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Welcome to the first week of December. Axios Pro Deals research associate Natalie Breymeyer here with your monthly recap of who's working where now.

Did you or a friend recently change jobs? Tell us! Get wind of layoffs somewhere? Tell us! How do you tell us? Reply to this email.

You can skim below to find New hires; Elections and appointments; Promotions; and Departures.

📥 Your opinion matters to us. Please share your thoughts by replying to this email!

There you have it. Make sure to continue sending us your personnel-related news throughout the month!

🌞 Natalie was able to take a long weekend in November to visit the San Juan Islands with friends where she enjoyed unseasonably sunny weather and lots of good food.

Thanks for reading, and special thanks to copy editor Mickey Meece.

Health Tech Deals

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1. The stage is set 

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2. Driving the dollars

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3. State of play

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4. By the numbers, early innings edition

5. 🗞️ Catch up quick 

🌴Axios BFD is coming to Miami, on Feb. 13, 2024. Request your invite.

Programming note: Today, Aaron takes a deep dive into the obesity and weight management deals world.

💖 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your colleagues, friends, and family to sign up.

1 big thing: A tale of two med techs 

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2. The BFD: ChatGPT's mark on medicine

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3. Deals o' the day

4. It's Personnel

5. Your daily dose

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Happy Wednesday, Health Tech enthusiasts!

🧗🏽 Erin got a climbing harness as an early birthday present and gave it a try on the wall this week.

💪🏽 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your colleagues, friends, and family to sign up.

1 big thing: Intuitive Ventures closes $150M fund

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2. The BFD: Home testing tie-up sees Imaware buy Binx assets

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State of play: In-home testing M&A

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5. Your Daily Dose

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Situational awareness: Roche will pay at least $2.7 billion for weight loss drug company Carmot Therapeutics, granting the pharma giant entry to the GLP-1 craze.  

🪁 Erin went indoor skydiving in preparation for the real thing this spring and had a literal blast.

💝 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your colleagues, friends, and family to sign up.

1 big thing: Cigna and Humana merger faces hurdles

The Cigna Group headquarters in Bloomfield, Connecticut, US.  

2. The BFD: Intermountain spinout scores $10M 

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It's Thursday, Health Tech readers, and we've got a newsy edition for you today.

🍽️ Aaron feasted at the SoHo House, where chef Santiago Astudillo of The Wesley prepared a bounty of various menu items.

 ✅ Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your colleagues, friends, and family to sign up.

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While deal value for VC med tech investments trended upward last quarter, deal volume slumped, according to a recent PitchBook report.

Why it matters: The discrepancy is a reflection that venture funding is harder to come by as VC investors prioritize higher-quality investments, according to PitchBook analyst Aaron DeGagne.

What's happening: Q3 venture capital activity in med tech totaled $3.2 billion, a 14.1% increase in deal value from the prior quarter, per the report.

Yes, but: The deal count in VC was 187, down 10.1% from Q2.

Although deal value rose for the second straight quarter, the deal count reached a new, multi-year low.

Zoom in: Top VC-led med tech deals in the quarter included Elon Musk's brain implant business Neuralink, which raised a $280 million Series D led by Peter Thiel's Founders fund

Surgical robotics company CMR Surgical raised $165 million from existing investors, while cancer diagnostic company Harbinger Health corralled new investors Pictet, Partners Investment, and Catalyst for its $140 million Series B.

Meanwhile, in the PE world, growth deal activity came out to $280 million —plummeting nearly 70% year over year.

PE deal count accumulated 37 deals, a drop off of 3.3% from the year earlier.

But, but, but: Private equity has been seemingly driving large-stage dealmaking in med tech, with Advent International and Warburg Pincus agreeing to acquire Baxter International's biopharma solutions unit for $4.25 billion in May.

In September, Carlyle was reported to be in exclusive talks for a $7 billion-plus deal to acquire Medtronic's patient monitoring and respiratory interventions businesses.

What they're saying: "Exit opportunities remain few and far between as the IPO market remains shut and potential acquirers continue to prioritize improving their own cost structures," writes DeGagne.

"Large mergers have recently fallen out of favor, and addition by subtraction remains the name of the game," he says.

What's next: DeGagne says he expects "historically low M&A activity continue into 2024," although he notes newly independent companies could start making consolidation moves.

For example, GE HealthCare, which spun out in January, reported Q3 2023 earnings that emphasized product integration opportunities for AI-powered medical imaging.

"It would be logical to expect the firm to consider acquisitions to further grow this business over the years ahead," DeGagne writes. 

VC flocks to quality amid tepid med tech deal landscape

Deal value for VC med tech investments trended upward last quarter, while deal volume slumped.

Health tech deals

While deal value for VC med tech investments trended upward last quarter, deal volume slumped, according to a recent PitchBook report.Why it matters: The discrepancy is a reflection that venture funding is harder to come by as <a class="gtmContentClick" data-vars-link-text="VC investors" data-vars-click-url="https://www.axios.com/2023/10/05/venture-capital-q3-slump" data-vars-content-id="158378ec-51a0-4cc1-a588-da84a2a6642b" data-vars-headline="VC flocks to quality amid tepid med tech deal landscape" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2023/10/05/venture-capital-q3-slump" target="_self">VC investors</a> prioritize higher-quality investments, according to PitchBook analyst Aaron DeGagne.

