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Five years into its investment, Frazier Healthcare Partners is exploring strategic alternatives for Parata Systems, sources familiar with the firm’s plans tell Sarah.

What’s happening: The Seattle-based firm has engaged Baird and William Blair for financial advice, but a process has not formally launched, sources say. 

Led by CEO Rob Kill, the Durham, North Carolina-based company, which offers the various technology solutions and tools needed to run a fully automated pharmacy, is generating north of $50 million in EBITDA.  

All potential outcomes appear to be on the table. Sources say Parata would make a great private equity deal, is a logical M&A target for publicly traded Omnicell, or could even consider a go-public route. 

Why it matters: There’s a huge opportunity to improve efficiencies and lower costs across the pharmacy industry, which is facing heightened headwinds, including a tight labor supply fueled by the global pandemic. 

Parata offers everything from medication adherence packaging to high-speed robotic dispensing technologies and pharmacy workflow solutions. 

It also provides data that pharmacists can use to better measure and manage pharmacy operations. This is particularly valuable for pharmacy operations with scale, whether that's or those with a centralized filling station and multiple locations. 

Between the lines: While industry giant Omnicell is largely focused on the hospital market, Parata is serving the traditional players and digital-first disruptors.

The company’s technology is sold to big-box retail pharmacies, those affiliated with the large grocers of the world, as well as long-term care pharmacies. 

Demand for its pharmacy technology is also an outgrowth of the proliferation of virtual pharmacies such as Hims & Hers or Amazon Pharmacy. This direct-to-home category also accounts for a big slice of the pie, sources tell Sarah.

Flashback: Frazier’s platform investment dates to 2017 when it bought TCGRx, following a year later with its purchase of Parata. 

M&A has remained critical to Parata’s playbook, most recently buying Synergy Medical in July 2021 to create a combined company servicing more than 4,000 pharmacies. 

Frazier and Baird declined to comment. Parata and Blair didn't return requests for comment. 

1 big thing: Frazier's Parata explores options

Illustration of a robot arm dropping a pill into a prescription bottle.

With $30 million in fresh funds, health monitoring startup Casana is readying to debut a toilet seat that takes your vitals, the company's executives tell Erin.

Morningside led the Series B fundraise, with Matrix, General Catalyst, Outsiders Fund and a leading industry investor participating.

Why it matters: Casana’s clinical commode is part of a broader trend that is seeing health care move out of the doctor’s office and into the home — or bathroom. 

“What is a potential game changer here is ... the opening of new distribution lanes and intermediaries for home health products,” Mintu Turakhia, director of the Stanford Center for Digital Health, tells Erin.

While the first phase of the shift centered around wearables, the next chapter will likely involve ambient home sensors, Turakhia says.

Details: Casana’s device, called the Heart Seat, uses three sensors (two of which are similar to the sensors found in an Apple Watch) to get a peek at heart health and spot early signs of a problem, or to monitor someone with an existing heart condition.

While an EKG is used to measure the heart’s electrical activity, photoplethysmography is deployed to detect blood volume changes with lights. 

A ballistocardiogram records tiny body movements caused by the heart’s mechanical activity.

By the numbers: The deal brings Casana’s total capital raised to $46 million. 

“This is far and away more money into toilet seats than anyone has ever dedicated in history,” Casana CEO Austin McChord tells Erin. 

What’s next: New York-based Casana plans to submit its vitals-collecting latrine to the Food and Drug Administration for approval as a class two medical device in the first half of this year, McChord says.

Yes, but: It's unclear what the payment model for something like this would look like. 

While McChord says he hopes Medicare will front the cost of both the seat and a monthly subscription that lets doctors access its data, Turakhia isn't so sure.

"I don’t see this being issued as part of remote patient monitoring which is reimbursed by Medicare," he says.

Examples of covered home blood pressure monitoring tools include those ordered by a doctor for single-use ambulatory blood pressure monitoring and for people who receive kidney dialysis at home — not quite the same kind of technology as a toilet seat meant for daily use.

The bottom line: Casana’s seat underscores the rising importance of ambient sensors that fade into the background while you take care of other business.

"I think it’s original, and what I like about it is it’s passive monitoring," says Michael Snyder, director of the Stanford Center of Genomics and Personalized Medicine. "That’s a real plus."

2. The BFD: $30M for heart-monitoring toilet seat

 Illustration of a toilet with a speech bubble saying “The doctor will see you now.”

Founder-owned West Coast Dental is seeking a buyer, sources familiar with the matter tell Sarah. 

