Weekly Health Tech Reads | 5/8/22

A big earnings week (Bright, agilon, Oak, One Medical, etc), the D2C adderall market implodes, and more

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News:

  • Bright Health's earnings announcement was relatively uneventful given everything it has been going through recently. They highlighted the operational changes they're starting to make as they prioritize "capital-efficient growth". Check out our HTN article for more on both those operational changes as well as how it seems they're moving a massive block of their exchange membership into at-risk deals with Neue. Link (HTN earnings summary) / Link (transcript) / Link (press release)

  • One Medical had a solid quarter, also hosting an uneventful earnings call that shared some interesting details on how its expanding programs like One Medical At-Home, One Medical Healthy Heart, and One Medical Healthy Mind.  Link (HTN earnings summary) / Link (transcript) / Link (press release)

  • Oak Street also posted a good quarter, growing its risk-based business. Interestingly, they're struggling more than others to grow in the Direct Contracting space, a result of voluntary alignment versus claims alignment.  Link (HTN earnings summary) / Link (transcript) / Link (press release)

  • agilon joined its primary care peers in posting a good quarter. In addition, agilon announced a JV with United Physicians to enter the Detroit market. As we discuss in the HTN article, it's a good example of how agilon's flywheel is working very well at the moment. They're demonstrating consistent success working with primary care groups to move them toward risk, and as long as they can continue doing that they're very well positioned in the market over the next few years.

  • Link (HTN earnings summary) / Link (transcript) / Link (press release)

  • Talkspace's Q1 earnings call was notable both for how different its experience was than Teladoc in the D2C mental health space and for how positive Talkspace seems about the employer sales environment. Analysts repeatedly asked Talkspace about these two dynamics expecting them to be seeing similar headwinds to other companies, but Talkspace was adamant that they are not seeing any issues. For instance, Talkspace repeatedly said it didn't see any of the increase in advertising costs that Teladoc saw in the D2C mental health space. Which, ok, but it's pretty odd that two public companies in the same market can have such different experiences during a quarter, right? I'm not sure what to make of this. Link (transcript) / Link (release) / Slack (h/t Justin Venneri) 

  • Yet another week where there are lots of happenings in the D2C mental health landscape, which we're going to aggregate into this one section. It started with the WSJ reporting on Monday that Truepill was halting prescriptions for Adderall. Given Truepill was Cerebral's preferred provider, it wasn't surprising to see Cerebral come out the next day and announce in a blog post that it was stopping all Adderall prescriptions. While it seems like the right crisis management move for Cerebral, it would have been nice to see them take a leadership role in addressing this issue rather than doing so after their hand was essentially forced by the pharmacies. It does appear that Cerebral is working to drive change internally, and it'll be worth watching how the organization changes from here. It also shouldn't come as a huge surprise that regulators are now coming knocking on Cerebral's door, as Business Insider reported that the DEA is questioning former Cerebral employees in what appears to be a criminal investigation. BI also reported on Saturday that the DOJ issued a subpoena to Cerebral on May 4th as it is investigating whether Cerebral violated the Controlled Substances Act. It's unfortunate how predictable of a mess all of this was. Here's hoping that Cerebral can manage to stay out of the news for a bit, find a way to fix its seemingly massive internal challenges, and provide the high quality mental health care that they're intending to provide. Link (WSJ Truepill) Link (Cerebral post) Link (BI DEA article) Link (BI DOJ article) Link (Slack - h/t Mike Mitchell)

  • Curana Health was formed by NEA this week, merging together three entities to provide value-based care in senior living communities. Elite Patient Care, Provider Health Services, and AllyAlign Health are combining to create the new Curana. NEA led the recapitalization of AllyAlign Health back in 2021, which was previously owned by PE firm Health Enterprise Partners. You can imagine the play NEA is executing here by coupling the insurance plan with a care delivery asset, as this move gives the combined Curana entity a care delivery arm, a Medicare Advantage insurance offering with ISNP plans, and a Medicare ACO. With these assets in place it appears Curana is poised to do well in the senior living community space, currently serving 1000 communities across 26 states with a medical group of over 400 clinicians. Smart move by NEA. Link / Slack (h/t Kevin Wang)

  • Tia partnered with UCSF to launch its women's health model in the Bay Area, which is now Tia's fourth market. Tia will be opening 10 clinics in the Bay Area, aiming to serve 40,000 people in the region. It's equally as interesting to note here that Tia is not expanding to the Bay Area in partnership with CommonSpirit Health, it's first health system partner.  Link / Slack

  • Cleo acquired CareTribe in a rather interesting acquisition in the caregiving space. Cleo, which has been focused on working with employers to offer benefits supporting parents with kids, is now expanding via CareTribe to support the sandwich generation that is dealing with both kids and aging parents. Seems like a super smart capability addition on Cleo's part. Link.