On the heels of the FTC suing private equity firm Welsh Carson Anderson & Stowe accusing it of suppressing market competition in Texas, WCAS now faces a related class-action lawsuit.

Driving the news: Union health plans that represent electricians and plumbers in Texas have filed a class-action lawsuit against WCAS-backed physician group U.S. Anesthesia Partners, according to STAT news.

Details: Per STAT, the suit builds on the FTC's September complaint, which argued that WCAS and USAP bought up anesthesia practices across Texas to concentrate market power and gain leverage in health insurance negotiations.

The unions claim USAP had price-fixing agreements with anesthesia groups that wasn't able to acquire, therefore maintaining a competitive advantage.

Within those agreements, anesthesia groups allowed USAP to bill insurers for their anesthesia services, and USAP leveraged that to charge insurers higher prices.

Reality check: A roll-up strategy is the oldest play in the PE playbook and it may be difficult to regulate this tactic, experts say.

"It's noteworthy that it's anesthesia," PitchBook analyst Rebecca Springer says of the FTC suit. "This is already a space that's a bit more consolidated. It's not as fragmented as some of the other areas of private equity plays in a space where elevated costs have obviously been the source of some contention."

"In some ways, this is a potentially was an easier case for the FTC to make if they wanted to set a precedent for going after PE roll-ups," she adds. "It would be much harder to implement this if you were looking at home health agencies or dental offices or even veterinary offices."

The other side: USAP and Welsh Carson had no comment on the class-action lawsuit, per STAT.

The companies last week filed a motion to dismiss the FTC's complaint, arguing, "the FTC has inaccurately represented the anesthesia market in Texas and has failed to properly allege that USAP has monopoly power by charging more than a competitive price."

WCAS did not immediately respond to Axios' request for comment.

Class-action lawsuit against Welsh Carson

Per STAT, the suit builds on the FTC's September complaint.

Illustration of a gavel hovering over a broken piggy bank full of money

On the heels of the <a class="gtmContentClick" data-vars-link-text="FTC suing private equity firm Welsh Carson Anderson &amp; Stowe" data-vars-click-url="https://link.axios.com/click/33497423.804/aHR0cHM6Ly93d3cuYXhpb3MuY29tLzIwMjMvMDkvMjEvZnRjLXN1ZXMtd2Vsc2gtY2Fyc29uLWFuZXN0aGVzaW9sb2d5LXRleGFzP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1wcm9fZGVhbHNfaGVhbHRodGVjaF9zdWJzJnN0cmVhbT10b3A/63d7efa24889932dcb08ba1cB6f8a02c5" data-vars-content-id="1e3caadd-d866-4958-b897-d971ccde8f14" data-vars-headline="Class-action lawsuit against Welsh Carson" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33497423.804/aHR0cHM6Ly93d3cuYXhpb3MuY29tLzIwMjMvMDkvMjEvZnRjLXN1ZXMtd2Vsc2gtY2Fyc29uLWFuZXN0aGVzaW9sb2d5LXRleGFzP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1wcm9fZGVhbHNfaGVhbHRodGVjaF9zdWJzJnN0cmVhbT10b3A/63d7efa24889932dcb08ba1cB6f8a02c5" target="_blank">FTC suing private equity firm Welsh Carson Anderson &amp; Stowe</a> accusing it of suppressing market competition in Texas, WCAS now faces a related class-action lawsuit.Driving the news: Union health plans that represent electricians and plumbers in Texas have filed a class-action lawsuit against WCAS-backed physician group U.S. Anesthesia Partners, according to <a class="gtmContentClick" data-vars-link-text="STAT news" data-vars-click-url="https://link.axios.com/click/33497423.804/aHR0cHM6Ly93d3cuc3RhdG5ld3MuY29tLzIwMjMvMTEvMjIvdS1zLWFuZXN0aGVzaWEtcGFydG5lcnMtd2Vsc2gtY2Fyc29uLWNsYXNzLWFjdGlvbi8_dXRtX2NhbXBhaWduPWhlYWx0aF9jYXJlX2luYyZ1dG1fbWVkaXVtPWVtYWlsJl9oc21pPTI4MzY5Nzc1MSZfaHNlbmM9cDJBTnF0ei05Y3NDcEpXd1pPVXN3QmFCa2hOXzZ1SV9kU0I4dVRJbEVCNk9CVTZveHREaHhYdTN1cUl3Vllyb1BOMFUwcjFONkp5TGx4RGoyWFBKaUJxRW1BelBxMjBIc280UkJPR2lIUTlWR2xrNmVEdkpmYTdmQSZ1dG1fY29udGVudD0yODM2OTc3NTEmdXRtX3NvdXJjZT1oc19lbWFpbCZzdHJlYW09dG9w/63d7efa24889932dcb08ba1cB23763e30" data-vars-content-id="1e3caadd-d866-4958-b897-d971ccde8f14" data-vars-headline="Class-action lawsuit against Welsh Carson" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33497423.804/aHR0cHM6Ly93d3cuc3RhdG5ld3MuY29tLzIwMjMvMTEvMjIvdS1zLWFuZXN0aGVzaWEtcGFydG5lcnMtd2Vsc2gtY2Fyc29uLWNsYXNzLWFjdGlvbi8_dXRtX2NhbXBhaWduPWhlYWx0aF9jYXJlX2luYyZ1dG1fbWVkaXVtPWVtYWlsJl9oc21pPTI4MzY5Nzc1MSZfaHNlbmM9cDJBTnF0ei05Y3NDcEpXd1pPVXN3QmFCa2hOXzZ1SV9kU0I4dVRJbEVCNk9CVTZveHREaHhYdTN1cUl3Vllyb1BOMFUwcjFONkp5TGx4RGoyWFBKaUJxRW1BelBxMjBIc280UkJPR2lIUTlWR2xrNmVEdkpmYTdmQSZ1dG1fY29udGVudD0yODM2OTc3NTEmdXRtX3NvdXJjZT1oc19lbWFpbCZzdHJlYW09dG9w/63d7efa24889932dcb08ba1cB23763e30" target="_blank">STAT news</a>.

