More insanity on health care valuations. City Block builds primary care clinics in urban areas. It just raised $400 million in new capital, with a valuation of almost $6 billion, in what is now a very competitive market among well-financed companies.
The insanity continues in venture funding. Maven raised another $110 million, and has a billion dollar valuation, for its telehealth business for maternity health. It is crazy to imagine you will get a return on what is essentially a commodity offering.
A few years ago several very large employers, including Amazon, Bershire and JP Morgan were going to revolutionize employee health benefits with a company called Haven. Went nowhere and disappeared. JP Morgan picked up the remnants and has started a division called Morgan Health. That firm just made a $50 million investment in Vera Health, yet another company that intends to build a series of primary care focused clinics.
Cricket Health offers a kidney disease management service. It just raised an additional $83 million in capital. I am telling y0u the capital markets are off the rails in valuations and throwing money around. All prompted by the government.
Olive (is it a vegetable or isn't it?), which offers data analytic services for hospitals and health systems, with a focus on AI, raises another $400 million. The company has raised over $900 million in capital in total and is valued at close to $2 billion. Froth, froth, froth.
Paceline raises a fresh $29.5 million in financing to support the 400th company supposedly helping consumers get more engaged in their health and wellness. Great return coming for those investors, not.
In a sign that perhaps the capital markets for health care payers and services may return to some semblance of sanity, Bright Health, an insurer and manager of provider networks, went public at around $18 a share, well below the pricing range it was seeking, and in a truly bad sign, declined in price by the end of the day. Similar experience to Oscar Health, which went public earlier this year. These new insurers have to compete with monsters like UnitedHealth, Aetna, Cigna and Anthem, and they will struggle to ever make money that justifies their share price.
Another example of unmoored valuations. This company is founded by someone who has previously had success with health care startups, so the assumption is he will be again. Not necessarily a good investment approach. $58 million in new capital, valuing the company at $500 million, for helping employer health plans provide health "navigation" services.
Hospitals are an expensive health care setting, so for decades policy has attempted to lessen hospital use, which has some unintended consequences, as revealed by the epidemic. One emerging trend has been "hospital at home", in which all the expensive equipment is placed, and monitoring of a patient is literally done, at their home. Mayo Clinic and Kaiser have both invested in a company facilitating hospital at home capabilities, putting as much as $100 million into Medically Home Group.
Vida Health comes alive with a $110 million capital raise to support its business of offering apps to help manage chronic health conditions. It only competes with a hundred other companies offering the same low value crap, so you can understand why investors jumped at the chance to put more money in.
Collective Health aggregates $280 million in new financing to support its employer health benefits management business. The investors have lost their collective minds. The company serves employers with 300,000 members in 55 companies, so it is being valued at about $1000 a member for a commodity business.
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].