A 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)
About 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 [email protected].
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