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- Weekly Health Tech Reads 9/28/25
Weekly Health Tech Reads 9/28/25
Evolent divests its VBC primary care business, Abridge and Epic may not be Pals, the challenges facing regional health plans, and more
Kevin O'Leary
September 28, 2025
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VBC PRIMARY CARE
Evolent divests its VBC primary care business, Evolent Care Partners, to Privia Health
Evolent announced this week that it is divesting its VBC primary care business, Evolent Care Partners (ECP), to Privia Health. ECP has approximately 1,000 providers and 120,000 members in the Medicare Shared Savings Program (MSSP). Evolent will receive up to $113 million in cash for ECP, consisting of $100 million upfront and up to $13 million based on ECP’s 2025 MSSP performance. Evolent will use the purchase price to buy down debt. The transaction equates to roughly a 10x EBITDA multiple for ECP, as Evolent noted the business was generating roughly $10 million in EBITDA annually.
Privia summed up the rationale for the acquisition well in its press release here:
This strategic transaction increases VBC attributed lives in existing Privia states, adds lives in new states, and also offers a compelling synergy opportunity for the ACO-participating providers to join Privia’s Medical Groups for a full suite of services and technology platform.
✍️ Going Deeper
The strategic implications are interesting here on both sides of the deal. For Evolent, it seems to signal their comfort with going all-in on a specialty-focused strategy, helping health plans manage high cost populations, i.e. cardiology, oncology, and MSK. I think it says something about the relative attractiveness of these strategies to investors at the moment that it is jettisoning a VBC primary care asset generating $10 million a year in EBITDA to focus on specialty care. This seems to be where the puck is moving.
On Privia’s side, this acquisition still makes a lot of sense for a primary care platform known for it’s motto “it’s called risk for a reason.” Here’s a VBC platform that is seemingly performing well. And on top of that, as noted in the press release above, there’s the synergy opportunity to bring those ACO providers into Privia’s Medical Groups. As Privia noted on its last earnings call, the key synergy there seems to be that the new “chassis” allows providers to charge 10% - 40% more for the same services. So not only does it make sense as a VBC platform, but there’s also an opportunity for Privia on the FFS side. Now if you’re scratching your head going, wait Kevin, so you’re telling me that Privia’s strategy is simultaneously increasing costs on the FFS side of the business while reducing costs on the VBC side of the business, how does that work? I think that’s an interesting question to ponder.
All in all, it seems like a win for both parties. If you step back and more generally think about the need for VBC in the current market, its not hard to imagine a broader platform that combines all these capabilities under one roof again at some point — i.e. simultaneously supporting the primary care doc and managing specialty costs for a population seems like a logical value prop.
AI
Abridge and Epic’s relationship grows increasingly complicated
Rebecca Torrance at Business Insider shared some great reporting on the rocky state of the relationship between Epic and AI platform Abridge. Notably, the reporting mentions that Epic received a single-digit ownership stake in Abridge as part of their partnership and sold its stake in Abridge earlier this year. If you do the math on Epic’s stake, if it sold 2% of Abridge at the $5.3 billion valuation from earlier this year, that’s roughly $100 million. You can do your own version of that math, but it seems that Epic netted out well there.
Abridge and Epic first announced their partnership back in 2023, with Abridge becoming Epic’s first “Pal” in Epic’s “Partners and Pals” program, which enabled Abridge to integrate into Epic’s clinical workflows. “Partners and Pals” perhaps became a misnomer by August 2025 — I’m surprised I haven’t seen more punny coverage of this — when Epic of course announced its own AI scribing product to much fanfare. At that time, Brittany Trang at Stat News reported that Abridge needed to call a town-hall style meeting to calm customers and assure them that its relationship with Epic was not impacted.
✍️ Going Deeper
I’d imagine that if you went back to 2023, both Abridge and Epic might choose to revisit the equity component of the Partners and Pals program, as I can’t imagine this headline is something that either party wanted. It’s not a great look for Epic, which already has reputation challenges. It’s also a momentum killer for Abridge, which now has to assuage partner (and presumably investor) concerns about the direction of the business.
