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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Closure of CareMax's acquisition of Steward Health Care System’s Medicare value-based care (VBC) business positions it as a formidable player in VBC.

Why it matters: In a profit-centric environment, the deal significantly accelerates publicly traded CareMax’s growth and “brings down the J-curve to profitability,” CareMax CEO Carlos de Solo tells Claire. 

Driving the news: The transaction, announced in June, closed Friday.

The deal adds about 170,000 senior VBC patients, bumping CareMax’s geographic footprint from four to 10 states, with 54 locations.

CareMax paid $25 million in cash along with 23.5 million shares for the business.

What they’re saying: Upon closing the transaction, CareMax becomes "one of the largest independent value-based care organizations out there, with a total possibility of managing 1 million members,” according to De Solo.

“This acquisition is going to propel them past every competitor in the market,” says Steward Health CEO Ralph de la Torre. 

What’s next: CareMax is heads-down on integration but may come up for air to pursue tuck-in buys of physician groups, De Solo says. 

Moving forward, CareMax and Steward will create an integrated care delivery network, with CareMax entering into a preferred provider agreement with Steward specialists and facilities.

Between the lines: Steward is an entrenched presence in VBC, with one of the largest accountable care organizations in the country. 

“What was really attractive about Steward is that they were really leading the way from a hospital system standpoint and thinking into the future about managing value-based care,” De Solo says. “Most hospitals are still focused on readmissions or bringing in patients.” 

State of play: Primary care has been in the crosshairs of major strategics like Amazon, Walgreens and CVS in recent months — particularly as choppy public markets make for a less welcoming home for those businesses.

For retail and pharmacy strategics, primary care represents  “an old business redefined” and easily vertically integrated into existing offerings, De Solo says.

“With pharmacy, with retail, with over-the-counter — even providing better care with groceries,” he says. “So much goes into healthy living. We’re providing health care, not sick care.”

The other side: Despite the significant bump in patient population with the Steward deal, CareMax still may not be scaled enough to attract, say, CVS, one health care banker says.

Yes, but: Don’t count out private equity, he says.

Sponsors are taking a close look at the myriad publicly traded primary care companies whose valuations have recently taken a knock, he adds.

See Agilon, which got a scathing analysis from Citron Research this summer, and Cano, which has attracted activist pressure. 

👀 What we’re watching: We’ve been wondering about CVS’ next chess move after its Signify deal, but what about Humana? 

The payor, rumored to have been looking at Cano Health, has a foothold in senior primary care through its Centerwell joint venture with Welsh Carson Anderson & Stowe. 

1 big thing: CareMax wants to be VBC's MVP

Illustration of a sack of money with a medical cross symbol on it.

Virtual maternal and family health unicorn Maven Clinic has raised $90 million in Series E funds, CEO Kate Ryder tells Erin.

Why it's the BFD: The round arrives as reproductive rights in the U.S. are under attack, pushing venture backers to turn to private companies for support.

"The overturn of Roe v. Wade created a ton of need in corporate America and across our payer partners including Medicaid," Ryder tells Erin.

"These category-leading, technology-forward companies play a crucial role in expanding access to care for women and families," says Lux Capital partner Deena Shakir, adding, "Women's health is population health, and reproductive rights are human rights."

Flashback: Maven last summer became the first maternal and family health company to hit a $1 billion valuation.

Deal details: General Catalyst led the round, bringing Maven's total funding to $300 million.

La Famiglia, Intermountain Ventures and insiders Sequoia, Oak HC/FT, Icon Ventures, Dragoneer Investment Group and Lux Capital also participated. 

Alongside the funding, Maven named three new board members: Homeward CEO Jennifer Schneider, former Independence Blue Cross COO Yvette Bright and former Collective Medical CEO Chris Klomp.

How it works: The company offers its services through employers, connecting users to caregivers trained in adoption, fertility, pregnancy and pediatrics.

Despite an uncertain political and economic environment, Maven has grown quickly with 15 million lives under management, a 5x rise since the company collected $110 million in Series D capital in August. 

The company operates in 175 countries, including India, Australia, Canada, the U.K. and Japan, and it recently entered U.S. Medicaid markets.

