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

 

 

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

News roundup: NHS announces EDITH breast cancer screening trial, Sword Health reveals mental health move in AI-first push, Evolent Health changes up board, Highmark’s enGen tech drops 208 (More and more AI)
Teladoc to buy Catapult Health in all-cash, $65 million deal (First buy since Livongo)
The table stacks–and clears: fundings for RadAI $60M, The Helper Bees $35M, Bicycle Health $16.5M. Walgreens suspends stock dividends after 91 years. And has Transcarent zeroed out 98point6? (The real start of the year)
This just in #2: Masimo board director Bob Chapek resigns (When you wish upon a star…)
This just in: Veradigm gives up on finding buyer, brings in ‘strategic advisory’ firm for “standalone” future (Surprised?)

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

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

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

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

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

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

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

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

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

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


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

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

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The table stacks–and clears: fundings for RadAI $60M, The Helper Bees $35M, Bicycle Health $16.5M. Walgreens suspends stock dividends after 91 years. And has Transcarent zeroed out 98point6?

February is the real opening of the New Year’s Casino. Investors place their bets–and the dealer’s stick clears the losers.

RadAI’s Series C racks up $60 million. The generative AI radiology company gained an oversubscribed round led by Transformation Capital, with participation from existing investors Khosla Ventures, World Innovation Lab, UP2398, Kickstart Fund, OCV Partners, Cone Health and others. It follows a $50 million Series B in May 2024 and boosts the company’s value to $525 million. RadAI’s two products to speed radiology workflows and findings are Rad AI Impressions, their first product, and Continuity for interpretation and follow up for potential new cancers. RadAI claims that their platforms are used by radiologists performing about 50% of all US medical imaging. In July 2024, it partnered with Bayer to bring its capability to Bayer’s Calantic Digital Solution customers.  Release, Mobihealthnews

The niftily named The Helper Bees nabbed $35 million in a Series C. This was a tidy amount for the formerly unsexy independent aging technology sector, led by Centana Growth Partners, with support from Silverton Partners, Impact Engine, Northwestern Mutual Future Ventures, and Alumni Ventures. The Austin, Texas-based company works through 43 health plans (payers) by providing national access to non-medical products and services such as in-home caregiving, home modifications, groceries and meals, pest control, housekeeping, lawn care, and transportation, closing significant care gaps in senior care and enabling aging in place. They support long-term care plans and Medicare Advantage. Their total funding is $54 million. Release, Mobihealthnews

Bicycle Health pedals to a $16.5 million raise, profitability. Bicycle’s telehealth platform for opioid use disorder (OUD) treatment has had its downs (a May 2024 layoff of 15% of staff) and ups (a $50 million Series B in 2022). Their latest up is turning profitable on an EBIT­DA and net in­come ba­sis as of Q4. In the middle is the just-announced unlettered down round led by existing investor Questa Capital, with participation from all other existing investors including SignalFire, Frist Cressey Ventures, City Light Capital, InterAlpen Partners, Valeo Ventures, and Hustle Fund, as well as new investor JSL Health. Added to the C-level roster are CFO Manu Kuppalli and COO Andy Thomas, with a background in brick-and-mortar behavioral health. Release, Endpoints, Mobihealthnews

On the loser’s side of the table

Walgreens suspends their quarterly dividend for the first time in 91 years. The rationale for ending the shareholder payments made since 1933 was announced late last Thursday “as management continues to evaluate and refine its capital allocation policy consistent with the company’s broader long-term turnaround efforts”. The admission was blunt: “The company’s cash needs over the next several years, including with respect to litigation and debt refinancing, were important considerations as part of the decision to suspend the dividend.” The share price promptly took a hit going from $11.43 at market close on Thursday to closing today (Tuesday) at $9.84, not exactly a desired result. Walgreens’ days as a ‘widows and orphans stock’ are long over. 

  • The litigation is a serious matter, with the Department of Justice (DOJ) filing a civil suit 16 January in Illinois over improper dispensing of opioids and other unlawful medications over more than a decade, in violation of the Controlled Substances Act (CSA).
  • The WBA Q3, announced mid-January, widened its net loss to $265 million. 
  • Walgreens is in the midst of closing 1,200 locations to get out from under real estate.
  • The rest is not much different than other retail–in-store theft, pharmacy sales erosion, and retail sales going online or elsewhere.
  • Mistakes such as buying VillageMD (and doubling down with Summit Health and CityMD) made it 10x worse.

Will this put the brakes on a sale? Certainly Sycamore Partners and other interested parties now must rethink their pricing and timing, though it may be positive if it improves WBA’s cash position. [TTA 10 Dec 20248 January]   Release, CNBC, AP 

Did Transcarent, after paying $100 million for 98point6’s virtual care platform in 2023, just pull the plug on the service? This tidbit from a commenter on HIStalk News 2/5/25 indicates that Transcarent may have. Exhibit 1 is a notice from Allegheny College (PA), a service customer for about two years, on their blog that students and staff were notified on 19 December that the service was going out of business. The college is searching for a replacement telehealth service. The Allegheny page is also showing up high in Google Search results.

Transcarent has a live 98point6 page with FAQs about the service and buttons for downloads on Google’s and Apple’s respective App Stores. There is no notice on Transcarent’s 98point6 page, but their last blog posting mentioning 98point6 was October 2024. On Google’s App Store, the last update is listed as 5 June 2024, which is unusual for a telehealth app. The app ownership is credited to Transcarent so it is not a leftover from the original company. According to the HIStalk commenter, most staff was laid off by April 2024. (As we reported in our 8 May 2024 report, 98point6 had only 100 on staff, and the number of those laid off was unknown.)

Confusing matters is that 98point6 continues as a platform, but not as a telehealth service. After they sold their virtual care service to Transcarent [TTA 9 Mar 2023], they announced a pivot into licensing its real-time and asynchronous software to third parties, including Transcarent. Less than a year later, 98point6 bought the remaining assets of telehealth provider Bright.md not sold to Evernorth’s MDLIVE–17 asynchronous telehealth provider customers [TTA 19 Jan 2024]. We have reached out to Transcarent for confirmation. They are welcome to reach out to TTA (email Editor Donna).

TTA’s January Whirl: Rock Health’s 2024 ‘down round’, Walgreens’ hit with Federal illegal Rx dispensing, UHG investors scoring on denied claims, Masimo’s new CEO, 23andMe ditching Lemonaid, DC changes, more!

 

 

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

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

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

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

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

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

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

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

The countdown to the holiday continues, with Walgreens working on a sale to a PE, kiosks reemerging, investigating a Masimo proxy war player, and shareholders sue HealthTap. CareMax sells the rest of itself, benefiting a 15% investor–and leaves 530 workers with coal in their stockings. Maternal monitoring in Malawi and healthcare workplace violence may make virtual nursing more attractive. And the tragedy of UnitedHealthcare’s CEO murder deepens with the suspect’s capture.

