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Public markets
Oura postpones its much-anticipated IPO
Chances are you’ve heard by now that Oura’s much-anticipated IPO was postponed on Tuesday morning, the day it was expected to price. The move caused much speculation about what was behind the postponement, as in the weeks leading up to the IPO various sources noted strong investor interest, with reports suggesting the offering was 4x to 5x oversubscribed. As context, the SpaceX IPO was reportedly also 4x oversubscribed, so it seems that Oura was in a solid position leading up to the IPO.
Axios’ Dan Primack noted that despite the investor interest, Oura wasn’t set to get the price it wanted, as broader macroeconomic concerns around the bond markets and oil prices appear to have spooked the public markets in recent days. There has also been some speculation that Apple Health’s new product features, announced in early September, could have contributed to investor uneasiness here. Given the timing of events, that strikes me as a more unlikely explanation — Apple announced these features in early September, yet as of last week reports indicated that demand was strong for Oura. So while I do think competitive concerns may raise some reasonable longer term questions for Oura, it seems unlikely that it was behind pulling the IPO.
Oura is at an interesting moment in time in its business journey — it is clearly sitting in a position of financial strength as a consumer brand today, with its S-1 highlighting consumer metrics that indicate the strength of its brand and growing profitability. Given that, it seems telling that Oura wasn’t painting itself in the IPO process as a consumer hardware business, but rather as a healthcare intelligence platform with a once-in-a-generation opportunity to redefine preventative healthcare. We will spend more time unpacking what that opportunity may look like in a piece for members this week.
I for one was hoping that we’d see Oura emerge from this process as a public company. It would have been great to be able to listen to quarterly earnings calls hearing how Oura is discussing its healthcare play and how that market is developing. Alas, we will have to wait. More broadly, it seems that there are a number of late stage healthcare services businesses waiting for an IPO window to open, and this news cannot help with that log jam.
It strikes me as a disappointing conclusion to the process, both for Oura specifically and for the healthcare services market more broadly.
Medicare Advantage
Devoted’s $25 billion valuation as it gears up for C-SNP growth
Devoted formally announced its Series G on Thursday, raising $1.18 billion at a $25 billion valuation, a round Business Insider first reported in August. The round included $555 million in a Series G and $622 million in a secondary offering that will close before the end of the year. Advent International led the round, and Temasek, Singapore’s sovereign wealth fund, co-led it. Both investors are new to Devoted. It appears that investors in the Series G round were required to also purchase shares in the secondary offering, providing meaningful liquidity to existing shareholders (at a price that I’d be taking all day, personally).
I can’t help but pause on this secondary dynamic, particularly given this news comes in the same week we saw Oura pull its IPO from the public markets over macro concerns like oil prices. Devoted still is selling $622 million in shares in the private markets at a valuation over 50% higher than earlier this year. It seems indicative of the wild dichotomy right now between the public and private markets. Despite my selfish interests in Oura being a public company, I can understand why Oura might prefer the private markets in this environment as well.
Ok, back to Devoted. I find it interesting to compare the Series G investors with those from Devoted’s January 2026 Series F funding announcement, when it raised $366 million at a reported $16.1 billion valuation. Thirteen investors in the Series F did not appear in this round, including several notable healthcare names: GV, Morgan Health, General Catalyst, and First Cressey Ventures.
Perhaps the most notable development in this announcement is that Devoted publicly confirmed that it is profitable. Endpoints’ Shelly Livingston first noted this after combing through Devoted’s NAIC filings across 46 states and finding it generated a 1.1% profit margin in 1H 2026, down from 2.4% in 1H 2025. While NAIC filings cover only the insurance entities, a Devoted spokesperson also confirmed to me that it is GAAP profitable at the parent company level, including the medical group and tech development.
It highlights Devoted’s strength right now, as well as the thesis they’re set to test over the coming years as it accelerates growth in a Medicare Advantage market that is broadly retreating over profitability concerns. Devoted’s valuation may not make sense to most folks like me outside the company, but I also suppose that shouldn’t really matter to anyone at Devoted, so long as it can maintain said profitability and continue providing liquidity to existing investors via secondaries.
Ultimately, Devoted is now firmly cemented IMO as the most interesting, and arguably the most important, test in the private markets as to whether an AI-centric approach can meaningfully bend the cost curve for US healthcare.
I’ll dive deeper into Devoted this week in the community on Devoted’s thesis and what I think are three particularly interesting themes to watch in Devoted’s growth:
What is Devoted’s admin cost profile? How much of Devoted’s “pay us less” narrative to CMS is driven by medical management versus lower admin expenses than a typical MA plan? I’m starting to think that reducing admin spending is perhaps the bigger part of Devoted’s narrative for investors, not the Devoted Medical Group, with its Orinoco tech platform playing a central role here.