Season Health, a food-as-medicine startup, will acquire the clinical assets of the dietitian network Wellory.

Why it matters: The deal is set to expand insurance coverage for Season, which is a main roadblock for many food-as-medicine startups.

Details: Deal terms were not disclosed, but the transaction was financed through a SAFE note, with existing investors and strategic partners participating, a source familiar tells Aaron.

What they're saying: "This acquisition significantly grows the size and capabilities of our provider network, which is now 10 times larger, and vastly diversifies our group," says Josh Hix, CEO of Season.

"We are still well capitalized from our Series A and have no concrete plans to proactively fundraise at this time," he says.

"We will continue to look for smart and strategic partnerships."

How it works: Andreessen Horowitz-backed Season Health offers patients a combination of clinical care and access to affordable, medically tailored meals and groceries.

Season members engage with registered dietitians three to four times per month, on average, via both messaging and virtual visits, per the company.

Founded in 2019, Wellory is a nutrition care platform with registered dietitians, serving more than 120 million patients in-network.

Season will now serve all 50 states geographically in over 15 languages.

The combined business will be able to serve more patients with conditions like diabetes, chronic kidney disease, obesity, and high-risk pregnancy.

Catch up quick: Wellory has raised $5.37 million in seed funding from investors like Story Ventures and Harlem Capital. The business was valued at $10.5 million in 2020, according to PitchBook.

Season snagged a $34 million Series A led by Andreessen in March 2022, putting the company's pre-money valuation at $66 million, per PitchBook.

The big picture: Food-as-medicine is being embraced as a new appetizer on the menu of holistic care, but obstacles remain around data measuring and getting insurers on board.

Between the lines: Season's approach mitigates a scenario in which patients use benefits to buy unhealthful or non-nutritious food, codifying its network of food vendors.

Medicaid's food-as-medicine program, as it stands, doesn't have guardrails on what food can be bought with the money, Axios has reported.

Nor is data being collected on what people are buying, LexisNexis risk solutions government group CEO Haywood Talcove told Axios previously.

Season Health strikes a deal

The deal will expand insurance coverage for Season.

Illustration of a plate shaped like a health cross with a knife and fork on either side.

Season Health, a <a class="gtmContentClick" data-vars-link-text="food-as-medicine" data-vars-click-url="https://www.axios.com/pro/health-tech-deals/2023/03/20/food-is-medicine-investors-and-execs-say" data-vars-content-id="2a0cbd8d-2521-4c7c-b5ff-18718bf10c8b" data-vars-headline="Season Health strikes a deal" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/pro/health-tech-deals/2023/03/20/food-is-medicine-investors-and-execs-say" target="_self">food-as-medicine</a> startup, will acquire the clinical assets of the dietitian network Wellory.Why it matters: The <a class="gtmContentClick" data-vars-link-text="deal" data-vars-click-url="https://www.globenewswire.com/news-release/2023/11/28/2787047/0/en/Season-Health-Announces-Strategic-Asset-Acquisition-from-Wellory-to-Expand-Clinical-Network-of-Registered-Dietitians-and-Insurance-Coverage.html?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=sendto_pronewslettertest&amp;stream=top#:~:text=Austin%2C%20TX%2C%20Nov.%2028,medical%20nutrition%20therapy%20to%20patients" data-vars-content-id="2a0cbd8d-2521-4c7c-b5ff-18718bf10c8b" data-vars-headline="Season Health strikes a deal" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.globenewswire.com/news-release/2023/11/28/2787047/0/en/Season-Health-Announces-Strategic-Asset-Acquisition-from-Wellory-to-Expand-Clinical-Network-of-Registered-Dietitians-and-Insurance-Coverage.html?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=sendto_pronewslettertest&amp;stream=top#:~:text=Austin%2C%20TX%2C%20Nov.%2028,medical%20nutrition%20therapy%20to%20patients" target="_blank">deal</a> is set to expand insurance coverage for Season, which is a main roadblock for many food-as-medicine startups.