Short takes: improving healthcare worker safety; CareMax may ax 530 jobs in bankruptcy/sale, finds 2nd buyer; $15M Series A for Evidently, $35M Series B for Hyro AI (Both coal and presents in stockings)
Breaking: Walgreens in talks to sell out to PE Sycamore Partners (A speedy denouement?)
Perspectives: Virtual Nursing Optimism Grows, But Providers Remain in Early Stages (AvaSure guest editorial)
News roundup: OnMed to debut CareStation at January CES, former HealthTap employees sue investor MDV, maternal monitoring spotlight with PeriGen/Texas Children’s in Malawi, Ouma Health-Marani Health partner (Kiosks and lawsuits reemerge)
Breaking: suspect in UnitedHealthcare CEO’s murder arrested in Pennsylvania, to be arraigned tonight (updated) (The tragedy expands)
Masimo update: SEC announces investigation of RTW Investments and role in proxy war voting (Next act in Masimo drama)

Our kickoff towards the holiday season very sadly starts with the shocking murder of UnitedHealthcare’s CEO en route to a meeting in midtown Manhattan. There’s an abundance of other news. Black Basta and Salt Typhoon are hacking telecoms, there’s a brace of M&A action from healthcare staffing to RPM to PR, and technology action includes Neuralink and mood prediction to sleep activity. But the sad trombone continues to play for 23andMe and VillageMD.

Weekend short takes: Merative’s $25M funding, Risant closes on Cone Health, Aya buys Cross Country staffing for $615M, Supreme Group acquires Amendola PR
BT Group hacked by Black Basta, China’s Salt Typhoon breached 8 telecoms in dozens of countries, government records 
News roundup: VA’s 2025 EHR budget + vendor breach, Neuralink robot arm study, linking mood prediction to sleep, CoachCare buys Revolution Health RPM/CCM, Seen Health’s $22M launch, Spectrum.Life in Deloitte Ireland’s Fast 50
Breaking: UnitedHealthcare CEO Brian Thompson murdered in NYC
Wojcicki: I’m transforming 23andMe to be ‘viable’ and thriving–but had ‘no idea why her board resigned’ (Sad Trombone 1)
VillageMD’s co-founder/CEO resigns as Walgreens continues the brush-off after billions in losses (Sad Trombone 2)


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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

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

Updates: ATA on telehealth policy priorities, UHG investor group demands denied care report, DOJ sues Walgreens on illegal Rx dispensing, VA nominee supports Oracle EHR deployment, RFK Jr. HHS nomination hits Senate

ATA urges nine telehealth priorities for the Trump Administration’s consideration. Acknowledging that HHS expanded Medicare telehealth flexibilities at the start of the pandemic in 2020 in the previous Trump Administration, the American Telemedicine Association’s list is long and detailed.

#1 was to withdraw last week’s Drug Enforcement Administration’s (DEA) proposed rule, “Special Registration for Telemedicine and Limited State Telemedicine Registrations”. This would create a framework for the remote prescribing of controlled substances that in ATA’s view, would create “untenable restrictions and significant barriers to care”.

The remaining eight include flexibilities that were part of the 2020 rules.

  1. Permanently Allow for the Remote Prescribing of Controlled Substances
  2. Work with Congress to Make Permanent the Medicare Telehealth Flexibilities
  3. Ensure Affordable Telehealth Services for the Commercially Insured
  4. Ensure Affordable Telehealth Coverage for Part-Time, Contracted Workers Who Don’t Qualify for Health Care Coverage
  5. Ensure All Provider Home Addresses Remain Confidential
  6. Expand the Medicare Diabetes Prevention Program
  7. Reinstate Virtual Cardiopulmonary Rehabilitation Programs
  8. Release Updated Regulatory Guidance on Medicare Telehealth Flexibilities

Additional details are in the ATA Action letter to President Trump and Vice-President Vance and the ATA release.

An institutional investor interest group demands a report on delayed and denied care from UnitedHealth Group. This takes the form of a proposal for the 2025 proxy that the UHG board of directors prepare a report on these practices that create increased costs and ‘macroeconomic risks’.  The proxy is usually filed in April for a meeting that is typically in June. UHG will respond at that time it files the proxy.

The group proposing the report is the Interfaith Center on Corporate Responsibility (ICCR). ICCR represents 300 faith-based institutional investors, such as asset managers, pension funds, and foundations, with over $4 trillion in invested capital. This institutional shareholder action is in the aftermath of the Brian Thompson assassination, which revealed widespread consumer anger about UnitedHealthcare’s practices in high rates of claims denials, including their use of AI in the review process, and prior authorizations to restrict utilization. UHG ignores this at its peril. By the time proxies are released and the shareholder meeting occurs in June, the trial of the assassin may be underway, putting this issue back in top news.  ICCR release, Healthcare Dive

Walgreens’ Mound of Misery gained a few hundred cubic yards with a lawsuit filed 16 January by the Department of Justice (DOJ) over improper dispensing of opioids and and other unlawful medications over more than a decade. The civil lawsuit filed in the US District Court for the Northern District of Illinois alleges that Walgreens and subsidiaries dispensed millions of unlawful prescriptions, violating the Controlled Substances Act (CSA). Since Walgreens then sought reimbursement from Federal healthcare programs, they violated the False Claims Act (FCA). The time frame is from August 2012 to the present. Specific allegations include that Walgreens pressured pharmacists to fill prescriptions despite clear ‘red flags’, in excessive quantities, and lacking a legitimate medical purpose and that they ignored the pharmacists and their own internal data. One of the red flags were prescriptions for the ‘trinity’ of an opioid, a benzodiazepine and a muscle relaxant. There are also four different whistleblower actions against Walgreens under the qui tam (on behalf of the government) provisions of the FCA that have been consolidated. If successful, Walgreens could face civil penalties of up to $80,850 for each unlawful prescription filled in violation of the CSA, plus treble damages and applicable penalties for each prescription paid by Federal programs in violation of the FCA. Timing and Walgreens’ response are not yet available. This lawsuit could be a massive stumbling block to the rumored Walgreens/WBA saleDOJ release, Healthcare Finance 

The VA Secretary nominee recommits to resuming the 2026 rollout of the Oracle Cerner EHR. Former House Representative for Georgia Doug Collins told members of the Senate Veterans’ Affairs Committee at his nomination hearing Tuesday that he would look at the Oracle Cerner EHR deployment with ‘fresh eyes’ and that “there’s no reason in the world we cannot get this done.” On 20 December, the VA formally stated that they were starting planning now for deployment in four Michigan facilities — Ann Arbor, Battle Creek, Detroit, and Saginaw–for implementation by mid-2016. He was critical of what has transpired to date in the limited deployment as ‘not acceptable’ and pointing out that VA facilities needed modernization of their computer systems. But perhaps a little overoptimistically, he’d like to see a faster implementation in 2016, though it should be done properly and not rushed. NextGov/FCW, Healthcare IT News

And in the Warp Speed World that is now DC, Robert F. Kennedy Jr. is scheduled to testify next Wednesday (29 January) before the Senate Finance Committee on his nomination as Health and Human Services Secretary. At HHS, he would supervise the Food and Drug Administration (FDA), Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH). He has promised major reforms including food safety and chemical additives, as well as the relationships between FDA and pharmaceutical companies. Healthcare Dive  Meanwhile, during the transition, HHS froze external communications or work-related appearances by staff. This is fairly standard procedure until review procedures are set up, but apparently no one planned for this in advance. This has derailed two conferences (AFCEA HIT Summit and the HHS Industry Summit) that were scheduled for this month and February. Exceptions to this are ‘mission critical’ and emergency communications. NextGov/FCW

TTA’s Finally 2025: Walgreens loses, stock up; fundings for Cera, Qventus, Solera; General Catalyst picks AWS; 3 consolidations; senior social companions at CES, more!

