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FTV Capital is optimistic about sponsor-led dealmaking in health care as non-traditional financing sources continue to flood the market in 2024,  partner Alex Mason tells Aaron.

Why it matters: Interest rate cuts may be coming, which investors are hoping opens the door for more PE-led exits and investments.

Axios spoke with Mason as part of the Expert Voices series. This interview was edited for length and clarity.

"There's definitely a lot more chatter and ... movement with some of the pretty scaled assets. I think people have sort of been on the sidelines long enough.  ... There's enough liquidity desires on either side to get things going. We'll see if the IPO window holds, or even opens.

Especially with the more mature health care IT, health care services assets, there should be continued interest from the PE world as an acquirer as opposed to strategics. Not to say there won't be strategic interest, but I think that has really buoyed some deal flow that we probably didn't really see it in 2023 and I think that will pull through and 2024."

What are the most attractive sub-sectors to you right now?

"We're seeing a lot of innovation on what we think about AI clinical decision support. ... The algorithms — we've seen a lot in radiology in particular, image-based — how do we enable sort of more efficient workflow for the radiologist or clinician? How do we help them make better, faster, or more efficient?

RCM is not dead and we think the revenue cycle is still alive and well. That is a really big market and a really big problem. We hold it near and dear to our hearts.

There is also this ongoing intersection of self-insured employers wanting to control more of the health care cost ... We're seeing the rise, I'd say, of the importance of the TPA, which is really, processing and adjudicating claims. It's the rails that self-insured employer uses. You saw Health Comp and Virgin."

"I personally just don't see the traditional lenders coming back anytime soon. There is just an ongoing ripple through the system of SVB and other dynamics and therefore, regulatory activity is really impacting underwriting.

I'd say in particular with lenders in health care, what we do see is folks have domain and regulatory knowledge of and comfort with businesses can really drive a lender's unique position in the marketplace.

So I think that scares away the tourists' side (not traditional lenders), which is probably a good thing because those businesses do need to get, financing as part of buyouts or growth capital side."

1 big thing: FTV Capital's Alex Mason on 2024 deal and financing outlook

Photo illustration of Alex Mason surrounded by a pattern of the FTV Capital logo and abstract shapes

Photo illustration: Gabriella Turrisi/Axios. Photo: Courtesy of FTV Capital

As it embarks on a $32 million-fueled business pivot, care enabler 98point6 bought telehealth company Bright.md's customers, CEO Jay Burrell tells Erin exclusively.

Why it matters: The deal will let 98point6's provider customers conduct asynchronous telemedicine visits, a fast-rising means of receiving virtual care.

Details: The deal — 45% in cash and 55% in equity — gives 98point6 Bright.md's 17 customers, per Burrell.

98point6 is also taking on half a dozen former Bright.md staff in commercial and sales.

It's 98point6's first acquisition as it transitions from care provider to tech licensor.

What's next: Burrell foresees more acquisitions in the near term and raising another round of capital by Q3.

"I'm preparing to put a little fuel in the commercial tank now that we have a portfolio of offerings," he says.

Burrell says the company plans to expand from health systems to private provider groups within roughly the next quarter.

Of note: 98point6 currently has 25 licensees signed up for its services, including MultiCare, Baptist Health, and UAB Medicine.

What they're saying: The strategy behind the current acquisition is creating "a single user interface for the patient and for the provider," says Burrell.

Be smart: A 2023 Rock Health survey suggested telehealth recently reached 80% adoption, boosting it into first place as the preferred channel for minor illnesses and prescriptions.

Compared with real-time video, audio-only and asynchronous forms of telemedicine were the most-used means of attaining virtual care, the survey found.

Catch up fast: When Seattle-based 98point6 last April announced its strategic shift from provider to enabler, Burrell foreshadowed the company's plan to use acquisitions to add capabilities like remote patient monitoring.

He hopes future buys enable the company to take on additional customers and technologies.

How it works: 98point6 Technologies charges health systems either a flat software licensing fee, a fee per transaction, or a mix of both.

Services include automated case assignment, EHR data integration, patient-clinician chat and video, automated care plans, clinical documentation, and medical recommendation letters.

State of play: Compared with telehealth providers, telehealth enablement startups promise simplicity over sparkle, drawing continued investor interest. Relevant deals from last spring alone include...

Virtual care enabler OpenLoop collected $15 million in Series A funding.

AI-powered revenue cycle service provider CodaMetrix closed a $55 million Series A round.

Opkit, which offers an insurance verification platform for telehealth companies, debuted with $1 million in seed financing.

2. The BFD: 98point6 buys Bright.md customers

Illustration of a middle aged women working on a laptop and sitting on a giant health plus. 