More broadly, I think about the AI startup ecosystem as a whole. It’s been pretty clear that Abridge and others have been racing to raise capital and build a platform beyond just the AI scribe use case. You can see why in news like this — it’s a race to become a platform partner to health systems before an incumbent like Epic comes in and eats your lunch. That is now happening, and my guess is that Abridge and a few others have indeed gotten big enough where they are not going anywhere, although I’d also imagine the folks looking at Abridge’s valuation growth in the past 24 months with wide-eyes while imagining possible future growth will probably be a bit disappointed.
I can’t help but think about this Financial Times interview with Hemant Taneja from a few weeks back talking about the general state of the AI market. When he was asked whether there’s a bubble, his response was: “Of course there’s a bubble. And by the way, bubbles are good. Bubbles align capital and talent in a new trend, and that creates some carnage, but it also creates enduring, new businesses that change the world. It happens in every bubble.”
While it seems odd to me to suggest that bubbles are a good thing, the whole “creates some carnage” thing is clearly coming for the AI scribe market soon.
CHART OF THE WEEK
The dire financial situation for regional health plans
HealthScape Advisors penned a very good report on the distressed financials of regional health plans, noting that:
most regional health plans are operating at a loss, and half of those have less than 2 years before triggering formal regulatory intervention.
The chart below highlights how regional not not-for-profit health plans have a median operating margin around -3% in 2024, with Blues plans and Other For-Profit plans also negative, compared to national health plans hovering around 2.5%.
You can see the outlier year that 2020 was for health plans, and in many ways it feels like the industry is still grappling with the after effects of that year. Either way, with so many regional health plans facing mounting losses and dwindling cash positions, I have a feeling we’re going to see a lot more situations like UCare here in Minnesota (link), Commonwealth Care Alliance in Massachusetts (link), or CareOregon in Oregon (link).
Other Top Headlines
UnitedHealthcare launched a new “UHC Store” product this week, a new offering available to 6 million commercial members to “shop” for healthcare benefits. Offerings including women’s health, mental health, weight loss can be purchased via the marketplace. Like everything in the employer innovation space, there’s always the risk that this is a shiny object that will capture employers attention for a fleeting moment, but it seems like an interesting bet to keep an eye on as employers grapple with how to provide access to various benefits while keeping costs down on the whole. Enabling an ala carte offering to buy up coverage seems like a logical move in this environment.
Metabolic health care model Virta Health issued a press release announcing it is now generating $160 million of annualized revenue, with more than 80% year-over-year revenue growth and improving profitability. Presumably that means that Virta is generating ~$13.3 million in revenue in September, while it generated ~$7.5 million last September (good for $89 million in annualized revenue). Coupling this press release with the newly posted VP, Investor Relations job on Virta’s site this week, it seems like things are going to plan for Virta to go public in 2026.
CMS issued a press release on Friday noting that Medicare Advantage plans are expected to remain stable in 2026 with Open Enrollment starting on October 15th. Plans are projecting an enrollment decline to 34 million seniors, down from 34.9 million in 2025. This would mean that 48% of seniors enroll in MA plans, down from 50% in 2025. CMS noted that it is slightly more optimistic, expecting enrollment to stay flat.
Between the recent UHC / Johns Hopkins network contract spat, and now Aetna and Duke Health struggling to come to terms, it seems like payor / provider rate negotiations are getting more challenging.
In the patient engagement / payments market, RevSpring acquired Kyruus. RevSpring changed PE hands in March 2024, as Frazier Healthcare Partners acquired it from GTCR for $1.3 billion. The press release notes that Kyruus will enhance RevSpring’s provider directory capabilities and boost conversion from search to payment.
Datavant acquired Digital Owl, an AI platform for structuring unstructured medical data.
Premier has signed a definitive agreement to be taken private by Patient Square Capital at a $2.6 billion valuation.
Funding Announcements
Oura, the smart ring maker, is reportedly raising $875 million at a $10.9 billion valuation per Bloomberg. It has sold 3 million rings in the last year and is on track to generate $1+ billion in revenue in 2025, more than double its $500 million in 2024 revenue. The growth is impressive — Oura had sold 2.5 million rings through June 2024 and is now up to 5.5 million total.
