HTN Weekly Health Tech Reads 8/15

Earnings season in full swing (Oscar, Clover, Cano, Oak all reported), Vera partners with COPC, LabCorp gets into digital health, & more!

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News:

  • Primary care startup Vera Whole Health, fresh off a $50 million investment from Morgan Health, announced it is partnering with Central Ohio Primary Care (COPC) to launch an offering selling to employers in Ohio. COPC, if you'll recall, played a central part of Agilon's growth story so it's interesting to see them getting involved with another primary care startup. The common tie between Vera and Agilon? They're both backed by private equity firm Clayton, Dubiller, and Rice, which apparently has a very close relationship with COPC. It'll be interesting to watch the strategic fit between Vera and Agilon here - this doesn't appear quite as clean as the Agilon relationship. Is Vera really just a new sales channel for COPC to go after employers directly? Will be curious to watch this relationship evolve, and how COPC captures economic value in it (beyond the equity stake in Vera). Link.
  • LabCorp acquired Ovia Health, a women's health startup building fertility and pregnancy apps sold primarily through employers and health plans. This acquisition comes about a year after LabCorp made a strategic investment in Ovia, which is at around $20 million of revenue. On LabCorp's most recent earnings call, they mentioned they'll be deploying a significant amount of capital in the 2nd half of the year to make acquisitions - will be curious to see if they continue to venture into the digital health arena with some of that capital. I can't imagine I'm the only one who doesn't think of LabCorp as the most consumer friendly brand in the world, so it'd be interesting to see if they try to stitch together a portfolio of more consumer-friendly brands and use that to drive the testing business. Link.
  • Oscar reported earnings for the quarter. Oscar is currently at ~563,000 ¬†members, up 44% YoY. The admin expense is creeping in the right direction, although Oscar still has some work to do to get closer to profitability. The +Oscar platform was featured heavily in the discussion and yet it leaves a lot of open questions. There seems to be a lot of promise of a vibrant pipeline but very little detail on what that actually looks like. In answers to a few questions, the Oscar team describes providers / provider-sponsored plans as its primary target for the +Oscar platform, similar to Health First. But there's no real firm discussion of pipeline or when the next deal is going to come. For a core growth driver of the organization this sure seems like it is stumbling out of the gate. Link.
  • Clover Health reported earnings as well, sending its stock up 11% briefly as total revenue was up 140% YoY, even despite a 111% MCR and a $312 million loss for the quarter. The revenue growth is mostly driven by Direct Contracting revenue, as Clover is now managing 60,000 plus patients via that program, generating $216 million of revenue for the quarter. Clover's net premium revenue was up only ~15% YoY. While the Direct Contracting revenue bump is nice, Clover is now reporting it expects that membership to remain flat over the remainder of the year, falling significantly short of earlier projections. Link.
  • Cano Health, one of the South Florida Medicare Advantage primary care SPACs, also reported earnings. Cano aims to be at ~160k members by the end of the year across ~100 primary care centers, and be generating close to $100 million in adjusted EBITDA. It's quite interesting comparing those numbers with Oak Street below - very different financial profiles of two companies operating in the same business. The earnings call provides a nice overview of the Cano model. Link.
  • Oak Street reported earnings, sharing they've now opened 100 centers, almost double where it was at when the pandemic began. They've had some issues managing medical expense during the quarter, and missed on their EBITDA target - reporting a loss of $53.5 million for the quarter. Oak expects to have ~110,000 risk-based members by the end of the year, and expects to lose ~$230 million in adjusted EBITDA. The earnings call featured some interesting insight into its patient acquisition strategy and the role that local events play into those. Pre-pandemic, they averaged 400 local events per center. It's interesting to note how Direct Contracting makes only a small appearance in one analyst question - a far cry from recent quarters where the entire earnings call has focused on that. Oak has ~6,500 DC members, which it expects to grow a few thousand a quarter. Link.
  • CVS / Aetna and Teladoc have partnered on a virtual primary care insurance offering. While it sounds cool, I'd be curious to know what it means operationally for Teladoc to deliver on a "continuous relationship with a virtual primary care doc" for Aetna members versus its traditional urgent-care like model. But so long as actuaries are willing to price virtual primary care plans lower than other plans it seems like we'll continue to see more and more of these plans launched - if you're a payor why wouldn't you? Link.
  • In the event you weren't already confused about the breadth of ShareCare's product offering, this week it acquired home health tech platform CareLinx for $65 million. CareLinx, which has a network of 450,000 caregivers, hit $5 million of revenue in 2020 and expects to grow to $20 million in 2021. Link.
  • Olive continues to be an active acquirer, this week announcing the acquisition of revenue cycle management startup Healthcare IP. ¬†Healthcare IP provides Olive with a clearinghouse that has over 900 hospital customers. Link.

Funding:

  • Digital therapeutic startup Mahana Therapeutics raised $61 million. Link.
  • Elektra Health, a startup helping women navigate menopause, raised $3.7 million. Link.
  • Spora Health raised $3 million for a virtual primary care model for the BIPOC community. Link.

Opinions:

  • This is a really well done article looking at how algorithms can fail patients, in this case featuring Appriss Health, a company that supports care coordination by connecting various data at the point of care (you may recall Appriss made the news earlier this year as it acquired health tech darling PatientPing). The article dives into at how Appriss's algorithms are used for prescription drug monitoring and some of the issues that poses. It features the story of a patient who was flagged as a high risk drug seeker... because the patient's dogs were on opioids and pet prescriptions are put under their owners names? It's so ridiculous its almost comical until you remember that is a person's life that has now been turned upside down as a result. American healthcare for ya. Link.
  • CMS leadership talked about what the next decade of CMMI innovation will look like in a Health Affairs article. It seems to mirror some of what's been already written over the last several months on the topic - streamlining the models, determining better financial incentives / benchmarks, etc. The emphasis on health equity is notable, as well as the statements about focusing on Medicaid instead of focusing primarily on Medicare. Seems like a rather large tailwind for startups going after the Medicaid market. Link.
  • This is an interesting perspective in JAMA about how private equity dollars going into healthcare delivery can potentially be a good thing within a value-based care construct. It looks at Oak Street and CareMore Health as examples of companies that improve clinical outcomes leveraging private equity dollars to scale their models. Link.
  • News came out this week questioning the role UHG played in a well-publicized study looking at surprise billing practices by emergency department companies. Team Health, which released the emails to The Intercept, appears to be taking a strategy of obfuscation here - if you don't like results of a study, distract folks from it by questioning the motives of the people behind it. Link.

Data:

  • HCA is being sued in a class action lawsuit over its recent acquisition of Mission Health in North Carolina . The lawsuit is worth perusing as it discusses how hospitals contract with payors and includes some data on pricing - including that Mission averages commercial rates that are 393% of Medicare for inpatient procedures. For instance, check out the chart below comparing Mission to the rest of North Carolina on a shoulder arthroscopy. Link.

Featured Jobs:

  • Carbon Health, a tech enabled in-person + virtual primary care model startup, is hiring a VP of Payer Partnerships. Link.
  • Dandy, a startup building a modernized operating system for dentists starting with the dental lab process, is hiring a Head of Legal. Link.
  • Pearl Health, a primary care enablement startup focused on helping providers transition to Direct Contracting and value based care, is hiring a Data/Web Software Engineer. Link.
  • Olive, a back-office automation platform for providers, is hiring a Director of Product. Link.
  • Stealth role alert! A series B startup focused on advancing the treatment of rare diseases leveraging clinical data is looking for a Director/Senior Director of Finance. Link.

Access the HTN Jobs Board for the full list of job postings.