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Looking to modernize how health care constituents pay and supply one another, industry veteran Dunston Almeida has launched a new company with a “nine-figure” commitment from New Enterprise Associates.

What’s happening: The new company, triValence, is building next-gen infrastructure to automate B2B supply-chain management and payment processes, Almeida tells Sarah. 

In addition to Almeida, a former Zelis, eviCore and Medco executive, triValence has assembled executives with past experience at CVS, Inovalon, John Hopkins, Optum and Symplr. 

Strategic advisers include former GE and Athenahealth CEO Jeff Immelt and ex-White House policy director Kavita Patel. Almeida says triValence aims for a 50% female leadership team. 

Why it matters: The health care payments and supply chain ecosystem is inefficient and ripe for change. Providers manage vendors and systems that are siloed, and processes remain largely paper-based and manual. 

Most health care payments innovation has focused on the consumer, whereas the B2B universe — despite its size — has lagged.

“There’s big demand because nobody is doing it,” Almeida says. “It’s boring. Not sexy. It’s infrastructure. It’s hard to do.” 

What he found: Almeida spent time examining the strategies and best practices of fintechs like Stripe and Plaid before launching his new venture. 

“A fintech company doesn’t make money from processing transactions; they are capturing massive amounts of data, then de-identifying it. If we are successful, we can use the data for value-based contracting.”  

Between the lines: NEA has a strong track record when it comes to funding company incubation, but the VC is extremely selective on this front. Its last three founding projects are: 

Radiology Partners, founded in 2012, and now the largest imaging business in the country.

Strive Health, founded in 2017, and now among the fastest-growing valued-based kidney care providers.

AllyAlign, founded as SeniorHousing in 2020 to set up Medicare Advantage I-SNPs and D-SNPs for seniors.

One fun thing: triValence is named after the Valence bond theory, an explanation for the chemical bonding of two atoms.  

Likewise, Almeida says, triValence is trying to create connectivity between the different stakeholders in the health care supply chain — manufacturers, distributors and physicians — all the while marrying health tech, fintech and data.

1 big thing: Health tech & fintech unite 💑

Illustration of two brains overlapping to form a Venn diagram

Earable has raised $6.6 million from lead investor Founders Fund and Smilegate Investment as it prepares to introduce a wearable headset aimed at improving sleep and productivity, the investors tell Erin.

Why it matters: Earable hopes to reawaken the field of sleep tracking, which has been on snooze for several years as most available devices can't provide more than an estimate of the time you spent in bed.

The big question: With dozens of sleep trackers already on the market, how will Earable's device differentiate itself? And will people want to sleep with a headset?

"If someone is struggling with their sleep, they might be willing to wear a headband, but they also might be more sensitive to the disruption caused by it,” says Seema Khosla, medical director of the North Dakota Center for Sleep. "The less obtrusive, the less annoying, the better!"

How it works: Earable isn't just a sleep tracker, Tam Vu, the company's founder and chief executive, tells Erin.

The headset includes bone-conduction headphones and biometric sensors designed to improve sleep health.

"We’re a neuroscience and AI company designed to improve humans' cognitive function," says Vu, who is also an associate professor of computer science at Oxford University.

Those sensors include an electroencephalogram to measure brain signals, an electrooculogram to track eye movements, and an electromyograph to measure muscle response, as well as others.

What's next: Vu intends for the Earable headset to eventually be capable of sharing medical-grade data with a user's clinician.

Last year, he co-authored a small study, building on earlier research from 2016 and 2018, suggesting an early version of the device measured sleep with similar accuracy to a sleep clinic. 

For now, he plans to sell the tool as a non-medical wellness gadget while he and his team perform more studies.

"The challenge is we need to make sure the data has been validated, and not just in healthy individuals," says Khosla. "We need to see how this technology behaves in disease states like obstructive sleep apnea, insomnia, [and] heart failure."

One fun thing: It's highly unusual for Founders Fund, the venture firm known both for its contrarian creator Peter Thiel and its early bets on companies including Facebook and SpaceX, to invest in companies that haven't yet generated significant revenue.

Earable is an exception. General partner Keith Rabois led the investment, bringing Earable's total funding to $10 million saying he expects the device to help "enhance human potential."

2. The BFD: Founders Fund seeds new sleep tracker

Madison Dearborn Partners is acquiring a 25% stake in Sevita, joining Centerbridge Partners and Vistria Group as an investor in the health care services company, sources tell Sarah.

Details: The investment is set to value Sevita, which provides integrated care in home- and community-based settings to individuals with complex needs, at around $3 billion. 