A potential merger between health insurers Cigna and Humana would create a powerhouse to rival UnitedHealth and CVS — but the deal is far from guaranteed from an antitrust perspective.

Why it matters: Both parties have pursued selective divestitures in their respective insurance presences, but Cigna's stronghold in pharmacy benefit could raise regulators' hackles, industry watchers tell Axios.

Catch up fast: The insurers are discussing a stock-and-cash deal that could be finalized by the end of the year, presuming talks don't dissolve, WSJ reported yesterday.

The combination would be huge: Cigna's market value at the time of writing stands at $77 billion, while Humana's is roughly $59 billion.

Cigna reported about $181 billion in revenue last year, while Humana booked about $93 billion in 2022.

Between the lines: Cigna earlier this month was reportedly selling its Medicare Advantage unit, per Reuters — a move one health care banker tells Axios was likely a prelude to jumping on Humana.

Meanwhile, Humana has a strong position in MA and has been exiting commercial markets over the last year.

"It gets trickier on the PBM side of things where we are unsure of how a deal could be structured to satisfy regulators," Julie Utterback, a senior equity analyst for Morningstar, wrote in an email to Axios' Tina Reed.

"It would leave us with three PBMs controlling the market with most of the market share," co-leader of Goodwin's health care practice, John Jones, tells Aaron.

"A big focus will be what impact it will have on costs," he adds. "These PBMs also administer the Medicare Part D benefit for Medicare so impact to the government and the elderly will also likely be evaluated."

Meanwhile, Humana's growing primary care business in CenterWell would give Cigna meaningful physician ownership, in a health care paradigm that's seen insurers snap up doctors' offices.

"The ability to house Humana's assets into a structure with Cigna's PBM — to me that's a really smart move and will help drive performance in VBC," says Equality Health CEO Hugh Lytle.

"At the end of the day, they're in a better position to deliver an Optum-like solution," he says.

Flashback: We've (sort of) seen this movie before. Both insurers attempted mega-mergers nearly a decade ago, with Cigna trying to merge with Elevance in an estimated $54 billion combination, and Humana attempting a $37 billion merger with Aetna, but regulators blocked both.

After both proposed mergers were struck down in 2017, Wall Street analysts speculated a Cigna-Humana tie-up could be the next move.

What they're saying: "It feels like deja vu," BTIG managing director and health care analyst David Larsen wrote in a research note circulated Thursday.

"After the mega health plan deals [of 2015] were blocked by regulators and the judicial system," Larsen adds, "we are somewhat surprised to see these announcements."

Yes, but: There are some differences between the two scenarios this time around. Compared with 2015, for example...

"The line between payers and providers has become more blurred over the past decade," says Larsen.

Cigna could argue that its high proportion of commercial members differentiates it enough from Humana's mostly Medicare and military customers.

"Those last deals [in 2015-17] were really about competitiveness and avoiding a marketplace that could create price inflation," Lytle says.

"Those things I think will be the underlying carriage here, too, even if Humana sells off their nascent commercial business and if Cigna sells off their MA business," he adds.

Reality check: "It's not often in a proposed merger that you see both trade down," says one venture health care investor.

Shares of Cigna closed 8% lower Wednesday, while Humana's stock closed more than 5% lower.

"It's investors reacting to what could be a pretty protracted process that's likely to end up in a deal that gets blocked," the investor says.

What's next: In an industry predictions note for Forbes (before the WSJ story), Scan Health Plan CEO Sachin Jain said he expects to see other big health plans like Elevance and Molina make M&A moves.

"And don't forget about smaller regional plans, who will continue to shore up their competitive positioning in the increasingly consolidated landscape of national giants," he wrote.

Our thought bubble: Whether or not the merger clears, the move changes the chessboard and demonstrates market appetite for consolidation.

Humana declined to comment. Cigna did not return Axios' request for comment.

Cigna-Humana deal would face intense anti-trust scrutiny

The combination would be huge. Regulators will be watching.

Image of sign at entrance to Connecticut headquarters

Cigna headquarters in Bloomfield, Conn. Photo: Joe Buglewicz/Bloomberg via Getty Images

