 million ($320 million) in an equally split debt/equity round. Equity funding came from existing investor Kairos HQ, then the Vanderbilt University Endowment, Schroders Capital, Jane Street Capital, Yabeo Capital, Squarepoint Capital, Guinness Asset Management, Oltre Impact, 8090 Partners, and technology investor Robin Klein. Debt was not disclosed. The fresh financing will go towards expanding patient capacity in the UK plus Germany from the current 15,000 to 100,000.  Cera delivers in-home care, nursing, telehealth, and prescription delivery services using a digital platform and AI algorithms that use the data gathered to predict changes in patient status. TechCrunch, UKTechNews

Two developments from separate companies in the vital areas of improving dementia and Alzheimer’s diagnosis–and outcomes:

  • Linus Health has debuted its cognitive assessment and patient questionnaire platform for clinical use by primary care providers. The assessment tests for subtle changes in cognitive function, which in the preclinical phase will often go undetected. The concept is to push forward diagnosis and therapies to slow disease progression. It is based on an iPad and includes their DCTclock, an AI-enhanced version of the traditional paper-based Clock Drawing Test using a digital stylus or pen that can also spot symptoms of early-stage Parkinson’s. The evaluation including the DCTclock takes about 10 minutes. Release, FierceBiotech
  • Cognito Therapeutics is still in the investigational stage with its GammaSense headset which delivers sound and light therapy to cognitively impaired patients. The sensory stimulation evokes gamma oscillations in the brain that reduces neurodegeneration and brain atrophy. Their paper delivered last week at the Alzheimers Association conference tracked subjects who used the headset one hour per day for six months. The therapy reduced white matter shrinkage to about 0.4%, compared to a historical tracking of about 2%. An earlier study also showed slowdowns in the decline of memory and cognitive function. FierceBiotech

Weekend roundup: telehealth claims ticked up again in January, Walmart opens Florida health ‘superstores’, Blue Shield California partners with Walgreens’ Health Corners

Telehealth now above 5% of January claims. Perhaps Omicron, winter weather, or the post-holiday blues, but telehealth visits after a long drop have risen to 5.4% of January medical claim lines. It’s also the third month in a row of increase: November was 4.4%, up from October’s 4.1%; December was 4.9%.

As a percent of the total, claims increased in November and December for acute respiratory and Covid-19, but leveled off in January. The numbers remained in single digits compared to the leading diagnosis code group, mental health conditions, which rose in January:

Month Mental health Acute respiratory Covid-19
January 2022 58.9 3.4 3.4
December 2021 55.0 6.0 4.8
November 2021 62.2 4.5 1.4

February and March claims will be the proof, but telehealth is leveling off to a steady 4-5% range of claims with seasonal rises, barring any mass infectious diseases. The FAIR Health monthly map also enables drill-down by region. Healthcare Dive

Walmart Health ‘superstores’ open in Florida, finally. The concept, which had gradually spread to 20 locations in Arkansas, Georgia, and Illinois starting in 2019, now has two locations in the Jacksonville area. Three additional locations will be opening by June in the Orlando and Tampa area. Openings were delayed from 2021 so that Walmart could debut their Epic EHR and patient portal in those locations. Plans for expansion in Florida, filled with areas with aging populations, have been hinted at but coyly not confirmed by Dr. David Carmouche, senior vice president of Omnichannel Care Offerings.

After a few false starts and retrenching, Walmart is leveraging its strong physical point in delivering health–retail supercenters–against competitors such as CVS, Walgreens, and Amazon. The centers provide primary and urgent care, labs, X-rays and diagnostics, dental, optical, hearing and behavioral health and counseling for a checkup priced around $90, with most under contract with payers. Walmart has not announced expansion beyond Florida or in current states, but prior statements have indicated their desire to open Walmart Healths across the country. Walmart release, Healthcare Dive, Miami Herald

And Walgreens is not far behind the curve with 12 Health Corners in California. Walgreens’ joint model with Blue Shield of California in the San Francisco Bay and Los Angeles areas is designed to boost community health, especially in areas with low health coverage or ‘health deserts’. Health advisers can provide simple in-store care along with guidance on preventive screenings, chronic care management and medications. Select health screenings, such as blood pressure checks and HbA1c tests will be available. 

Both in-person and virtual services through the Health Corner app are available at no additional cost to members enrolled in Blue Shield’s commercial PPO (Preferred Provider Organization) and HMO (Health Maintenance Organization) plans, who live within 20 miles of a Walgreens Health Corner location. It is part of both Walgreens’ enlarging of patient care offerings, including telehealth at a local level, and Blue Shield’s health transformation goals.

Their release promises an additional eight locations by mid-year. Healthcare Finance, FierceHealthcare

Short takes: 2022’s big kickoff with Babylon-Higi, Vera-Castlight buys; will funding slow down in ’22, eye-tracking telehealth for MS, vital signs tracking lightbulbs at CES 2022, and three catchups!

