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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Everside Health has fielded many inquiries from strategics on the heels of Amazon's primary care splash, but CEO Chris Miller told Sarah during an Axios Pro virtual event this week that his freshly funded company is "in no rush to sell."

Why it matters: Primary care players continue to attract attention, but the market has shifted from prioritizing skyrocketing growth to focusing on profitability — and Everside is following suit. 

Catch up fast: Everside scrapped IPO plans and hauled in $164 million in NEA-led funding this summer. 

Zoom in: The company is well-positioned to reach profitability in 12 to 18 months, Miller says, noting the minimal capital needs its model requires to open new clinics.

"I think that also gives us a pretty distinct advantage in terms of some of those bigger public companies that are losing, frankly, quite a bit of capital," Miller says. Plus, the ability to be well-capitalized in this space enables it to "play a bit more offense than defense.'"

Everside expects to see organic growth of 25%-30% year over year, he adds. 

What they're saying: Miller views Amazon's acquisition of One Medical as a positive for the industry — not a competitive threat to his Denver-based company, which is fast approaching 400 health centers. 

"We love the fact that more individuals and clients — and frankly some big retailers and payers — are paying attention to the results that can be driven through value-based care."

What's next: A sale might not be on the table, but Everside is exploring a number of commercial opportunities with large payers, and even a few retailers, Miller says.

The goal is to be a one-stop shop and total cost-of-care provider for its clients, having already started expanding beyond primary care and into mental health and occupational therapy. 

"We're looking at each vertical in a build-by-partner strategy," which could include partnerships in specialties like MSK. But, he adds, "one of the reasons we raised $164 million recently was to be open to M&A."

Clients, for example, are asking Everside to provide dental and vision, Miller notes.

Context: Everside and One Medical, while both direct-to-employer primary care providers, aren't direct competitors for now, according to Miller. 

Everside's "sweet spot" is blue-collar America — unions, manufacturing companies and school districts, for example — whereas ONEM's D2C model prioritizes bigger cities and employers. 

"Frankly, those are the patients that really need much better health care," Miller says. Likewise, those are employers that "really desperately need to save money on health care... it's a need versus a nice to have." 

Everside, also doing more in the Fortune 200/Fortune 500 space, is unique in its scale, with nearly 400 health centers spanning 34 states.

Miller boasts that it saves its clients 17% by year three and 31% by year five, and is eager to get to the point of taking full risk eventually. 

The big picture: "There's 110 million Americans that get their insurance through self-insured employers right now, and we're serving 1.6 million lives. So there's a lot of room for us to continue to grow. We think every American needs this type of service."

1 big thing: Freshly backed Everside Health fending off overtures

Axios' Sarah Pringle interviews Everside Health's Chris Miller

Paul Singer's Elliott Investment Management took a substantial stake in kidney care giant Fresenius, Bloomberg reports.

Why it's the BFD: Elliott's position boosts the likelihood of a breakup of the German-based conglomerate, "whose structure has long been viewed as too complex and inefficient by some shareholders," Bloomberg writes.

Deal details: The size of Elliott's stake, which was not reported, has not yet exceeded the 3% disclosure threshold under German securities rules, per Bloomberg. 

Shares of Fresenius — which had tumbled roughly 40% year-to-date prior to the news — jumped about 13% in Wednesday trading. 

Catch up quick: Increasingly bulky conglomerate Fresenius has struggled in recent years, losing longtime CEO Stephan Sturm in August after cost pressures and COVID-related impacts weighed on earnings.

For the past half-decade, shares of the company have steadily declined, seeing shares fall from a high of $57 in 2018 to a low of $14 on Thursday.

Michael Sen, who has led the Fresenius Kabi unit since April 2021 and was involved with corporate restructuring in prior roles at both Siemens and E.ON, this month stepped in to succeed Sturm.

The company comprises four units: its intravenous drug division, Kabi;  hospital chain Helios; its stake in dialysis unit Fresenius Medical Care; and its stake in health care center operator Vamad.

Flashback: Just this March, Fresenius Health Partners (the parent company's U.S. unit), InterWell Health and Cricket Health joined forces to create a massive kidney care business valued at $2.4 billion.

Between the lines: Elliott, an activist fund known for its sharp cost-cutting tactics, has a history at other public behemoths, including athenahealth, Thyssenkrupp AG and software conglomerate SAP SE.

Yes, but: The firm could encounter difficulties deploying its usual playbook at Fresenius, per Bloomberg, due to special rights given to the foundation of former company leader Else Kroener, who steered the company for roughly four decades until her death in 1988. 

The foundation has been resistant to structural overhauls of Fresenius in the past, Bloomberg reports.  

2. The BFD: Elliott agitates Fresenius

Illustration of a saline bag solution with money as the liquid in the bag. 

SubjectWell, a clinical trial technology company, raised $35m in Series B funding led by Asset Management Ventures. https://axios.link/3DbKmLU 

Bain Capital invested in CitiusTech, a Princeton, N.J.-based provider of digital technology and consulting services to health care and life sciences companies. Bain joins BPEA EQT as an investor. https://www.citiustech.com/

AUM Biosciences, a Singapore-based oncology biotech, agreed to go public at an implied $400m pre-money equity value via Mountain Crest Acquisition Corp. V (Nasdaq: MCAG). AUM raised around $29m in VC funding from firms like Everlife Asia and SPRIM Ventures. https://axios.link/3MNAtqT

3. Deals o' the day

Tia VP of payer strategy Amanda Sussex joined Seven Starling as an advisor.

Former Seven Starling head of strategic partnerships Meghan Brown joined Huckleberry Labs as director of partnerships.

Kalderos named former Homethrive advisor Lisa Bomrad its first chief people officer.

CenExel named former Syneos Health senior leader Brandy Isaacks VP of project management & scientific affairs. 

American Physician Partners named former Ardent Health Services executive James Grimes senior VP, CFO. 

Carlin Consumer Health appointed former Baush + Lomb exectuive Scott Chapman CEO. 

4. It's Personnel

🍺🍷🍸 Meet us IRL! Axios Pro is holding a subscriber-exclusive happy hour next Tuesday night in NYC. Space is limited! RSVP.

✈️ Sarah is heading to NYC this weekend to enjoy the city's fall vibes, good food & drink and rendezvous with friends ahead of Axios' BFD event next Wednesday.  

❣️ 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 20, 2022

1 big thing: Freshly backed Everside Health fending off overtures