A potential merger between health insurers Cigna and Humana would create a powerhouse to rival UnitedHealth and CVS — but the deal is far from guaranteed from an antitrust perspective.Why it matters: Both parties have pursued selective divestitures in their respective insurance presences, but Cigna&#x27;s stronghold in pharmacy benefit could raise regulators&#x27; hackles, industry watchers tell Axios.Catch up fast: The insurers are discussing a stock-and-cash deal that could be finalized by the end of the year, presuming talks don&#x27;t dissolve, WSJ <a class="gtmContentClick" data-vars-link-text="reported yesterday" data-vars-click-url="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cud3NqLmNvbS9idXNpbmVzcy9kZWFscy9jaWduYS1odW1hbmEtaW4tdGFsa3MtZm9yLWJsb2NrYnVzdGVyLW1lcmdlci1jNWM3ZjFiMD91dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249cHJvX2RlYWxzX2hlYWx0aHRlY2hfc3VicyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB190e0cb2" data-vars-content-id="37205dd8-9cd0-443b-9151-7611ba51d731" data-vars-headline="Cigna-Humana deal would face intense anti-trust scrutiny" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cud3NqLmNvbS9idXNpbmVzcy9kZWFscy9jaWduYS1odW1hbmEtaW4tdGFsa3MtZm9yLWJsb2NrYnVzdGVyLW1lcmdlci1jNWM3ZjFiMD91dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249cHJvX2RlYWxzX2hlYWx0aHRlY2hfc3VicyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB190e0cb2" target="_blank">reported yesterday</a>.<ul><li>The combination would be huge: Cigna&#x27;s market value at the time of writing stands at $77 billion, while Humana&#x27;s is roughly $59 billion.</li><li>Cigna reported about $181 billion in revenue last year, while Humana booked about $93 billion in 2022.</li></ul>Between the lines: Cigna earlier this month was reportedly selling its Medicare Advantage unit, <a class="gtmContentClick" data-vars-link-text="per Reuters" data-vars-click-url="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cucmV1dGVycy5jb20vbWFya2V0cy9kZWFscy9jaWduYS1leHBsb3Jlcy1zaGVkZGluZy1tZWRpY2FyZS1hZHZhbnRhZ2UtYnVzaW5lc3Mtc291cmNlcy0yMDIzLTExLTA2Lz91dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249cHJvX2RlYWxzX2hlYWx0aHRlY2hfc3VicyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB24942ee9" data-vars-content-id="37205dd8-9cd0-443b-9151-7611ba51d731" data-vars-headline="Cigna-Humana deal would face intense anti-trust scrutiny" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cucmV1dGVycy5jb20vbWFya2V0cy9kZWFscy9jaWduYS1leHBsb3Jlcy1zaGVkZGluZy1tZWRpY2FyZS1hZHZhbnRhZ2UtYnVzaW5lc3Mtc291cmNlcy0yMDIzLTExLTA2Lz91dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249cHJvX2RlYWxzX2hlYWx0aHRlY2hfc3VicyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB24942ee9" target="_blank">per Reuters</a> — a move one health care banker tells Axios was likely a prelude to jumping on Humana.<ul><li>Meanwhile, Humana has a strong position in MA and has been <a class="gtmContentClick" data-vars-link-text="exiting commercial markets" data-vars-click-url="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZmllcmNlaGVhbHRoY2FyZS5jb20vcGF5ZXJzL2h1bWFuYS1zaGVkLWVtcGxveWVyLWdyb3VwLWNvbW1lcmNpYWwtYnVzaW5lc3M_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXByb19kZWFsc19oZWFsdGh0ZWNoX3N1YnMmc3RyZWFtPXRvcA/61b8a591584bc520355bcf4fB87a065bd" data-vars-content-id="37205dd8-9cd0-443b-9151-7611ba51d731" data-vars-headline="Cigna-Humana deal would face intense anti-trust scrutiny" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZmllcmNlaGVhbHRoY2FyZS5jb20vcGF5ZXJzL2h1bWFuYS1zaGVkLWVtcGxveWVyLWdyb3VwLWNvbW1lcmNpYWwtYnVzaW5lc3M_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXByb19kZWFsc19oZWFsdGh0ZWNoX3N1YnMmc3RyZWFtPXRvcA/61b8a591584bc520355bcf4fB87a065bd" target="_blank">exiting commercial markets</a> over the last year.</li><li>&quot;It gets trickier on the PBM side of things where we are unsure of how a deal could be structured to satisfy regulators,&quot; Julie Utterback, a senior equity analyst for Morningstar, wrote in an email to Axios&#x27; Tina Reed.</li><li>&quot;It would leave us with three PBMs controlling the market with most of the market share,&quot; co-leader of Goodwin&#x27;s health care practice, John Jones, tells Aaron.