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Health Tech Deals

Amazon subsidiary PillPack is paying $5.79 million to the U.S. and various states for fraudulently overbilling for insulin, according to a document filed this week with the Department of Justice.

Why it matters: Amazon is a power player in the health care market, with sprawling efforts in virtual and in-person care, medical supplies, diagnostics and pharmacy.

The latter effort, which launched in November 2020 as Amazon Pharmacy, came on the heels of the tech giant's acquisition of specialty medication startup PillPack for $750 million.

Flashback: Amazon Pharmacy leaders TJ Parker and Elliot Cohen — the cofounders of PillPack — were quietly demoted to roles as consultants for the company in December, two sources told Axios at the time.

Parker and Cohen had steered Amazon Pharmacy since PillPack was acquired in 2018.

In December, Neil Lindsay, the former head of Amazon Prime,  stepped in to oversee Amazon Pharmacy.

Details: As part of the settlement, PillPack also admitted and accepted responsibility for regularly giving patients a full carton of insulin pens rather than the appropriate amount — a practice that clearly exceeded the limits imposed by Medicare and Medicaid — and then falsely under-reporting it to avoid penalties.

"From April 2014 through November 2019, PillPack’s general practice was to dispense insulin pens to patients using full cartons," the document reads.

"PillPack would dispense and bill for the full carton, and falsely under report the days-of-supply to make it appear that the dispensing did not violate the program’s days-of-supply limit," according to the report.

Under the terms of the settlement, PillPack will pay $5.6 million to the U.S. and $175,523 to state governments for a total of $5.79 million.

In response to an inquiry from Axios, an Amazon spokesperson provided the following statement: 

"Patient health and wellness is at the heart of everything we do. We proactively reviewed and changed our insulin pen distribution practices in 2019. Prior to that, it was common among pharmacies to not open pre-packaged boxes of insulin pens to ensure customers had enough life-saving medication, some may have received more insulin pens than their pharmacy benefit plans allowed or that they needed," the spokesperson said. 

This had no impact on patient safety, and we never charged customers for more than what was dispensed."

What they're saying: The DOJ entrusts pharmacies with providing government health care programs with accurate information and preventing medication waste and PillPack "abused this trust," U.S. Attorney Damian Williams writes in the document.

"This Office will continue to hold pharmacies accountable when they submit false information and waste taxpayer dollars," Williams adds.

Get more details in tomorrow's Axios Pro Health Tech newsletter. 

Amazon-owned PillPack pays nearly $6 million to settle DOJ fraud suit

The suit centers on fraudulent overbilling for insulin.

Health care

Axios Pro: Deals

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Thoma Bravo is leading a $60 million investment in Vivian Health, joining IAC (NASDAQ: IAC) as an investor in the health care-exclusive online jobs marketplace, the parties tell Axios exclusively. 

Why it matters: As America's population ages, the health care industry is facing a major labor crisis. Vivian helps employers fill their jobs more efficiently, and provides health care professionals with improved access to attractive job opportunities. 

With the industry poised to be short 3 million workers by 2026, Vivian claims it fills open jobs up to 50% faster than its competitors, reducing costs up to 80%.

"Part of what we need to be able to do as a company and society is figure out how to serve health care workers better," founder Parth Bhakta tells Axios. 

How it works: Vivian works almost like a "LinkedIn for health care", Bhakta says, connecting clinicians with both staffing agencies (including 8 of the nation's 10 largest) and major health systems. 

The startup was built around the concept of a universal health care-centric profile that is employer-agnostic. 

By serving as a "a passport to clinicians' health care career", Bhakta says clinicians using Vivian can, within seconds, qualify for job opportunities while recruiters can instantly engage with candidates. 

By the numbers:  Vivian facilitates 15% of the country's travel nursing placements,  equating to $1.5 billion in annualized labor spend. 

Under IAC's backing since 2019, Vivian has grown revenue by 45x, facilitating 3 million-plus job applications. 

More than 700,000 clinicians in the U.S. are registered to use Vivian's platform to secure work.

146 employer partners — including staffing agencies and health systems — rely on its marketplace. 

One fun thing: Bhakta, a former angel investor, co-founded Vivian with Eric Connor in late 2017, inspired by experiences of Connor's then-fiancé as a travel nurse. 

There was no clarity around the market rate for nurse staffing positions at the time, he says: "We were a bit disillusioned by that."

The bottom line: Reducing friction in the hiring process may help alleviate the pace of health care professionals leaving the industry.

"Being able to match a clinician to a better job opportunity is going to be crucial to reducing burnout," Bhakta says. 

Go deeper, including financing details, in Axios Pro Health Tech.

