Weekly Health Tech Reads | 11/6/22

Q3 earnings in full swing, VillageMD exploring merging with Summit Health, & more!

This week’s newsletter is sponsored by Lightmatter.

Lightmatter is a software design and development agency that works exclusively with clients in healthcare and life sciences. With offerings that span branding, design, development, and more, their US-based team has developed deep expertise in building digital health products. Drawing from years of experience building for a wide variety of clients in the space, they’ll help you navigate the inevitable challenges you'll encounter on the road to launching or scaling your product.Visit the Lightmatter site to learn why teams like NYU Langone, Cofertility, and Pearl Health have partnered with them to launch their products.

Earnings Rundown:

  • Humana posted a relatively good quarter of earnings, spending time getting back to the basics and highlighting how they're focused on growth in the core Medicare Advantage business. We highlighted a number of the more meaningful statements in Slack in terms of how they're getting back to growth here - better segmentation, better plan design, and better retention. It was also interesting to note there was very little focus on the primary care strategy, or questions about potential M&A - aside from one, where Humana indicated it'll likely only be pursuing tuck-in acquisitions in markets where they already have a footprint. It continues to look like Humana won't be a player in any of the bigger acquisition conversations, a consistent theme from what we heard in their investor day back in September.Link (transcript) / Slack

  • CVS seemed like it was playing defense during its earnings call, trying to explain how it was going to achieve its 2024 EPS target despite the headwinds of Star rating decline and the loss of Centene's PBM contract. CVS estimated the combined impact of those two headwinds at $2 billion, noting that they won't be able to make it back internally, and so will either need to achieve its EPS target via share repurchases or M&A. Some pointed questions from analysts on the M&A front and why we haven't seen a primary care acquisition yet as the centerpiece of their healthcare delivery strategy. CVS said they'll still continue to evaluate options there. Given these headwinds, CVS seems at real risk of losing the momentum it's had over the last few years in terms of executing on its healthcare rollout, even with the acquisition of Signify providing a meaningful capability expansion into the home. Link (transcript)

  • One Medical released its Q3 earnings report with no conference call because of the impending Amazon acquisition. The headline of the report was that while VBC membership is only 40,000 out of 815,000 total members, its revenue from those VBC members makes up over half of total revenue for the organization this year. A reminder of the vastly different financial worlds of VBC and FFS. Link / Slack (h/t Kevin Wang)

  • agilon's stock price took a hit after reporting Q3 earnings that saw solid revenue growth and increasing medical margin. agilon's Direct Contracting business was a big topic of conversation as it lost $3 million in Adjusted EBITDA  for the quarter due to retrospective trend adjustment. agilon doesn't seem too worried about this as they shared they're still beating national averages on utilization trends. There was also an interesting question about agilon's lead primary care partner in Ohio, COPC, and COPC's relationship with Vera Whole Health to build out an advanced primary care model for the commercial population. It highlights more inevitable consolidation that will happen in the space - it's hard to imagine that COPC and other primary care practices will want separate platform partners over time - eventually you can imagine them wanting one partner across all lines of business over time. The question will be whether these platforms chose to expand organically or via acquisition. Link (transcript)

  • Cigna's earnings spent a lot of time on the Centene PBM contract win from CVS, with Cigna sharing there will be a near term earnings hit as it onboards Centene, but a lot of excitement about the contract longer term. Cigna was also asked about their M&A strategy, with other payors in an "arms race". Cigna's view is that it'll look at M&A opportunities for a few of its businesses with growth potential, including Evernorth Care Services. Link (transcript)

Other News:

  • Walgreens / VillageMD is apparently discussing a merger with Summit Health, a Warburg Pincus-backed provider, which itself merged with CityMD (paywalled) back in 2019. The combined valuation is reportedly being discussed between $5 billion and $10 billion, which obviously means VillageMD has taken a pretty meaningful hit from October 2021, when Walmart valued it at over $15 billion. Leaving aside market dynamics, this would be an incredibly interesting strategic move. Summit Health has to be very high on the list of any of the big players looking to increase their value-based care capabilities. So making a move like this would provide Walgreens with an anchor provider partner to help them move into risk-based contracts. If you're Warbug Pincus, it'd be a bit odd not to run an auction and sell Summit Health to the highest bidder. But perhaps combining with VillageMD provides some longer term upside for Warburg that is appealing given recent valuation declines. Link / Slack

  • Privia is entering North Carolina via a partnership with Novant Health, and specifically its division Novant Health Enterprises. The two organizations appear to be launching a clinically integrated network that is intended to help provider groups in the community move to value-based contracts. It's interesting to see Novant talking about this move as part of their strategy of enabling independent providers in North Carolina. Privia will be the tech platform for the CIN. Link