Will Devoted face political headwinds as it scales? Devoted operates at the intersection of some of the country’s most contentious political conversations around healthcare: private equity ownership, vertically integrated healthcare, and Medicare Advantage. While Devoted currently enjoys a brand halo compared to scaled MA plans as a relatively under-the-radar startup, how long will that persist if it successfully reaches the scale of Humana? Particularly now with backing from a sovereign wealth fund, it is easy to envision a DC narrative emerging against a foreign-owned, highly valued, quickly growing private insurance company.
C-SNP growth. Devoted appears to have found its golden goose in C-SNP plans, a rapidly expanding part of the MA market, likely because C-SNP members have a favorable profitability profile in a broader MA market that has faced profitability challenges. C-SNP market data suggests that while plan profitability roughly doubles with C-SNP members, there’s little evidence that these plan types improve health outcomes or reduce costs, which should naturally raise questions about the durability of C-SNP growth.
Chart of the Week
Cigna’s investor day highlights the specialty Rx opportunity
Turning back to the public markets, Cigna hosted its investor day this week. Arguably, no public company has navigated the tumultuous healthcare landscape better than Cigna over the last several years, as its shift away from government programs toward employer-sponsored healthcare and pharmacy has tracked broader market tailwinds and headwinds incredibly well.
Given all of that, I think it is worth paying close attention to this chart below highlighting what Cigna thinks is happening to healthcare expenses for employers over the next decade:
Source: Cigna Investor Day
It is worth noting the overall cost growth, with pharmacy spend moving from 20% of total healthcare costs in 2016 to 40%+ by 2036. This growth is driven primarily by specialty pharma spending, which Cigna expects will grow from 12% of total spending in 2016 to ~30% in 2036. Cigna seems well positioned to capitalize on this shift in how American healthcare is delivered, which will increasingly become a question of how people access life-changing medications.
You can look at these charts either in a glass-half-full or glass-half-empty way. On the half-full front, this specialty pharma spending growth will mean Americans have access to new medicines that likely fundamentally change how we think about diseases today. On the half-empty front, it seems highly likely that the folks talking about unsustainable employer healthcare costs today will still be making the exact same arguments a decade from now. In many ways, this feels like the story of American healthcare, and it reflects our collective preference for expensive, cutting-edge therapies over cutting healthcare spending.
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Other Top Headlines
Grindr, a dating and social app for the LGBTQ+ community, announced it acquired Freddie, a telehealth provider specializing in PrEP and HIV prevention care, for $250m in cash and stock, plus up to $70m in additional contingent cash payments. In Grindr’s letter to shareholders, it notes that it views this as the start of a healthcare business that can be larger than Grindr’s core business today. Freddie is generating $80+ million of revenue in 2026, with $10 million+ in Adj EBITDA margins in the mid-teens (a 12.5% margin), and a 40%+ margin profile at maturity. The synergy logic seems pretty clear — Freddie has treated 55k patients globally; Grindr has 400,000 users who indicate they take PrEP, and estimates that an additional 2 million Grindr users should be on PrEP in the US alone. Freddie also reports that it generates $4,800 in revenue per patient per year in the US, so at 50,000 patients, that would imply annual revenue of ~$240 million, further highlighting the opportunity afoot. Grindr management noted that acquiring Freddie will save 24 months of build time had it chosen to develop this capability internally. This move went a bit under the radar this week, but is actually one of the more fascinating consumer → healthcare moves I’ve seen in a while.
We got our first glimpse into the 2027 Medicare Advantage market this week, with CMS releasing plan data. The CMS press release on Monday noted that health plans are currently projecting 34 million enrollees in 2027, down from ~36.3 million in 2026. CMS said it does not expect this decline to materialize, as health plans have predicted it before. Based on our analysis of the landscape, MA plans appear to be pulling back on PPO offerings, prioritizing HMO plans and focusing on profitable segments including C-SNPs. It is worth noting the gap between CMS and payor narratives already in the Medicare Advantage landscape, which sets the stage for a fascinating conversation over the coming months about broader Medicare Advantage market dynamics and how CMS manages the program. While most payors seem to be pulling back on benefits, a few, including Devoted, seem to be leaning in, particularly in areas like C-SNP. This raises a fascinating set of questions for CMS, especially in an election season when affordability is top of mind for everyone.
MultiCare bucked a trend this week by launching a new provider-sponsored health plan in the Medicare Advantage market in a handful of Washington counties. For much of this year, we’ve been talking about how provider-sponsored health plans are leaving the market because operating them is financially untenable. It would appear MultiCare is channeling its inner Warren Buffett and heeding his advice about being greedy when others are fearful. I speculated on LinkedIn back in June that now might be an ideal time for the next wave of PSHPs to get started, which not everyone agreed with, so either this is a terrible idea on MultiCare’s part or perhaps an interesting opportunity for it to grow into a retreating market.
Health Partners and Essentia announced that their respective Boards have approved a merger of the two Minnesota-based health systems.
Anthropic has joined ARPA-H’s clinical AI automation moonshot effort, ADVOCATE, via a collaboration with UC San Diego Health and Harvard Medical School, per STAT reporting. The team will be developing a supervisory agent that monitors other agents.
