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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Employer primary care providers Marathon Health and Everside Health announced plans to merge, Axios' Claire Rychlewski writes.

Why it matters: U.S. companies are spending big on employees' health care, often with little insight into whether they're paying for quality care.

Details: The combined company — which will operate as Marathon Health — expects to generate "well over $500 million" in revenue this year, Marathon CEO Jeff Wells tells Axios.

Wells, who will lead the business moving forward, described the transaction as a merger-of-equals and said talks between the two started last spring. Financial terms were not disclosed.

Everside CEO Chris Miller will depart for other opportunities but remains a shareholder.

Marathon backer General Atlantic and Everside backers New Enterprise Associates and Oak HC/FT remain invested in the entity.

How it works: Marathon and Everside provide employers onsite, network and virtual primary care clinics and services.

Alongside primary care, the companies offer occupational health, behavioral health and care navigation.

The big picture: Marathon and Everside's value proposition is in potential savings for employers, which are currently staring down the largest annual increase in health care costs in a decade.

"The awareness of primary care as the solution — and the right type of primary care — has actually never been stronger," Wells says.

What's next: Integration of the merger is top-of-mind near-term, with no additional M&A planned now, Wells says.

Yes, but: "One thing we've recognized is employers increasingly have point solution fatigue," he adds, noting Marathon could seek acquisitions that focus on integrating multiple HCIT solutions.

State of play: Marathon competes with Premise Health — which OMERS acquired for $1.1 billion in 2018 from Water Street Healthcare — as well as Select Medical-owned Concentra Health.

Meanwhile, strategics like Amazon and CVS have increased their primary care footholds.

Catch up quick: General Atlantic acquired a majority stake in Marathon in 2019 for an undisclosed price.

Everside, formerly Paladina Health, was sold to NEA by dialysis business DaVita for $100 million in 2018. NEA led a $165 million raise for the company that year.

Both companies have completed a spate of acquisitions of smaller-scale competitors in subsequent years.

What we're watching: Everside had plans to go public in 2021 before scrapping an IPO due to market conditions.

What they're saying: "We don't have a defined path to access the public markets versus other paths to access capital," Wells tells Axios.

1 big thing: Primary care merger-of-equals 

Illustration of “Hello, My name is” sticker in the shape of a health plus

Unlearn, an AI-powered tech platform creating "digital twins" of clinical trial participants to accelerate drug development, raised a $50 million Series C.

Why it's the BFD: On average, development costs now exceed $2 billion per new drug, Aaron writes.

Details: The round was led by by Altimeter Capital. New investors Insight Partners, 8VC, DCVC and DCVC Bio also joined.

Insiders Radical Ventures, Wittington Ventures, Mubadala Capital, Epic Ventures and Necessary Ventures participated as well.

What's next: The round should get San Francisco-based Unlearn to profitability, CEO Charles Fisher tells Axios.

"Our goal is that this will be the last time we raise capital," he says. Founded in 2017, Unlearn has raised more than $130 million in total.

He declined to disclose Unlearn's revenue.

How it works: Unlearn's AI and machine learning models create individual digital "twins" for participants in clinical trials, before the patients are randomized into experimental or control arms.

The digital twin helps forecast health outcomes under placebo, regardless of their actual assignment.

This results in clinical trials with smaller control groups, allowing more patients to receive experimental treatment and reducing the time it takes to bring new drugs and therapies to market.

"Our mission is to advance AI to eliminate trial and error in medicine," he says.

Of note: Unlearn's approach has been qualified by the European Medicines Agency (EMA) for use. The company recently announced the FDA's Center for Drug Evaluation and Research (CDER) concurred with EMA's judgment.

What they're saying: "Unlearn has assembled a strong team using AI to tackle a key and urgent need in the massive clinical trials market in a differentiated way," says Altimeter partner Pauline Yang.

"This digital twin technology allows pharma and biotech companies to reduce meaningfully the control arm to reduce both time and cost of patient recruitment," she says.

2. The BFD: Unlearn $50M Series C for digital twins for clinical trials

Illustration of ones and zeroes coming out of a head.

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

• Headlight, a San Diego-based mental and behavioral health company, raised $18M in funding c0-led by Matrix and Epic Ventures. headlight.health

• TalkLife, a U.K.-based mental health startup, raised funding from Telus Ventures. axios.link/42zAqXA 

• Essence Labs, a Lewes, Del.-based employee benefits platform for hormonal health, raised $600,000 in funding co-led by the Berkeley SkyDeck Fund, Davidovs VC and Growing Well Partners. theessence.app

• Lifestyle monitoring company Lilli raised £8.2 million in Series A funding led by West Hill Capital. intelligentlilli.com

• Spectrum Science, a health care and life science consulting and marketing firm, acquired clinical trial recruitment company Continuum Clinical. axios.link/3SQCXJy 

3. Deals o' the day

• Myoung Cha, former president and chief strategy officer at Carbon Health, joined Verily as chief product officer. verily.com

• Amir Dan Rubin, former CEO of One Medical and Andrew Dreyfus, former CEO of Blue Cross Blue Shield of Massachusetts, joined the board of directors at Octave, a San Francisco-based mental health care practice. findoctave.com

• Jon Neal, former CRO at InstaMed, joined Atlas Health as CRO. atlas.health

• Ed Lee, former EVP at The Permanente Federation, joined Nabla as CMO. nabla.com

4. It's Personnel

💉 Drug companies scramble to boost production of weight-loss drugs — Axios

✂️ How one company managed to cut its health spending by almost half — Axios

💰 House Budget's new math on weight-loss drugs — Axios Pro Health Policy

5. Your daily dose

illustration of a digital thermometer that reads "daily dose" 

👀 Situational awareness: Join us virtually on Feb. 13 for Axios BFD: Miami. Register to livestream the event here.

🦢 Claire watched the first two episodes of "Feud: Capote vs. the Swans" and found it aesthetically thrilling but narratively lacking. 

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

February 08, 2024

1 big thing: Primary care merger-of-equals