 

 

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

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

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

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

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

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

The countdown to the holiday continues, with Walgreens working on a sale to a PE, kiosks reemerging, investigating a Masimo proxy war player, and shareholders sue HealthTap. CareMax sells the rest of itself, benefiting a 15% investor–and leaves 530 workers with coal in their stockings. Maternal monitoring in Malawi and healthcare workplace violence may make virtual nursing more attractive. And the tragedy of UnitedHealthcare’s CEO murder deepens with the suspect’s capture.

Short takes: improving healthcare worker safety; CareMax may ax 530 jobs in bankruptcy/sale, finds 2nd buyer; $15M Series A for Evidently, $35M Series B for Hyro AI (Both coal and presents in stockings)
Breaking: Walgreens in talks to sell out to PE Sycamore Partners (A speedy denouement?)
Perspectives: Virtual Nursing Optimism Grows, But Providers Remain in Early Stages (AvaSure guest editorial)
News roundup: OnMed to debut CareStation at January CES, former HealthTap employees sue investor MDV, maternal monitoring spotlight with PeriGen/Texas Children’s in Malawi, Ouma Health-Marani Health partner (Kiosks and lawsuits reemerge)
Breaking: suspect in UnitedHealthcare CEO’s murder arrested in Pennsylvania, to be arraigned tonight (updated) (The tragedy expands)
Masimo update: SEC announces investigation of RTW Investments and role in proxy war voting (Next act in Masimo drama)

Our kickoff towards the holiday season very sadly starts with the shocking murder of UnitedHealthcare’s CEO en route to a meeting in midtown Manhattan. There’s an abundance of other news. Black Basta and Salt Typhoon are hacking telecoms, there’s a brace of M&A action from healthcare staffing to RPM to PR, and technology action includes Neuralink and mood prediction to sleep activity. But the sad trombone continues to play for 23andMe and VillageMD.

Weekend short takes: Merative’s $25M funding, Risant closes on Cone Health, Aya buys Cross Country staffing for $615M, Supreme Group acquires Amendola PR
BT Group hacked by Black Basta, China’s Salt Typhoon breached 8 telecoms in dozens of countries, government records 
News roundup: VA’s 2025 EHR budget + vendor breach, Neuralink robot arm study, linking mood prediction to sleep, CoachCare buys Revolution Health RPM/CCM, Seen Health’s $22M launch, Spectrum.Life in Deloitte Ireland’s Fast 50
Breaking: UnitedHealthcare CEO Brian Thompson murdered in NYC
Wojcicki: I’m transforming 23andMe to be ‘viable’ and thriving–but had ‘no idea why her board resigned’ (Sad Trombone 1)
VillageMD’s co-founder/CEO resigns as Walgreens continues the brush-off after billions in losses (Sad Trombone 2)


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Walgreens’ kicks off FY 2025 with a wider net loss of $265M; shares rise 25% as closures, sales, and cost-cutting continue

Walgreens kicked off their FY 2025 on a sad trombone note–yet Mr. Market liked the music. In one of those contradictions that only make sense to Wall Street, Walgreens’s Q1 2025 earnings report, ending 30 Nov 2024 that reported last Friday, was dismal by any reading–but seemed hopeful to market makers who lifted the shares by over 25% as of midday 14 January. 

US retail pharmacy sales and operating losses were the main drags on WBA’s results.

First, the highlights from the earnings release:

  • Operating loss was $245 million, versus $39 million in Q1 2024. The increased loss was due to lower US retail sales and lapping prior year sale-leaseback gains. Another driver was the US Retail Pharmacy Footprint Optimization Program, unexplained in the release.
  • Net loss was $265 million, versus $67 million in Q1 2024, driven by operating losses.
  • It was a dismal quarter for US Pharmacy, which includes the retail stores, despite gains in pharmacy sales of 10.4% due to drug inflation. Retail sales (the front end of the store) decreased 6.2%.
  • A bright spot was US Healthcare, which includes VillageMD, CareCentrix, and Shields, had a smaller operating loss of $325 million, versus same quarter in FY 2024’s $436 million. VillageMD sales increased 9%, CareCentrix increased 16% and Shields increased 30%.
  • Another bright spot was Boots UK’s performance. Their ‘comparable’ pharmacy sales increased 10.9% versus prior year, retail sales  8.1 percent% and grew across all categories. Boots.com sales–22% of total retail sales–were up 30% boosted by Black Friday.

So why did Mr. Market kvell over this and immediately boost the same shares that fell 63% in 2024? Mostly from the earnings call with CEO Tim Wentworth and other C-levels:

  • Results beat the Street estimates (LSEG survey):
    • Earnings per share: 51 cents adjusted vs. 37 cents expected
    • Revenue: $39.46 billion vs. $37.36 billion expected
  • Guidance for FY 2025 estimates adjusted earnings per share at $1.40 to $1.80 per share with revenue in the $150 billion range.
  • CEO Tim Wentworth confirmed that retail locations will continue to close and will accelerate. 70 were closed in Q1 2025.
    • Their goal is to close 1,200 locations from 2024 through 2026, with 450 to 500 underperforming locations to shutter in 2025. Walgreens currently has around 8,500 retail locations.
  • The sale of VillageMD is underway but no potential acquirers were mentioned on the call.  Separately for Summit Health and CityMD, Walgreens is considering “best options” such as sale or restructuring. These units were snapped up by VillageMD in January 2023.
  • They are working to turn around retail sales which are declining due to consumers restricting spending due to inflation and the value in using online retailers.
    • One measure is around labor scheduling being redesigned to improve the in-store experience. Walgreens is launching a new scheduling model in about 200 locations based on store demand patterns.
  • In pharmacy, they plan to roll out digital and virtual check-in for patients plus micro-fulfillment centers for prescription processing.

Interestingly, Walgreens in the US is not promoting online sales–unlike Boots UK which has done well with it.

There was no comment on the reported consideration of sale to a private equity (PE) firm such as Sycamore Partners [TTA 10 Dec 2024, 8 January], which would remove it from the NYSE.

Street analysts are boosting the stock now, but state that they need to see a few more quarters of stable performance to feel more confident about WBA’s future. Whether that will happen and that the US retail/pharmacy picture improves is to be determined. HIStalk, CNBC, FierceHealthcare, Healthcare Dive

News roundup #2: why Walgreens is considering selling to a PE, December fundings, 2024’s surprises, M&A ’25 predictions, Transcarent buying Accolade for $621M

Why would Walgreens sell out to a private equity investor, reportedly Sycamore Partners? This news leaked early in December to the Wall Street Journal that this PE would either buy Walgreens Boots Alliance (WBA) in whole, in parts, or with partners [TTA 10 Dec 2024]. This MedCityNews article gathers the speculation from multiple financial executives, and the answer is a resounding Maybe.

  • Primary care was a losing bet–and their retail pharmacies are challenged by new models like Amazon Pharmacy and Cost Plus.
  • It will take about $9.2 to $10 billion, which is a lot for Sycamore to pony up. But it’s a bargain from what PE giant KKR offered in 2019– $70 billion.
  • Sycamore may have competition for buying WBA.
  • The 12,000 store network is now seen not as an asset, but a liability, not only for pharmacy but also for retail goods.
  • Sycamore may be more interested in the retail and e-commerce sides of Walgreens versus healthcare. For instance, WBA company Boots in the UK has leveraged its beauty business to nearly the prominence of health in their stores.
  • A private company may have more power to swiftly make the changes that Walgreens needs, versus a company having to report quarterly to shareholders. 