$60M for LinkedIn for health care

Vivian Health hopes to fill the health care hiring gap.

empty surgical scrubs showing missing person

Venture capital

A portfolio company of BlackRock fund (NYSE: BLK) intends to make a proposal to transact with certain non-core assets of Tabula Rasa Healthcare (Nasdaq: TRHC), according to a letter of intent disclosed in a 13D filing on Thursday. 

Why it matters: Tabula Rasa, working with Citigroup, was in advanced discussions regarding the sale of non-core assets, including PrescribeWellness, Axios reported in late March. 

Sources said then that conversations were being held with PE-backed strategics, with BlackRock-backed Transaction Data Systems among logical buyers of PrescribeWellness. TDS is a pharmacy technology company.

PrescribeWellness is a CRM (customer relationship management) tool that’s integrated with over 10,000 independent pharmacy operating systems.

BlackRock declined to comment, while Tabula Rasa did not immediately return a request for comment.

State of play: Besides PE-backed portfolio companies, logical buyers would include Omnicell (NASDAQ: OMNCL), should it want to beef up its pharmacy-focused hardware and software presence within independent pharmacies.

Flashback: BlackRock’s perpetual capital fund agreed to acquire a majority interest in Transaction Data Systems in May 2021, with minority investor GTCR retaining a minority interest.

Context: Tabula Rasa has been outspoken about its plans to unload non-core assets to boost profitability, strengthen the balance sheet and become and remain cash flow positive by Q3.

The company in February disclosed a letter of intent to sell DoseMeRx, a precision dosing tool used by pharmacists and physicians

Tabula Rasa bought PrescribeWellness less than three years ago for $150 million, but current price talk could not be determined.

Tabula Rasa asset sale nears

A filing shows a BlackRock-backed company is ready to engage.

Mergers and acquisitions

The U.S. Department of Energy's Loan Programs Office (LPO) on Monday announced a conditional commitment to lend up to $107 million to expand production capacity for a critical minerals plant in Louisiana.

Why it matters: The loan, if finalized, would mark the first in more than a decade from the office's Advanced Technology Vehicles Manufacturing (ATVM) program.

It would also be ATVM's first loan to support a supply chain manufacturing project, the LPO said.

What's happening: The loan would expand the production capacity at the Syrah Vidalia Facility, in Vidalia, Louisiana.

The facility is owned by Syrah Technologies, LLC, a subsidiary of an Australian firm. 

The expansion would enable the Vidalia Facility to produce more graphite-based active anode material for EV batteries.  

Of note: Graphite for the facility would be sourced from a mining and processing operation in Balama, Mozambique, which is also owned and controlled by Syrah Technologies’ parent-owner, LPO said. 

This would make the Syrah Vidalia Facility the first vertically integrated, large-scale producer of active anode material outside of China.

Requests for comment from the Department of Energy and Syrah were not immediately returned. 

Get more details on this news in tomorrow's Axios Pro Climate Deals newsletter. 

Loan commitment could bump U.S. battery market

The loan would be the first of its type from LPO in 10+ years.

Minerals

Wireframe Ventures raised $77 million for a pre-seed and seed fund focused on climate tech, biology, and other verticals.

Why it matters: Competition in climate-tech is driving funders to seek earlier-stage — and riskier — companies.

Between the lines: Wireframe's founders say its second fund has attracted a wider range of limited partners compared to 2016, including a broader array of institutional investors.

Get more details in Axios Pro Climate Deals

Exclusive: Wireframe's $77M fund eyes climate

Competition is driving investors to earlier-stage firms.

A green seedling shaped like a dollar sign sprouts from a terra cotta pot.

Evernow, a telehealth company focused on perimenopause and menopause, collected $28.5m from a cadre of venture capital firms, tech executives and celebrity backers.

Why it matters: A ton of funding has gone toward fertility in recent months, but very few companies are focused on supporting women's health once they've passed that (completely optional!) stage. 

Details: Individual investors include SpaceX COO Gwynne Shotwell, Color CEO Othman Laraki, Drew Barrymore, Gwyneth Paltrow, Carla Harris and Cameron Diaz.  

How it works: Potential users fill out a questionnaire to rule out medical issues that might interfere with treatment, and then San Francisco-based Evernow matches them with a clinician they can text and email with questions as symptoms change.

Yes, but: Evernow doesn't accept insurance, and its plans cost $75-$129 a month.

Evernow is filling a cash plus telehealth niche that's similar to Hims & Hers or Ro but specific to menopause, says women's health investor Leslie Schrock.

Get more details in Axios Pro Health Tech Deals.

Celebrities and VCs join Evernow's $28M round

Backers included venture firms, Gwyneth Paltrow and Cameron Diaz.

A trio of  clean-energy players are enabling the nation's largest competitive wholesale electricity market to reduce load by expanding demand-response to residential customers' thermostats.

Why it matters:  Demand-response programs can help utilities and others avoid costly upgrades by enabling them to rein in demand at peak times.