Details: A sale process formally kicked off earlier this week, targeting a standalone sponsor deal, sources say. SVB Leerink is advising the Los Angeles-based multi-specialty and pediatrics dental company. 

West Coast Dental generates EBITDA in the low- to mid- $30 million range. 

Its de novo growth strategy is considered unique and likely to appeal to private equity buyers, sources say. 

The company is led by CEO Payam Sohrab, a veteran dental executive coming out of Western Dental Services and Interdent, which are now owned by New Mountain Capital and H.I.G., respectively. 

🗯️ Sarah’s thought bubble: Dental might be one of the more charted areas of PE investment when it comes to traditional retail health care. But that doesn’t mean there isn’t a long runway of future white space. 

The industry remains highly fragmented and utilization continues to increase thanks to more commercial coverage. 

In recent activity,  Deca Dental in August scored a strategic investment from Blackstone Tactical Opportunities.

Elsewhere, The Jordan Co last July snapped up Dental 365, providing an exit for Regal Healthcare Partners, in a deal valued at $440 million, sources told Sarah then. 

What they're saying: PitchBook notes in a recent report: “Dentistry has faced declining reimbursement rates for at least a decade. This has driven many independent dentists to sell their practices and affiliate with either dentist-owned or corporate (often private equity-owned) dental support organizations (DSOs) in order to achieve better bargaining power with payers and suppliers and unlock cost efficiencies.” 

A stressful pandemic-induced environment has led even more independent providers to join larger practice groups. 

What we’re watching: The industry goliaths. And we're asking what’s in the cards for KKR-backed Heartland Dental and Ares Management — and Leonard Green & Partners-owned Aspen Dental? The public markets? A secondaries deal? All we know is they seem to keep getting bigger. 

WCD couldn't immediately be reached and Leerink declined to comment.

3. 🦷 Bracing for a sale

Illustration of a model of a mouth with golden braces.

ICYMI, catch Erin and Google chief medical officer Karen DeSalvo chatting at yesterday’s launch event.

Why it matters: Google Health reorganized late last year, formally disbanding to spread its efforts across the organization. In its latest iteration, the company is working to imbue each of its numerous divisions with health expertise, DeSalvo says.

🗯️ Erin's thought bubble: Google isn’t backing away from health care, but rather deepening its investment in the category by infusing its work into virtually every sector, from wearables to hospital deals.

“We have such a relationship already with consumers who come to us for Dr. Google, and some of that is quality information, but we also want to help them take action,” DeSalvo says.

4.  The latest iteration of Dr. Google

Screenshot of Axios health tech reporter Erin Brodwin interviewing Google chief medical officer Karen DeSalvo.

Emids, a portfolio company of New Mountain Capital, acquired Cloud Development Resources, which delivers low-code digital consulting services for health care and life sciences companies. http://axios.link/81B9 

H.I.G. Acquisition II, a TMT or health SPAC formed by H.I.G. Capital, withdrew registration for a $300m IPO. http://axios.link/iZpR

5. Today's deals

Hims & Hers (NYSE: HIMS), a telehealth company and digital pharmacy, named Yemi Okupe chief financial officer. 

Patrick Carroll, formerly Hims' chief medical officer, will now serve on the company's board of directors, and senior vice presidents Peter Stahl and Aimee Paik will oversee Carroll's former duties.

Tia Clinic, a hybrid women's primary care startup, hired Aparna Patankar as director of strategic integrations from Blue Shield of California, where she served as director of digital strategy and planning.

Harris Williams hired Julian Feneley as managing director in the healthcare & life sciences group to lead its expansion into Europe. Feneley was previously managing director and head of health care Europe at Macquarie Capital. https://www.harriswilliams.com/ 

6. It's personnel

Hello, health tech readers. We made it to Friday, marking the end of our first week! Questions? Comments? Tips?  Write to us.

Did you miss our launch event? Here's the replay. Erin speaks with Google chief medical officer Karen DeSalvo at the 15:50 mark. (More below.) 

💾 Situational awareness: It’s the end of an era. IBM, which forked out more than $4 billion to build out Watson Health over a series of deals, has successfully locked down a buyer in Francisco Partners for the various assets. 

You heard it here first: Big Blue was originally seeking $1 billion-plus for the health care data and analytics businesses, sources told Sarah in December.  Stay tuned for more details.

⛷ With zero fresh pow in Tahoe (and none forecasted until next month), Erin probably won't spend this weekend on the slopes. But sunny skies + frozen flakes = wonderful wintry walks.

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

January 21, 2022

1 big thing: Frazier's Parata explores options