</li><li>&quot;A big focus will be what impact it will have on costs,&quot; he adds. &quot;These PBMs also administer the Medicare Part D benefit for Medicare so impact to the government and the elderly will also likely be evaluated.&quot;</li></ul>Meanwhile, Humana&#x27;s <a class="gtmContentClick" data-vars-link-text="growing primary care business" data-vars-click-url="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZmllcmNlaGVhbHRoY2FyZS5jb20vcGF5ZXJzL2h1bWFuYXMtY2VudGVyd2VsbC1leWVzLWFnZ3Jlc3NpdmUtZ3Jvd3RoLXRlY2gtaW5ub3ZhdGlvbi1zZW5pb3ItZm9jdXNlZC1wcmltYXJ5LWNhcmU_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXByb19kZWFsc19oZWFsdGh0ZWNoX3N1YnMmc3RyZWFtPXRvcA/61b8a591584bc520355bcf4fB9d321baf" data-vars-content-id="37205dd8-9cd0-443b-9151-7611ba51d731" data-vars-headline="Cigna-Humana deal would face intense anti-trust scrutiny" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZmllcmNlaGVhbHRoY2FyZS5jb20vcGF5ZXJzL2h1bWFuYXMtY2VudGVyd2VsbC1leWVzLWFnZ3Jlc3NpdmUtZ3Jvd3RoLXRlY2gtaW5ub3ZhdGlvbi1zZW5pb3ItZm9jdXNlZC1wcmltYXJ5LWNhcmU_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXByb19kZWFsc19oZWFsdGh0ZWNoX3N1YnMmc3RyZWFtPXRvcA/61b8a591584bc520355bcf4fB9d321baf" target="_blank">growing primary care business</a> in CenterWell would give Cigna meaningful physician ownership, in a health care paradigm that&#x27;s seen <a class="gtmContentClick" data-vars-link-text="insurers snap up doctors&#x27; offices." data-vars-click-url="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZmllcmNlaGVhbHRoY2FyZS5jb20vcGF5ZXIvd2h5LWluc3VyZXJzLWFyZS1zcGVuZGluZy1iaWxsaW9ucy1kb2N0b3JzP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1wcm9fZGVhbHNfaGVhbHRodGVjaF9zdWJzJnN0cmVhbT10b3A/61b8a591584bc520355bcf4fB8b027293" data-vars-content-id="37205dd8-9cd0-443b-9151-7611ba51d731" data-vars-headline="Cigna-Humana deal would face intense anti-trust scrutiny" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZmllcmNlaGVhbHRoY2FyZS5jb20vcGF5ZXIvd2h5LWluc3VyZXJzLWFyZS1zcGVuZGluZy1iaWxsaW9ucy1kb2N0b3JzP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1wcm9fZGVhbHNfaGVhbHRodGVjaF9zdWJzJnN0cmVhbT10b3A/61b8a591584bc520355bcf4fB8b027293" target="_blank">insurers snap up doctors&#x27; offices.</a><ul><li>&quot;The ability to house Humana&#x27;s assets into a structure with Cigna&#x27;s PBM — to me that&#x27;s a really smart move and will help drive performance in VBC,&quot; says Equality Health CEO Hugh Lytle.</li><li>&quot;At the end of the day, they&#x27;re in a better position to deliver an Optum-like solution,&quot; he says.</li></ul>Flashback: We&#x27;ve (sort of) seen this movie before. Both insurers attempted mega-mergers nearly a decade ago, with Cigna <a class="gtmContentClick" data-vars-link-text="trying" data-vars-click-url="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuYnVzaW5lc3N3aXJlLmNvbS9uZXdzL2hvbWUvMjAxNTA3MjQwMDUxNjcvZW4vQW50aGVtLUFubm91bmNlcy1EZWZpbml0aXZlLUFncmVlbWVudC1BY3F1aXJlLUNpZ25hLUNvcnBvcmF0aW9uP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1wcm9fZGVhbHNfaGVhbHRodGVjaF9zdWJzJnN0cmVhbT10b3AjLlZiSXVzVTFSSGNz/61b8a591584bc520355bcf4fB5c945d40" data-vars-content-id="37205dd8-9cd0-443b-9151-7611ba51d731" data-vars-headline="Cigna-Humana deal would face intense anti-trust scrutiny" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuYnVzaW5lc3N3aXJlLmNvbS9uZXdzL2hvbWUvMjAxNTA3MjQwMDUxNjcvZW4vQW50aGVtLUFubm91bmNlcy1EZWZpbml0aXZlLUFncmVlbWVudC1BY3F1aXJlLUNpZ25hLUNvcnBvcmF0aW9uP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1wcm9fZGVhbHNfaGVhbHRodGVjaF9zdWJzJnN0cmVhbT10b3AjLlZiSXVzVTFSSGNz/61b8a591584bc520355bcf4fB5c945d40" target="_blank">trying</a> to merge with Elevance in an estimated $54 billion combination, and Humana <a class="gtmContentClick" data-vars-link-text="attempting" data-vars-click-url="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZmllcmNlaGVhbHRoY2FyZS5jb20vcGF5ZXIvYWV0bmEtdG8tYWNxdWlyZS1odW1hbmEtZm9yLTM3Yj91dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249cHJvX2RlYWxzX2hlYWx0aHRlY2hfc3VicyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB43ebd40f" data-vars-content-id="37205dd8-9cd0-443b-9151-7611ba51d731" data-vars-headline="Cigna-Humana deal would face intense anti-trust scrutiny" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZmllcmNlaGVhbHRoY2FyZS5jb20vcGF5ZXIvYWV0bmEtdG8tYWNxdWlyZS1odW1hbmEtZm9yLTM3Yj91dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249cHJvX2RlYWxzX2hlYWx0aHRlY2hfc3VicyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB43ebd40f" target="_blank">attempting</a> a $37 billion merger with Aetna, but regulators blocked both.