There was the usual rush to announce fundings by December’s end, a refreshing change from 2023’s end. MedCityNews helpfully rounded up five of the last-minute closings:

  • Already noted: Oura’s $200 million plus funding for a Series D from Dexcom ($75 million) and Fidelity Management. Our earlier reporting noted total financing at $223 million and the valuation at $5 billion.
  • Cleerly’s $106 million Series C led by Insight Partners. Cleerly developed AI-assisted detailed phenotyping of coronary artery disease.
  • Remodel Health gained $100 million in a funding led by Oak HC/FT and Hercules Capital. Remodel works with employers and employees to build and access Individual Coverage Health Reimbursement Arrangement (ICHRA) plans.
  • Cala Health raised $50 million from Vertex Growth Fund and Nexus NeuroTech Ventures. Cala is a bioelectronic medicine company which developed FDA-cleared, noninvasive devices for hand tremors.
  • Soda Health’s $50 million Series B, led by General Catalyst, is in the hot sector of ‘food as medicine’. Soda provides a ‘smart benefits’ card to use at approved retailers for food, health products, and pharmacy benefits.

2024 had its share of surprises in this two-part Mobihealthnews roundup. No surprise for our Readers in that GLP-1 drugs for weight loss went to radioactive-level hot (but this Editor predicts a collapse in 2025). The failure of retail clinics such as Walmart Health and VillageMD surprised many in the industry–as well as Optum shuttering its telehealth business. Developing: menopause and autoimmune health (and their relationship)–and food as medicine. On the insurance side, the troubles of the Medicare Advantage health plan model multiplied, not moderated. And AI? On top of everything, but you maybe shouldn’t develop your own LLM. Part One, Part Two

Predictions for 2025 mergers and acquisitions center on consolidations. There’s little foo-foo or froth in this Mobihealthnews article– instead, lots of New Reality. Many pandemic-born startups will die quiet deaths in sales, shotgun marriages, and shutdowns. Much caution in any M&A. The emphasis is on interoperability, which is widely defined as acquirer-acquiree and a clearly presented integrated value proposition to customers. Their industry leader panel cannot agree whether M&A will accelerate as a result of changes at FTC (Lina Khan’s departure and a new chair) or slow down. And at least one leader believes that Medicare Advantage will stabilize and recover.

But one buyer plays it high and wide in ’25–the deep-pocketed Transcarent, agreeing to buy Accolade for $621 million in 2025’s First Big Deal. Accolade is also in enterprise care navigation, as well as providing virtual primary care, specialist consultations, and patient advocates. It went public on Nasdaq in 2020. Transcarent’s offer is $7.03 per share in cash, an approximately 110% premium over the company’s closing stock price yesterday 7 January. The funding is coming from General Catalyst (!) and Glen Tullman’s 62 Ventures. Accolade will go private at the closing, expected to be Q2 following shareholder and regulatory approvals, and be integrated into Transcarent. The combined Transcarent will have 1,400 employer and payer clients. Release, Healthcare Dive

Breaking: Walgreens in talks to sell out to PE Sycamore Partners

The other shoe drops. Clunk. Walgreens Boots Alliance is in talks to sell to private equity firm Sycamore Partners, according to the proverbial “people familiar with the matter” speaking with the Wall Street Journal. The deal could close as early next year.

WBA would exit public markets, where it is currently trading at a little over $10 for a market capitalization just short of $9 billion. Shares rose abruptly at about 1pm Eastern Time (NY).

It is quite a fall from its value even five years ago at close to $60/share. Other factors are their acquisition binge of latter years including Shields Health and VillageMD, as well as declining brick-and-mortar store sales.

According to the article, it would be a very large apple for Sycamore Partners to eat and digest. Sycamore has an aggregate committed capital of approximately $10 billion according to Transacted.  It would be likely that some parts of the present Walgreens and WBA would be sold off or partners would be invited in, according to the WSJ’s ‘people familiar…’.

The house cleaning promised by CEO Tim Wentworth is coming to pass, fast, undoubtedly spurred by Stefano Pessina.

Walgreens is slated to report its next quarterly results on 9 January.

Hat tip to Endpoints. One of their reporters contacted Walgreens and received this response: “We don’t comment on rumors or speculation about our business.” a Walgreens spokesperson told Endpoints News.

This story is developing. 

VillageMD’s co-founder/CEO resigns as Walgreens continues the brush-off after billions in losses

Walgreens’ disposition of VillageMD clarifies with CEO/co-founder/board chair Tim Barry’s sudden and unceremonious departure. The news dropped on Wednesday 27 November, directly into the media black hole of the Thanksgiving holiday.

A tell-tale sign is that Walgreens’ board has appointed only an interim, VillageMD’s chief operating officer Jim Murray. It is not clear from company statements made to media if Mr. Murray will replace Mr. Barry on the board.

Mr. Murray was appointed only last April, having nearly all his experience on the insurance side. He retired from Centene in late March, having come aboard after being COO at Magellan Health when Centene acquired it (now mostly sold off) and with 28 years previously at Humana. [TTA 10 Apr and release] This may suit Mr. Murray, given his age at about 70 (from Centene regulatory filings). 

In a statement to the Chicago Tribune, a Walgreens spokesperson said that “We look forward to continuing to partner with Jim Murray as he assumes day-to-day leadership responsibilities.” (Editor Donna–as if a COO does not already have day-to-day leadership responsibilities?) Murray has been “integral in helping lead the company’s turnaround as VillageMD makes meaningful progress and positions itself for profitable growth.” Neither the Walgreens representative nor VillageMD spokesperson Molly Lynch answered media questions about why Mr. Barry left or the circumstances behind the sudden departure without even a fig leaf (or pumpkin pie) of a cover story or the usual ‘thanks for your service’–which leads to more questions and doubts about What Really Happened.

The larger picture of sinking Walgreens financials. They closed FY 2024 with an operating loss of over $14 billion, more than doubling FY 2023’s loss of $6.9 billion versus FY 2022’s profit of $1.4 billion during the pandemic. $12.7 billion of a total $13.4 billion impairment was due to VillageMD’s loss in value due to clinic closures, slow patient panel growth, and downward trends in Medicare reimbursement. The remainder of about $332 million was attributed to loss of value in the CareCentrix home care unit (Form 10-K 10 October 2024, document page 123; impairments page 97; also TTA 28 Mar)

The Big Idea of combining primary care with retail locations in the Roz Brewer/WBA’s Stefano Pessina vision (hallucination?) was a major misstep into a Big Hole.

  • Bad timing was one factor. VillageMD added to a mound of miseries in retail and pharmacy sales caving, competition from direct vendors such as Amazon and Mark Cuban Cost Plus, plus  traditional brick-and-mortar CVS and Walmart. There were also expensive settlements around opioid prescribing. VillageMD also tapped Walgreens for $3.5 billion to acquire Summit Medical and CityMD–and defaulted on a $2.25 billion loan in August.
  • Joining primary care clinics with retail footprints wasn’t based on testing consumer behavior and acceptance–or practice reality. The plan was to have 1,000 joint locations modeled on the picture above left by 2027. As a model, it depended on obtaining both sufficient providers and building loyal patient panels, a slow pull if there ever was one. Physically adding clinic locations to Walgreens’ stores proved to be both expensive and difficult. 
  • These factors and others sank Roz Brewer’s CEO-dom, the share price, and the vision of Mr. Barry’s and VillageMD’s founders and physicians. The last dated back to 2013 and built into a network of hundreds of freestanding primary care clinics in value-based care. Many of the 140+ closures starting early this year were not only of expansions, but also of long-standing VillageMD offices, including in its core market of Chicago metro. Earlier this year, Cigna wrote off most of its $2.5 billion investment, throwing its Q1 into the red [TTA 2 May].