Babylon Health closed out 2021 by acquiring health kiosk Higi for an undisclosed amount. Babylon had earlier invested in Higi’s Series B [TTA 30 May 20] and was reported in October to be exercising its $30 million option to buy Higi after closing their SPAC. Release

Vera Whole Health, an advanced primary care provider and clinic group based in Seattle, is acquiring Castlight Health, a data and care navigation platform. Vera will acquire Castlight in a $370 million all-cash deal. Strategic partners and investors include Anthem, Morgan Health (the JP Morgan Chase & Co business for the transformation of employee healthcare), Central Ohio Primary Care, and Clayton, Dubilier & Rice funds. Former Aetna chairman and CEO Ron Williams will become chairman. Release.

Which leads to the usual question…will funding in 2022 continue the hot streak of 2021? It’s one opinion, but Lee Shapiro of 7wireVentures, formerly with Livongo, is sensing a slowdown, citing increased interest rates (money), the US midterm elections (which don’t affect the rest of the world), less new money, and investors wising up on the length of time any healthcare or health tech investment takes to pay off. 2021 with 79 digital health M&As plus an abundance of SPACs that tailed off by end of year will be hard to match. Mobihealthnews

XRHealth, a telehealth clinic that provides treatments in patients’ homes based on virtual reality treatment, has integrated Tobii‘s eye-tracking technology into the XR platform and the Pico Neo 3 Pro Eye VR headset. XR Health provides rehabilitative and pain management therapies via VR. The Tobii system will enable treatment using the headset for multiple sclerosis (MS), Parkinson’s, and other neurological conditions. According to the release published in Multiple Sclerosis News Today, “detecting subtle changes in eye movement can help diagnose these diseases at an early stage, as well as assess disease progression and response to treatment. Tobii‘s eye-tracking technology is able to detect those changes in real time, providing data and insights to clinicians during therapy sessions.” Hat tip to Editor Emeritus Steve Hards

CES 2022 is on this week, far less splashy than before as an in-person/virtual hybrid event. Debuting at CES is the Sengled Smart Health Monitoring Light. Looking like a standard LED lamp bulb, it contains sensors that network and can take passive vital signs measurements of sleep quality, breathing, heart rate, and motion of occupants in the home. The more bulbs the better, of course. Whether or not they can detect falls, as the article touts, is likely an inference on motion. They feed into either Alexa or Google Assistant, plus Sengled’s app, using Frequency-Modulated Continuous Wave (FMCW) radar operating in the 2.4 GHz range. Expect it to be coming out towards the end of the year and probably twice the price of conventional LED smart bulbs. TechRadar Hat tip to Adrian Scaife via LinkedIn

Catching up…

Walgreens and VillageMD continue on the ‘go big or go home’ highway with nine more Village Medicals at Walgreens in San Antonio, Texas. Plans are to build 600 Village Medicals at Walgreens in more than 30 markets by 2025, growing to 1,000 by 2027. HealthcareFinance

Centene, the health payer conglomerate, finalized its $2.2 billion acquisition of Magellan Health, a major behavioral health management company. It will likely be CEO Michael Neidorff’s swan song, as an activist investor forced his retirement (at age 78 after over 25 years at the helm) this year and significant board changes. Magellan’s former COO and president Jim Murray will become Centene’s chief transformation officer, a new position, lead what they term the Value Creation Office as well as the Centene Advanced Behavioral Health division. Forbes, Centene release

And suitors with a spare billion or so may be lining up to buy IBM Watson Health. The first offers came in on 4 January with the winner to be announced possibly by end of the month. IBM spent over $4 billion over time to build up Watson Health, but now wants out, badly. Axios

Theranos, The Trial of Elizabeth Holmes, ch. 6: the decision maker was Holmes–and she was ‘cagey’

Judge Davila is speeding up the trial, adding hours and days–perhaps because the damning testimony has become depressingly similar. Were the investors sloppy, or did Theranos–and Holmes–deliberately deceive?

Maybe…both.

Documents and slideshows from Theranos glowed.

  • The company faked memos and reports from both Pfizer and Schering-Plough, which was in the process of being acquired by Merck. Schering-Plough’s Constance Cullen said she found CEO Elizabeth Holmes’ answers to technical questions “cagey” and she was blocked by Holmes from asking questions of other Theranos employees.
  • Presentations describing the Theranos lab capabilities were written in present, not future, tense. Example from the prosecution reading from an investor deck: “Theranos proprietary technology runs comprehensive blood tests from a finger stick.” Another slide was 10-Pinocchio-worthy: “Theranos has been comprehensively validated over the course of the last seven years by 10 of the 15 largest pharmaceutical companies, with hundreds of thousands of assays processed.”

These were good enough for investors like Lisa Peterson of the DeVos family office, who testified last week about their decision to put in $100 million. In fact, investors were Social Networking right to Theranos’ door. The well-connected Daniel Mosley, who invested “a little under $6 million” in Theranos, after his client and friend Henry Kissinger, a Theranos board member and $3 million investor, asked him to evaluate the company, in 2014 recommended it to his other clients–the DeVos, Walton ($150 million), and Cox ($10 million)  families. Black Diamond Ventures founder Chris Lucas invested $7 million in Theranos. He believed that Theranos’ analyzers were being used by the military in the Middle East. Presumably, his uncle Don Lucas, who sat on the Theranos board, backed up the claim. They were additionally impressed by Holmes’ intensity and insistence that the company was on a mission to revolutionize blood testing. Risk can be fashionable for ‘high-quality families’ who aren’t hands-on with their money and won’t experience hardship if the investment doesn’t pan out.