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Funding Announcements
Ortet, a new frontier AI lab for healthcare, announced a $500 million “commitment” from Thoreau to fund the development of compute and data infrastructure. Thoreau has been quite active recently, between buying a controlling stake in Ensemble earlier this summer and announcing a $100 million “commitment” to Penelope Health a few weeks ago. I keep using quotation marks around “commitment” because it’s an odd turn of phrase in venture investing, implying these are structured investment vehicles that will deploy this capital over time. Goldman Sachs advised on the Thoreau/Ortet transaction. Given Thoreau’s general thesis about automating healthcare’s transaction layer, it is interesting to see it funding a frontier lab, and will be worth keeping an eye on how Thoreau brings this together over time.
EliseAI, an AI company automating tasks for housing and healthcare, raised $350 million at a $4 billion valuation. a16z and Bessemer Venture Partners led the round. Elise noted it focuses on both housing and healthcare given the similar profiles of the industries — i.e. large expense items for American households that run on thin margins. That said, the press release suggests EliseAI’s traction is predominantly in housing at the moment, based on the amount of real estate and healthcare take-up mentioned. EliseAI noted it generates $200 million in ARR in housing and has doubled revenue YoY for 5 consecutive years. It didn’t share any specific metrics related to its healthcare business, while job descriptions note it is just entering the healthcare market as a new vertical.
Aleph Surgical, an autonomous surgical robot manufacturer, raised $7.5 million in pre-seed funding. a16z led the round. Aleph’s website notes that it is hiring a founding surgeon part-time to define benchmarks and training curricula to help robots learn to perform surgery. It’s such an interesting juxtaposition to me, seeing an autonomous surgical robot startup hiring a part-time surgeon after raising funding. The surgical robotics market will be fascinating to watch over the coming years, with Intuitive Surgical leading the way for the past several decades. A number of other players are also building in the fast-growing market, as highlighted by Oliver Wyman a few years back. It is worth paying attention to how Intuitive Surgical is publicly talking about how it views the opportunity for AI in surgical robotics as well given the market position it currently maintains.
What I’m Reading
In the Journal of the American College of Cardiology, Harlan Krumholz shared his perspective on how AI will change the role of medical expertise as AI reduces the information asymmetry between patients and their providers. It’s an optimistic view of the medical professional's future role, but it also recognizes how much is shifting as patients increasingly have access to more information. It’s fascinating to juxtapose this perspective with the article we discussed in last week’s NL from NEJM Voices, where Michelle Kittleson expressed frustration with a patient who sent a portal message telling her to schedule a test she thought was unnecessary. Both articles revolve around a topic we discuss a lot these days — building trust between the patient and the provider in this new world we’re entering. It strikes me that clinical organizations have a real opportunity to move toward the future state Krumholz paints in his piece, and the ones that do so effectively will be well positioned to win.
Business Insider’s Hilary Brueck shared her experience visiting Neko Health’s recently opened NYC clinic for a full-body scan. Her conclusion was that while it was a fun experience, if she were going to spend an extra $500 on her health, she’d spend it on a gym membership plus a DEXA Scan, noting that “for anyone who's already somewhat aware of their health and wellness, it remains a little too basic.” It’s fascinating to juxtapose that reaction with Daniel Ek’s All In Podcast interview this week on the Neko thesis, which largely centers on increasing the amount of health data an individual has about their health in order to enable a more preventative future model for healthcare. Neko has certainly done an excellent job building early brand momentum in the US, as evidenced by its 25,000-person waitlist for its NYC clinic. Yet the Business Insider review leaves me firmly in the “skeptic” category about a $7 billion business reinventing the future of healthcare. Excitement around a cash-pay consumer economy in healthcare is almost certainly driving the bull case thesis here, but I’d imagine Neko will soon be asking very healthcare-y questions about how it can capture more of the healthcare dollar. There’s an interesting thought exercise around the opportunity in coupling offerings like a Neko Health scan with a Crowd Health crowdfunding model.
The folks at Georgetown CHIR published a really nice overview on the current state of the
ICHRACHOICE market, based on interviews with various key stakeholders. It includes several interesting perspectives on CHOICE adoption for insurers, brokers, and employers, focusing on how healthcare costs is the key factor driving employers' decision to adopt CHOICE. There’s an interesting negative signal for the level-funded plan market in this report as well — it notes that one of the groups of small employers that is moving to CHOICE is one that had previously moved to a level-funded plan to save on costs, only to see massive premium increases because of high-cost claims in their population. The report highlights interviewees' skepticism that the large group market will flip to CHOICE anytime soon. When it does happen, it’ll be for specific slices — i.e. for remote employees working out of state. It’s a good look on where CHOICE is today.We published a guest perspective from folks at LRVHealth and CVS Health contemplating the challenges that large organizations will inevitably face in managing teams of AI agents operating in critical organizational workflows.
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