  • Cerebral isn't the only digital health startup this week having issues with the DOJ, as Pillpack is paying $6 million to settle a DOJ suit that it was fraudulently overbilling for insulin. Is it too much to ask of health tech companies to not do things that will result in DOJ fines / investigations? Link / Slack (h/t Jay Smith)

Funding:

  • Alan, a French startup that comes across a lot like Europe's version of Oscar Health, raised $193 million at a $2.9 billion valuation. Its biggest source of revenue is an insurance plan that currently has 300,000 members across 15,000 employers. But it is also getting into virtual care delivery, even though that is finding mixed success. One of their first forays into virtual care was Alan Baby, which is shutting down as Alan starts focusing more on mental health. Profitability is also on Alan's mind, with a target of hitting profitability by the end of 2025, at which point they expect to have 3 million members. As a side note, it's refreshing to see this much data from a private company! Link / Slack (h/t Rik Renard)

  • Hello Heart raised $70 million to build a heart health coaching app. As Joe noted in Slack, it's interesting to see how Hello is pitching itself not as a virtual care provider but rather a coaching app under the digital therapeutic moniker. They're working with employers and cite some interesting cost reduction data that was discussed in Slack.  Link / Slack (h/t Joe Connolly)

  • Element5 raised $30 million for a workflow automation solution for post acute care orgs. Link / Slack

  • Walnut raised $10 million to help patients pay their medical bills using the buy-now-pay-later concept. Walnut also received $100 million in debt financing to underwrite the risk so that it is able to pay providers upfront and collect later. It's interesting to see that Walnut is primarily working with digital health startups, which seems like a sign that the space is maturing and as digital health companies look to drive to profitability, not surprisingly they are doing the same things care providers have always done, i.e. sending unpaid bills from people who can't afford them to debt collectors. Also worth noting Walnut's comments on investment timing - they thought they would have seen a 50% higher valuation if they had raised in Q4. Link / Slack (h/t Agata Kowalski) 

  • Heard raised $10 million for a mental health provider platform that helps therapists manage back office functions like accounting, payroll, and taxes. Will be curious to watch how they expand the offering from here - seems like they very naturally could follow the route Alma is taking and go deeper in mental health, or they could choose to expand to other specialties offering this set of services. Link.

  • Upswing Health, a new virtual MSK platform for employers, raised a new $5 million seed round. Link / Slack (h/t Adrian Rawlinson)

Opinions:

  • Rock Health released a blog suggesting that digital health is not in a bubble, which prompted a lot of discussion on the HTN slack and elsewhere - are we or aren't we? I'm not sure how we have a discussion of a bubble without a heavy dose of what's been happening on the public markets recently. Events like Teladoc's $6.6 billion markdown of the Livongo acquisition would seem to provide pretty strong evidence that valuations over the last few years haven't been based on anything business fundamentals would justify, which certainly feels bubble-esqe. Yet whether or not this is a bubble that will "burst" in typical bubble fashion seems less important than the coming reset in valuations across the private markets. The tide is pretty clearly starting to go out, and the massive valuations that companies were raising at with unrealistic growth expectations seem likely to come falling back to earth. Link / Slack (h/t Tamra Lair) 

  • This is a really solid primer on Medicare Advantage from the Commonwealth Fund. It provides a good overview of MA, how it differs from original Medicare, how plans are paid by the government (see the chart below), and more. Check out the chart with margins on DSNP and CSNP plans if you want to know why those keep coming up more and more in big payor earnings calls (all MA plans have average margin of 6.5% while DSNPs are at 10.7% and CSNPs are at 11.2%). Link.

Data:

  • An Aledade team published an interesting study demonstrating the cost effectiveness of advanced care planning (ACP) at the end of life. Aledade recently purchased the ACP startup it partnered with in this study, Iris Healthcare, which I think says everything you need to know about the potential value of ACP. It's refreshing to see this level of rigor going into evaluating the impact of health tech tools. The study also highlights the practical challenges with implementing ACP, which largely seem to center around getting providers to implement it. This study was done across 45 practices in 14 states over four years, and it was used by 332 patients. That equates to about two patients per practice per year.  Link

  • WTW released a survey of 636 employers looking at trends in health benefits innovation. There were two stats that stuck out to us most here. The first: while almost all employers will be offering virtual care, only 55% think it will reduce costs and 50% will think it will improve outcomes - lots of interesting thoughts in Slack on why this is. The second: 54% say lack of employee awareness of how to find programs is a key challenge. With all of the different navigation companies out there, that data doesn't seem too supportive that the navigators are actually driving much change. Link / Slack

  • The Lown Institute released a report looking at how hospitals are spending on charity care in their communities compared to the value of their tax exemptions. Not surprisingly, a lot of brand name health systems don't look very good in this.  Link / Slack (h/t Lois Drapin)

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