Many of the practices participated successfully in CMS’ advanced ACO shared savings models starting in 2016 such as Next Generation, Direct Contracting, and the current ACO REACH. The practices integrated telehealth as part of their value-based care models to achieve quality metrics. In CY 2023, VillageMD-operated ACO entities in the REACH model achieved $140 million in gross savings for Medicare, with $36 million shared back with the government and the remainder reinvested in the care model. (CMS reports are released 10-12 months after the prior year’s end.) 12 November release

Walgreens went big–and was sent home with the metaphorical tail between the hind legs. Perhaps engraved on VillageMD’s headstone will be what Walgreens CEO Tim Wentworth said of VillageMD during the Q4 earnings call in October, “… We’ve declared it’s not a crucial part of our future.” Mr. Wentworth and the board declared months ago that they wished to sell all or part of the business, at least below their majority holding at 63% [TTA 8 Aug, 2 JulyWho even wants to or is able to buy, with Walmart Health defunct and Oak Street Health and One Medical retrenching for their respective owners? Will VillageMD be part of anyone’s future? Healthcare Finance News, Healthcare Dive

Weekend reading: 23andMe’s up in the air future, including genetic data; Walgreens debates What To Stop and Start; what if healthcare pursued a zero-failure rate?

While 23andMe figures out a future….what happens to the genetic data?  Troubled 23andMe today announced that it will be reporting its FY2025 Q2 numbers next Tuesday 12 November. An interesting part of their release is that shareholders can submit and upvote questions to management via the Say Technologies portal–and they’re blistering. They ask about the plan for recovery (132 votes, 60K shares represented), whether the company will be sold off piecemeal (128 votes, 73.5K shares) and a sale of the company (78 votes, 47.8K shares. Also questioned (38 votes, 3.4K shares): the addition of three new board members, none of whom have biopharmaceutical experience as all former CFOs outside of healthcare. These replace the seven that ankled on 17 September [TTA 17 Sept]. 

To Wojcicki, of course, with her reported 49.99% of voting control, shareholders’ questions aren’t really going to matter. Whether they will be addressed on Tuesday is anyone’s guess.

Many 23andMe customers have questioned how to remove their personal genetic data from their database, which if en masse will reduce the value of the company. This TechCrunch article explains how that data is not covered by HIPAA privacy regulations, but 23andMe’s own retention rules.

If 23andMe sells, the data goes with it. If there is no sale, apparently recent Wojcicki statements indicate that the model going forward for the company is the sale of that data to pharma developers and researchers, ditching its independent drug discovery, and moving into telehealth prescribing of GLP-1 drugs through its Lemonaid subsidiary. 

For those concerned about their privacy, or wary of a change of ownership, accounts can be easily deleted–but not the genetic information. TechCrunch gives how to delete your account–but apparently that won’t delete your genetic information, date of birth, and gender. 23andMe will also retain limited personal information attached to your account for an undefined time. Individuals can also reverse their consent for sharing that information with researchers, but cannot remove it. 12 million people have reportedly given consent–deliberately or not. A real lesson on oversharing for millions–if they care. 

What can Walgreens reasonably stop or reverse in its multiple series of Bad Decisions? A short interview at HLTH with US Healthcare head Mary Langowski indicates that there’s not much that hasn’t been already announced. We know that VillageMD is shuttering locations and is up for sale. 1,200 retail locations will be closed over the next three years. But what else to stop? “A lot of what I’ve fo­cused on in the first six months, is re­al­ly, it’s okay to stop stuff. What are we gonna stop?” While it’s totally fine to fail ‘at some things’, these weren’t small fails. Wentworth is concentrating on the new chief commercial officer selling Wal­greens’ ser­vices to pay­ers, providers, and life sci­ence com­pa­nies, such as clinical trials capabilities, CareCentrix, and Shields Health. There’s also some push towards “build­ing a stand­alone phar­ma­cy busi­ness rather than a ver­ti­cal­ly in­te­grat­ed busi­ness”. Endpoints News

Thinking about if healthcare adopted a ‘zero-failure’ rate. Michael Alkire’s (CEO, Premier Inc., a health system operational improvement provider) daughter was on Alaska Airlines’ Flight 1282 on 5 January 2024. That was the Boeing 737-9 MAX flight that had a blowout of a mid-cabin exit door plug placed there instead of an emergency exit door. The blowout was due to four improperly installed (loose) bolts. It occurred at 16,000 feet and the lower altitude, combined with no one seated in that row, contributed to a 100% survivability rate and a successful landing, though passengers were injured. Anyone with an interest in aircraft knows that one little thing, like a worn jackscrew on a rudder or an untightened bolt, can lead to a non-survivable crash.

Mr. Alkire’s point is that we should be striving, as the airlines and aircraft manufacturers have done (which failed in this case) for zero failure in healthcare.  He cites the well-known statistic that 98,000 people die each year from medical errors. We don’t have a culture of continuous performance improvement. For one, clinical innovations can take nearly two decades to become standard practice. Yet it works. Simple things, such as clinical surveillance in nursing homes, can reduce adverse drug events by 92%.  Much more to ponder in this Influencer contribution to MedCityNews. (And Boeing has a long way to go to restore trust–buying back Spirit AeroSystems, the former Boeing Wichita, is a necessary start they are finally making.)

News roundup 16 Oct: Walgreens shuts 1,200 stores–500 in ’25, CVS exiting core infusion biz, Masimo v. Apple update, DEA recommends 3rd telehealth extension, Change hack costing UHG $705M, Owlet back in NYSE compliance

A roundup of chickens coming home to roost? But some chickens are just happy to come home.

Walgreens’ Mound of Misery just grew a little higher. The headlines today were all about Walgreens’ closing 1,200 stores over the next three years. Their current store location roster is about 9,000, according to their website. 500 of these will be closed during their upcoming FY2025.  Their release stated this would be “immediately accretive to adjusted EPS and free cash flow”. (Were they making any money at all?) This helped to give their share price a nice bump from $9 to above $10 at market close today. Last year, Walgreens’ shares were priced above $22.

Q4 (closing 31 August) closed with a 6% boost in retail sales. However, losses were $3.0 billion versus a net loss of $180 million in the prior year’s Q4. The reasons cited in their release were a higher operating loss, a $2.3 billion non-cash charge for valuation allowance on deferred tax assets primarily related to opioid liabilities recognized in prior periods, and a non-cash impairment charge related to equity investment in China. The operating loss related to a non-cash goodwill impairment charge for CareCentrix. 

The full year was not cheery. Sales were $147.7 billion, an increase of 6.2% from a year ago (in constant currency, 5.7%). But losses in their FY2024 were $14.1 billion, a stunning increase of 104.5% compared to prior year.