State of play: VC interest in women's digital health has ballooned on the heels of the Dobbs decision in June. Startups focused on women's mental health, fertility and telemedicine abortion have recently secured significant funding, including:

Future Family, a startup combining fertility financing and virtual care, in April raised $25 million in Series B funding at an $80 million valuation.

Caraway, a virtual health startup focused on young women's mental and reproductive wellbeing, in July launched with $10.5 million in seed funding.

Telemedicine abortion care provider Hey Jane in February raised $6.1 million.

Meanwhile, several new VC groups with an exclusive focus on abortion rights, maternal health and reproductive care have cropped up in recent months, including VCs for Repro, which debuted in November with 85 firms managing $14.8 billion.

One fun thing: New York-based Maven has attracted a celebrity lineup of investors including Oprah Winfrey, Mindy Kaling, Natalie Portman and Reese Witherspoon.

What they're saying: Ryder and Maven chief medical officer Neel Shah tell Erin that current conditions put pressure on the company's customers as well as on its employees, investors and care partners.

"It’s hard for any business leader to build a business in such a time of uncertainty and anxiety," Ryder says. "The polarization is tough. There’s a lot out there to distract our team and make life hard for them."

Meanwhile, that pressure also means employers are increasingly looking to Maven as a key service provider, per the company's leaders.

"Fertility has become a core benefit for a growing number of employers," Shah says. "Even in this economy where labor markets are tight, it’s something people are investing in with intention."

What's next: Ryder and Shah see big potential to convince employers that fertility is not a "nice to have" benefit, but rather "a need to have."

"There’s a huge opportunity to educate the market on what fertility is," Shah says. "It’s health care, not a perk."

2. The BFD: Maven lands $90M 

Illustration of a baby onesie printed with the image of a $100 bill.

GoodRx filed paperwork Thursday with the SEC for Wheel to acquire GoodRx Care's virtual care tech backbone for $19.5 million in cash, Wheel CEO Michelle Davey confirmed to Erin late last week.

Why it matters: As unsexy as it might sound, digital health infrastructure is rapidly emerging as one of the sector's hottest bets, as virtual-first care companies proliferate and scale. 

Deal details: Under the terms of the licensing agreement, Wheel gets access to GoodRx's tools for clinical management, patient engagement and medical records. 

GoodRx will continue to own the consumer-facing GoodRx Care website and mobile app, per the filing.

GoodRx will continue to use the tech to provide telehealth to its users with Wheel’s tech and staffing services.

The sale is expected to close by the end of the month. 

Context: The deal comes as health tech enjoys its Shopify moment, with a flurry of startups vying to supply the technological backbone for health care companies. For example:

Primary care software company Hint Health acquired health record company AeroDPC in a cash and equity deal this month.

Capable Health, a maker of plug-and-play enablement tools for digital health startups, in May raised $6 million in seed funds.

Primary care-focused tech developer Fold Health in July collected $6 million in seed capital from former Athenahealth CEO Jonathan Bush and others.

Catch up quick: Since 2020, Wheel has partnered with GoodRx by providing the company its nationwide network of clinicians. 

Davey tells Axios that its clinicians' positive experience with GoodRx's electronic medical record (EMR) tools heavily influenced the decision.

"We’ve seen a lot of EMRs, and what GoodRx has built is the best one out there, by leaps and bounds," Davey says.

What they're saying: Davey says the deal comes as health tech faces "a major inflection point" and will allow Wheel to scale more broadly across the heath care ecosystem, including urgent care centers and more traditional health care providers.

"This acquisition speeds up our ability to provide our customers with more capabilities and support more care models," Davey says.

3. Wheel buys GoodRx tech for $20M

Illustration of a red cross as a price tag with three dollar signs on it

Google Cloud and Epic signed a deal that will enable hospitals using the electronic health record company's products to take those records to the cloud, they announced Monday at HLTH.

Why it matters: The partnership gives health systems another option for their cloud environment. Google Cloud officials say the platform will offer new tools to build more efficiencies and optimize care, as well as secure their data, Axios' Tina Reed writes. 

New Jersey-based Hackensack Meridian Health will be the first health system to migrate its Epic records to Google Cloud. 

