Short takes: Cue Health shuts (updated for Ch. 7), Walmart Health lays off, Walgreens sells $400M share in Cencora, $26M Series B for Expressable

May 23, 2024 | by

Cue Health gets the clue to shut down operations. It will be a Memorial Day to remember for the 480 remaining US employees of the San Diego-based company. Come Tuesday, none of them will be returning to work. The 230 scheduled earlier this month to wind up in July, plus the remaining 250, have their last day and paycheck on Friday 24 May, according to the WARN Act paperwork filed with the state of California. Notices were doled out to employees by the chief human resources office. The notice includes company leadership, presumably also including the new (since March) CEO Clint Sever. Cue has overseas operations in Hyderabad, India; it is unknown whether that will be affected. 

Update 28 May: Cue Health filed for Chapter 7 today in the District of Delaware to formally wind down its business. The press release stated that the board attempted to pursue additional financing or a strategic transaction. The next steps will be a bankruptcy trustee appointment to sell the Company’s assets. This will be used to pay creditors in accordance with the provisions of the Bankruptcy Code. Release  

Cue Health’s collapse follows the news on 15 May that the US Food and Drug Administration (FDA) invalidated Cue Health’s main business in Covid-19 Tests for Home and OTC Use and for the authorized lab test version, advising that the tests be tossed in the trash. Their remaining test is one for Mpox on an EUA. Two other tests developed for flu and RSV are still under FDA review. At its peak, it had over 1,500 employees and was valued at $3 billion. Undoubtedly, none of this is a surprise to Cue’s employees who’ve been hanging on. Presumably the released employees will be lucky to receive their final paychecks and can forget about severance or health insurance via COBRA since that requires an existing business. Our best wishes to all of them.  San Diego Union-Tribune, Becker’s, MedTechDive

Another unsurprising layoff is that of 74 workers at Walmart Health Virtual Care located in Phoenix. Last month, Walmart announced the closing of Virtual Care along with its 51 Health Centers for primary and urgent care, having never scaled its model. The WARN Act notice was filed with Arizona on 17 May. Employees were offered severance of 90 days if they were unable to close another Walmart position. This is on top of Walmart relocating most positions, including remote, to Bentonville, with some in the San Francisco and NYC areas. Becker’s, FierceHealthcare The Health Centers are closing on 28 June per an update from Walmart. Walmart is also ending its Walmart Flex Medicare Advantage plan through UnitedHealthcare which was available solely in Georgia. There is no word about other Georgia and Florida programs in conjunction with Centene’s Ambetter and Orlando Health. TTA 30 April

Walgreens Boots Alliance (WBA) cashed in another $400 million sale of Cencora stock. The funds will be used for debt paydown and general corporate purposes. Their share of Cencora, a drug distributor formerly known as Amerisource Bergen, is now at 12% from 13% as recently as February. In that month, they sold 2% for $992 million in shares [TTA 14 Feb]. There is no change to their board representation (Ornella Barra, COO International) nor the partnership. WBA release

And to wind up with a little bit of good news, Expressable raised a $26 million Series B, for a total of $45.5 million since 2019. The virtual speech therapy provider will be using the funds for further development of their care delivery platform, expansion of their clinical network of W2-employed speech-language pathologists, and acceleration of their growth in health plans and provider partnerships. The round was led by HarbourVest Partners, with participation from Digitalis Ventures and existing investors F-Prime Capital and Lerer Hippeau. Release   Hat tip to past colleague Amy VanStee, VP of content and marketing.

Walmart Health shutters health centers, Walmart Virtual Care, in sudden move (updated–why?)

April 30, 2024 | by

In a shocker, Walmart throws in towel on onsite primary care, urgent care, and telehealth, effective today (30 April). Walmart’s release stated that “we determined there is not a sustainable business model for us to continue” either service since “the challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time.” Analysts also attributed the difficulties to the rising cost of labor, real estate, complex billing procedures, and reimbursement rates that haven’t increased in years.

The boom was lowered only three weeks after Walmart announced that they were slowing down 2024 openings of its primary and urgent care centers from 30 to 22 [TTA 5 April]. From aggressive promises back in 2018 of at least 1,000 locations, later revised to 4,000 locations by 2029, to serve the underserved with primary care, dental care, and basic lab and imaging services, only 51 centers were opened in superstores in six states–Arkansas, Florida, Georgia, Illinois, Missouri, and Texas. The top executive spot became a revolving door. 

The release did not disclose when the center closures would be effective. From the screenshot above from the Walmart Health website, it can be inferred that because appointments must be scheduled within the next 30 days and no new patients are being accepted, the closures will be start to be effective 30 or 31 May. The centers employ physicians, dentists, and nurse-practitioners. Walmart Health also had recently inked high profile partnerships with Centene’s Ambetter-Sunshine Health plan as an ACA preferred provider [TTA 8 Nov 23] and with Orlando Health in Florida for care coordination. It is not known what will happen to these latter partnerships. Update. UnitedHealthcare and Walmart have ended their co-branded Medicare Advantage “Walmart Flex” plan. This was part of a 10-year deal inked last year. The MA plan was available in Georgia only, with ambitions to expand. Other partner programs were available in Florida and Georgia. Becker’s

Walmart Health Virtual Care, in contrast, has no such notice on its website. Virtual Care services may be more problematic to shut down as they are provided to health plan members (e.g. UnitedHealthcare) and employers. Walmart Health acquired MeMD telehealth in May 2021 in very different times–at that time, they had five million members. Virtual Care also covers behavioral health. That winddown may differ in timing based on contracts and patient handoffs.

The release affirms that ~4,500 Walmart pharmacies and 3,000 +optical centers will continue and grow. Pharmacies already offer Testing and Treatment services, health screenings, access to specialty pharmacy medication and care, as well as other essential services such as medication therapy management. In vision care, Walmart recently acquired 200 Vision Centers.

Employees affected will receive either the opportunity to move to another location or separation benefits. The practices are “partners’ and will be paid for 90 days. Walmart’s wobbliness on the health provision front, along with rising costs, less reimbursement, and more competition than they thought, caught up to them in the end–as it did with VillageMD/Village Medical and Walgreens.  Healthcare Dive, Becker’s, Crain’s Chicago Business

Update. Perhaps there’s another trend here. A user of Walmart Health, ‘Wiggles’, posted on the always interesting HIStalk making some excellent points. Many of their appointments were canceled due to lack of available clinicians. He or she surmised that physicians (and this Editor would add, nurse-practitioners) don’t find putting in hours at a Walmart Health carries any prestige for the money earned nor that they enjoy ‘care-by-wire’. Your Editor would add that the areas where Walmart built the clinics may be areas of clinician scarcity–that they are booked solid. Add to that two cited reasons for shrinking Walgreens’ VillageMD operation–that they cannot fill the patient panels for each physician in many areas (saturation?), nor can they get the physicians in other areas to work in the space offered at a co-location (undesirable working conditions?). Could it be, as ‘Wiggles’ surmises, that here’s an opportunity for clinical professionals to take back control? (This is on top of the actions that pharmacists are taking across Walgreens and CVS on their working conditions.)