Want more health tech deals? Check out the Axios Pro Deals Tracker.

• Onera Health, a Dutch provider of remote sleep diagnostic and monitoring solutions, raised over €30m in Series C funding. EQT Life Sciences and Gimv co-led, and were joined by insiders Innovation Industries, Invest-NL, imec.xpand, BOM,and 15th Rock. https://axios.link/48Gas7a

• Wounded Warrior Project, a Jacksonville, Fla.-based nonprofit for wounded veterans, invested $100m in Warrior Care Network, a partnership to increase access to care and improve health outcomes for veteran mental health and brain injury with locations in Atlanta, Chicago, Los Angeles and Boston. https://www.woundedwarriorproject.org/programs/warrior-care-network

• Neocis, a Miami-based developer of robot-assisted dental implant surgery tech, raised $20m from NVentures and Mirae Asset Management. https://axios.link/3RUQ1w3

• Avante, a Seattle-based health enterprise software startup, raised $10m in unlabeled funding led by Fuse Venture Partners with participation from Ascend.vc and HighSage Ventures. https://axios.link/3HDp2At

• Care Continuity, an Irving, Tex.-based patient navigation startup, raised $10m in Series A-3 funding co-led by Empactful Capital and Viewside Capital Partners with participation from Flat Creek Capital and Loop 289 Limited Partners.

• XRHealth, a Boston-based developer of FDA-cleared VR and AR tools for chronic pain, anxiety, fibromyalgia, and dementia, raised $6m in unlabeled funding led by Asabys Partners with participation from Nova Prime Fund. https://axios.link/3tT0akL 

• QDI Systems, a Dutch developer of quantum dots tech for the medical market, raised €5m in Series A funding. NOM led, and was joined by insiders Carduso Capital, RuG Ventures and Maki.vc. https://axios.link/3HjpmUE

•  Vesey Street Capital Partners completed a majority recapitalization of Inceptua Group, a Luxembourg-based global service partner and specialty pharmaceutical company. https://www.inceptua.com/

• VMG Health, a Dallas-based portfolio company of Northlane Capital Partners, acquired Compliance Risk Analyzer, a suite of auditing and predictive analytics software, from DoctorsManagement. www.vmghealth.com

• HCAP Partners invested in hospital automation technology provider Apprio for an undisclosed price. https://axios.link/3vCyJfD 

• Ardian — alongside Bpifrance, MACSF and management —will acquire a majority stake in Healthy Group, parent of France's leading pharmacy banner Aprium Pharmacie, for an undisclosed price. https://healthy-group.fr/ 

3. Deals o' the day

• Katie Higgins, former CRO at Crossover Health, and Steven Leist, former VP at American Airlines, joined Progyny as CCO and CTO, respectively. https://progyny.com/

• Jess Compagnola, former CFO of Nomad Health, joined Carrum Health as CFO. https://carrumhealth.com/

• Alyssa Rapp, former CEO of Surgical Solutions, became CEO of Empower Aesthetics. https://www.empower.spa/ 

• David Green, former interim CFO of Prolacta Bioscience, became CFO of SeaStar Medical Holding Corporation. https://seastarmedical.com/

• Adam Perlman, former Mayo Clinic medical director, joined Pendulum Therapeutics as chief medical officer. https://pendulumlife.com/

• Elise-Marie Menke, former strategic partnerships lead at Google Health, joined IKS Health as VP of product. https://www.ikshealth.com/ 

• Elise Witek, former VP of sales at Exym, joined Eleos Health as AVP of partnerships. https://eleos.health/

• Kristin Kelly, VP of growth at Firefly Health, joined Primary Venture Partners as an expert adviser. https://www.primary.vc/

• Dave Lewis, former Tesco chief executive, chair of GSK spinoff Haleon, joined Clayton, Dubilier & Rice as an operating adviser. www.cdr-inc.com

• Dominic Chan, former director and head of business development and sponsors coverage at Vaquero Capital, joined Berenson & Company as VP. https://berensonco.com/

4. It's Personnel

🩹 US health care exposed: The case of the $1,500 Band-Aid — Forbes

👩‍🦽 U.S. health care isn't ready for a surge of seniors with disabilities — WaPo

🏥 Health industry reignites debate over mandatory payment experiments — Axios 

5. Your daily dose

illustration of a digital thermometer that reads "daily dose" 

Situational awareness: The FTC will review the proposed merger between the University of Pittsburgh Medical Center and Washington Health Services for potential anticompetitive impact. 

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

January 16, 2024

1 big thing: FTV Capital's Alex Mason on 2024 deal and financing outlook