<ul><li>After both proposed mergers were struck down in 2017, <a class="gtmContentClick" data-vars-link-text="Wall Street analysts speculated" data-vars-click-url="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuYXhpb3MuY29tLzIwMTcvMTIvMTUvaW52ZXN0b3JzLWl0Y2hpbmctdG8tc2VlLWEtY2lnbmEtaHVtYW5hLWRlYWwtMTUxMzMwMzIwMz91dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249bmV3c2xldHRlcl9heGlvc3ZpdGFscyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB8577478c" data-vars-content-id="37205dd8-9cd0-443b-9151-7611ba51d731" data-vars-headline="Cigna-Humana deal would face intense anti-trust scrutiny" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuYXhpb3MuY29tLzIwMTcvMTIvMTUvaW52ZXN0b3JzLWl0Y2hpbmctdG8tc2VlLWEtY2lnbmEtaHVtYW5hLWRlYWwtMTUxMzMwMzIwMz91dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249bmV3c2xldHRlcl9heGlvc3ZpdGFscyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB8577478c" target="_blank">Wall Street analysts speculated</a> a Cigna-Humana tie-up could be the next move.</li></ul>What they&#x27;re saying: &quot;It feels like deja vu,&quot; BTIG managing director and health care analyst David Larsen wrote in a research note circulated Thursday.<ul><li>&quot;After the mega health plan deals [of 2015] were blocked by regulators and the judicial system,&quot; Larsen adds, &quot;we are somewhat surprised to see these announcements.&quot;</li></ul>Yes, but: There are some differences between the two scenarios this time around. Compared with 2015, for example...<ul><li>&quot;The line between payers and providers has become more blurred over the past decade,&quot; says Larsen.</li><li>Cigna could argue that its high proportion of commercial members differentiates it enough from Humana&#x27;s mostly Medicare and military customers.</li><li>&quot;Those last deals [in 2015-17] were really about competitiveness and avoiding a marketplace that could create price inflation,&quot; Lytle says.</li><li>&quot;Those things I think will be the underlying carriage here, too, even if Humana sells off their nascent commercial business and if Cigna sells off their MA business,&quot; he adds.</li></ul>Reality check: &quot;It&#x27;s not often in a proposed merger that you see both trade down,&quot; says one venture health care investor.<ul><li>Shares of Cigna closed 8% lower Wednesday, while Humana&#x27;s stock closed more than 5% lower.</li><li>&quot;It&#x27;s investors reacting to what could be a pretty protracted process that&#x27;s likely to end up in a deal that gets blocked,&quot; the investor says.</li></ul>What&#x27;s next: In an industry <a class="gtmContentClick" data-vars-link-text="predictions note for Forbes" data-vars-click-url="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZm9yYmVzLmNvbS9zaXRlcy9zYWNoaW5qYWluLzIwMjMvMTEvMjgvdG9wLTEwLWhlYWx0aGNhcmUtaW5kdXN0cnktcHJlZGljdGlvbnMtZm9yLTIwMjQvP3NoPTE5MzhhYmIxNjEyNiZ1dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249cHJvX2RlYWxzX2hlYWx0aHRlY2hfc3VicyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB55ef910c" data-vars-content-id="37205dd8-9cd0-443b-9151-7611ba51d731" data-vars-headline="Cigna-Humana deal would face intense anti-trust scrutiny" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/33535938.265/aHR0cHM6Ly93d3cuZm9yYmVzLmNvbS9zaXRlcy9zYWNoaW5qYWluLzIwMjMvMTEvMjgvdG9wLTEwLWhlYWx0aGNhcmUtaW5kdXN0cnktcHJlZGljdGlvbnMtZm9yLTIwMjQvP3NoPTE5MzhhYmIxNjEyNiZ1dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249cHJvX2RlYWxzX2hlYWx0aHRlY2hfc3VicyZzdHJlYW09dG9w/61b8a591584bc520355bcf4fB55ef910c" target="_blank">predictions note for Forbes</a> (before the WSJ story), Scan Health Plan CEO Sachin Jain said he expects to see other big health plans like Elevance and Molina make M&amp;A moves.<ul><li>&quot;And don&#x27;t forget about smaller regional plans, who will continue to shore up their competitive positioning in the increasingly consolidated landscape of national giants,&quot; he wrote.</li></ul>Our thought bubble: Whether or not the merger clears, the move changes the chessboard and demonstrates market appetite for consolidation.Humana declined to comment. Cigna did not return Axios&#x27; request for comment.