The investors like Peterson and Mosley believed what they were shown was steak, not marshmallow, like projected revenue of $140 million in 2014 after zero revenue in the two prior years. They didn’t examine the books, other key corporate records, or make a technical evaluation of the labs. Why? “We were very careful not to circumvent things and upset Elizabeth,” Peterson of the DeVos office said. “If we did too much, we wouldn’t be invited back to invest.” Ooof. But on their side, in 2014-2015, the winds of hype were blowing fair, the skies were blue on CNBC, and Walgreens plus Safeway were lashed to the mizzenmast. The Verge, CNBC, KTVU Fox 2

The defense keeps pinning blame on the investors for being naïve, which is taken up by the NY Times. With 20/20 hindsight and infinite wisdom, the article blames the investors for not being scrupulous in their due diligence. A fair point made is that in ‘hot’ startup markets, no one looks too closely for the Fear Of Missing Out (FOMO)–something we see this very day.

Holmes’ chances of pinning the blame on president/boyfriend ‘Sunny’ Balwani and evading any lengthy time are low at best.

  • The defense sub-strategy of painting Holmes as controlled by Balwani appears to be augering in. CNBC uncovered a 27 June 2018 videotaped deposition in an investor lawsuit, eventually settled, where Holmes, in between taking the Fifth Amendment, also claimed she was the ultimate decision-maker at Theranos.
  • An analysis published in the Mercury News (PDF), through the paywall, is not sanguine about Holmes beating the odds and walking free, or with minimal time. However, juries do strange things in assessing fraud, even when piled high and wide by the prosecution, out of sheer boredom or cussedness. Holmes is also surrounded by family, friends, baby on breaks, and baby papa, all of which can sway some jurors.

So as the trial passes the halfway corner, we observers are waiting for a final bombshell–or two.

TTA’s earlier coverage: Chapter 5, Chapter 4 (see new comment from Malcolm Fisk)Chapter 3Chapter 2Chapter 1

To be continued….

Theranos, The Trial of Elizabeth Holmes, ch. 4: we deceive those who want to believe

The Theranos Cave apparently has no bottom. Reportedly at the halfway mark, Tuesday’s trial focused on the testimony of former Theranos product manager Daniel Edlin. Recommended by his college friend Christian Holmes in 2011, he soon stepped into frontline work, assembling presentations sent to investors such as Rupert Murdoch, conducting VIP tours with demonstrations of the Edison labs, coordinating with the press, and with Elizabeth Holmes, plumping for Department of Defense and pharmaceutical company business. 

According to Mr. Edlin’s testimony, Theranos executives and staff staged demos and blood tests for investors and VIPs. Sometimes the blood tests worked fine, sometimes they didn’t (as in Rupert Murdoch’s case). Investors and reporters often were more interested in seeing Edison and MiniLab machines “work” without seeing any test results. All routine for an early-stage technology company. What was not routine was that other test results others were “corrected” (for Walgreens executives), reference ranges changed, or tests removed on the direction of Dr. Daniel Young, a Theranos VP.  The MiniLab never was used for patient blood testing as it had trouble performing general chemistry or ELISA tests adequately.

Rupert Murdoch’s (listed as a witness) investor presentation binder was entered into evidence. According to CNBC, one section of the binder read: “Theranos offers tests with the highest level of accuracy.” Another section said the blood-testing technology “generates significantly higher integrity data than currently possible.” Mr. Edlin testified that Ms. Holmes vetted every investor deck and binder, including the ones shown to DOD. The website, overseen by Ms. Holmes, made statements such as “At Theranos we can perform all lab tests on a sample 1/1000 the size of a typical blood test.” However, even Theranos’ general counsel advised against using these superiority claims:

  • “Please remove reference to “all” tests and replace with statements such as “multiple” or “several.” It is highly unlikely that the laboratory can perform every conceivable test, both from a logistical standpoint and because the CLIA certification designates specific specialties of test the lab performs.
  • For a similar reason, replace “full range” with “broad range.”
  • Replace “highest quality” with “high quality”
  • What substantiation do you have for “have results to you and your doctor faster than previously possible?”
  • Remove “unrivaled accuracy.”

To be fair, some of this language did change over time. The defense, for instance, had a try at shifting blame to one of Theranos’ marketing agencies.

But overstatements were a way of ‘fake it till you make it’ life at Theranos. The infamous Fortune article (later retracted by the author), the glowing 8 September 2013 Wall Street Journal article by Joseph Rago made at the time of the Walgreens pilot were felt to be overstatements by Theranos insiders, but never corrected. Walgreens and Safeway executives previously testified that they were told that Theranos devices were in use in Army medical evacuation units. But the truth was, according to Mr. Edlin who managed the DOD relationship, that AFRICOM (US Army African Command) deployed the Edison device in Cameroon, Uganda, and South Sudan to run as an experiment to test the viability of the machine. It was never deployed in the Middle East (CENTCOM). The Edison 4.0 was deemed too heavy and put off until lighter-weight units were developed. Nonetheless, Theranos received a 12-month service contract. 

