HTN | Weekly Health Tech Reads | 11/12
November 12, 2023
A review of Q3 calls from the week - this week we'll focus on the insuretech earnings
Oscar Health continues to execute on the insurance business; signs Sanford as a customer for +Oscar
It continues to feel like Oscar has turned the corner in its earnings calls - it is moving past the ongoing viability / profitability questions the insuretech category has faced, and is making progress towards being a viable ACA insurer with potential growth opportunities. One of those growth opportunities, +Oscar, announced a new deal with Sanford Health, a health system in South Dakota, to use the campaign builder tool for the 200,000 members of its Sanford Health Plan. They're focused on initiatives around growth / retention, PCP utilization, engagement in clinical programs, and adherence. It's a nice sale for +Oscar that helps make the commercial focus tangible. Oscar also shared some interesting competitive nuggets on 2024 ACA pricing across carriers in response to an analyst question about Oscar's pricing - from their view, CVS/Aetna increased footprint into four new states but is less competitively priced than recent years, Centene remains in the middle of the pack, UHC entered a new state but priced more competitively, and BCBS remains the most aggressive in terms of pricing.
Clover Health's Q3 earnings underscores the challenges they've had in the Direct Contracting / ACO REACH program
Clover highlighted its bullishness on momentum around the impact the Clover Assistant is having and Clover's ability to get to profitability without needing any additional outside capital in 2024. Also discussed on the call were two key headwinds that should at least cause some question about the impact of Clover's platform on performance. First, Clover received a three star rating as an MA plan for measurement year 2022, although they view that as a one year blip. Second, and more notably, was Clover's continued poor performance in the ACO REACH program. Clover noted that in its non-insurance business it will be continuing to shrink its focus on Original Medicare because of this performance, faulting the design of the program during the call. Clover's decision here is understandable given it shared it owes CMS a $147 million payment in Q4, including a $52 million payment for its shared loss generated in 2022. Clover intends to reduce the number of providers it has participating by another 40% by 1/1/2024 (mind you, Clover's non-insurance members already has dropped from 166,432 in Q3 2022 to 51,528 in Q3 2023). Clover noted it intends to double down on the Medicare Advantage business in the non-insurance division, although you can see in the Q&A an analyst was a bit confused by this, as Original Medicare (via ACO reach) seems to represent the vast majority, if not the entirety of Clover's non-insurance business. Clover doesn't share the number of MA lives it has in its non-insurance business, instead sharing in response that "We've been approached, we've had discussions". So take that for what you will. It'll be interesting to see what this non-insurance division looks like in 2024.
Bright Health Q3 earnings call focuses on moving on from insurance and optimism around the care delivery business moving forward
Bright continued its quarterly tradition of avoiding analyst questions while the deal with Molina for the insurance business is pending regulatory approval. But in the prepared remarks they did share some helpful details about the care delivery approach. They have 355,000 value based consumers in care delivery at the end of Q3, ~60,000 of which are in ACO REACH. In an interesting contrast to Clover, Bright seems quite happy with the ACO REACH program and its performance. The discussion included some interesting commentary around Bright's performance - one ACO did quite well, and the other was weighed down by Babylon's bankruptcy, according to Bright. Bright had to take a $22.4 million bad debt expense because of the bankruptcy. If you'll recall, in May 2022 Bright and Babylon partnered to bring Babylon's IPA into Bright's ACO. Bright sees a near term revenue headwind in ACO REACH, but a solid profitability opportunity, and expressed its plans to grow, noting an opportunity to partner with FQHCs. Bright had to take a NEA provided Bright with another $60 million credit agreement in the quarter. The call included a bit of a forward-looking, optimistic tone about the care delivery business - noting how they have an opportunity to translate the 290,000+ patients they have in VBC contracts today (outside of ACO REACH, I think) to full-risk models. If Bright is able to execute on this, there's an embedded $1 billion of revenue to be unlocked within those existing patients.
CHART(S) OF THE WEEK
Sharing a visual or two from the week that made us think
This is an interesting perspective from Kenneth Lam posted in JAMA Internal Medicine (and on X) on when people move into long-term care facility. His commentary on X around caregiving needs pre / post entry into a facility are interesting to think about - with the data suggesting that around one-third of people have paid caregivers before entering long-term care, and a disabling event in the preceeding year or two as driving the move.
A round-up of other newsworthy items we noticed during the week
The FDA has approved Eli Lilly's typ-2 diabetes drug, called Zepbound (formerly known as Mounjaro), for the official use of weight loss. The drug, which sits in the same class of semaglutides like Ozempic and Wegovy, has already been prescribed for off-label use for weight loss. The price tag for the newly approved drug will be about $1,096 per month, following suit with the lofty costs of its fellow semaglutide classmates.
Link / Slack (h/t Katie Chlada)
The FTC is going after big pharma with its recent announcement that it has challenged 100+ patents held by manufacturers of brand-name asthma inhalers, ephinephrine injectors, and other drug products for being inaccurately listed in the FDA's 'Approved Drug Products with Therapeutic Equivalence Evaluations'. There were 10 companies that received notice letters, including AbbVie, AstraZeneca, Boehringer, GSK, among others.
Link / Slack (h/t Casey Langwith)
A new AI-enabled women's health startup, called Cercle, has launched with aims to help fertility providers and researchers to develop more personalized treatment plans. The startup is backed by formed Meta COO, Sheryl Sandberg.
Link / Slack (h/t Amitha Kalaichandran, MD MHS)
CMS released the CY2025 Proposed Rule this week. HTNer Deana Bell provided a very helpful breakdown in Slack on various aspects of the proposed rule, including changes to broker commissions, behavioral health access, prior authorizations, and more.
Link / Slack (h/t Deana Bell)
Amazon has launched One Medical for Prime, giving 24/7 virtual care access to Prime members for $9 per month.
Best Buy Health announced a partnership with Mass General Brigham to improve access to at-home healthcare services. The partnership will leverage Best Buy's existing home care platform, Current Health to enhance Mass General's Home Care service offering.
A collection of notable startup financing rounds across the industry
Eleos Health, a behavioral health AI company, raised $40 million in Series B funding to expand its AI-enabled product offerings, including group therapy sessions, case management, and more.
Link / Slack
Needed, a perinatal nutrition startup, secured $14 million in financing to accelerate product innovation and launch its research arm, Needed Labs. The company offers nutritional supplements for women at the perinatal stage to support various functions, such as egg and sperm quality, lactation, stress, sleep, and hydration.
Link / Slack
Nema Health, a virtual trauma therapy provider, raised $4.1 million in Seed funding. The company's care platform provides individuals with comprehensive care teams, including a therapist, peer mentor, case manager, and psychiatrist to support PTSD treatment.
Link / Slack
A round-up of posts from the broader healthcare community this week that made us think
Inevitability of GLP1s & Potential Acceleration of Health Equity by Zachariah Reitano
This is an interesting follow up article to the original from Ro's founder digging into the inevitable dominance of GLP-1s in the market. The piece explores prevalence and demand, clinical efficacy, economic incentives, and more.
Hospital Sector is Under Siege by Gary Gottlieb
Good perspective here from the former CEO of Partners Healthcare about the financial predicament many hospitals find themselves in currently.
Digital health startups need more doctor CEOs by Christina Farr
The article highlights some perspectives on the value of physician entrepreneurs and the benefits of having a physician as CEO of a digital health company.