VillageMD is being monetized along with other assets. “CEO Tim Wentworth said in the earnings call that the company is focused on “monetizing non-core assets to generate cash,” naming VillageMD as an example, to focus on its core retail pharmacy business.” HIStalk 16 Oct Can Walgreens shrink itself to profitability? Fierce Healthcare

Over at CVS, they’re doing their own shrinking. CVS is closing its core infusion services business, with plans to either close or sell 29 related regional pharmacies. Infusion services were bought from Coram LLC in 2013 for $2.1 billion. This Reuters exclusive was based on an 8 October memo and confirmed by a CVS press representative. Patients relying on antibiotics, drugs supporting muscular health, and intravenous nutrition services will be transferred to other providers. CVS will continue to provide certain services: specialty medications and enteral nutrition, or tube feeding, at pharmacies in Minnesota, Pennsylvania and San Diego, with nationwide nursing services. Hat tip to HIStalk 16 Oct.

Masimo wins one big patent challenge, loses one (or four), to Apple. 

The Win: Apple had sued Masimo in the US District Court of Delaware for patent infringement of Apple’s utility patent 10,942,491 B2 (“the ‘491 patent”). Masimo was charged as violating Apple’s patent on 19 features. Masimo appealed to the Patent Trial and Appeal Board (PTAB) of the US Patent and Trademark Office (USPTO) for an inter partes review (IPR) of the patent on the grounds of ‘unpatentability’, a very high proof. Masimo succeeded in this, rendering Apple’s ‘491 patent useless. Apple can appeal but the likelihood of success against the PTAB ruling that required three administrative patent judges to review, at this level of proof, is low. In this Editor’s view, this may spur other developers to come up with innovations now that these 19 features have been deemed unpatentable.

The Loss (I think): In review in the Delaware District Court are four complicated lawsuits between the two combatants, with Apple’s premise that Masimo has infringed upon other patents. Masimo alleged “inequitable conduct” by Apple in their patent filings with the PTO, essentially alleging fraudulent filings on multiple patents. Apple has been granted a summary judgment on Masimo’s claims, throwing them out.

Interestingly, Masimo–never shy to announce wins versus their foe Apple under the prior leadership of Joe Kiani–has remained strangely mum. (Perhaps everyone is waiting for the takeover dust to settle?) Will the ‘new’ Masimo be so combative against Apple? A far more detailed analysis for the patent mavens is in Strata-gee. A very large hat tip and bow to their editor, Ted Green, who writes about marketing primarily in the audio/visual business but has been 100% on top of The Masimo Saga–thank you!

To no one’s surprise, DEA kicks the telehealth waiver can down the road–for the third time. The Drug Enforcement Administration (DEA) sent to the White House’s Office of Management and Budget (OMB) a proposed rule to extend telehealth prescribing of Schedule II and higher controlled substances without changes. These waivers which removed the in-person examination requirement under the Ryan-Haight Act were instituted during the Covid pandemic and extended twice [TTA 11 Oct 2311 May 23] with a final expiration of 31 December 2024. In September, reports indicated that DEA not only wanted to restore prior restrictions but also wished to introduce additional ones. However, their timing (September!) given Federal standards of publishing draft rules and lengthy comment periods before a final rule was impossible to be achieved by year’s end. [TTA 13 Sept]

Whether OMB will approve the extension (to a date that cannot be confirmed since the text is unavailable, but reportedly one year) is not certain, as it may be disputed by the Department of Health and Human Services (HHS). Since the waiver is due to expire at the end of the year, this may help to assure the multitude of mental health and other telehealth companies dependent on legal remote diagnosis and prescribing controlled substances that their businesses can continue. FierceHealthcare

UHG didn’t have a happy quarter either due to Change. The total hit to UnitedHealth Group of the Change Healthcare hack is now estimated at $705 million, or 75 cents a share. Their 2025 guidance on profit is a lackluster $30 per share–below Wall Street estimates of $31.18. Government plans’ cuts in payments for Medicare Advantage plus and low state payment rates for Medicaid are affecting UHG as well as nearly every other payer. UHG’s share price on the news reacted negatively, falling 9% and dragging down other payers as well. UHG must rue the day they bought Change Healthcare, as it has been largely bad news ever since. CNBC

And winding up on a happy note–Owlet is back in good graces with the NYSE. Last year, they faced a NYSE notification that they were out of compliance with the $50 million minimum valuation of the company over a consecutive 30-day trading day period. They are now in compliance and their Class A shares can trade without the ‘BC’ black mark and no longer be listed as such on the NYSE website. The NYSE will be following its standard procedure of a 12-month follow-up on compliance. Release, Mobihealthnews

The baby sock and baby monitoring company has had a rough couple of years between a cracked SPAC (2021), FDA notifying them at the end of 2021 that they considered the Smart Sock a medical device, forcing the company to pull it from distribution [TTA 4 Dec 21], mounting losses, layoffs, and rebuilding with an FDA-cleared BabySat and enhanced Dream Sock [TTA 21 June 23]. Usually, this concatenation of events means the company either shuts or sells, but Owlet has done neither and bootstrapped itself. Revenue in their Q2 ending 30 June was up 58% year over year with a narrower operating loss of $2.2 million, compared with $6.7 million in prior year. It recently expanded their European distribution of the Dream Sock after CE Mark certification in May to a total of 11 countries [TTA 18 Sep]. 

What’s next for: Steward CEO now in criminal contempt of Congress; Walgreens’ Pessina’s fortune vanishes by 97%; Masimo’s Kiani now a man without a company

Senate unanimously votes to hold Steward Health CEO in contempt. The resolution passed on Wednesday 25 September refers the contempt charges against Dr. Ralph de la Torre, the CEO of Steward Health, to the Department of Justice (DOJ). The Senate Committee on Health, Education, Labor and Pensions (HELP) voted on 19 September to recommend two contempt charges–criminal and civil–to the full Senate. It is the first time since 1971 that a criminal contempt charge has been passed. The DOJ’s actions can include prosecution by the District of Columbia’s US Attorney which can mean arrest and possible incarceration, with a fine that doesn’t exceed $100,000, or civil contempt which usually involves a fine and another subpoena to appear. FierceHealthcare, Becker’s

The threatening language of the HELP committee members such as Bernie Sanders and Ed Markey surely did not encourage de la Torre or his legal counsel to appear on 12 September, with the anger across the board among all members regardless of party. All that it promised to be was, in street language, the worst kind of beatdown. Formally, the appearance was rejected because of Steward’s bankruptcy in adjudication in the US Bankruptcy Court for the Southern District of Texas supervising the sale of Steward assets. There is also a court order that prevents de la Torre from commenting during the sale process. To the press, his legal counsel depicted the HELP committee hearing as “a pseudo-criminal proceeding in which they use the time, not to gather facts, but to convict Dr. de la Torre in the eyes of public opinion.” TTA 14 Sept

Steward Health’s spectacular collapse opens even more Pandora’s Boxes for de la Torre. He possibly faces additional lawsuits attempting to ‘pierce the corporate veil’ to claw back his bank and personal, sizeable maritime and aviation assets–or hold him criminally liable, far more complicated, long-term, and damaging. A cynical view would be that de la Torre would be well advised to get on his $40 million yacht or one of his private aircraft–and depart for a destination that is reluctant to extradite to the US. 