The prosecution strategy here is to show that Ms. Holmes was hands-on when it came to marketing and investor communications, approved the overstated claims, and was not “controlled” by Sunny Balwani as the defense maintains. If anything, he deferred to her. 

CNN Business, KTVU Fox 2 running commentary, Daily Mail, California News Times  Unfortunately, the Mercury News, Bloomberg, and WSJ are paywalled.

TTA’s earlier coverage: Chapter 3, Chapter 2, Chapter 1

To be continued….

Short takes: Walgreens now majority share of VillageMD, CareCentrix; Lark Health lifts $100M, UnitedHealth Group’s profitable Q3 and Change delay

Walgreens has ‘gone big’ with its VillageMD primary care practice investment, putting on the table $5.2 billion. It’s now t the majority owner with 63% of the company, up from 30% last year. Their projected number of co-located full-service Village Medical practices is projected to grow to 600 by 2025, up from a current 52. VillageMD is still planning an IPO in 2022, making for a potential great ROI for Walgreens. Walgreens Boots Alliance also invested $330 million in CareCentrix, a post-acute and home care provider, for 55% of the company. CareCentrix was a recent investor in Vesta Healthcare [TTA 9 April]. Wrapping it all up is their new Walgreens Health, for tech-enabled consumer-directed primary care, post-acute care, and home care.

Weight loss and chronic conditions app Lark Health flew into a $100 million Series D, led by Deerfield Management Company, with PFM Health Sciences and returning investors Franklin Templeton, King River Capital, Castlepeak, IPD, Olive Tree Capital, and Marvell Technology co-founder Weili Dai. Their total funding since 2011 is over $195 million (Crunchbase). Lark claims an AI-based platform for individual coaching in weight loss along with related conditions such as diabetes, pre-diabetes, diabetes prevention, cardiovascular, and behavioral health. The platform logs and provides immediate feedback on food and tracks data from sources like Apple Health. The new funds will be used for R&D and to expand its virtual care integrations to more payers. Current payer partnerships include Anthem, Highmark BCBS, and Medical Mutual. Release, MedCityNews, FierceHealthcare

UnitedHealth Group, parent of UnitedHealthcare and Optum, reported $4.1 billion in profit for Q3, notching $72.3 billion in revenue for the quarter, a tidy gain over year prior’s $65.1 billion. The mega-acquisition of Change Healthcare to fold into OptumInsight is further delayed, being worked towards a closing of early 2022, having hit more than a few strong regulatory headwinds and the rocks of DOJ [TTA 14 Aug].  Becker’s Payer Issues, FierceHealthcare 

Theranos, The Trial of Elizabeth Holmes, ch. 3: Safeway, Walgreens execs testify to deception, frustration with Holmes, failed pilots and labs (updated)

It’s Tuesday, and it’s another court day in Silicon Valley’s Big Trial, this time with the former C-level executives of Safeway and Walgreens who did the partner deals with Theranos–and rued the days Elizabeth Holmes walked in their doors. Updated for additional Tuesday testimony reports.

Former Safeway (supermarket) CEO Steve Burd returned to the stand for more prosecution questions and a turn with the defense. Mr. Burd had formed Safeway Health to introduce Theranos in 2010, after Ms. Holmes personally negotiated a deal with Safeway without attorneys. Ms. Holmes definitely wove a spell on Mr. Burd. “There are very few people I had met in the business that I would actually say are charismatic. She was charismatic, she was very smart, and she was doing one of the hardest things you can do in a business, and that’s to create an enterprise from scratch.” Always decisive, ‘she owned the room’.

From that point, and after an unusually high 100 hours of due diligence (updated, ArsTechnica 13 Oct), it was full speed ahead. But the potholes turned up fast after Ms. Holmes had convinced Safeway to invest in the company, claiming that they could run 95% of tests on one cartridge and that they could handle the volume from hundreds of store testing sites. During a pitch to the Safeway board, board member Michael Shannon offered his blood draw for a PSA test, the screening test for prostate cancer. The Theranos Edison machine “made a bunch of noise,” but never delivered a result, even after Ms. Holmes said something about getting it later (updated, ArsTechnica 13 Oct).

By the time the pilot started with regular blood draws, from the testimony, “there were results that didn’t make any sense. Samples were lost and samples were not properly cooled. He also said tests took days to come back when other companies could deliver in 24 hours. In an email to Holmes, Burd wrote: “I am genuinely concerned that Safeway’s lab reputation gets worse by the day.” By 2012, Safeway had built out 98% of 960 planned stores to hold Theranos testing sites, but had long since blown past the $30 million estimate. Multiple launch dates were missed over two years. By November 12, Mr. Burd had reached the end of his tether. “I can only recall having been discouraged once in the last 62 years. That said, I am getting close to my second event. ” and “This does not feel like a partnership, I’ve never been more frustrated.”

