Axios Pro: Health Tech Deals

March 03, 2022

Axios Pro Exclusive Content

Happy Friday eve, Health Tech crew!

🏛 Situational awareness: The trial of Ramesh "Sunny" Balwani, the former president and COO of Theranos and ex-beau of CEO Elizabeth Holmes, begins next week. He faces the same counts brought against Holmes.

1 big thing: WellSky's consumer push

Illustration collage of a hand hovering over three identical medical crosses and numerous geometric shapes
Illustration: Annelise Capossela/Axios

WellSky recently closed its acquisition of TapCloud, a patient engagement tech company, inheriting “the one thing we really didn’t have,” CEO Bill Miller tells Sarah.

Why it matters: WellSky’s latest buy is on the small side of its 12 deals to date, but TapCloud is WellSky's first consumer-focused one, reflecting the post-acute care technology giant’s larger ambitions.

How it works: TapCloud opens the line of communication between patients and clinicians, letting individuals share symptoms or pertinent health data in real time.

  • That enables providers to make care interventions and reduce preventable emergency care.
  • “All providers would say they have evidence-based analytics, but sometimes the evidence isn’t really in receipt of data that comes from the patient themself,” and in Miller's view, that's historically been overlooked.

State of play: This progression, or "phase 3" for WellSky, hints at where the company is headed as more care moves into the home.

  • Phase 1 focused on building a consistent EHR that works across the broader post-acute care landscape.
  • Phase 2 was for ensuring interoperability and adding analytics that work across that waterfront.
  • Phase 3, as TapCloud suggests, adds to that from a consumer-oriented standpoint.

Zoom in: Miller is confident that WellSky can ultimately be used by patients to get additional care and services (like a physical trainer), proper medications, health care products or food and nutrition, for instance.

  • “When you have 5 million caregivers every day using your system and countless family members and patients on the other end of that, it becomes interesting to think about what WellSky becomes over time.”

Context: There are now more large privately held health care technology consolidators than ever before, each of which is taking a different spin on things.

  • In addition to WellSky, PE-backed companies include Netsmart, Waystar, PointClickCare, RLDatix, Symplr, and so on.
  • WellSky, Miller says, generates EBITDA well over $250 million on more than $550 million of revenue. “We’re focused on M&A right now but the public markets could always avail themselves to somebody like WellSky,” he notes.
  • Backed by Leonard Green & Partners and TPG, WellSky has deep pockets for all types of M&A, including the transformative kind, he says.

Flashback: LGP joined TPG in mid-2020 as an investor in WellSky in a deal that valued the company at $3 billion-plus, sources told Sarah then.

  • A few months later, it bought CarePort for $1.35 billion, gaining technology that manages the discharge process from the acute care setting into the post-acute setting.

What else: Miller suspects that Oracle’s $28 billion Cerner deal may inspire more big caps into “the budding post-acute space, and more into healthcare IT in general.”

  • Big Tech and large-cap participation in health care is a good thing, in Miller’s view.
  • “I think it will bring capital, talent and hopefully some defragmentation of our health care system, which I’d argue has held us back a little bit in terms of performance and outcomes.”

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