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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Wellvana Health, a Martin Ventures-backed value-based care enabler, is exploring strategic alternatives, sources tell Sarah. 

Why it matters: As strategics look to disrupt primary care, investors remain hyper-focused on supporting the industry's transition to a reimbursement model based on the quality of care and outcomes. 

Nashville's Wellvana is one fast-growing player dedicated to that effort.  

Driving the news: A SVB Securities-run process prioritizing a primary capital investment just kicked off, sources say.

By the numbers: Wellvana is projecting over $1 billion of revenue and around $25 million of EBITDA in 2023, sources say. 

Revenue and EBITDA are estimated to surpass $2 billion and $100 million, respectively, in 2024.

How it works: Wellvana sets up contracts with provider groups to help them succeed with value-based care. 

About two-thirds of Wellvana members enter into the DCE/ACO Reach program, with the remaining one-third Medicare Advantage.

With 800-plus primary care doctors in its network, more than 70,000 members on the Wellvana platform will be full-risk in 2023, with a footprint in 20 states.

Wellvana has a heavy "boots on the ground" model, as one source puts it, engaging regularly with practices to identify opportunities to improve quality outcomes and generate savings. Wellvana shares in those savings. 

State of play: A good comp for Wellvana is Agilon Health, which CD&R took public last year — but there are a couple of big differences:

Agilon is heavier in Medicare Advantage versus ACO Reach. 

Agilon tends to partner with larger practices and is more geographically concentrated, whereas Wellvana focuses on partnering with small practices that have historically been under-prioritized by risk-enablement companies. 

What they said: Most value-based care startups in primary care focus on larger entities with existing infrastructure, but 40% of the senior population is managed by small independent practices with 10 or fewer physicians, Vytalize Health CEO Faris Ghawi told Sarah in April.

Be smart: Wellvana has a big health care name behind it — Charlie N. Martin Jr.

The industry veteran and entrepreneur co-founded and stood up Wellvana with a $4.5 million investment in 2018 through his Nashville VC shop, Martin Ventures. 

Martin among other things founded and was CEO of Vanguard Health Systems, ultimately selling it to Tenet Healthcare for $4.3 billion in 2013. 

Yes, and: Wellvana in January named former SmileDirectClub CFO Kyle Wailes CEO. Wailes formerly helped build out Intermedix's primary care practice business before it was acquired by R1. 

The bottom line: Health care is inevitably moving towards value-based care, but many millions of Medicare beneficiaries are still not part of these programs. That means there's room for many winners as investors demonstrate a voracious desire to participate in this innovation.

1 big thing: Wellvana explores options

Illustration of a hundred dollar bill with red cross on it

NeuroFlow, a Philadelphia-based provider of behavioral health integration technology, has collected $25 million in growth capital led by SEMCAP Health, the parties tell Axios.

Why it's the BFD: NeuroFlow's technology empowers stakeholder collaboration to address gaps in care and improve care navigation created by behavioral health's massive supply-demand imbalance.  

Details: The capital infusion will support growth across its sales and business development teams to build out its referral network; boost marketing spend; support investment into data privacy and security; and product development in Spanish and other languages.

How it works: NeuroFlow provides standardized behavioral health assessments to identify a broad range of behavioral health conditions, tracks progress and risk levels by utilizing patient engagement, and equips care teams with AI-driven clinical decision support for care navigation. 

Its enterprise workflow and care management software also aims to reduce administrative burdens for its payor, provider and government customers — and can plug into existing workflows and systems. 

Its referral network includes behavioral health companies including Array, LifeStance Health, Marvin, and Brightside Health and AbleTo. 

Customers include Magellan Health, Health First, Bozeman Health, the Department of Defense, among others. 

By the numbers: The SEMCAP-led capital infusion brings NeuroFlow's total funding to date to $57 million. 

The company in January 2021 raised a $20 million Series B round led by  Magellan.  

NeuroFlow over the last year has expanded its reach to 15 million supported lives, from 2 million. 

What they're saying: "In this category and niche we've found, there's no reason we can't be ubiquitous across the ecosystem," COO and co-founder Adam Pardes says. "We are the glue that connects a lot of point solutions for different care providers."

Context: SEMCAP Health is an investment platform of SEMCAP, a Wayne, Pennsylvania-based growth equity investor focused on health care, education and food and nutrition. 

State of play: This is the second behavioral health-related investment this week with a "niche" model aimed at a massive total addressable market. 

Brave Health, a virtual care startup dedicated to mental health care for Medicaid members, raked in $40 million in Series C funding led by Town Hall Ventures. 

The bottom line: While digital health funding has taken a tumble, the money is still showing up for players with a vast growth trajectory and proven impact on the health care ecosystem.

2. The BFD: NeuroFlow gathers $25M

Illustration of an app-like brain with an alarm icon on it

VSS Capital Partners invested in Center for Rheumatology, an Albany, N.Y.-based provider of rheumatology services. www.joint-docs.com

MSouth Equity Partners made a significant investment in Medix Staffing Solutions, a Chicago provider of allied health care staffing. https://www.medixteam.com/

Clayton, Dubilier & Rice and TPG completed their acquisition of Covetrus, an animal-health technology and services business. https://covetrus.com/

Longreach Group is seeking a buyer for Quasar, a Hong Kong-based medical device firm that could fetch between $300m and $400m, per Bloomberg. https://axios.link/3VoH2nv

Palo Santo raised $50m for a VC fund focused on psychedelic therapeutics companies. www.palosanto.vc

3. Deals o' the day

Trinity Homecare named Dominique Kent, CFO for senior living at Pacific Investments, to its board of directors. 

4. It's Personnel

🌊 Erin is back from Mexico, where she attended a wedding on an agave ranch in Guadalajara and swam on the beaches of Sayulita. 

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

October 13, 2022

1 big thing: Wellvana explores options