Theranos never rolled out to the public with Safeway. Mr. Burd retired from Safeway after a long career in May 2013.

Apparently the defense cross conducted by Kevin Downey is concentrating on The Big Chance that Safeway took with Theranos, after all a ‘startup’ that never built out their technology for consumer use, and all the regulatory hurdles the company faced. Mr. Burd confirmed it but he and the board reviewed the agreement and included requirements such as a CLIA waiver to operate the lab devices, negotiating preferred network status with commercial health plans, and a network of partners. Most of all, Safeway negotiated the right to terminate the agreement if the pilot failed and Theranos did not obtain FDA clearance. On the redirect, the government maintains that Theranos started in 2003 and purported to be making money (!!).

Up next for the prosecution was Wade Miquelon, former CFO of Walgreens. Walgreens was the only Theranos partner to put Theranos centers in their store. He testified to the presentation he received in 2010 which was similar to those received by investors. It included claims that Theranos’ technology could “run comprehensive blood tests” from a finger stick in real time and that it had partnerships with major pharmaceutical companies and military organizations–some of which were semi-true, the rest fictional. Apparently, some of the validation reports from pharmaceutical companies were false–while they had logos, there was one from Schering-Plough where its name was misspelled and never noticed by anyone at Walgreens. The prosecution had already established to the jury in opening arguments on 8 September that the Pfizer report endorsing the technology had also been faked. It had been written by Theranos, with a Pfizer logo added. 

Mr. Miquelon testified that he was never told that third-party labs were being used.“My understanding is, the blood would be tested on the [Theranos] Edison device,” adding later, “My understanding was that the base level testing would be able to do 96 percent of the testing done at labs.” He stated that third-party testing would be to check calibrations and accuracy. Relying on such testing would be beside the point of cost and time savings. 

Mr. Miquelon’s testimony will continue on Wednesday.

KTVU2’s coverage is nearly all tweets so it’s assembling a picture from many fragments. Ars Technica on Mr. BurdUpdated: Additional information on Mr. Miquelon: Fortune, Washington Post

Walgreens sued Theranos in 2016 for $160 million invested [TTA 9 Nov 2016]. The company was one of the few able to claw back substantial funds, a paltry $25 million, in August 2017. Safeway settled in June 2017 for an undisclosed amount. They had built out 800 centers and cost the company $360 million before the agreement was axed (updated for cost, ArsTechnica 13 Oct).

If you have access to the WSJ, their coverage details a trail of forged documents, massive fundraising–and losses, and partner deception. The NY Times ran an interesting ‘color’ article on the atmosphere in the San Jose courtroom. The trial is settling into a groove. Two court artists (complete with art) have interesting impressions of Ms. Holmes and the participants. The spectators appear to be primarily retirees with the time to line up for the 34 seats in the courtroom and 50 in an overflow room, though the testimony goes over the head of many. Ms. Holmes’ family and partner accompany her daily. And two jurors have departed, one a Buddhist who became uncomfortable with the idea of punishing Ms. Holmes. Judge Davila has already extended trial hours one hour to get through the stack of witnesses a little faster.

Our previous coverage: Chapter 1, Chapter 2

To be continued….

Is healthcare too much for Big Tech’s Google and Apple? Look at the track record. And David Feinberg’s $34M Cerner package.

With Google scattering Google Health to the four winds of the organization--the heck with what employees recruited for Health think of being reorg’d to, say, Maps or YouTube and falling through the corporate rabbit hole–more detail has leaked of Apple’s struggles. This time, on the scaleback list (a/k/a chopping block) is Health Habit. It’s an app in the Apple Store that connects users with AC Wellness, a doctor’s group in Cupertino, California. The ‘eligible participants’ are restricted to Apple employees. From the app site, they can check weight, nutrition, blood pressure, and schedule wellness checks. It seems to be the typical ‘skunk works’ project that’s not ready for prime time, but its public fate seems to be poorly timed and simultaneously, overblown because they are–well–Apple

Bottom line, is healthcare once again proving rather resistant to being leveraged by technological solutions? Those of us who go back to the Stone Age of health tech, or those of us who joined in the Iron and Bronze Ages, remember when you couldn’t get into a conference cocktail party without a “wellness” app. (You say you’re in behavioral and remote patient monitoring for older adults? Oh, look! A squirrel!)

Microsoft was going to dominate consumer health with their HealthVault for personal health records (PHRs). We know how that turned out–dead apps, Fitbit an also-ran bought, Pebble and Misfit going to the drawer of failed toys, Jawbone t-boning plus Intel and Basis written off in 2017, and HealthVault unlamentedly put out with the trash at the end of 2019. Oh yes, there was an earlier Google Health for PHRs, which died with a whimper back in 2012 or so.

The press releases crow about Big Tech’s mastery of complexity, yet going off on their own without partners–or even with partners–never seems to work. In the industry, it makes for a few good articles and the usual rocket launching at places like Forbes, but the pros tend to treat it with a shrug and pull out a competitive plan. Glen Tullman, founder of Livongo who will never have to worry about paying for chateaubriand for two for the next billion years or so, stated the obvious when he said that patients cared about the overall experience, not the tech.

