Two health care firms owned by private equity firms are merging in a transaction supposedly valued at $3 billion. HealthComp administers self-funded plans for employers and other groups and Virgin Pulse provides wellness and care management services.
https://www.fiercehealthcare.com/payers/virgin-pulse-healthcomp-merge-3b-deal-aimed-improving-employer-healthA number of companies which attracted large financing rounds during the epidemic have imploded when reality set in. The latest is Cano Health, which is a little surprising since it was a primary care center company, and others with similar models have been very successful. In any event, the public investors appear in for a big loss.
https://www.fiercehealthcare.com/providers/primary-care-business-cano-health-exploring-sale-its-cash-dwindles-plans-exit-severalAnother over-hyped digital health company screws shareholders who bought the hype, as Babylon Health has to bail itself out by going private, with nothing being returned to ordinary shareholders. The epidemic froth created a whole boatload of these situations, and the bill is coming due now.
https://ir.babylonhealth.com/news-events/press-releases/detail/111/babylon-announces-update-on-take-private-proposalCVS has finalized its $10.6 billion buyout of Oak Street health, which operates primary care centers for Medicare members. People may think CVS is a drug store company, but it bought Aetna a few years ago and Aetna provides the majority of revenue. CVS also owns a very large pharmacy benefit management division. Insurers increasingly own providers, partly to help manage costs, but mostly to skirt profit limits on insurance products. More unneeded and ill-advised consolidation in health care.
https://www.cvshealth.com/news/company-news/cvs-health-completes-acquisition-of-oak-street-health.htmlAnother example of over-priced companies trying to find some way to survive in the post-epidemic financial world. Transcarent, which does something, somehow to "access high quality, affordable care" is buying the virtual care part of cutesy-named 98point6, one of ten million virtual care companies, none of whom have any competitive differentiator. Just ask TeleDoc. Supposedly the deal is for around $100 million. Very, very hard to believe, but desperate times take desperate measures. Oh, and did I mention there is some AI involved somehow?
https://transcarent.com/press-releases/transcarent-to-acquire-98point6-ai-powered-virtual-care-platform-and-careIn an attempt to swiftly revive two floundering health care companies, a PE firm has announced the merger and recapitalization of Revive Health and SwiftMD. You know they are floundering by the description of their businesses. SwiftMD is a "virtual" health company that is also "digital". These buzz words might have once summoned fear but now only loathing. Revive Health offers "integrated" care plans, whatever that is. More floundering to come for these fishy firms.
https://www.prnewswire.com/news-releases/eir-partners-announces-combination-of-revivehealth-and-swiftmd-through-a-majority-recapitalization-301729155.htmlInvestors have not yet learned their lesson, as Pearl Health gathers a new round of $75 million in capital for its business of supporting physicians who want to participate in value-based care arrangements.
https://www.fiercehealthcare.com/health-tech/andreessen-horowitz-backs-pearl-healths-75m-round-scale-value-based-care-techNow here is a tale from the glory days of epidemic investing, as the Feds pumped trillions into the economy and a lot of it went to investing, some to really solid investments like cryptocurrency (haha), but some into more dangerous sectors, like for example health care “digital health” companies. This firm, Carbon Health, raised hundreds of millions of dollars, at one point had a multi-billion dollar valuation, overpaid for several acquisitions, announced grandiose plans to be in every part of health care delivery and management, and so on. Then reality hit, layoffs came, business lines are being closed, and I am sure the company is still losing money by the bucketfuls. Along with the layoffs, Carbon got a rescue funding led by CVS of $100 million. I suspect the valuation was way below prior rounds. The supposedly smart institutional investors who piled into companies like this were nothing but fools. (Carbon Story) (Carbon Story)
Another merger of two struggling "digital" health companies, which use virtual reality as a product design. Apparently you are less likely to drown in high seas when you are holding on to another person than when you are alone, even though neither of you has a life jacket. BehaVR (aren't these health care company names cute) which focuses on milder mental health issues, and OxfordVR, which focuses on more serious mental health illness, are merging. Investors, who appear to have their own cognition issues, also pumped over $13 million in new financing into the combined company.
https://medcitynews.com/2022/12/behavr-and-oxfordvr-merge-secure-13m-in-funding/?utm_campaign=MCN%20Daily%20Top%20Stories&utm_medium=email&_hsmi=238406331&_hsenc=p2ANqtz-8cy6wVaOQMQZODKLVPEDpTodBaSTdzyLF3gRQHhuiFVpGvAIbyhG_bi35lHOgzQPxyWiOGXOCYMP087WLE-wXNuaqerCwkfX48Bu88IeoRccbZqO0&utm_content=238406331&utm_source=hs_emailMercer, a large benefits consulting firm, confirms that health plan premiums are rising in 2023, publishing survey results showing that employers expect an increase of costs by at least 5%. Employers are taking steps to lower the cost increases by pushing employees to lower-cost providers and using other cost-control techniques.
https://www.mercer.us/newsroom/health-benefit-cost-rose-3-2-percent-in-2022-but-employers-see-bigger-increases-ahead.htmlMore money pouring into young health care companies as Dispatch Health gains $330 million in new capital to deliver high acuity health care in a patient's home, rather than a hospital or an ER, which will supposedly save money. It won't. Nothing ever does in health care.
https://medcitynews.com/2022/11/dispatchhealth-looks-to-expand-in-home-care-with-more-than-330m-in-financing/?utm_campaign=MCN%20Daily%20Top%20Stories&utm_medium=email&_hsmi=236056549&_hsenc=p2ANqtz-_DhuNF9HOs_8tdWYc_JGc7mjb5KDoxvjUqAWhovDOGgjW4dX3QgJ6LKpeeQVMAivsUbM9xjfl27xnqH0ixyx0WCUfJmlExhpsVk-mGBamIq807sF4&utm_content=236056549&utm_source=hs_emailAbout this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at khroche@healthy-skeptic.com.
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