Capital Rx, a next-gen PBM, raised $400 million and will rebrand as Judi Health. The business will operate three brands moving forward, with Capital Rx remaining the PBM and Judi Health and Judi doing other enterprise-y things.
Inspiren, an AI ecosystem for senior living communities, raised $100 million.
Conceivable, an AI-powered IVF lab, raised $50 million.
ThymeCare, a VBC oncology platform, raised $97 million at a reported $1 billion valuation. ThymeCare now manages $5 billion in oncology spend across Medicare and commercial contracts. Morgan Health, an investor in the round, penned a brief piece articulating the thesis for the employer market.
Sunrise Group, a digital sleep clinic, raised $29 million.
AmplifyMD, a virtual care platform for health systems, raised $20 million. The press release cites outcomes including a reduction in telestroke operating costs, increases in telehospitalist consults per shift, and a reduction in outpatient specialty wait times.
Bonsai Health, an AI front office platform for medspas and derm practices, raised $7 million. Bonsai notes that since it launched it has helped 235k patients across 100+ practices and scheduled 36,000 appointments.
Prosper AI, a AI platform for healthcare call centers, raised $5 million. The Forbes article notes that Prosper has quadrupled revenue in the last three months. Customers include “a Providence-affiliated hospital network, a Fortune 50 pharma hub, a 30,000-employee medical billing company, and one of the largest practice management software in the U.S. with over 100,000 physicians.”
Third Way Health, an AI operations platform for providers, received a strategic investment from MedPOINT Management, an MSO in California.
What I’m Reading
Mike Suiters, CEO of Positive Development, on choices for Autism Spectrum Disorder therapy by Martin Cech and me
Martin and I published this interview with Positive Development’s CEO Mike Suiters this week. I thought it was a really interesting look into how Positive Development is building a new model in autism therapy. In a market that is facing some challenging trade offs in terms of cost, quality, and access, PD seems to be offering a really interesting new type of therapy that can help solve some of those challenges. Read more
How Expiration of ACA Tax Credits Will Affect Healthcare Spending by Fredric Blavin and Michael Simpson
A report from the Urban Institute projects if enhanced subsidies expire it will shrink the subsidized ACA population to 11.7 million in 2026, versus 19 million if they stay in effect. It further finds that providers would lose $32 billion in revenue, while uncompensated care would increase $7.7 billion. Read more
Georgia’s Medicaid Work Requirement Program Spent Twice as Much on Administrative Costs as on Health Care, GAO Says by Margaret Coker
This was a fascinating read in ProPublica on Georgia’s Medicaid work requirement program, called Pathways to Coverage. Per an analysis by the Government Accountability Office, the program has spent twice as much on administrative costs ($54.2 million) as it has on healthcare costs ($26.1 million). As the article notes, those numbers don’t even include $27 million paid to Deloitte to support the program, or $10 million that went to consulting and legal fees related to the program. Read more
AI isn’t replacing radiologists by Deena Mousa
This is an interesting look at the impact AI has had on the radiology field, and why the number and salaries of radiologists continues to increase despite predictions the field would go away. Coupling this piece with the New York Times coverage of how Mayo Clinic’s radiology department is implementing AI I think makes for an interesting conversation / case study on the adoption of AI generally. Read more
The Meteoric Growth of Special Needs Plans (SNPs) by Marc Ryan
A good look at how the Special Needs Plan (SNP) market is growing quickly while the rest of the Medicare Advantage market contracts. It highlights both the upside in SNP plans for insurers that can do it well, but also the need to thoughtfully enter the market with a plan for clinical infrastructure to execute against. Read more
OpenEvidence: Disruptive or not? Plus, why it matters by Ann Somers Hogg
This is an interesting read looking at OpenEvidence and exploring whether it meets Clayton Christensen’s definition of Disruptive Innovation. Read more
Developing an Innovative Talent Strategy for Pharma Services Organizations by Oxeon
Oxeon put together this good quick primer on the pharmacy services market, looking at the investor excitement in the market and what that means for hiring talent in the space. Read more
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