Speaking of experience, Amazon Care promises the best for its employees and enterprise accounts–a one-minute telehealth connection, a mobile clinician if needed within the hour, and drugs at the door in two hours. All with direct pay. This has met with skepticism from telehealth giants like Teladoc and Amwell with established corporate bases. There’s also CVS Health and Walgreens. The Editor has opined that care isn’t Amazon’s game at all–it’s accumulating and owning national healthcare data on Amazon Care and Pharmacy users that is far more valuable than whatever is spent on providing care and services [TTA 16 June]. Will Amazon really be able to pull it off?

Paddy Padmanabhan, the author of Healthcare Digital Transformation, lists a few more reasons It’s Too Hard For Big Tech In Healthcare in his HealthcareITNews article here….

  • Healthcare is a part-time job for Big Tech
  • Big tech firms want to solve the healthcare problem by themselves
  • Selling technology is not the same as selling healthcare services

…but holds out some hope that the initial success of “digital-first and virtual-first providers of healthcare emerging as challengers” will point the way for them.

And speaking of Google Health and former employees, Cerner’s necessary SEC disclosure today of new CEO and president David Feinberg, MD’s compensation package was sure to create some talk in Googleville among his now-scattered team. $34.5 million over the next 15 months is structured as follows:

  • $900,000 base salary
  • a target cash bonus of $1.35 million
  • a one-time cash bonus of $375,000 stock
  • $13.5 million in Cerner’s restricted shares for 2022
  • $3.375 million in stock shares for the fourth quarter of 2021
  • a new hire award of $15 million in restricted stock shares to offset his equity loss with Google. 

Whew! Becker’s HealthIT

News roundup: AliveCor’s latest FDA clearance plus antitrust vs. Apple, VRI on the market, Walgreens’ ‘tech-enabled future’ indefinite plus VillageMD status, monthly telehealth usage drops 12.5%

AliveCor disclosed its latest FDA 510(k) clearance for the KardiaMobile 6L, for calculation of patients’ QTc interval by the patient remotely or in the office with a physician or other clinician. QTc interval is, for those of us who aren’t cardiologists, is the total time from ventricular depolarization to complete repolarization. If too long (prolongation) or too short (congenital short) for the heart rate, it can indicate a dangerous ventricular arrhythmia or atrial or ventricular fibrillation. The manual measurement takes 30 seconds. AliveCor also has clearance on software (InstantQT) that measures QT intervals quickly and accurately to detect potentially dangerous QT prolongations in patients. Prolongations can be triggered by medications including anti-arrythmia drugs, anti-fungals, antibiotics, and some psychiatric drugs. AliveCor release. In other recent news, in June they acquired CardioLabs, a monitoring and cardiac diagnostic service provider based in Tennessee, to expand their clinical servies. Release.  

And in David Sues Goliath–Again–News, AliveCor also filed, in that quiet week right before Memorial Day, a Federal antitrust suit in the Northern District of California. This lawsuit is over Apple’s exclusion of other heartrate analysis providers from the Apple Watch, harming AliveCor and consumers, and seeks damages plus an injunction to cease the exclusion. Release  This is in addition to their US International Trade Commission (ITC) complaint on infringement of AliveCor patents held for heart monitoring on the Apple Watch 4, 5, and 6. That seeks to bar importation of Apple Watches [TTA 29 Apr]. No update on that so far. 

‘Insider’ report: VRI on the market. PERS Insider, our newly discovered source for news about the emergency response device market, reported on 22 June that VRI, a PERS and remote patient monitoring provider, is up for sale. It has been majority-owned by Pamlico Capital, a private equity company, since 2014. VRI does not sell direct to consumer but concentrates on health insurance, government programs, and other B2B through its dealer network. No reasons for sale given, but with all things telehealth and most things remote healthtech fetching hefty sums post-pandemic, perhaps Pamlico senses a fortuitous time to test the waters for an exit. Article. (Subscribe here to their weekly free letter)

Walgreens Boots Alliance’s new CEO promises a ‘tech-enabled’ future for the chain, sans details. The incoming CEO, Rosalind Brewer, fresh from her COO position at Starbucks, on WBA’s Q3 earnings call mentioned a buildout of a “previously communicated tech-enabled healthcare initiative” but no further information, as still reviewing the company. Stefano Pessina has retired from the long-held CEO position, but retains the executive chair title in addition to being WBA’s largest individual shareholder. Forbes’ breathless report. More to the profit point, the latest on Walgreens and VillageMD’s full-service Village Medical practices at Walgreens locations: 29 new locations in Houston, Austin and El Paso, Texas this year, staying on track for 600 primary care practices in more than 30 markets over next four years. Business Wire

National telehealth usage dips to 4.9% of US claims in April, a 12.5% drop from March. Analyzing regional and national insurance claims data, non-profit health analytics company FAIR Health in its monthly report tracks telehealth receding as patients return to in-person care. Telehealth is now dominated by mental health procedure codes, accounting for 58.65% of diagnoses, with all other conditions at 3% or lower. Regionally, the Northeast is even higher at 64.2% and the Midwest above 69%. Monthly National report, Monthly Regional Tracker page

Telehealth usage going flat, off by 1/3 and declining: Trilliant Health study

Trilliant Health, a healthcare data analytics and advisory shop based in Tennessee, has run some projections on the US healthcare market and telehealth, and they’re not as bright as many of us–and a lot of investors plus Mr. Market–have believed. It opens up on page 4 of the electronic document (also available in PDF) with this ‘downer’–that the largest sector of the largest global economy is overbuilt and unsustainable. Hospitals and health systems have operated for decades that basic economic factors–demand, supply, and yield–don’t apply, and there are more companies competing with them for the consumer healthcare dollar than they realize–with more proliferating every day. 