“We expect running Epic on Google Cloud will be simpler for our IT and developers,  and will allow them to focus more on uncovering creative ways to improve patient care,” said Kash Patel, chief digital information officer for Hackensack in a statement.

The big picture: It was one of a series of partnerships Google Cloud announced at the HLTH 2022 Conference.

It also announced a deal with Hackensack and Tennessee-based Lifepoint Health to launch what they're calling Healthcare Data Engine accelerators in 2023.

In short, these offer template dashboards for health systems to break down siloes within their own data to address common use cases. 

Health systems have a common interest in better mining their data to proactively address social determinants of health. The accelerators could help create a unified dashboard identifying patients that need support and prompting providers to offer more resources.

4. Overheard at HLTH: Google Cloud's Epic partnership

Illustration of a weather forecast, stylized as rain made of money. 

AngelEye Health, a Nashville, Tenn.-based patient engagement provider focused on neonatal, pediatric intensive care and nursery units, has raised an undisclosed amount of Series B funding led by Brad Whitmore and Mountain Group Partners with participation from SeedtoB Capital and the Rash Family Office, bringing total capital to $20m. https://www.angeleyehealth.com

Hemanext, a Lexington, Mass.-based developer of blood processing, storage and transfusion tech, has raised $18m in Series B equity funding led by Sonenshine Fulford Group. https://axios.link/3WQwfU0

Assure Health, a Fort Lauderdale, Fla.-based virtual chronic care provider, has raised $8.7m in seed funding. https://www.myassurehealth.com 

Northwell and Aegis Ventures has launched Upliv Health, a New York-based virtual menopause care startup, and says the company aims to collect $8.4m in seed funding by the end of 2023. https://www.uplivhealth.com 

WellTheory, a virtual autoimmune care provider, has raised $7.2m in a seed funding round led by Accel with participation from Box Group, Lux Capital, Scribble Ventures, Rock Health and the CEOs of Maven, Everlane and Pillpack. https://axios.link/3Ac3Iyl 

Luminopia, a Cambridge, Mass.-based developer of prescription digital therapeutics for neuro-visual disorders, has raised $5.7m in seed extension financing led by ShangBay Capital with participation from Sony Innovation Fund, The Vertical Group, SSI Strategy and insiders. https://luminopia.com 

Truepill, a San Mateo, Calif.-based digital pharmacy infrastructure provider, has raised an undisclosed round from undisclosed investors. https://www.truepill.com 

PayZen, an SF-based health care payments affordability platform, has raised $20m in equity led by 7wire Ventures and a $200m credit facility from Viola Credit. www.payzen.com

Curavit Clinical Research, a Philadelphia-based virtual contract research organization, has raised $5m in Series A funding led by Osage Venture Partners with additional investment from Royal Street Ventures and Narrow Gauge Ventures. https://curavitclinicalresearch.com

Centre Partners and Health Enterprise Partners has invested in Tampa, Fla.-based Toney Healthcare Consulting. www.tonyhealthcare.com

Editor's note: This story has been corrected to note that Upliv Health aims to raise $8.4m in seed funding, not $8.9m in seed funding. 

5. Deals o' the day

Charlie Health has named former Amazon Health senior project manager Alexander Bertha VP of care strategy.

Tendo has named former Biofourmis digital director Josh Pappas director of sales.

Grant Avenue Capital has named former Tailwind Capital partner Brian Berkin managing director. 

Luminopia has appointed ShangBay Capital founding managing partner William Dai to its board of directors.

6. It's Personnel

Happy Monday and, to those of you who celebrate, HLTH week!

❤️‍🩹 Situational awareness: Erin and colleague Tina Reed are in Sin City for HLTH, taking the main stage today with Google's Thomas Kurian (9am PT) and Lance Armstrong (5:10pm PT). 

🌊 Claire got in her last warm lakefront walk of the season Friday before fickle Chicago temperatures fell from 75 to about 40 degrees. 

🙏🏻 Thanks for reading, and extra thanks to newsletter editor George Moriarty and copy editor Brad Bonhall. Please ask your friends, family and fellow HLTH-goers to sign up.

November 14, 2022

1 big thing: CareMax wants to be VBC's MVP