The details: Google Nest, Voltus and Resideo (NYSE: REZI) are introducing this capability through a "bring your own thermostat" program.

Catch up fast: Voltus has developed software technology to help manage distributed resources. The company in December announced plans to go public via SPAC, with a valuation of $1.3 billion.

Resideo, a spinoff of Honeywell, provides smart devices and other home tech, as  well as a distributed energy resource management system.

Go deeper: With the launch, the three companies say they're focusing on electricity markets that don't already have incentive programs in place for demand-response.

They estimate that about half of electricity customers in the U.S. don't have access to a thermostat-related demand-response program, Google Nest and Resideo tell Axios.

What they're saying: "As the grid is evolving, as there’s more renewables, there's more need for controllable load at the wholesale market level," Dave Oberholzer, a general manager at Resideo, tells Axios.

"The program we're doing here is to get experience in the wholesale markets with distributed residential load," he adds, "so that when the time comes, and when there's solar and wind that need to be accounted for as far as variable generation, there's variable load there that's available at the wholesale market."

Clean energy players eye home power consumption

Utilities will be able to dial-back homeowners' thermostats

Illustration of a pattern of light switches, all of them turned on except one.

Climate tech

Thomas H. Lee Partners has agreed to acquire health care data enablement company Intelligent Medical Objects, the parties tell Axios exclusively.

Why it matters: Clinical data quality has long been a problem for different health care stakeholders, and the opportunity exists to tackle this problem for providers, life sciences companies, payers and public health entities.

“Everyone is sort of dealing with that same messy data pool,” IMO CEO Ann Barnes says. “There is an enormous void in the market now, specifically around this deep understanding of clinical data and how to standardize and normalize it, and how to reach into that big vat of data and pull out very specific use cases.”

Details: The deal marks an exit for Warburg Pincus six years into its investment, valuing the Rosemont, Ill.-based company at north of $1.5 billion, sources say.

That equates to a forward valuation multiple of 25x-plus, they say, based on EBITDA of approximately $60 million.

Evercore advised IMO, while William Blair worked with THL.

How it works: IMO’s main product, IMO Core, allows doctors to document patient information “in their own language, the way they speak,” Barnes says, rather than in abstract codes or complex clinical terminology.

More efficient documentation can minimize clinician burnout, reduce unnecessary care and charges, optimize billing and reimbursement, streamline data management, and ultimately, inform better care.

“There’s no data more valuable than the clinical data," says Shahab Vagefi, who joined THL six months ago as a managing director from Martis Capital.

By the numbers: IMO manages more than 5 million clinical terms and maps to all major coding systems.

Used by over 740,000 physicians daily, IMO is embedded within every major EHR (electronic health record) and many minor EHRs in both the acute care and ambulatory settings.

“You have this mishmash of different data coming together,” Vagefi says, with IMO acting as “the Switzerland” of patient information tools.

What's next: The investment will propel product development and expand commercial relationships with hospitals and in non-provider markets.

M&A will become part of the equation for IMO, which has for the last 30 years been an organic-only growth story.

“First and foremost there are potentially some AI tools we can we use,” the CEO says.

The company has already has built new workflow products like surgical scheduling, for instance.

The bottom line: Simplifying patient and treatment data can empower stakeholders across the health care ecosystem, and IMO seeks to be the utility that helps all constituents get there.

Go deeper in today's Axios Pro Deals Health Tech newsletter.  

This article has been updated with deal and valuation details.

Scoop: THL buys Intelligent Medical Objects in $1.5B-plus deal

The $1.5 billion-plus deal bolsters clinical data technology.

Illustration of a medical cross inside of a speech bubble.

Health tech deals

PocketHealth, a medical image sharing startup, raised $16 million in Series A funding led by Questa Capital to expand its U.S. presence, cofounders Harsh and Rishi Nayyar tell Axios exclusively.

Why it matters: For decades, established tech giants and startups have been striving to shake up the electronic health record (EHR) industry, and recent anti-data-blocking legislation giving patients the chance to access their health information with apps has reinvigorated those efforts.

Details: Existing investor Radical Ventures also participated in Toronto-based PocketHealth's Series A round, bringing the company's total capital to $22.5 million.

How it works: The Nayyar brothers stressed that PocketHealth is not an EHR company but rather a technology that integrates with existing EHRs, letting patients collect and share X-Rays and MRIs from their personal records.

Pocket charges patients a yearly $49 subscription fee to collect, download, share and transport their medical images, functioning as a kind of Dropbox for health scans. The images are end-to-end encrypted for security, Rishi Nayyar says.

Someone with a Pocket account can share their images with someone who doesn't, and users can also revoke that permission at any time, adds Nayyar.

Users can also share their records with clinicians via fax.

The company also has an enterprise subscription where hospitals can share images with other providers.

What they're saying: Industry observers tell Axios they see a lot of value in making health records easier to access and share, adding that in their view, the category would benefit from more investment.