Sledding through their 160-page report, we turn to our sweet spot, telehealth, and Trilliant is not delivering cheerful news (pages 32-43). 

  • Unsurprisingly, demand for telehealth is tapering off. Based on claims data for face-to-face video visits, excluding Medicare fee-for-service (Original Medicare) and self-pay visits, they peaked above 12 million in April 2020 and, save for a bump up in December 2020-January 2021, steadily declined to about 9 million by March 2021.
  • Teladoc, the leading provider, is projecting that 2021 volume will only represent 4 percent of the US population–a lot more than before, but not growing as it did in 2020.
  • Telehealth’s growth was astronomical on both coasts–California, Massachusetts, Vermont, Oregon–and Hawaii–but relatively lower in middle and Southern America in places like Wyoming, North Dakota, Mississippi, and Iowa. Telehealth usage is declining sharply in that region as well but across the board in all states including California. In fact, Phoenix and Dallas had higher telehealth utilization pre-pandemic than during it.
  • Mental health drove telehealth growth during the pandemic, representing 35 percent of claims, almost four times the next group of categories at 8 percent. The largest group of diagnoses were for anxiety and depression among women 20-49. With the reopening of the US economy and children heading back to school, will this sustain or decline?
  • Women 30-39 are the largest users of telehealth–pre, during, and post-pandemic

Telehealth is not only proliferating, it is going up against now-open urgent care, retail clinics from Walgreens, Walmart, and CVS, plus tech-enabled providers that blend virtual care with home care, such as Amazon with a full rollout of Amazon Care and other employers. The cost of care is also a negative driver. FierceHealthcare analyzes other parts of the report impacting practices, health systems, and hospitals.

 

Disruption or giveaway: Amazon Care signs on employers, but who? Amazon Pharmacy’s 6 months of meds for $6. (updated)

Is this disruption, a giveaway, or blue smoke requiring IFR? An Amazon Care VP, Babak Parviz, said at the Wall Street Journal’s Tech Health virtual event that all is well with their rollout of virtual primary care (VPC). Washington state is first, with VPC now available nationally to all Amazon employees as well as companies. However, Mr. Parviz did not disclose the signed-up companies, nor a timetable for when in-person Amazon Care practices will be expanding to Washington, DC, Baltimore, and other cities in the coming months.

Mr. Parviz also provided some details of what Amazon Care would ultimately look like:

  • Clinician chat/video connected within 60 seconds
  • If an in-person visit is required, a mobile clinician arrives within 60 minutes, who can perform some diagnostic tests, such as for strep throat, provide vaccinations and draw blood for lab work. For other diagnoses, that clinician is equipped with a kit with devices to monitor vital signs which are live-streamed to remote clinicians.
  • Medication delivery within 120 minutes

FierceHealthcare

The timing of the Amazon Care rollout has not changed since our coverage of their announcement in March. This Editor noted in that article that Credit Suisse in their overview was underwhelmed by Amazon Care as well as other efforts in the complex and crowded healthcare space. Amazon Care also doesn’t integrate with payers. It’s payment upfront, then the patient files a claim with their insurer.

Existing players are already established in large chunks of what Amazon wants to own.

  • Both Amwell’s Ido Schoenberg [TTA 2 April] and Teladoc’s Jason Gorevic (FierceHealthcare 12 May) have opined that they are way ahead of Amazon both in corporate affiliations and comprehensive solutions. Examples: Amwell’s recently announced upgrade of their clinician platform and adding platforms for in-home hospital-grade care [TTA 29 Apr], Teladoc’s moves into mental health with myStrength [TTA 14 May].
  • Even Walmart is getting into telehealth with their purchase of a small player, MeMD [TTA 8 May].
  • CVS has their MinuteClinics affiliated with leading local health systems, and Walgreens is building out 500 free-standing VillageMD locations [TTA 4 Dec 20]. CVS and Walgreens are also fully integrated with payers and pharmacy benefit management plans (PBM).

