In what has to be one of the strangest deals yet, large dialysis provider Fresenius is merging with two over-hyped and over-valued "digital health" companies oriented to kidney care--Interwell, which has a network of specialists and Cricket Health which supposedly does patient engagement. This apparently will make the conglomeration more attractive to payers and patients. This mess is valued at $2.3 billion.
VillageMD is one of a series of focused primary care clinics which have gone public or gotten large investments at huge valuations. All these companies are struggling to maintain those valuations. Some do so by questionable acquistions. VillageMD is buying Healthy Interactions, which offers patient education services, at an undisclosed by undoubtedly excessive price, supposedly to provide the services to its members.
I have mentioned before the phenomenon in excessive capital times that scads of money goes to unproven companies, who then try to obscure their lack of coherent strategy by acquiring with other similar companies. Health care is rife with this tactic. Here we see Signify Health acquiring Caravan Health for $300 million, much of which is funny money stock. Both firms work in the commodity space of value-based purchasing and accountable care organization support. One plus one still equals zero.
IBM ending a huge bust in its health care efforts, selling its Watson health care assets to a PE firm. IBM spent a fortune building this and claimed it would revolutionize health care, but it has very limited clinical utility. More hype in health care.
More lunacy, kind of ironic for a mental health company, as Lyra Health raises a fresh $235 million in capital at over a $5 billion valuation. Just gonna say the company will never earn enough money to justify that valuation. But institutional investors work on the greater fool principle--they think they can always find someone stupider to take a dumb investment off their hands.
More froth in the capital markets as R1 RCM pays $4.1 billion for CloudMed. R1 RCM helps health care providers with billing and other practice management software and services and CloudMed supposedly brings artificial intelligence to those activities.
Medically Home, which attempts to outfit the homes of patients with serious illnesses so that they can be treated outside of a hospital, has raised an additional $110 million in capital to support growth of the business.
The day's second incomprehensible deal involves Babylon Health babbling on about buying Higi Health, which offers kiosks for biometric screenings. Babylon is a digital and telehealth company. No price announced but whatever it was, it was too much.
More goofy deals. Nomi Health, which supposedly helps connect employers directly with providers, is buying Artemis Health, which helps employers control health benefit spending, for $200 million.
This is why I don't invest in "digital" health BS. Castlight Health went public at a huge valuation. The hype caught up with it and the valuation plunged. It now has agreed to be bought by Vera Whole Health for $2 a share or a whopping $370 million. I doubt it is worth that much, but Vera is another hype-driven company, although in theoretically a more solid segment--primary care, desperate to find some way to make it look like it actually is adding value to the system. I always find it hilarious to see the rational for these deals. Castlight's tools will supposedly help Vera's providers. Right, sure, of course, anything you say, load of crap.
Livongo was one of the hottest "digital" health companies, and investors may feel like they got a certain digit from the company, as Cigna drops it as a preferred vendor and the company's acquisition by Teladoc for an outrageous sum also look like less than a brilliant move. Two overpriced companies do not make one fairly valued one.
Large database firm Oracle is buying electronic medical records and administrative software vendor Cerner for $28.3 billion, a move that likely is aimed at further penetration in a heavy software use industry and at competitor Salesforce.
Bright Health, like Oscar Health and a couple of others, was going to be a new kind of health plan. The company has raised zillions of dollars and even after a disastrous IPO, has raised more money now from investors including Cigna Health, which is bottom fishing. They clearly are hoping Cigna will eventually take them out of their misery. The reason they have to raise all this money is they keep spending it fruitlessly and not making anything like a profit. The notion that these guys can seriously compete with the UnitedHealth's of the world is absurd. People who have a lot of money to invest are not always smart.
Athenahealth has done very well in the market for electronic medical records and other provider information systems. It is being sold by one set of investors to two private equity firms for $17 billion dollars. The company may be good, but that is far too high a price in a very competitive market. We are seeing the result of the fed pumping trillions of dollars into the economy. This will be a very leveraged deal which will eventually stress the company.
Investors may get the sharp end of the stick and swallow some losses, as Sword Health, which manages musculoskeletal conditions, raised an insane $163 million at an even more insane $2 billion valuation. There is nothing proprietary about what this company does, and no barriers to entry.
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.
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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