Walgreens Boots Alliance’s troubles drastically shrink executive chairman Stefano Pessina’s personal fortune. Chairman Pessina, who holds 17% of WBA stock and is the single largest shareholder, has seen his holdings shrink in value by 97%, from $12 billion in 2015 to a current $1.3 billion, according to Bloomberg data. The 83-year-old WBA head has seen hard times before. He pulled a rabbit out of the proverbial hat in 2007 by going private with Boots and then merging it with Walgreens in 2015, but time and Mr. Market are not on his side with taking on the debt load necessary.

Is WBA or Walgreens attractive to an acquirer? With stock trading at a record low of around $8 and a market capitalization of about $7.5 billion, it may be a bargain if an investor ignores or doesn’t blanch at the debt load. But those who understand the business cannot buy due to US antitrust regulations, which rules out any retail competitor or PBM. Or the company could be parted out to healthcare providers or a health insurer, but that ignores their miseries, such as reduced Medicare Advantage reimbursements. Their mistakes such as VillageMD and unprofitable locations are in the middle of being worked out and the company is shrinking. Meanwhile, their 15 October full-year earnings report will be dripping with red ink, as their Q1-3 lost $314 million versus prior year earnings of $1.2 billion. Crain’s Chicago Business

Vanishing for Joe Kiani is his day job at Masimo after a dramatic proxy fight. The founder of the audio and health monitor company was voted out of his board seat by shareholders. He followed by resigning as CEO after founding the company 35 years ago. Michelle Brennan, a board member (from Politan) has been appointed as interim CEO. Previously, she was a senior executive at Johnson & Johnson’s companies, including international experience in business development, for over 30 years. She also is on the board of Cardinal Health. Korn Ferry is coordinating the search for a permanent CEO.

The proxy battle wasn’t even close, according a CNBC report reported by Strata-gee. Quoting an inside source, the Politan slate of two directors, Darlene Solomon and William Jellison, received twice as many votes as Joe Kiani and Christopher Chavez on the Masimo slate. 

The company is continuing ‘strategic alternatives’ (read: sale) of its consumer health and audio businesses, the latter mostly acquired in the utterly snakebit 2022 acquisition of Sound United’s consumer audio brands. Masimo is using Centerview Partners and Morgan Stanley as financial advisors and Sullivan & Cromwell as a legal advisor. Presumably, the Kiani-arranged sales to or joint ventures of these units with unnamed investors is off. Masimo will be retaining their professional healthcare and pulse oximetry products. For Q3 2024, Masimo reiterated its financials from early August, with earlier guidance here.

Whether others will depart with Kiani is too soon to tell. During the proxy fight in July, Masimo’s chief operating officer, Bilal Muhsin, promised to resign if Kiani was forced out, specifically citing that he would refuse to work with Quentin Koffey, a Masimo director and chief investment officer of Politan Capital. Other managers signed similar letters around the same time.  However, in the Masimo release on the Kiani resignation, financials, and management changes, CFO Micah Young and Muhsin stated that would provide more details on an earnings call in October.

The Strate-gee view was that shareholders got tired of hearing promises about Sound United and that Kiani was high-handed with them–treating it as his personal company and not theirs. Healthcare Dive

Rounding up follow ups: Walgreens shareholder suit on pharmacy performance, Steward CEO no-shows Senate committee, Masimo-Politan proxy fight has court win for Politan–vote on for 19 September

Another shovelful topping Walgreens’ Mound of Misery. Filed in the US District Court for the Northern District of Illinois, this shareholder lawsuit points to the poor performance of Walgreens’ pharmacy division. The fault is assigned to Walgreens management, specifically CEO Tim Wentworth and CFO Manmohan Mahajan plus 10 other executives including chairman Stefano Pessina, in overstating the division’s performance between 12 October 2023 to 26 June 2024 . It charges that they “falsely and materially claimed confidence in the brand inflation, volume growth, cost execution, discipline, and overall contributions of [Walgreens’] pharmacy division”, leading to an overvaluation of Walgreens’ share price. In addition, Walgreens “veiled the reality: that (Walgreens’) pharmacy division was not actually equipped to adapt to ongoing hurdles within the industry”.

The shareholder is Mark Tobias, a shareholder since late 2022. Key to the suit is the 12 October 2023 earnings conference call that contained positive comments about the pharmacy operation made by Wentworth, new at that time to Walgreens, and Mahajan. Their tune changed by the 27 June 2024 conference call where they admitted that the pharmacy model was “not sustainable”. Walgreens’ share price on 12 October 2023 was $24.19.  As of 4pm New York time today, 13 September, Walgreens closed at $9.21.

From the Crains Chicago Business article, the lawsuit demands restitution and reforms:

  • Walgreens should be awarded damages and restitution from the individual defendants
  • The company and defendants take steps to reform and improve corporate governance and internal procedures
  • Those reforms may include
    • Strengthening the board’s supervision of operations
    • Permitting Walgreens shareholders to nominate at least five candidates for election to the board
    • Ensure the establishment of effective oversight of compliance with applicable laws, rules and regulations

The Crains article also includes a Scribd copy of the filing.  Also Healthcare Dive

Another very large Mound of Misery buried Steward Health…but CEO Ralph de la Torre doesn’t plan to comply with a Senate committee subpoena. His testimony before the Senate’s Health, Education, Labor and Pensions committee was scheduled for 12 September but last week on 4 September, his attorneys informed the committee that Dr. de la Torre would not appear. They cited the ongoing US Bankruptcy Court for the Southern District of Texas sale of Steward assets (Healthcare Dive update) and a court order that silences him from comment during the sale process. The committee, chaired by Senator Bernie Sanders, is also accused by the CEO’s attorneys of using the bankruptcy and de la Torre’s marine possessions (a $40 million yacht and $15 million fishing boat) and private jets as “a pseudo-criminal proceeding in which they use the time, not to gather facts, but to convict Dr. de la Torre in the eyes of public opinion.”

The committee plans to decide on 19 September among two options: whether Dr. de la Torre will be brought up on criminal contempt charges that would be referred to the District of Columbia US Attorney, or civil contempt which usually involves a fine and another subpoena to appear. Several Senators on the committee–Sanders, Elizabeth Warren, and Edward Markey–have called de la Torre’s no-show “outrageous”. Sanders has issued threats of de la Torre being held accountable for his greed, but exactly how much of this is for the press and what the committee will do is unclear.  More of concern to the CEO would be whether further lawsuits would attempt to ‘pierce the corporate veil’ and claw back his bank and personal assets–or hold him criminally liable. Healthcare Dive, AP

The ugly Masimo-Politan Capital proxy fight continues–with a win for Politan. The attempt by Masimo, a consumer audio company that branched out into professional healthcare and pulse oximetry products–and last year won a big patent infringement decision against Apple on pulse oximetryto further postpone a shareholder vote on giving control to activist shareholder Politan Capital ended in a loss yesterday. The US District Court, Central District of California denied Masimo’s request for a preliminary injunction to block Politan’s nominees for the Masimo board. Unless Masimo’s motion asking the same court to find Politan in contempt due to breaking the court’s sealing order on the decision, and the court grants a further delay, the shareholder vote will be held next Thursday 19 September. The likely outcome, according to Strata-gee which is covering this from the consumer audio perspective, is that shareholders will turn the board over to Politan by electing their representatives to the two open seats, booting CEO Joe Kiani–and total corporate chaos will ensue. Strata-gee has all the gory details. Background in TTA 8 August and prior.