As GLP-1s boom, the stage is set for a shakeout, investors and executives tell Axios.

Driving the news: This year has seen a cadre of early-stage weight management startups snag investor dollars to address the $1 billion-plus market.

Why it matters: These investments have crowded the competitive field and now companies will seek to scale within the space, the investors and execs say.

The big picture: The rise of GLP-1 weight loss drugs, like Ozempic and Wegovy, could revolutionize a health care sector that receives around one-quarter of all VC dollars, Axios' Dan Primack reported.

What they're saying: "There should be multiple winners, considering that 70% of America is overweight or is obese — but there is no way the number of companies that currently exist can last," says Sarah Jones Simmer, CEO of weight management coaching service Found.

"In Q1-Q3 2023, we saw funding go primarily to early-stage digital health startups with specialized obesity care offerings," says Sari Kaganoff, GM of consulting at Rock Health.

Kaganoff says the startups have similar capabilities, so the challenge is to win new customers and users.

"We'll probably see more enterprises buying startups than startup consolidation (like Weight Watchers' acquisition of Sequence) to acquire new capabilities."

A primary driver of the number of startups, well, starting up? Employers and payors are recognizing the need for weight management programs, says Kaya Ventures managing partner Madeline Darcy.

That tailwind — alongside a cultural shift of people viewing obesity from seeing it as a "sin of one's lifestyle choices" to viewing it as a chronic condition — is driving Kaya's interest in the sector, Darcy says.

"With the high demand for GLP-1s and an influx of companies, the demand for new medications has driven a line of sight for potential revenue for founders," says Alfie CEO Alexander Singh.

Alfie, which uses AI-powered clinical decision support to treat weight loss, raised $2.1 million of seed funding in June.

Reality check: While demand for weight management is growing, insurers and employers are still being cautious around spending, Darcy says.

"A large need doesn't necessarily translate to a speedy [go-to-market] for startups," she says.

"We're seeing this acutely in the pull-back of coverage for GLP-1 medications," Darcy adds.

A Found-sponsored survey reported that 96% of employers surveyed acknowledged the need for weight management — but just 26% said they planned to offer benefits.

Yes, but: "I'm confident we'll see that number grow as more employers reconcile demand and cost to plan for 2024," says Found's Jones Simmer.

Coverage has been reduced thus far in part due to employers facing unprecedented spikes in medical spending they hadn't budgeted for, she says.

The big picture: It costs more than $10,000 annually for insurers to cover GLP-1s, which are in short supply at the moment.

Data from Found's state of weight care report showed an overall decline in coverage for GLP-1s in 2023—only 31% of insurance plans covered GLP-1s for weight loss in June, down from 64% six months earlier.

Doctors are simultaneously being inundated with prescription requests from patients who may not be eligible.

"Health care is not a setting that supports growth at all costs, we need to maintain a high bar for prescribing," Darcy says.

Meanwhile, obesity costs the U.S. health care system nearly $173 billion a year, per the CDC.

For GLP-1s, "price is a temporary issue," says Jones Simmer. "As soon as newer competitors come out, pricing will come down."

Last month, the FDA approved Eli Lilly's tirzepatide for weight loss, broadening the competitive market that was primarily dominated by Novo Nordisk.

Startups that don't primarily focus on GLP-1 prescription are well-positioned, according to Darcy.

Darcy cites Found, which raised $100 million in Series B capital at a $600 million valuation back in 2021 and has a focus on lifestyle, as one example.

Clinical nutrition startups like Culina, with "the ability to scale through partnering with primary care and specialty care, like cardiovascular care are getting strong traction with payers," Darcy says.

Additionally, metabolic monitoring startup Levels, which offers biofeedback on how food impacts health, raised its $7 million Series A extension in January, following a $38 million fundraise in 2022.

Legacy weight loss players have also made moves, with Weight Watchers, acquiring weight management telehealth platform Sequence for $132 million in March, and Noom offering expanded access to GLP-1s.

Be smart: Not all VC-backed players are success stories.

Weight management platform Calibrate — formerly backed by heavy hitters like Tiger Global Management, Founders Fund and Optum Ventures — hit roadblocks with getting members access to GLP-1s, forcing the company to issue millions in refunds, Business Insider reported.

The company recently sold to PE firm Madryn Asset Management and raised $29 million as part of a restructuring last month.

"The consumer model is really struggling," says Alfie's Singh. "We will likely see [companies make] harder pushes to B2B to stay alive and provide care to patients."

Venture capital deal volume and value in 2023 in obesity management stood at nine deals with $67 million invested.

That's compared with $574 million over 19 deals in 2022 and $2.2 billion over 33 deals in 2021.

Yes, but: The robust numbers for the two years prior may be attributable to the mega-rounds players like Ro and Noom raised before entering obesity management, Rock Health's Kaganoff says.

Ro, which launched its weight loss program this year, raised a whopping $500 million Series D in 2021, followed by another $150 million raise in 2022. The company was valued at $7 billion as of last year.

Meanwhile, Noom — which launched the obesity-focused product Noom Med this year — raised a $540 million Series F from Silver Lake in 2021, putting its pre-money valuation at $3.7 billion.

The bottom line: "We expect that the market of specifically obesity-focused startups is still early (hence the smaller rounds)," says Kaganoff. "And these companies will raise money to scale their solutions in the coming years."

Obesity management set for a shakeout

This year has seen a cadre of early-stage weight management startups snag investor dollars to address the $1 billion-plus market.

Deep Dive

As GLP-1s boom, the stage is set for a shakeout, investors and executives tell Axios.Driving the news: This year has seen a <a class="gtmContentClick" data-vars-link-text="cadre of early-stage weight management" data-vars-click-url="https://www.axios.com/pro/health-tech-deals/2023/07/05/weight-management-booming-health-tech-pitchbook" data-vars-content-id="43566907-bf12-4241-bb68-e5c7ba3360c6" data-vars-headline="Obesity management set for a shakeout" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/pro/health-tech-deals/2023/07/05/weight-management-booming-health-tech-pitchbook" target="_self">cadre of early-stage weight management</a> startups snag investor dollars to address the $1 billion-plus market.

Aaron Weitzman

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