Another loss leader is pharmacy. Amazon is also offering to Prime members a pharmacy prescription savings benefit: six-month supplies of select medications for $6. The conditions are that members must pay out-of-pocket (no insurance), they must have the six-month prescription from their provider, and the medication must be both available and eligible on Amazon Pharmacy. Medications included are for high blood pressure, diabetes, and more. The timing is interesting as Walmart also announced a few days earlier a similar program for Walmart+ members. Mobihealthnews.

crystal-ballThis Editor’s opinion is that Amazon’s business plans for both entities and in healthcare are really about accumulating data, not user revenue, and are certainly not altruistic no matter what they say. Amazon will accumulate and own national healthcare data on Amazon Care and Pharmacy users far more valuable than whatever is spent on providing care and services. Amazon will not only use it internally for cross-selling, but can monetize the data to pharmaceutical companies, payers, developers, and other commercial third parties in and ex-US. Shouldn’t privacy advocates be concerned, as this isn’t being disclosed? 

Walmart Health moves into the hot telehealth area with MeMD buy

Retail giant Walmart’s health arm, Walmart Health, has agreed to purchase privately held telehealth provider MeMD. MeMD provides telehealth services in primary care, urgent care, women’s/men’s health, and mental health services to both individuals and organizations for their employees. Neither purchase price nor executive leadership transitions were disclosed. The transaction, which requires regulatory approval, is expected to close in the next few months.

The relatively low profile MeMD was founded in 2010 by ER physician and entrepreneur John Shufeldt, MD. The company is headquartered in Scottsdale, Arizona, and offers national coverage for its five million members.

A big move that indicates a strategic wobbliness? Walmart Health’s strategy has been a roller coaster over the past few years. Aggressively starting out of the gate in 2018 with high-profile exec Sean Slovenski leading and plans to open up 1,000 clinics, they retrenched in 2020 with his departure and slowed down the opening of Walmart Health locations. Virtual visits, which are merchandisable in-store and online, signal a different direction that may be easier to scale than brick-and-mortar locations, and have proven their market. Meanwhile, back at the stores, last month Walmart announced a partnership with Ro to put its trendy Roman men’s sexual health and vitamin product lines into 4,600+ Walmart stores starting 1 May. RetailBrew 

Looming in the background, of course, is CVS with their MinuteClinics, Walgreens with 500 free-standing VillageMD locations [TTA 4 Dec 20], and Amazon rolling out Amazon Care nationally. Walmart’s employees have used Doctor on Demand’s services, with the company dropping the visit cost to $4 during the pandemic. With the Grand Rounds merger [TTA 18 Mar], this may have been another reason for Walmart to bring in-house a telehealth provider. Who may be feeling the most heat from Walmart’s and Amazon’s moves? Teladoc and Amwell. Walmart release, Becker’s Hospital Review, Engadget

The Theranos Story, ch. 66: Walgreens and Safeway aren’t investors, they’re business partners!

The difference is not hair-splitting in the defense effort to have charges tossed. In Federal District Court on Tuesday (6 October) in San Jose, Elizabeth Holmes’ defense made the case to Judge Edward Davila on dismissing some of the prosecution’s charges against her. As petitioned in late August, the defense maintains that two of the entities, Walgreens Boots and Safeway (a Western regional supermarket chain), were unfairly classified as investors versus ‘business partners’. As investors, the prosecution could charge Holmes with fraud crimes with a longer statute of limitations. If they were to be classified as business partners and ‘transactions’, while there were crimes committed, the statute of limitations has expired.

The prosecution’s rebuttal is that Walgreens and Safeway could be considered as both investors and partners. The defense response was that the government took too much time to file the charges and failed to get the proper consent, which may be the hair that splits the ability of the prosecution to use these charges.

Let’s look back at both companies’ involvement with Theranos

  • Walgreens reportedly invested over $140 million in Theranos. This consisted of direct funding (a $40 million loan convertible into equity), and an “innovation fund’ designed to fund the rollout of Theranos Wellness Centers in Walgreens US locations starting in 2013. Walgreens filed suit against Theranos in November 2016 to recoup that investment based on breach of contract, after civil lawsuits were filed against them jointly, halted development, and settled for $25 to 30 million in late July 2017 when Theranos assets were dwindling to barely breathing status [TTA 3 Aug 17]. More details on their Partnership from Hell are recapped here from the 2016 lawsuit.
  • Safeway’s involvement as the exclusive supermarket partner was planned to be even more extensive. Their 2012 deal was $350 million for building 800 clinic locations in Safeway stores. This was dropped in November 2015 [TTA 20 Nov 15], around the same time as Walgreens halted the expansion of the Theranos Centers. According to reports at the time, Safeway had already built out the 800 locations, later repurposing them for flu shots and similar. Direct investment was estimated at $10 million (WSJ). Safeway settled with Theranos for $30 million in June 2017. 

The publicly available history shows that both funded Theranos directly in addition to being business partners. Both took substantial additional risk investments from building out facilities to showcase Theranos’ services for their customers. Both settled civilly for amounts far below the fair recoupment of their investment.

While this sounds like legal nitpicking, the defense strategy, in this Editor’s layperson’s calculation, is to erode the number of charges against Holmes and their seriousness so that her inevitable sentence becomes lighter. Another move in this vein is the mental defect defense [TTA 18 Sept] alleging Holmes’ psychic inability to discern right from wrong in her business dealings. Start with something over the top like ‘insanity defense lite’, and then chip away at the rest of the charges. Fox Business, Mercury News