Sevita, which recently rebranded from Civitas and did business as The Mentor Network, generated around $300 million of 2021 EBITDA, sources said previously.

Why it matters: The complex, oftentimes dual-eligible population that Sevita serves comprises high-spend individuals who are frequently vastly underserved. Hence, this is a patient population where the opportunity to improve costs and outcomes is greater than many other areas. 

What’s next: Off the back of the stake sale, Centerbridge and Vistria are running a process to move Sevita into a continuation fund, through which they will gain more time and capital to expand the business. 

Through a single-asset continuation fund, limited partners in older funds that own a stake in an asset are typically able to liquidate and/or reinvest in the continuation pool. New investors, or secondary buyers, also enter the mix through the process.

By pressing the reset button, the freshly capitalized company can further its pursuit of integrated care delivery by participating in more value-based arrangements. 

Flashback: Centerbridge, the majority owner, completed its LBO of Sevita alongside Vistria in March 2019 at a $1.4 billion enterprise value. Further, the company has already produced big gains for its backers. 

MDP, Vistria and Centerbridge declined to comment.

3. Madison Dearborn to buy into Sevita

Virtual-first forms of care have attracted a lot of recent investor attention, but chronic care is another category that’s starting to find purchase in the virtual-first market.

Driving the news: Hybrid chronic care company Thirty Madison is expanding into two new condition areas — sleep and dermatology — while Wheel, maker of an out-of-the-box platform for virtual care companies, saw its valuation quadruple in the last nine months and is starting to think about a play in chronic conditions, the companies’ executives tell Erin.

Between the lines: For chronic conditions, a one-off wellness checkup isn’t enough to keep flare-ups or emergencies at bay. Instead, continuous care is the name of the game, and increasingly, more companies are stepping in to provide more touchpoints for care.

“While our big chunks are currently urgent and primary care and behavioral health, we’ll increasingly look at care across the continuum,” says Michelle Davey, chief executive of Wheel. “In specialty-level care, we’ve seen a lot of growth, but we’re still in early innings.”

“Our secret sauce is ongoing care,” says Vik Panda, Thirty Madison’s new general manager of sleep.

4. Continuous care in the spotlight

Illustration of a Axios brand medicine bottle that says "your daily dose" next to a spoon.

🦾 Wandercraft, a health tech company in dynamic robotics and exoskeleton technology, has raised $45 million in a series C round. Quadrant Management led the round, joined by existing investor Bpifrance and new participants MACSF, Malakoff Humanis, AG2R La Mondiale, Mutuelles Impact and Sofiouest. https://www.wandercraft.eu/  

5. Venture capital deals

Virtus Health, an Australian IVF provider, said Thursday it received a A$608.9m (USD $439.56m) buyout proposal from CapVest Partners, a European buyout firm, Reuters writes. The proposal tops a previous bid from BGH, it said. http://axios.link/AH8P 

🐕 Alliance Animal Health, a veterinary hospital operator, has received a significant growth investment from L Catterton. LightBay Capital will remain an investor.

This confirms a December Axios report when sources told Sarah the investment valued Alliance between $750m and $800m. 

Permira and a subsidiary of the Abu Dhabi Investment Authority have agreed to jointly acquire and combine Italy’s Kedrion Biopharma and the U.K.’s Bio Products Laboratory, two pharmaceutical companies making therapeutics from blood plasma. The firms are partnering with the Marcucci family and FSI. http://axios.link/3Dt5 

6. Private equity deals

DarioHealth (Nasdaq: DRIO), a global digital therapeutics company, agreed to buy Physimax, a provider of computer vision tech for musculoskeletal health. http://axios.link/2ebw 

7. M&A 

🎉 Happy Thursday, health tech enthusiasts, or as we like to call it, Friday eve. 

Situational awareness: T minus 30 minutes until Erin goes live with Google chief health officer Karen DeSalvo. Register here if you haven’t already!

⛷ Pre-pandemic, I-banks, lenders and law firms hosted weekend trips for “VIP” groups of health care investors out West in bougie ski towns, like celeb-fave Aspen, today's featured ski spot. While rendezvous of this type are unlikely the norm today, surely some of you have escaped to those glorious snow-capped mountain towns.

By the numbers: 76 of 76 trails are open on Aspen Mountain today with 1 to 2 inches of light snowfall expected. Sounds pretty nice… 

🙏 Thanks for reading Axios Pro Health Tech! Please ask your book club, colleagues and ski instructors to sign up.

January 20, 2022

1 big thing: Health tech & fintech unite 💑