Breaking: Walgreens considering sale of entire stake in VillageMD

The other shoe just dropped. Walgreens Boots Alliance filed today (7 August) Form 8-K with the Securities and Exchange Commission (SEC) that confirms that they are considering a VillageMD sale. On page 2, Walgreens is considering the “sale of all or part of the VillageMD businesses, possible restructuring options and other strategic opportunities.”

The broad reason why is that VillageMD has “substantial ongoing and expected future cash requirements”. The specific event is VillageMD’s default as of 2 August on the VillageMD Secured Loan, a senior secured term loan and credit facility amounting to $2.25 billion. Currently (6 August), the loan is in a forbearance agreement while the companies work out terms. The 8-K also reiterates that Walgreens “is actively engaged in discussions with VillageMD’s stakeholders and other third parties with respect to the future of its investment in VillageMD”.

None of this should be surprising given recent statements made by CEO Tim Wentworth on the dismal Q3 earnings call [TTA 2 July], disclosing that Walgreens plans to lower its Village MD ownership below a majority holding (currently 63%). This signaled a partial sale at least–and that Walgreens was giving up on VillageMD as an integral part of the company. Between the direct investment of $5.3 billion and subsidizing Village MD’s purchase of Summit Health/CityMD with an additional $3.5 billion plus development costs, the Village MD Money Pit has disappeared roughly $10 billion of Walgreens’ fisc. Closing 160 locations did not, and could not, unsink this ship. While VillageMD is not the only dark spot for Walgreens’ business (retail is crashing, pharmacy is going soft), the plunging stock price has kicked off multiple shareholder class action lawsuits.[TTA 17 July]

It’s going to be tough to find any buyer at all at even a fraction of what Walgreens invested. An industry analyst estimated VillageMD’s 2023 losses at $800 million last April. WBA took a writedown last quarter, a $12.4 billion non-cash impairment charge related to VillageMD goodwill. Cigna also wrote off $1.8 billion of its 2022 $2.2 billion investment which gave it a ‘in the teens’ share [TTA 2 May]. Even CVS is trying to amortize its $10.6 billion buy of its own Money Pit–much smaller Oak Street Health–by finding a joint venture private equity partner [TTA 29 May].

This filing, coupled by the announcement of a third sale of Cencora stock to generate cash [TTA 7 Aug], points to no end in sight of Walgreens’ troubles. The SEC filing took place after markets closed; investors can expect a very down morning in an unstable market. Crain’s Chicago Business, Forbes 

Midweek wrap: Walgreens sells off $1.1B Cencora shares, R1 RCM goes private for $8.9B, Steward’s unwinding with 2 hospital closures, 1,200+ laid off, $30M state funding, bids due for physician group, CEO Senate hearing

Retrenching is the theme this (crazy) week.

Walgreens sells another 2% of Cencora shares, raising $1.1 billion of much-needed cash. Walgreens reduced its ownership share of the drug distributor formerly known as Amerisource Bergen to 10% by selling the remainder of their unencumbered shares, approximately 2% of the common stock. Known as a Rule 144 sale of restricted or control stock, the proceeds as of 1 August are $818 million followed by a concurrent share repurchase by Cencora of $250 million. This is the third sale this year: in May Walgreens sold 1% for $400 million and in February 2% for $990 million. All these sales were to fund operations and pay down debt. Despite the further reduction, Ornella Barra, COO International of Walgreens Boots Alliance, will continue on Cencora’s board. The partnership agreement remains in place. Release, Healthcare Dive, Reuters

Revenue cycle management company R1 RCM finally found investors to take it private.  TowerBrook Capital Partners and Clayton, Dubilier and Rice are the winners, acquiring R1 for $8.9 billion. They will purchase outstanding shares at $14.30 per share in an all-cash deal expected to close by the end of 2024. Private equity investor TowerBrook already owns 36% of the company. This shuts out rival New Mountain Capital as their 23 February bid was offered at a lower $13.75 per share. At that time, New Mountain owned 32%; that bid valued the company at nearly $6 billion. The purchase will be financed with a combination of committed debt financing and equity from investment funds affiliated with TowerBrook and CD&R. Large shareholders Ascension Health Alliance (also R1’s major customer) and Coliseum Capital Management were not mentioned in the acquisition release.

In March, a special committee was formed by their board to evaluate strategic alternatives, code for ‘we believe it’s undervalued’. The company is currently traded on Nasdaq and closed today at $13.96. R1 closed 2023 profitably with net income of $3.3 million, flipping a $63 million 2022 loss, on a revenue increase of nearly 25% to $2.3 billion. Q1 and Q2 2024 are a more mixed picture. Q1 had revenue of $603.9 million, up 11% year-over-year, but with a net loss of $35.1 million caused in part by $10 million in losses created by the Change Healthcare ransomware attack. Q2 continued the trend, with revenues of $627.9 million up 12% versus prior year, but a widening net loss of $7.6 million versus $1 million in the prior year. Q2 earnings release, Q1 earnings release, FierceHealthcare, Healthcare Dive

Seeking ‘strategic alternatives’ for current investors and going private seems to be the new fashion in the crowded healthcare business process outsourcing (BPO) and RCM sectors. Profitable but problematic companies such as Veradigm [TTA 28 May] and GeBBS [TTA 17 Apr] both up for sale or investment. To date, Veradigm has not gone public with any offers, but GeBBS was scheduled last month to have binding offers submitted by Carlyle Group, Hillhouse Investment, and CVC Capital Partners. ChrysCapital, India’s largest private equity firm, owns 80% of GeBBS. Economic Times (India)

The messy unwinding of Steward Health Care in the US Bankruptcy Court for the Southern District of Texas continues.

  • The court approved the closure of two Massachusetts hospitals, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, at the end of August. Neither hospital received qualifying bids in the sale process and both hospitals, serving primarily low-income patients, are among the worst performers in Steward’s anemic portfolio.
  • Based on WARN notices filed with the state, over 1,200 people will lose their employment as well as communities losing services. 
  • Yesterday, the Commonwealth of Massachusetts agreed to provide $30 million to keep the six remaining hospitals in the state running in two tranches: $11.3 million on 9 August and $18.7 million on 16 August. 
  • Those hospitals are being handed over to NYC-based Apollo Global Management, a global alternative asset manager, to facilitate their sale from current landlords Medical Properties Trust and partner Macquarie Infrastructure Partners to new operators.
  • Auctions pushed forward include the Arizona hospitals, with a new bid deadline of 12 August with a 19 August sale objection deadline and a 22 August sale hearing. Other hospitals in Ohio, Pennsylvania, Arkansas, and Louisiana have not been rescheduled after their canceled auctions.
  • The Stewardship Health practice group now has a bid deadline of 6 August, with the sale objection deadline now 9 August and the sale hearing set for 13 August. Optum walked away from its deal back in April with the Chapter 11 filing and there is no word if they are bidding in bankruptcy.

Additional updates: the Senate investigation of Steward is going forward with a subpoena issued to CEO Ralph de la Torre. The public hearing of the HELP Committee and his appearance are scheduled for 12 September. FierceHealthcare No further developments in the US Attorney’s Boston office investigation of violations of the Foreign Corrupt Practices Act about Steward’s business dealings in Malta between 2018 and 2023. One wonders whether Dr. de la Torre will sail off on his 190-foot superyacht to one of the few places where extradition is difficult, such as Ecuador, Bolivia, Venezuela, or Iceland.

Healthcare Dive, Becker’s 31 July, Becker’s 6 August  Most recently in TTA 2 July, 18 July, 25 July

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