  • General Catalyst continues signing up health systems to vague partnerships, this week announcing Hackensack Meridian Health in New Jersey as a partner. According to the article, Hackensack's CEO described General Catalyst as a "think tank" helping to guide Hackensack's strategic planning, although no money is changing hands between the two. Given that, I'm pretty sure I can save Hackensack leadership some time and just sum up GC's strategic plan for them in a few sentences: "Here's our health assurance portfolio. This is the future of digital health! How do we know that? Oh, have you heard of Livongo? So yeah, you need to implement them all now." Link (paywalled) / Slack (h/t Frederik Mueller)

  • Redesign Health is partnering with KidsX to launch businesses targeting the pediatrics space. KidsX was created by a consortium of 32 children's hospitals, providing yet another example of how VCs / venture studios are more closely aligning with incumbent providers as built in customers. Link

  • Minneapolis-based senior care company LifeSpark acquired Livio Health, the care delivery arm of BCBS MN. As part of the deal, BCBS MN is investing in LifeSpark.  Link / Slack 

  • Voya Financial acquired BenefitFocus, a benefits admin platform serving brokerages and consulting firms that help employers administer health benefits, for $570 million. Link / Slack (h/t Kevin Wang)

  • Direct primary care platform Hint Health acquired AeroDPC, an EMR for direct primary care practices. Link / Slack (h/t Beth Holmes)

  • Valera Health raised $45 million for its virtual behavioral health practice. Link / Slack

  • Carta Healthcare raised $20 million to help health systems leverage clinical data to improve outcomes and reduce costs.  Link / Slack (h/t David Kolacny Jr)

  • Guaranteed, a hospice platform, raised $7 million.Link / Slack

  • Options MD, a telehealth startup for treatment resistant depression, raised $2.35 million. Link / Slack (h/t Saumitra Thakur)

  • A new food-as-medicine startup Swap Health launched with funding this week. Link


  • STAT News published a great article on the role that Welsh Carson has played in a number of healthcare investments, including PACE primary care model InnovAge. The article highlights the background of WCAS's investment in InnovAge - a WCAS exec, Tom Scully, who previously had led CMS, saw PACE as a huge financial opportunity, but originally for-profit entities couldn't own PACE providers. So Scully lobbied CMS officials for 2+ years to allow for-profit ownership of PACE models. It's a really good example of how meaningful financial opportunity in healthcare often stems from regulatory changes, and having advisors who can make those changes happen is quite advantageous. But at the same time, the article highlights many of the issues you'd expect with private equity-backed investments seeking to drive increased profitability in healthcare. Link (STAT paywalled)

  • Forbes posted a profile of primary care startup Forward Health, which has now expanded to twenty five clinics across the country. What caught my attention in the article was that they're saying a third of their members are uninsured, a number they expect to grow over time, suggesting it helps to keep people out of medical debt. This prompted an interesting dialogue on Slack - it sure seems like a dangerous game to suggest paying $1,800 annually for access to a primary care clinic in lieu of insurance will help keep people out of medical debt. I'd love to see Forward publish something regarding how many of its members without insurance have avoided medical debt versus gone into medical debt. Link / Slack

  • Speaking of medical debt, the Tradeoffs pod this week highlighted how 100 million people in the US have some kind of healthcare debt (defined a bit more broadly than debt having gone to collections).  Link 

  • This is a sobering look at the challenges facing Medicaid agencies, among other things noting that the average Medicaid agency has 17% of jobs vacant. Link / Slack


  • Elevance shared data from a survey of ~5000 consumers on virtual primary care. It's interesting to note how many virtual primary care companies seem to claim that they're managing chronic conditions, but if they are, patients sure seem unaware of it. Some interesting conversation in Slack this week double clicking on what that data might mean. Link / Slack 

  • Omada and DiMe released a survey of 700+ buyers (employers, payors, benefits consultants) about their views on virtual care. It's interesting to see how the report seeks to create space between the definitions of "telemedicine" and "virtual care", and then also between "virtual care" and "virtual first care". To borrow a phrase from the week, this seems like it is slicing the baloney pretty thin. I'd love to see those 700 buyers surveyed try to articulate the difference between those three definitions. Link

  • An interesting new study suggests that symptom checkers are not great at gathering relevant medical information for making a diagnosis. Perhaps not surprisingly the company that did the best, Kahun Medical, is also the company that funded the study. Link

Join the conversation

or to participate.