"I could see a company of this kind riding a good wave," says Christopher McCord, managing director at consulting firm Healthcare Growth Partners. "It's a natural evolution of further empowering the patient."

What's next: Pocket plans to use the funding to hire more staff and build more clinical partnerships in the U.S. and Canada, the Nayyars say.

"We started with images because it’s such a critical part of the process but we’re adding more and more context," Nayyar says.

Pocket plans to allow patients to upload more parts of their medical record, such as Covid vaccination records, lab results and medication history.

Scoop: Medical image sharing startup raises $16M

The company is akin to Dropbox, but for for medical scans.

Illustration of a phone with an x-ray image of a dollar sign.

Health tech

Climate Deals

RenewaFi, a New York-based climate tech startup that lets companies buy and sell renewable energy, raised $3 million in seed funding, the company tells Axios exclusively.

Why it matters: Now that renewable energy can be generated efficiently, investors see it as time to rethink the way companies buy and sell it. 

The details: First Round Capital, Floating Point, BoxGroup and Powerhouse Ventures participated in the funding round along with angel investors Arcadia CEO Kiran Bhatraju and Apollo partner Corinne Still.

Yaffe declined to disclose the valuation of the round. None of the investors will have board seats, he confirmed.

State of play: Buying and selling renewable energy is a time and capital-intensive process, RenewaFi CEO Noam Yaffe tells Axios. 

Prior to starting RenewaFi, he worked on the sell-side for a power plant developer in Austin and Power Purchase Agreements would take months to close and would often delay construction on new plants.

PPA fees, paid to the entity executing the contract, could run upwards of $2 million for a months-long process in addition to the contract cost itself.

How it works: RenewaFi took a page from fintech's playbook and moved the market for renewables online. 

Instead of paying fees and working with outside firms to secure a PPA, RenewaFi lets buyers submit projects for bids from sellers and select which proposal best suits their needs.

RenewaFi takes a success fee from each completed PPA that Yaffe says is minimal compared to other firms' fees. 

Quick take: Yaffe likened RenewaFi to a stock trading app and the traditional PPA process to calling an individual stock broker on the phone to execute trades. 

Though the latter works for some people, others may prefer a more DIY approach and save on the fees, Yaffe says. 

A next-gen renewables middleman nets $3M

RenewaFi raised $3 million in seed funding.

Illustration of a wind turbine blowing money

Specialty pharmacy startup House Rx raised $25 million in Series A funding led by Bessemer Venture Partners, company co-founders Ogi Kavazovic and Tesh Khullar tell Axios.

Why it matters: Specialty medications present a special hassle since insurers dispense the majority of such drugs, often on a delayed basis and without coordination with providers.

These drugs are often expensive and include medications for different types of cancers and other severe conditions.

Insurers and pharmacy benefits managers (PBMs) are mandating that providers complete detailed prior authorizations, a lengthy and mostly manual process.

In surveys, some oncologists have suggested those delays may be tied to poorer health outcomes.

How it works: House Rx partners with specialty clinics to get patients care and medications from the same place.

The company either trains clinics' existing staff to use its tools and software or places pharmacists or pharmacy technicians inside the clinic, where they collaborate with doctors on patient care.

"We were afraid we might be starting a turf war, but it turns out the doctors and the pharmacists love it," says Kavazovic, House Rx's CEO. "It's a complementary skillset."

House Rx also assigns a remote pharmacist to the clinic to verify that prescriptions are being written and sent out appropriately.

Currently focused on Medicare Advantage patients, the company charges a per provider/per month service fee.

Yes but: The company faces fierce competition from controlling incumbent PBMs for whom specialty drugs tend to be highly profitable.

"There is a ton of opportunity here, but it is very challenging for specialty pharmacies to get penetration into these broader PBM networks," says Antonio Ciaccia, a pharmacy sector analyst and the CEO of research firm 46brooklyn.

Khullar, House Rx's president, hopes that as more and more startups begin to challenge those dominant PBMs, House Rx will have more leverage — especially if it can show better patient outcomes.

Details: First Round Capital, Character.vc and 1984.vc joined Bessemer in House Rx's raise, which brings its total financing to $30 million.

What they're saying: Kavazovic, Khullar and industry observers view House Rx's biggest potential advantage as helping to streamline and improve patient care.

"That’s the dream, honestly — getting physicians and pharmacists and nurses working together," says Ciaccia. "When you’re talking about patients with complex diseases on specialty medications, collaboration is essential to make sure they're calibrated on the right treatment path."

Erin Brodwin co-authors the Axios Pro Health Tech deals newsletter. Start your free trial at AxiosPro.com.

Scoop: Specialty pharmacy startup nets $25M

House Rx helps simplify care for patients needing special support.

Illustration of money pouring into a prescription bottle.  

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